EPS of $-0.23 increased by 30.3% from previous year
Gross margin of 70.2%
Net income of -23.00M
""We generated $145.5 million of revenue, up 26% year-over-year, while driving continued efficiency across our business. Non-GAAP gross margin was 70.9%, a rise of 90 basis points compared to the previous year, and we demonstrated strong operating leverage, realizing our first-ever quarter of non-GAAP operating income profitability and non-GAAP net income profitability."" - Bill Magnuson, Co-Founder & CEO
Braze Inc (BRZE) Q2 2025 Results: Revenue +26% YoY, First Positive Non-GAAP Profit; Braze Data Platform and AI Initiatives Accelerate Growth
Executive Summary
Braze delivered a solid Q2 FY2025 performance, highlighted by 26% year-over-year revenue growth to $145.5 million and a sustained push toward profitability on a non-GAAP basis. The company achieved its first-ever non-GAAP operating income and non-GAAP net income profitability, underpinned by a non-GAAP gross margin of 70.9% and ongoing operating efficiency improvements. Management attributed margin gains to technology-stack optimization and personnel efficiencies, while continuing to reinvest in GTM and product initiatives. The quarter also featured significant top-line expansion driven by an enlarged customer base (2,163 customers, up 205 YoY; 222 large customers, up 28% YoY) and robust ARR growth, supported by durable multi-channel engagement capabilities and an expanding data platform ecosystem.
Strategically, Braze is accelerating its data-first approach through the Braze Data Platform, launched to unify data ingestion, activation, and distribution across environments (including cloud data warehouses) and to enable more sophisticated AI-enabled experiences. Management signaled ongoing channel expansion (including RCS and WhatsApp), a more flexible credit-based pricing model, and a broader product-led growth lens centered on free trials and sandbox experiences to shorten evaluation cycles. While the macro backdrop remains pressurized and gross churn persists, Braze’s trajectory toward revenue growth with improving profitability, expanding ARR, and growing enterprise scale supports a constructive long-term investment thesis. Near-term catalysts include Forge (product roadmap and AI updates) and ongoing enterprise expansions, with a careful eye on cost discipline and cash flow variability as the company scales.
Key Performance Indicators
Revenue
145.50M
QoQ: 7.41% | YoY:26.40%
Gross Profit
102.08M
70.16% margin
QoQ: 12.28% | YoY:28.19%
Operating Income
-27.95M
QoQ: 30.26% | YoY:20.98%
Net Income
-23.00M
QoQ: 35.47% | YoY:27.43%
EPS
-0.23
QoQ: 34.29% | YoY:30.30%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $145.499 million, up 26% year-over-year; QoQ growth 7.41% in the trailing four quarters context.
Operating performance (GAAP): Operating loss of $27.95 million; EBIT margin of -19.20%. Non-GAAP operating income: $4.2 million, representing 3% of revenue; QoQ and YoY improvement vs. prior-year quarter where non-GAAP operating loss was $7.6 million (7%).
Net income and EPS: Net loss of $22.999 million; GAAP EPS -0.23. Non-GAAP net income of $9.1 million, or $0.09 per share.
Customer and ARR dynamics: 2,163 customers as of July 31, up 205 YoY and 61 QoQ; large ARR customers (≥$500k ARR) at 222, up 28% YoY and contributing ~61% of total ARR.
Financial Highlights
Overview of notable metrics and trends observed in Q2 FY2025:
- Revenue: $145.499 million, up 26% year-over-year; QoQ growth 7.41% in the trailing four quarters context.
- Gross profit: $102.079 million; gross margin 70.16% (non-GAAP gross margin 70.9% reported by management).
- Operating performance (GAAP): Operating loss of $27.95 million; EBIT margin of -19.20%. Non-GAAP operating income: $4.2 million, representing 3% of revenue; QoQ and YoY improvement vs. prior-year quarter where non-GAAP operating loss was $7.6 million (7%).
- Net income and EPS: Net loss of $22.999 million; GAAP EPS -0.23. Non-GAAP net income of $9.1 million, or $0.09 per share.
- Customer and ARR dynamics: 2,163 customers as of July 31, up 205 YoY and 61 QoQ; large ARR customers (≥$500k ARR) at 222, up 28% YoY and contributing ~61% of total ARR.
- Revenue mix and geographic exposure: International revenue declined to 5% of total revenue in Q2 (compared to 43% YoY in the prior year quarter and 44% in Q1 FY2025), signaling a continued geographic expansion plan.
- Remaining performance obligations (RPO): Total RPO $690 million, up 32% YoY and 5% QoQ; Current RPO $438 million, up 24% YoY and 4% QoQ. Revenue visibility remains robust via long-duration deals and renewals.
- Cash flow and liquidity: Net cash provided by operating activities of $11.6 million; free cash flow approximately $7.2 million. Cash and cash equivalents plus marketable securities totaled about $504 million at quarter end; net debt roughly $8.0 million (gross debt $87.9 million).
