Braze, Inc. (BRZE) Q2 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended July 31, 2026. Braze, Inc. operates a cloud-based customer engagement platform delivering real-time experiences across push notifications, email, SMS, and other channels. The company serves approximately 2,789 customers globally, with significant revenue generated outside the United States (approximately 45% of total revenue for the six months ended July 31, 2026).
Key Financial Metrics
| Metric | Three Months Ended July 31, 2026 | Six Months Ended July 31, 2026 |
|---|---|---|
| Revenue | $227.2 million | $438.2 million |
| Gross Profit | $151.9 million | $290.5 million |
| Gross Margin | 66.8% | 66.3% |
| Net Loss | $(18.3) million | $(43.8) million |
| Net Loss Per Share (Basic & Diluted) | $(0.17) | $(0.41) |
| Operating Cash Flow (6 months) | $52.3 million | |
| Non-GAAP Free Cash Flow (6 months) | $48.5 million | |
| Cash, Cash Equivalents, and Marketable Securities | $413.9 million (as of July 31, 2026) | |
| Deferred Revenue | $346.7 million (Current Liability) |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 26.2% year-over-year (YoY) for the quarter and 28.1% YoY for the six-month period. Growth was driven by both new customer acquisition (44.7% of quarterly growth) and expansion within existing customers (55.3% of quarterly growth).
- Cost of Revenue: Increased 29.5% YoY for the quarter, primarily due to higher third-party messaging fees and hosting costs associated with revenue growth. This contributed to a slight compression in gross margin (down 0.9% for the quarter).
- Operating Expenses:
- Sales & Marketing: Increased 12.4% YoY due to higher headcount and variable compensation.
- Research & Development: Increased 9.8% YoY due to increased headcount and software services.
- General & Administrative: Decreased 13.5% YoY, driven by the absence of one-time acquisition-related compensation costs incurred in the prior year.
- Stock Repurchases: In March 2026, the company initiated a $100 million share repurchase program. During the six months ended July 31, 2026, the company executed an Accelerated Share Repurchase (ASR) transaction for $50.0 million, retiring 1.7 million shares. Approximately $50.0 million remains available under the program.
- Acquisition Impact: The company acquired OfferFit, Inc. in June 2025. Amortization of acquired technology and personnel costs related to the acquired workforce contributed to the decrease in gross margin.
Guidance, Outlook, and Risks
- Outlook: Management expects revenue growth to continue but anticipates the annual revenue growth rate will decline as the business matures. The company plans to continue investing in sales, marketing, and R&D to support growth and innovation, particularly in AI capabilities.
- Liquidity: The company believes its current cash, cash equivalents, and marketable securities ($413.9 million) are sufficient to meet working capital and capital expenditure requirements for at least the next 12 months.
- Material Weakness in Internal Controls: The company identified a material weakness in internal control over financial reporting related to ineffective Information Technology General Controls (ITGCs) regarding user access and program change management. Management is implementing a remediation plan, but full remediation is not expected until the fiscal year ending January 31, 2027.
- Risks: Key risks include macroeconomic instability affecting customer spending, intense competition, reliance on third-party cloud providers (AWS, Rackspace), data privacy regulations (GDPR, CCPA), and the potential for AI-related liability or reputational harm.
Investor Verification Checklist
- Verify the timeline and progress of the remediation plan for the material weakness in ITGCs.
- Monitor the trajectory of gross margin compression as the company scales infrastructure and messaging costs.
- Assess the impact of the OfferFit acquisition on future amortization expenses and integration synergies.
- Review the remaining balance and execution strategy of the $50 million remaining share repurchase authorization.
- Track the dollar-based net retention rate (110% for the trailing 12 months) to gauge customer expansion health.