NASDAQ:BRZE

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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.
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Author
European Investor 09-09-26

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Author
WS Investor 06-25-25
Braze announced record customer bookings for the quarter and fiscal year ended January 31, 2025, alongside leadership changes. Myles Kleeger, President and Chief Commercial Officer, will step down after ten years but will remain until June 1, 2025, to ensure a smooth transition. The company plans to hire a Chief Revenue Officer reporting to CEO Bill Magnuson.

Leadership adjustments include Jesse Hoobler as Senior Vice President of Customer Experience, Jerry Schorn as Vice President leading Sales for the Americas, and John Ashton as Vice President of Global Partnerships. CEO Bill Magnuson expressed gratitude for Kleeger’s contributions and confidence in the new leadership team as Braze enters its next growth phase.
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Author
The Investor 02-03-25