"âWe delivered great second quarter results, generating $180 million of revenue, up 24% year-over-year and 11% from the prior quarter.â" - William Magnuson
Braze logged a solid QQ2 2026 performance, delivering 24% year-over-year revenue growth to $180.1 million and 11% sequential growth, supported by continued renewals, expansions, and the meaningful contribution from the OfferFit acquisition. Management highlighted robust late-stage pipeline, historically high competitive win rates, and a stabilization in downsell dynamics, contributing to better profitability as the year progresses. The combination of Braze's core platform with OfferFitâs AI-driven decisioning is positioned to accelerate one-to-one personalization at scale, with AI-driven capabilities expected to become increasingly accessible to broader customer segments. Near-term guidance was raised for QQ3 and full-year 2026, reflecting confidence in topline growth and incremental margin expansion as OfferFit scales. The company also signaled a strategic emphasis on AIâdata unification, Canvas orchestration, and composable intelligence, with Forge as a key event to showcase the AI roadmap. Key risks include macro demand volatility, integration execution, and the challenge of sustaining high DBNR in a evolving AI-enabled landscape.
Key Performance Indicators
Revenue
180.11M
QoQ: 11.14% | YoY:23.79%
Gross Profit
121.89M
67.67% margin
QoQ: 9.61% | YoY:19.41%
Operating Income
-36.60M
QoQ: 9.01% | YoY:-30.94%
Net Income
-27.90M
QoQ: 22.04% | YoY:-21.31%
EPS
-0.26
QoQ: 23.53% | YoY:-13.04%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $180.11 million, up 24% YoY and 11% QoQ. Organic revenue (excluding OfferFit) was $177 million for the quarter, up 22% YoY.
Gross profit: $121.89 million, gross margin 0.6767. Non-GAAP gross profit $125.0 million with a non-GAAP gross margin of 69.3% (versus 70.9% in the prior-year quarter). Key driver of margin pressure was higher premium messaging volumes; offset by cost optimization in the tech stack and personnel efficiencies.
Operating and net income: Non-GAAP operating income $6.0 million (3.4% of revenue). Non-GAAP net income $17.0 million. GAAP net income was negative at $27.9 million due to standard non-cash and accounting effects; EPS (non-GAAP) $0.15.
Cash flow: Free cash flow $4.0 million; cash from operations $7.0 million. Ending cash and equivalents, restricted cash and marketable securities approximately $368 million, including ~$181 million cash portion of the OfferFit acquisition.
Customer and ARR metrics: Total customers 2,422, up 12% YoY and 80 sequentially; large customers (>$500k ARR) 282, up 27% YoY. 62% of ARR contributed by customers spending $500k+ annually. Committed ARR surpassed $700 million.
Financial Highlights
Revenue and profitability
- Revenue: $180.11 million, up 24% YoY and 11% QoQ. Organic revenue (excluding OfferFit) was $177 million for the quarter, up 22% YoY.
- Gross profit: $121.89 million, gross margin 0.6767. Non-GAAP gross profit $125.0 million with a non-GAAP gross margin of 69.3% (versus 70.9% in the prior-year quarter). Key driver of margin pressure was higher premium messaging volumes; offset by cost optimization in the tech stack and personnel efficiencies.
- Operating and net income: Non-GAAP operating income $6.0 million (3.4% of revenue). Non-GAAP net income $17.0 million. GAAP net income was negative at $27.9 million due to standard non-cash and accounting effects; EPS (non-GAAP) $0.15.
- Cash flow: Free cash flow $4.0 million; cash from operations $7.0 million. Ending cash and equivalents, restricted cash and marketable securities approximately $368 million, including ~$181 million cash portion of the OfferFit acquisition.
- Customer and ARR metrics: Total customers 2,422, up 12% YoY and 80 sequentially; large customers (>$500k ARR) 282, up 27% YoY. 62% of ARR contributed by customers spending $500k+ annually. Committed ARR surpassed $700 million.
- RPO and deployment: Remaining performance obligation (RPO) $862 million (up 25% YoY, up 4% QoQ). Current RPO $558 million (up 27% YoY, up 7% QoQ). About $12 million of RPO and $10.5 million of CRPO derived from OfferFit. Dollar-weighted contract length remains just over 2 years.
