Braze, Inc. (BRZE) Q1 2027 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary highlights strong financial performance with a 26% YoY growth in Q1, a $100 million share repurchase, and AI-driven product advancements. The Q&A section reveals efficient AI tool adoption, increased sales efficiency, and robust customer engagement, all contributing to a positive outlook. Despite minor concerns like Decisioning Studio bottlenecks, overall sentiment remains positive, supported by strategic hires and AI integration. Market cap suggests moderate stock price movement, leading to a prediction of a 2-8% increase.
Key Financial Performance
Revenue $211 million, up 30% year-over-year and 3% from the prior quarter. Growth driven by existing customer contract expansions, renewals, and new business.
BrazeAI Decisioning Studio Revenue $5.7 million, implying an organic year-over-year growth rate of 26.7%. Growth attributed to accelerated hiring and ramp of forward-deployed delivery personnel.
Subscription Revenue 93% of total revenue for the quarter.
Professional Services Revenue 7% of total revenue, with 85% of it being recurring revenue recognized ratably over the life of a contract.
Customer Count 2,713 customers, up 16% year-over-year and 104 sequentially.
Large Customers Spending $500,000+ Annually 349 customers, up 33% year-over-year, contributing 65% to total ARR compared to 62% in the prior year.
Dollar-Based Net Retention (All Customers) 110%, an improvement of approximately 100 basis points sequentially.
Dollar-Based Net Retention (Large Customers) 111%, an improvement of approximately 100 basis points sequentially.
Remaining Performance Obligation (RPO) $1.1 billion, up 30% year-over-year and 4% sequentially. Current RPO was $670 million, accelerating to 28% year-over-year from 27% in the prior quarter.
Non-GAAP Gross Profit $142 million, representing a non-GAAP gross margin of 67.4%, compared to $112 million and 69.3% in the prior year. Decrease in margin driven by higher premium messaging volumes and Decisioning Studio headcount.
Non-GAAP Operating Income $10.5 million, or 5% of revenue, compared to $2.8 million, or 2% of revenue, in the prior year.
Non-GAAP Net Income $11.4 million, or $0.10 per share, compared to $7.3 million, or $0.07 per share, in the prior year.
Cash, Cash Equivalents, Restricted Cash, and Marketable Securities $392 million at the end of the quarter.
Operating Cash Flow $28 million, compared to $24 million in the prior year.
Free Cash Flow $27 million, a record, compared to $23 million in the prior year.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
BrazeAI Operator and BrazeAI Agent Console: Reached general availability early in the first quarter, ahead of schedule, with strong early adoption. Hundreds of customers are using them to design and execute sophisticated programs efficiently.
BrazeAI Decisioning Studio: Contributed $5.7 million in revenue in Q1, with a rapidly scaling business pipeline. It replaced manual testing operations with continuous automated experimentation, achieving double-digit increases in click-through rates.
Market Expansion: Expanded into LatAm with a global beauty customer and secured new business with companies in Australia, France, and the U.S., including a leading energy drink company.
New Business Wins: Notable wins include Bondora Group, ClassPass, Denny's, Deuna, Kueski, NRMA, Regal Cinemas, Salomon, and Subway. Also secured a milestone deal with a prominent AI lab.
Revenue Growth: Achieved $211 million in revenue, up 30% year-over-year and 3% sequentially. Raised revenue guidance for Q2 and fiscal year 2027.
Operational Efficiencies: Improved non-GAAP operating margin by over 300 basis points year-over-year. Generated $27 million in record free cash flow.
AI Integration: Positioned AI at the core of the platform, enabling real-time, first-party data-driven customer engagement. AI tools like BrazeAI Operator and Agent Console are transforming customer engagement processes.
Legacy Replacement Cycle: Continued to capitalize on replacing legacy platforms with AI-driven solutions, emphasizing real-time data and enterprise-grade performance.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Supply Constraints: In Q4, supply constraints forced the company to limit Decisioning Studio bookings in certain regions and delay start dates by multiple months. This could impact revenue growth and customer satisfaction if not addressed.
Gross Margin Decline: Non-GAAP gross margin decreased year-over-year from 69.3% to 67.4%, driven by higher premium messaging volumes and additional Decisioning Studio headcount. This could pressure profitability if the trend continues.
