A maker of customer-engagement software, Braze helps brands like Spotify, Sephora, and Dominos send personalized messages in real time across email, push notifications, in-app, and ads. Founded in New York in 2011 by three hackers who met at a hackathon, it started life as Appboy before rebranding to Braze in 2017. The name comes from a metalworking term for joining pieces together at high heat — a fitting metaphor for connecting brands with their customers.
Dollar-based net retention rose to 110%, its first increase in 14 quarters, as revenue grew 30% to $211M.
rose to 110%, the first increase after fourteen quarters of decline. rose 30.2% to $211.0 million and reached $28.1 million, driven by both new customer acquisition and a rebound in existing customer expansion. The stabilization of net retention suggests the spending reset among existing customers may be over, even as fell to 65.7% on higher messaging and infrastructure costs.
Key takeaways
rose to 110% on a trailing 12-month basis, up from 108% in the prior quarter and 109% for the full year FY2026, marking the first increase after fourteen consecutive quarters of decline.
rose 30.2% to $211.0 million, with 55.9% of the growth coming from existing customers expanding their usage and 44.1% from new customers — a split that tilted further toward expansion compared to recent quarters.
fell 2.9 percentage points to 65.7%, driven by higher third-party messaging fees, hosting costs, and acquisition-related operating expenses from the OfferFit acquisition.
Section summaries
Management's Discussion and Analysis
Revenue grew 30% to $211M driven by existing and new customers, while gross margin fell to 66% on higher messaging and infrastructure costs.
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Total increased 30.2% to $211.0 million, with 55.9% of the growth from existing customers and 44.1% from new customers.
declined to 65.7% from 68.6%, primarily due to higher third-party messaging fees, hosting costs, and acquisition-related operating expenses.
Operating loss narrowed to $27.5 million from $40.2 million a year ago, as general and administrative expense fell 23.7% due to a $9.7 million reduction in acquisition-related professional services and legal costs.
rose 16.5% to $28.1 million and rose 17.1% to $28.0 million, supported by a $38.2 million increase in .
The number of customers with over $500,000 reached 349, and total customers rose to 2,713.
What changed
, which had been flagged to watch for stabilization above 105%, rose to 110% — the first increase since Q1 FY2023 and a clear break from the 14-quarter decline that bottomed at 108% in Q2 and Q3 of FY2026.
, previously watched for whether 67-68% represented a new baseline, fell further to 65.7% as third-party messaging fees and OfferFit-related hosting and costs continued to layer on.
G&A expense growth, which had spiked 51.2% in Q1 FY2026 and 29.9% in Q2 FY2026 on acquisition-related costs, reversed sharply — falling 23.7% as those one-time professional services and legal fees subsided.
The in IT general controls, first identified in the FY2025 annual report and flagged each quarter since, remains unremediated as of this filing.
What to watch
Whether holds at 110% or continues to rise in Q2 FY2027, confirming the expansion recovery is durable rather than a single-quarter bounce.
The trajectory of — whether 65.7% represents the trough now that OfferFit is fully layered in, or if third-party messaging fees drive further compression.
Progress on remediating the in IT general controls, which has now been outstanding for over a year and resulted in an adverse auditor opinion on internal controls in the FY2026 10-K.
Whether the 30.2% growth rate is sustainable, or if it reflects a one-time benefit from the inflection and new customer additions.
Sales and marketing expense rose 20.3% to $89.2 million on increased headcount and variable compensation, while R&D expense grew 25.3% to $46.1 million.
General and administrative expense fell 23.7% to $30.9 million, largely from a $9.7 million reduction in acquisition-related professional services and legal costs.
was $28.1 million, and reached $26.8 million, supported by a $38.2 million increase in .
The company had 2,713 customers and a trailing 12-month of 110%, with 349 customers generating of $500,000 or more.
Quantitative and Qualitative Disclosures About Market Risk
Primary market risk is interest rate sensitivity on $391.5M in cash and securities; foreign-exchange risk is limited and partially hedged.
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Cash, equivalents, and marketable securities totaled $391.5M as of April 30, 2026, with $242.2M in U.S. government and corporate debt securities held for capital preservation.
A hypothetical 10% change in interest rates would not materially impact the consolidated financial statements; securities are classified as available-for-sale, so unrealized gains/losses are not recognized unless sold or deemed non-temporarily impaired.
Substantially all sales are in U.S. dollars except Japan sales denominated in yen, so faces minimal foreign-currency risk, but operating expenses in local currencies create translation and transaction exposure.
A hypothetical 10% move in the U.S. dollar against other currencies would not materially affect realized or unrealized foreign-exchange gains/losses.
The company uses to hedge portions of forecasted foreign-currency cash flows and to offset earnings impacts from certain foreign-currency transactions.
Inflation is not seen as having a material effect currently, but the company warns it may be unable to fully pass through future cost increases.
From time to time, we may become involved in various legal proceedings arising from the normal course of business activities. As of the date of this Quarterly Report on Form 10-Q, we are not presently a party to any litigation the outcome of which, we believe, if determined adve…
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From time to time, we may become involved in various legal proceedings arising from the normal course of business activities. As of the date of this Quarterly Report on Form 10-Q, we are not presently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows or financial condition. Defending such proceedings can be costly and can impose a significant burden on management and employees. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Braze faces risks from macroeconomic headwinds, intense competition, reliance on a single platform, and a material weakness in IT controls.
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Unstable economic conditions, including inflation and interest rate hikes, are extending sales cycles and pressuring customer spending and renewal levels.
The company has a history of net losses ($25.5M in Q1 FY2027) and an of $744.7M, with no guarantee of achieving profitability.
A in internal control over financial reporting related to IT General Controls was identified, which could impair accurate financial reporting if not remediated.
The business is substantially dependent on a single cloud-based platform, making it vulnerable to any decline in market acceptance, technological disruption, or service outages.
Intense competition from larger, well-established companies like Adobe and Salesforce could lead to pricing pressure, loss of market share, and difficulty attracting and retaining customers.
Reliance on third-party infrastructure providers like AWS and Rackspace, and messaging channels like Apple and Google, exposes the company to significant service disruption risks.