European Investor
09 Sep 2026, 09:18
Braze Stock Drops 12% Premarket as Q3 Outlook Overshadows Strong Revenue Growth
Braze (NASDAQ: BRZE) shares fell about 12% in premarket trading Wednesday despite reporting strong fiscal second-quarter results, as investors focused on the company’s third-quarter outlook and expected sequential slowdown in profitability.
Fiscal Q2 revenue increased 26.2% year over year to $227.2 million, driven by new customers, upsells and renewals. Subscription revenue reached $207.7 million, while remaining performance obligations totaled $1.09 billion.
Profitability improved considerably. GAAP operating loss narrowed to $18.1 million from $38.8 million, while non-GAAP operating income increased to $22 million from $6 million. Non-GAAP EPS rose to $0.19 from $0.15. Free cash flow climbed to a record second-quarter level of $21.7 million from $3.5 million a year earlier.
Customer metrics were also healthy. Braze ended the quarter with 2,789 customers, up from 2,422 a year earlier, while dollar-based net retention improved to 110% from 108%. The number of customers generating at least $500,000 in annual recurring revenue increased to 361 from 282.
However, Braze expects third-quarter revenue of $229 million to $230 million, representing only modest sequential growth from Q2. Non-GAAP operating income is projected at $16 million to $17 million, below the $22 million generated in the latest quarter. Full-year revenue is expected between $910 million and $913 million, with non-GAAP EPS of $0.64 to $0.65.
The 12% premarket decline suggests investors were looking for a stronger near-term outlook despite Braze’s 26% revenue growth, improving retention and substantial expansion in cash generation.
Braze (NASDAQ: BRZE) shares fell about 12% in premarket trading Wednesday despite reporting strong fiscal second-quarter results, as investors focused on the company’s third-quarter outlook and expected sequential slowdown in profitability.
Fiscal Q2 revenue increased 26.2% year over year to $227.2 million, driven by new customers, upsells and renewals. Subscription revenue reached $207.7 million, while remaining performance obligations totaled $1.09 billion.
Profitability improved considerably. GAAP operating loss narrowed to $18.1 million from $38.8 million, while non-GAAP operating income increased to $22 million from $6 million. Non-GAAP EPS rose to $0.19 from $0.15. Free cash flow climbed to a record second-quarter level of $21.7 million from $3.5 million a year earlier.
Customer metrics were also healthy. Braze ended the quarter with 2,789 customers, up from 2,422 a year earlier, while dollar-based net retention improved to 110% from 108%. The number of customers generating at least $500,000 in annual recurring revenue increased to 361 from 282.
However, Braze expects third-quarter revenue of $229 million to $230 million, representing only modest sequential growth from Q2. Non-GAAP operating income is projected at $16 million to $17 million, below the $22 million generated in the latest quarter. Full-year revenue is expected between $910 million and $913 million, with non-GAAP EPS of $0.64 to $0.65.
The 12% premarket decline suggests investors were looking for a stronger near-term outlook despite Braze’s 26% revenue growth, improving retention and substantial expansion in cash generation.