CFO Transition: The departure of CFO Isabelle Winkles introduces potential risks related to leadership continuity and financial strategy execution during the ongoing search for a replacement.
Economic Uncertainty: The company operates in a competitive and uncertain economic environment, which could impact customer spending and contract renewals.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Revenue Guidance for Q2 FY 2027: Expected revenue to be in the range of $219.5 million to $220.5 million, representing a year-over-year growth rate of approximately 22% at the midpoint.
Non-GAAP Operating Income for Q2 FY 2027: Expected to be in the range of $17 million to $18 million, implying a non-GAAP operating margin of approximately 8% at the midpoint.
Revenue Guidance for FY 2027: Expected total revenue to be in the range of $895 million to $899 million, representing a year-over-year growth rate of approximately 22% at the midpoint.
Non-GAAP Operating Income for FY 2027: Expected to be in the range of $70 million to $74 million, implying a non-GAAP operating margin of 8% at the midpoint.
BrazeAI Decisioning Studio Revenue Growth: Revenue from Decisioning Studio in Q2 is expected to grow 15% to 20% sequentially from Q1.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
The selected topic was not discussed during the call.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:How much of a headwind was the bottleneck in Decisioning Studio due to the lack of forward-deployed engineers (FDEs), and how is the hiring and headcount addressing this issue?
A:The company feels good about the momentum and pace of hiring. While the specific impact in Q1 was not broken out, the hiring has positively influenced Q2 revenue projections. The company has expanded headcount in regions like EMEA and APAC, where capacity was previously lacking.
Q:How do customers rank customer engagement in their AI project priorities, and how is Braze addressing AI adoption?
A:Customer engagement is a significant priority in AI projects. Braze focuses on transforming marketer workflows and improving personalization and relevance optimization. The company is leveraging reinforcement learning, GenAI, and agentic approaches to develop a robust suite of BrazeAI offerings. Customer education remains paramount.
Q:Is Operator helping less sophisticated marketers adopt AI, and how is Braze promoting its AI tools?
A:Operator has made AI adoption easier for less sophisticated marketers. Braze has promoted Operator and Agent Console through events, hackathons, and enhanced features like Content Optimizer. The company is also focusing on customer education and scaled use cases.
Q:How is Braze addressing the cost and efficiency of using large language models (LLMs) in its AI tools?
A:Braze uses preprocessing and context engineering to make LLMs more efficient, reducing token usage and enabling the use of faster, cheaper models. This approach balances quality, performance, and cost.
Q:What caused the jump in professional services revenue, and how does it impact gross margins?
A:The increase is due to changes in packaging customer success (CS) entitlements, which are now separately SKU'd. This change reallocates revenue from subscription to professional services but does not affect overall revenue recognition. The impact on gross margins is minimal, with messaging being a primary component.
Q:How are new AI modules affecting sales cycles and deal sizes?
A:The new AI modules have led to higher velocity decision-making and competitive win rates. Sales cycles are becoming more efficient, and deal sizes are increasing. The company is also focusing on verticalization and partner alignment to further improve sales efficiency.
Q:What is driving the increase in monthly active users (MAUs) and customer engagement?
A:Increased campaign creation and experimentation, aided by tools like Operator, are driving higher customer engagement. The digital ecosystem is improving, and AI-native applications are contributing to growth.
Q:What are CS credits, and how do they affect revenue composition?
A:CS credits are customer success entitlements that were previously bundled with subscription fees. They are now separately SKU'd, reallocating revenue from subscription to professional services. This change does not affect the overall recurring revenue composition.
Q:How is Braze expanding its sales capacity, and what impact will this have?
A:Braze is prioritizing hiring in sales and field organizations, particularly in the enterprise segment. The company is on track with its hiring goals and expects this to positively impact deal velocity and competitive win rates.
Q:What is the potential impact of Decisioning Studio and other AI tools on dollar-based net retention (DBNR)?
A:Decisioning Studio, priced at $200,000 to $300,000 per use case, has a direct impact on upsells. The expansion of the product portfolio and new SKUs are expected to sustain or potentially increase DBNR levels.