- Guidance for Q3 and full-year 2025: Q3 revenue guide of $147.5–$148.5 million (≈+19% YoY at midpoint); non-GAAP operating loss of $3.5–$4.5 million; non-GAAP net loss 0 to -$0.01 per share; full-year 2025 revenue guidance of $582.5–$585.5 million (~+24% YoY); non-GAAP net income guidance of $6.5–$7.5 million; non-GAAP EPS of $0.06–$0.07.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
145.50M
26.40%
7.41%
Gross Profit
102.08M
28.19%
12.28%
Operating Income
-27.95M
20.98%
30.26%
Net Income
-23.00M
27.43%
35.47%
EPS
-0.23
30.30%
34.29%
Key Financial Ratios
currentRatio
2.03
grossProfitMargin
70.2%
operatingProfitMargin
-19.2%
netProfitMargin
-15.8%
returnOnAssets
-2.79%
returnOnEquity
-5.07%
debtEquityRatio
0.19
operatingCashFlowPerShare
$0.11
freeCashFlowPerShare
$0.07
priceToBookRatio
9.85
priceEarningsRatio
-48.59
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key takeaways from Braze management commentary and Q&A on the earnings call:
- Strategy and AI focus: Bill Magnuson emphasized Braze's leadership in customer engagement and the importance of AI-enabled capabilities as marketers consolidate legacy tech and adopt modern platforms. 'We were encouraged by the new business one in the quarter, the progress made in our product investments and the continued development of our AI initiatives.'
- Data platform and ecosystem: Braze introduced a comprehensive Braze Data Platform in July to streamline data unification, activation, and distribution, with extensions to cloud data ingestion (Redshift, Databricks, Snowflake) and AI-enhanced capabilities; 'The Braze data platform is a comprehensive set of data capabilities and partner integrations designed to streamline data unification, activation and distribution.'
- Free trials and product-led growth: Bill outlined the free 14-day trial program and guided sandbox experiences as part of product-led growth, aiming to reduce friction in evaluations and accelerate expansion within existing customers. 'Free trial program... 14 days without charge' and 'guided sandbox experience' are designed to showcase real-time capabilities and reliability.
- Channel expansion and RCS: Management highlighted RCS readiness for iOS 18 and the opportunity to lift and shift SMS strategies to RCS, with expected advantages in sender authentication, richer analytics, and content types; 'We are excited for RCS and actively preparing full support... share more about that at Forge in just a few weeks.'
- Land-and-expand dynamics and geographic reach: Braze reiterated that land-and-expand opportunities span geographies and verticals, with notable enterprise wins and eight-figure ARR opportunities; 'Enterprise remains a strength for Braze' and 'new channels and verticals will drive additional expansion opportunities.'
- Financial resilience and guidance: Isabelle Winkles noted that Q2 non-GAAP gross margin was 70.9%, and that while churn remains elevated, the company generated positive operating cash flow for three straight quarters; management reaffirmed 2025 guidance and highlighted FX and timing as sources of quarterly volatility.
"We generated $145.5 million of revenue, up 26% year-over-year, while driving continued efficiency across our business. Non-GAAP gross margin was 70.9%, a rise of 90 basis points compared to the previous year, and we demonstrated strong operating leverage, realizing our first-ever quarter of non-GAAP operating income profitability and non-GAAP net income profitability."
— Bill Magnuson, Co-Founder & CEO
"The Braze data platform is a comprehensive set of data capabilities and partner integrations designed to streamline data unification, activation and distribution. Built with flexibility, interoperability and modularity in mind..."
— Bill Magnuson, Co-Founder & CEO
Forward Guidance
Outlook discussion aligned with management commentary:
- Near-term outlook: Q3 revenue guidance of $147.5–$148.5 million implies ~19% YoY growth at the midpoint, with non-GAAP operating loss of $3.5–$4.5 million and non-GAAP net loss of $0.5–$1.5 million (or breakeven to a small loss per share on ~102 million shares). Forge-related event costs are expected to add $5–$6 million to Q3 operating expenses, and the mid-year compensation/promotion cycle will further weigh on expenses. These dynamics suggest continued investment discipline even as top-line growth remains resilient in a challenging macro backdrop.
- Full-year view: Revenue guidance of $582.5–$585.5 million implies ~24% YoY growth at the midpoint; non-GAAP operating loss of $7.5–$8.5 million; non-GAAP net income of $6.5–$7.5 million; non-GAAP EPS of $0.06–$0.07 on roughly 108 million diluted shares. The guidance reflects ongoing product investments (AI, data platform, channel expansion) offset by ongoing cost optimization and efficiency gains.
- Key risk factors to monitor: (1) churn normalization and net retention stability given elevated churn in recent quarters; (2) the sustainability of expansion in large ARR customers and the pace of cross-sell into existing customers; (3) macro-driven budgetary pressure and longer sales cycles in enterprise deals; (4) execution risk related to integrating the Braze Data Platform with diverse data-stack environments and the potential impact of pricing and channel mix changes (e.g., RCS pricing dynamics and credit model uptake).
