Braze, Inc. 10-Q Summary: Q1 2025
Business Context and Reporting Period
This summary covers Braze, Inc.'s (BRZE) unaudited financial results for the quarterly period ended April 30, 2025. Braze operates a cloud-based customer engagement platform enabling brands to deliver personalized experiences across multiple channels. The company is a large accelerated filer incorporated in Delaware.
Key Financial Metrics
| Metric | Q1 2025 | Q1 2024 |
|---|---|---|
| Revenue | $162.1 million | $135.5 million |
| Gross Profit | $111.2 million | $90.9 million |
| Gross Margin | 68.6% | 67.1% |
| Operating Loss | $(40.2) million | $(40.1) million |
| Net Loss | $(35.6) million | $(35.7) million |
| Net Loss Per Share (Basic & Diluted) | $(0.34) | $(0.35) |
| Operating Cash Flow | $24.1 million | $19.4 million |
| Non-GAAP Free Cash Flow | $22.9 million | $11.4 million |
| Cash, Cash Equivalents & Marketable Securities | $539.8 million | $N/A |
| Deferred Revenue | $265.0 million | $N/A |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 19.6% year-over-year, driven by a 19.0% increase in subscription revenue. Approximately 60.8% of the subscription growth came from new customers, while 39.2% came from existing customer expansion.
- International Expansion: International revenue grew by $14.3 million, now representing 46% of total revenue.
- Expense Increases: General and Administrative (G&A) expenses surged 51.2% to $40.5 million, primarily due to $10.0 million in acquisition-related professional services and legal costs. Sales and Marketing expenses rose 6.2%, and R&D expenses increased 7.1%.
- Customer Metrics: Total customers grew to 2,342 (from 2,102 in Q1 2024). Monthly Active Users (MAU) remained stable at approximately 7.2 billion. Dollar-based net retention rate for the trailing 12 months declined to 109% (from 117% in Q1 2024), attributed to customers renewing at levels aligned with current needs rather than future demand.
Outlook, Risks, and Unusual Items
- Acquisition Activity: In June 2025 (subsequent to the period end), Braze closed the acquisition of OfferFit, Inc., for up to $325.0 million in cash and stock. This aims to integrate OfferFit's multi-agent decisioning engine into Braze's platform.
- Internal Control Material Weakness: Management concluded that disclosure controls and procedures were not effective as of April 30, 2025, due to a material weakness in Information Technology General Controls (ITGCs) regarding user access and program change management. Remediation is expected by the end of Q4 2025.
- Liquidity: The company holds $539.8 million in cash and marketable securities. Management believes this is sufficient to meet working capital and capital expenditure requirements for at least the next 12 months.
- Risk Factors: Key risks include macroeconomic instability affecting customer spending, intense competition, reliance on third-party cloud infrastructure (AWS, Rackspace), and regulatory changes regarding data privacy and AI.
Investor Verification Checklist
- Verify the timeline and progress of the remediation plan for the identified material weakness in ITGCs.
- Monitor the integration progress and financial impact of the OfferFit acquisition announced in June 2025.
- Assess the sustainability of the 19.6% revenue growth rate given the decline in dollar-based net retention to 109%.
- Review the composition of the $10.0 million in acquisition-related G&A expenses to determine if they are one-time or recurring.
- Confirm the company's ability to maintain positive free cash flow as operating expenses scale.