Braze, Inc. ((BRZE)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Braze, Inc. recently held its earnings call, revealing a positive sentiment driven by strong revenue growth, profitability, and strategic advancements, notably through the acquisition of OfferFit. Despite facing macroeconomic challenges and extended sales cycles, the company’s impressive financial performance and customer expansion underscore its robust market position.
Strong Revenue Growth
Braze reported a significant 22% year-over-year increase in revenue for the fourth quarter, reaching $160.4 million. This growth was largely driven by subscription revenue, which constituted 96% of the total revenue. The substantial rise highlights Braze’s ability to scale its operations and maintain a steady revenue stream.
Non-GAAP Profitability Achieved
The company achieved a non-GAAP operating income of $8 million, marking a notable shift from a negative 5.7% operating margin in the previous year to a positive 5.0%. This improvement in profitability reflects Braze’s effective cost management and operational efficiency.
Increase in Large Customers
Braze experienced a 22% year-over-year increase in customers with an annual recurring revenue (ARR) of $500,000 or more, totaling 247. This growth indicates strong demand for Braze’s services among large enterprises, reinforcing its position as a key player in the market.
Record Net New Customers
The company added 85 net new customers in the fourth quarter, bringing the total to 2,296, a year-over-year increase of 252. This record growth in customer base demonstrates Braze’s expanding market reach and appeal.
OfferFit Acquisition
Braze announced a strategic acquisition of OfferFit in a $325 million cash and stock deal. This acquisition is set to enhance Braze’s AI-driven customer engagement capabilities, positioning the company for future growth and innovation.
Positive Cash Flow
The company generated $15 million in free cash flow for the quarter, a significant turnaround from negative cash flow in the previous year. This positive cash flow is a testament to Braze’s improved financial health and operational efficiency.
Macroeconomic Challenges
Braze acknowledged the ongoing macroeconomic disruptions and evolving global trends as challenges for some customers and prospects. These external factors are influencing customer behavior and decision-making processes.
Extended Sales Cycles
The company noted that enterprise sales cycles remain lengthy and involve more stakeholders, with a higher percentage of deals going to request for proposal (RFP) compared to the past. This trend reflects the complexities of enterprise sales in the current economic environment.
Impact of WhatsApp Changes
Meta’s decision to discontinue WhatsApp marketing messages for U.S. customers introduces some uncertainty. However, Braze indicated that the impact is minimal, as the majority of demand for these services is from non-U.S. customers.
Forward-Looking Guidance
Looking ahead, Braze provided guidance for the first quarter of fiscal 2026, with expected revenue between $158 million and $159 million, indicating a 17% year-over-year growth at the midpoint. For the full fiscal year 2026, the company anticipates revenue in the range of $686 million to $691 million, representing a 16% growth at the midpoint. These projections exclude the impact of the anticipated OfferFit acquisition, which is expected to contribute approximately 2 percentage points to year-over-year revenue growth.
In conclusion, Braze’s earnings call highlighted a strong financial performance and strategic advancements, despite facing macroeconomic challenges. The company’s robust revenue growth, increased profitability, and expanding customer base underscore its solid market position and potential for future growth.