- Product mix and AI: Subscription revenue ~95% of top line; AI roadmap and OfferFit integration are key growth levers. Management underscored AI-driven personalization and composable intelligence to elevate customer experiences while maintaining data-context integrity.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
180.11M
23.79%
11.14%
Gross Profit
121.89M
19.41%
9.61%
Operating Income
-36.60M
-30.94%
9.01%
Net Income
-27.90M
-21.31%
22.04%
EPS
-0.26
-13.04%
23.53%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Theme: AI strategy and roadmap
- Quote: Bill Magnuson described Braze as âfuture-focused and is rapidly deploying new AI solutions in tandem with first-party data activationâ and highlighted a shift towards AI-driven, autonomous customer engagement systems.
- Quote: The team discussed âcomposable intelligenceâ and agents/operators embedding brand context into models to scale one-to-one personalization while preserving brand continuity.
Theme: OfferFit integration and growth
- Quote: Isabelle Winkles noted OfferFitâs pipeline âsharply accelerated, especially across our enterprise segmentâ and that the two newly onboarded net-new large customers reflect the integrationâs early success.
- Quote: Bill emphasized that OfferFit contributes to a roughly 2 percentage point uplift to full-year revenue growth for 2026 and that they are on pace to deliver an $11â$12 million contribution in the year.
Theme: Revenue quality and retention dynamics
- Quote: Management highlighted stabilization in in-period dollar-based net retention (DBNR) to just over 107% in Q2 vs. Q1âs slightly under 107%, with a view that DBNR stabilization will continue to be tracked in upcoming quarters.
- Quote: The team cited reduced downsell activity and high win rates as contributors to improving profitability and a stronger back-half outlook.
Theme: Sales execution and efficiency
- Quote: The executives described âsynchronizationâ of GTM investments, improved late-stage pipeline productivity, and durable pricing/policy that supports efficiency gains across regions.
Theme: Forge and AI investments
- Quote: Braze plans to share more about AI vision and product innovation at Forge, including details on Subscribed Studios and Stripe collaboration for subscription-focused AI-driven lifecycle journeys.
âWe delivered great second quarter results, generating $180 million of revenue, up 24% year-over-year and 11% from the prior quarter.â
â William Magnuson
âOfferFit by Braze has sharply accelerated, especially across our enterprise segment, where we have earned a high level of trust by delivering sophistication at scale.â
â William Magnuson
Forward Guidance
Outlook assessment
- Near-term guidance (Q3 2026): Revenue guidance of $183.5Mâ$184.5M (~21% YoY at midpoint) with non-GAAP operating income of $3.5Mâ$4.5M (~2% margin at midpoint) and non-GAAP net income of $6.5Mâ$7.5M (~$0.06â$0.07 per share).
- Full-year 2026 guidance: Revenue $717Mâ$720M (~21% YoY at midpoint); non-GAAP operating income $24.5Mâ$25.5M; non-GAAP net income $45.5Mâ$46.5M; non-GAAP EPS $0.41â$0.42. OfferFit is expected to contribute about 2 percentage points to YoY growth, with approximately 8 months of impact reflected in the full-year forecast.
- Margin trajectory: Non-GAAP operating margin target around 3.5% for the full year, implying roughly a 350 basis point improvement versus fiscal 2025. The mix impact from OfferFit is acknowledged, with gross margins expected to remain around Brazeâs historical levels as the integration progresses and scale increases.
What could drive upside or downside
- Upside: Accelerated AI adoption, stronger-than-expected OfferFit cross-sell, continued normalization of downsell, and faster-than-expected integration benefits (synergies in R&D and GTM).
- Downside: Macro softness impacting new logo velocity, longer-than-expected integration timelines, or higher-than-anticipated costs to scale the OfferFit/Ai roadmap. Monitor pipeline velocity, late-stage win rates, and DBNR durability as leading indicators.
