Summary
Braze closed its fiscal 2024 third quarter ended October 31, 2023 with revenue of $124.0 million, up 33.1% from $93.1 million in the prior-year quarter. Gross profit rose to $87.6 million from $64.0 million, and gross margin improved to 70.7% from 68.7%. The company remains unprofitable, though the loss narrowed on several lines. Operating loss was $35.1 million versus $36.9 million a year earlier. Net loss attributable to Braze was $30.7 million, or $0.31 per diluted share, compared with $33.4 million, or $0.35. Operating margin was -28.3%, up from -39.6%. For the nine months, revenue reached $340.8 million, up 32.8%. Management attributed the gain primarily to new customers, upsells and renewals.
Retention and scale metrics tell a mixed story. Dollar-based net retention for all customers over the trailing 12 months ended October 31, 2023 was 118%, down from 126% a year earlier, and for customers with annual recurring revenue of at least $500,000 it was 121%, down from 129%. Total customers grew to 2,011 from 1,715, and the number of customers with ARR of $500,000 or more rose to 189 from 148. Monthly active users reached 6.0 billion as of October 31, 2023, up from 4.8 billion as of January 31, 2023. Backlog looked healthy. Deferred revenue was $178.6 million, up 26.9% from $140.7 million. Remaining performance obligations were $560.1 million, up 37.0%. Braze said it recently passed $500 million of committed annual recurring revenue.
Cash trends improved sharply. Net cash used in operating activities was $2.0 million in the quarter, up from $23.9 million used a year earlier. For the nine months, operating cash flow was positive at $3.0 million, up from $22.3 million used in the prior-year period. Capital expenditures were $3.0 million in the quarter, down from $4.2 million. Free cash flow, a non-GAAP measure, was negative $5.9 million in the quarter, an improvement from negative $28.1 million. On a non-GAAP basis, gross margin was 71.4% versus 69.7%, operating loss was $8.9 million versus $17.3 million, and net loss per share was $0.05 versus $0.15.
Braze initiated guidance for the fiscal fourth quarter ending January 31, 2024 and updated its outlook for the full fiscal year. For the fourth quarter, it guided revenue of $124.0 million to $125.0 million, a non-GAAP operating loss of $7.0 million to $8.0 million, and non-GAAP net loss per share of $0.04 to $0.05. For the full fiscal year, it guided revenue of $465.0 million to $466.0 million, a non-GAAP operating loss of $39.5 million to $40.5 million, and non-GAAP net loss per share of $0.26 to $0.27. Management said it expects the non-GAAP operating loss margin to be negative 6% or better in the fourth quarter.
Risks remain real. Braze has a history of operating losses and still reports a GAAP loss even as its non-GAAP losses shrink. Disclosed risk factors include unstable market and economic conditions, rapid revenue growth that may not be indicative of future growth, intense competition, reliance on third-party cloud infrastructure, and the ability to attract and renew customers. Management also flagged seasonality, noting that the largest sequential increase in messaging volume and compute typically falls in the fourth quarter. Product and customer activity in the period included Feature Flags, new AI offerings such as AI Recommendations, Canvas AI Step and Message Content Recommendations, and customer wins at FabFitFun, Mythical Games, Ouro, Papa John's UK and Sonos. Braze also noted recognition as a Leader in the 2023 Gartner Magic Quadrant for Multichannel Marketing Hubs and in two 2023 IDC MarketScape assessments, and it made its platform available in AWS Marketplace.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $124.0M | $115.1M | +7.7% | $93.1M | +33.1% |
| Gross profit | $87.6M | $79.6M | +10.0% | $64.0M | +36.9% |
| Gross margin | 70.7% | 69.2% | +1.5 pp | 68.7% | +2.0 pp |
| Research & development | $29.9M | $29.1M | +2.5% | $25.6M | +16.8% |
| Sales & marketing | $66.4M | $60.4M | +9.9% | $52.8M | +25.7% |
| General & administrative | $26.4M | $25.5M | +3.9% | $22.4M | +17.9% |
| Total operating expenses | $122.7M | $115.0M | +6.7% | $100.9M | +21.7% |
| Operating income (loss) | -$35.1M | -$35.4M | +0.7% | -$36.9M | +4.7% |
| Operating margin | -28.3% | -30.7% | +2.4 pp | -39.6% | +11.3 pp |
| Net income (loss) | -$31.0M | -$32.0M | +3.3% | -$33.9M | +8.6% |
| Net margin | -25.0% | -27.8% | +2.9 pp | -36.4% | +11.4 pp |
| Diluted EPS | -$0.31 | -$0.33 | +$0.02 | -$0.35 | +$0.04 |
| Customers | 2,011 | 1,958 | +2.7% | 1,715 | +17.3% |
| Net retention rate | 118.0% | 120.0% | -2.0 pp | 126.0% | -8.0 pp |
Risks
The company reported an unremediated material weakness in internal control over financial reporting related to the lack of properly designed controls over revenue recognition under ASC 606 as of October 31, 2023. If remediation is delayed, financial statements could be materially misstated and investor confidence could suffer.
Unfavorable macroeconomic conditions, including inflation, higher interest rates, instability in banking and financial services, and geopolitical conflicts, have affected customer spending behavior and could extend sales cycles or reduce demand for the platform. MD&A identifies these conditions as leading to increased economic uncertainty.
Braze depends on renewals and expansion, and its dollar-based net retention rate was 118% for the trailing 12 months ended October 31, 2023, compared with 126% for the trailing 12 months ended October 31, 2022. For customers with ARR of $500,000 or more, the rate was 121% compared with 129% over the same periods.
The company has incorporated generative AI/ML into its platform, and competitors may deploy AI/ML more quickly or successfully. AI-generated content that is harmful, biased, inaccurate, or discriminatory could create legal and reputational harm, and evolving AI regulations may require costly changes.
Sales to large enterprise customers can be long and unpredictable, generally three to six months but sometimes extending over 12 months, and macroeconomic conditions may further extend cycles or reduce win rates. This can delay revenue relative to incurred sales and marketing expenses.
Braze faces intense competition from legacy marketing clouds such as Adobe and Salesforce and point solutions such as Airship, Iterable, CleverTap, MailChimp, and MoEngage. Competitors may bundle products, lower prices, or consolidate, which could lead to price reductions, fewer sales, reduced revenue and gross margins, and loss of market share.
The SEC has indicated it may increase regulatory focus on the use of customer engagement tools in the financial services industry, and privacy, data security, and AI/ML laws are evolving. New restrictions could reduce demand for the platform in regulated markets.
Although revenue grew 33.1% for the quarter ended October 31, 2023, the company expects its annual revenue growth rate to decline as the business matures. If it fails to expand existing customers, attract new customers, or price effectively, future results could be volatile.
SaaS KPIs
All quarters →Monthly Active Users
Total Customers
Free Cash Flow
Non-GAAP Operating Margin
Summary, forecast, risks and KPIs are extracted from Braze, Inc.'s SEC filings for Q3 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.