- Monitoring metrics for investors: trajectory of NRR (current quarter intra-quarter path vs. trailing 12 months), expansion in large customers (ARR >$500k), progression of remaining performance obligations (RPO) and current RPO, free cash flow trajectory, and progression toward profitable non-GAAP operation while maintaining investment in R&D and GTM.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
BRZE Focus
70.16%
-19.20%
-5.07%
-48.59%
EXFY
56.30%
0.66%
-2.42%
-12.22%
CWAN
72.00%
4.42%
-0.11%
-2,328.22%
CXM
72.50%
-0.04%
0.39%
348.18%
ALKT
58.90%
-15.90%
-3.76%
-57.86%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Braze is positioning itself as a data-driven leader in the customer-engagement category, leveraging the Braze Data Platform and AI capabilities to differentiate from legacy marketing clouds. The Q2 results demonstrate improving profitability on a non-GAAP basis, a growing enterprise footprint, and a backlog of $690 million in RPO, signaling sustained revenue visibility. The free trials and sandbox approach, coupled with RCS-channel expansion and the Forge product roadmap, could accelerate customer acquisition and cross-sell momentum over the next 12–24 months. However, near-term GAAP profitability remains negative, churn remains a concern, and macro conditions could temper near-term deal velocity. The successful monetization of data capabilities and AI features, the rate of adoption of new channels, and the pace of international expansion will be key determinants of Braze’s ability to re-rate growth and profitability in the medium term. Given the robust cash position and improving unit economics, Braze presents a compelling long-term upside for investors who believe in its platform moat, ecosystem strategy, and the relevance of first-party data-driven engagement in an increasingly privacy-conscious environment. A potential investor should monitor quarterly NRR progression, the trajectory of large-ARR growth, RPO renewal velocity, and the monetization cadence of the Braze Data Platform and AI features.
Key Investment Factors
Growth Potential
Braze is growing revenue at a double-digit pace (26% YoY in Q2) with meaningful expansion in large ARR customers and a robust RPO backlog ($690M, +32% YoY). The Braze Data Platform and AI initiatives create a defensible, data-centric moat that can improve cross-sell opportunities across channels and geographies. The shift to product-led growth (free trials, sandbox) should accelerate awareness and trial-to-adoption cycles, supporting longer-term ARR expansion and higher retention.
Profitability Risk
Near-term profitability remains negative on GAAP, and profitability improvements rely on continued efficiency gains and offsetting investment in AI, data-platform capabilities, and global GTM expansion. Churn remains elevated, and revenue growth is susceptible to macro fluctuations and longer enterprise sales cycles. Additionally, the integration and monetization of the Braze Data Platform with diverse data ecosystems and pricing for new channels (e.g., RCS) involve execution risk and potential pricing volatility.
Financial Position
Braze maintains a strong balance sheet with roughly $504 million in cash and marketable securities and manageable net debt (~$8 million). The company generated positive operating cash flow in three consecutive quarters and produced free cash flow of about $7.2 million in Q2. The balance sheet supports ongoing R&D investment, GTM scaling, and potential strategic acquisitions or partnerships if opportunities arise, while the strong ARR and RPO provide visibility into future revenue streams.
SWOT Analysis
Strengths
Strong YoY revenue growth (26%) and improving non-GAAP profitability (first positive non-GAAP operating income and net income).
Large and growing installed base: 2,163 customers, 222 large ARR customers (≥$500k), with 61% of ARR coming from large customers.
Robust gross margins (~70.9%) and improving cost structure via technology-stack optimization and efficiency gains.
Braze Data Platform and broad channel exposure (including RCS, WhatsApp, Line) provide differentiated data activation and orchestration capabilities.
Strategic product investments in AI, data unification, and a flexible credit model support broader adoption and future monetization.
Weaknesses
GAAP net income remains negative; ongoing dependence on non-GAAP adjustments for profitability signals.
Churn remains elevated; NRR, while >100%, still shows pressure from macro headwinds.
Short-term variability in deferred revenue and RPO due to contract terms and acquisition lapping (North Star) affecting some KPIs.
Geographic concentration remains modest (international revenue 5% of total), indicating potential exposure to regional macro fluctuations.
Opportunities
Monetization of Braze Data Platform and AI features across a broader customer base.
RCS and other new channels could unlock higher engagement and incremental revenue opportunities.
Product-led growth (free trials, sandbox) can accelerate trials-to-adoption and upsell within existing customers.
Continued enterprise expansion and geographic growth in new markets and verticals (travel, financial services, retail).
Threats
Intense competition from legacy marketing clouds and other CDPs; risk of pricing pressures and customer consolidation.
Macro headwinds potentially delaying decision cycles and reducing new-logo velocity.
Execution risk related to integrating a data platform with heterogeneous customer data environments and maintaining data privacy governance.