Key monitors for investors: progression of the AI-enabled product roadmap, Forge event outcomes (new product and partner announcements), OfferFit cross-sell metrics (ACV uplift, attach rate, and uplift to revenue), and the evolution of DBNR and CRPO over the next 6â12 quarters.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
BRZE Focus
67.67%
N/A
N/A
N/A
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 positioned at the intersection of first-party data, AI-enabled orchestration, and cross-channel engagement. The QQ2 2026 results demonstrate durable ARR growth, improving retention dynamics, and meaningful contributions from the OfferFit acquisition. The AI roadmap, including composable intelligence, reinforces Brazeâs ability to deliver autonomous, personalized experiences at scale, potentially increasing marketer productivity and ROI. The company expects ~21% full-year revenue growth with a margin uplift to ~3.5% non-GAAP operating margin by year-end, aided by synergies from OfferFit and disciplined cost management. Investors should monitor the rate of AI feature adoption, progress of the OfferFit integration (ACV uplift, attach rate, and cross-sell success), and the durability of DBNR and large-customer contributions. A favorable execution track record on GTM and continued pipeline strength could support multiple expansion, especially as Forge reveals more AI innovations. Key catalyst risk remains integration execution and any sustained macro weakness affecting enterprise decision cycles.
Key Investment Factors
Growth Potential
⢠AI-first differentiation through Braze AI â composable intelligence, reinforcement learning, and GenAI copilots positioned to boost marketer productivity and customer relevance at scale. Expect increased adoption across verticals (retail, e-commerce, financial services) and geographies as customers seek efficiency gains and better ROI.
⢠OfferFit integration provides a clear cross-sell opportunity with enterprise loyalty and personalization use cases, contributing ~2% to YoY revenue growth in 2026 and potentially higher uplift as product integration deepens.
⢠Large addressable market for first-party data-centric customer engagement with increasing emphasis on privacy, data unification, and channel orchestration across Canvas and AI decisioning engines.
⢠Global expansion and go-to-market discipline driving improved pipeline quality, higher win rates, and expanding large-customer base (282 large customers; 62% of ARR from >$500k customers).
Profitability Risk
⢠Macro demand volatility could impact budgets and deal cycles, though management notes historically stable deal cycles to date.
⢠Integration risk with OfferFit, including potential execution delays, higher post-merger costs, or longer-than-expected realization of synergies.
⢠AI market competition and customer adoption risk: Braze must sustain ease-of-use and ROI demonstration to overcome customersâ inertia in adopting advanced AI capabilities.
⢠Non-GAAP profitability remains modest; sustained investments in GTM and R&D are required to scale profitability toward long-term targets.
Financial Position
⢠Strong liquidity: Ending cash ~$368M (including $181M cash portion of OfferFit). Net cash position is modest after merger-related outlays, but cash flow generation is positive with $7.0M operating cash flow in QQ2 and $4.0M free cash flow.
⢠Solid balance sheet: Total assets ~$1.022B; total liabilities ~$423.5M; total stockholdersâ equity ~$598.9M; debt levels modest (long-term debt ~$128.8M; total debt ~$84.4M) with a net debt position of approximately $3.4M.
⢠ARR and RPO metrics indicate durable revenue visibility: Committed ARR >$700M; RPO $862M; current RPO $558M; weighted contract length just over 2 years, suggesting steady forward revenue.
SWOT Analysis
Strengths
Strong top-line growth with 24% YoY revenue expansion and record committed ARR (>$700M).
Robust retention metrics: DBNR stabilized around 107% overall and 111% for large customers.
OfferFit acquisition integration in motion with early enterprise wins and expected ~2% annual revenue uplift.
AI roadmap and composable intelligence position Braze to differentiate across channels and automate personalized journeys at scale.
Positive cash generation, improving profitability trajectory, and disciplined cost management.
Weaknesses
Low GAAP profitability with continued reliance on non-GAAP constructs; need sustained profitability expansion.
Acquisition integration costs and ramp into margins; potential short-term margin headwinds from OfferFit integration.
Concentration risk in large customers and dependency on enterprise renewals; any macro slowdown could impact renewals.
Opportunities
AI-enabled marketing workflows and first-party data strategies; expanding AI features to broader customer base.
Cross-sell opportunities through OfferFit across Brazeâs install base; elevating ARPU and retention.
Expansion into new geographies and verticals with tailored GTM and pricing strategies.
Forge conference as a platform to showcase AI roadmap and strategic partnerships (e.g., Subscribed Studios).
Threats
Macro uncertainty could delay renewals or new bookings; competitive pressure from larger marketing clouds and AI-native vendors.
Integration risk with OfferFit and potential delays in achieving anticipated synergies.
Regulatory/policy shifts affecting data usage and first-party data monetization could impact model effectiveness.