Q:How important is first-party data in improving win rates and customer outcomes?
A:First-party data is crucial for differentiation and driving customer outcomes. Braze's vertically integrated platform and robust AI roadmap enhance its ability to leverage first-party data effectively.
Q:How is Braze addressing the bottleneck in Decisioning Studio deployments?
A:The company has reduced deployment delays from over 4 months to about 2 months by ramping up hiring, group onboarding, and developing self-serve capabilities. A Braze Operator version is also under development to automate some tasks.
Q:How is Braze increasing its presence in data-intensive workloads?
A:Braze is expanding its Braze Data Platform and partnerships with Google BigQuery, Snowflake, and Databricks. The company focuses on real-time access to first-party data and creative content to enhance its orchestration engine.
Q:What is the penetration rate of Decisioning Studio, and how is it expected to grow?
A:The focus is on upselling within the existing customer base. The pipeline for Decisioning Studio remains robust, and the company is addressing capacity issues to meet demand.
Q:How are U.S. carrier fees for SMS affecting Braze's business?
A:Carrier fees are passed directly to customers, consistent with Braze's approach. These fees contribute to the gross margin impact of premium messaging channels.
Q:How do LLM-based agentic decisioning and reinforcement learning-based decisioning coexist in Braze's offerings?
A:Different use cases are suited for each approach. Braze's full spectrum AI strategy integrates both technologies, allowing customers to mix and match solutions based on their needs.
Q:Are large enterprise customers rethinking organizational structures around customer engagement due to AI?
A:Yes, Braze is seeing a trend toward more holistic customer engagement teams that integrate marketing, growth, and product functions. AI tools are enhancing marketer productivity and enabling strategic decision-making.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the specific impact of the bottleneck in Decisioning Studio on Q1 results, instead focusing on the positive momentum in hiring and its influence on Q2 revenue projections.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI advantage
AI architecture
AI enterprise
AI focus
AI hand
AI lab
AI layer
AI problem
AI purpose
AI scale
AI solution
AI today
ARR path
Agent Console
Bondora Group
Brands business
BrazeAI Agent
BrazeAI Studio
BrazeAI case
BrazeAI dashboard
BrazeAI hand
Isabelle
architecture AI
care
cohort
cycle
market momentum
member
program
rule
segmentation
series
standard customer
stream
testing
welcome
world brand
BRZE Transcript
Braze, Inc. (BRZE) Q1 2027 Earnings Call Transcript
Positive5-27
The earnings call summary highlights strong financial performance with a 26% YoY growth in Q1, a $100 million share repurchase, and AI-driven product advancements. The Q&A section reveals efficient AI tool adoption, increased sales efficiency, and robust customer engagement, all contributing to a positive outlook. Despite minor concerns like Decisioning Studio bottlenecks, overall sentiment remains positive, supported by strategic hires and AI integration. Market cap suggests moderate stock price movement, leading to a prediction of a 2-8% increase.
Braze, Inc. (BRZE) Q4 2026 Earnings Call Transcript
Positive3-24
The earnings call highlights strong financial performance, optimistic AI-driven product development, and strategic market positioning. The Q&A session reinforced positive sentiment with no changes in guidance philosophy and improved DBNR. Despite mixed margin impacts, the focus on achieving an 8% operating margin and strong early adoption of new products suggest positive market reception. The company's emphasis on AI integration and verticalization further supports growth potential. Given the market cap, the stock price is likely to react positively, within the 2% to 8% range, over the next two weeks.
Braze, Inc. (BRZE) Presents at Barclays 23rd Annual Global Technology Conference Transcript
Neutral12-11
Braze, Inc. (BRZE) Q3 2026 Earnings Call Transcript
Positive12-9
Braze's earnings call reflects strong financial performance with a 21% revenue growth forecast and improved operating margins. The Q&A session highlighted positive trends in customer engagement and AI integration. Despite economic headwinds, there is a normalization in buying patterns, and customers are investing in premium channels. The strategic expansion of AI capabilities and strong upsell momentum in high-value customer segments further support a positive outlook. The market cap suggests a moderate reaction, leading to a predicted stock price increase of 2% to 8% over the next two weeks.
BRZE Slides
BRZE Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
