Executive Summary
Braze delivered a solid QQ3 2025 (quarter ended Oct 31, 2024) with revenue of $152.1 million, up 23% year over year, marking another period of durable top-line growth supported by existing contract expansions, renewals and new business. The company crossed the $600 million mark in committed ARR and expanded enterprise exposure, with large customers (>$500k ARR) totaling 234, representing 61% of ARR and up 24% YoY. Non-GAAP operating income declined slightly on seasonal investments in marketing, yet Braze sustained positive non-GAAP net income for the second consecutive quarter, highlighting ongoing efficiency improvements alongside investment in growth initiatives. Management attributes continued demand from legacy vendor replacement cycles, AI-enabled product enhancements, and an expanding customer community as key drivers of long-term value creation. On the product front, Braze disclosed major Forge-era innovations (Canvas enhancements, AI-driven Project Catalyst, LINE/RCS/WhatsApp expansions) and reiterated a beta timeline for Project Catalyst in H1 next year. The Q4 and FY2025 guidance positions Braze to achieve mid-teens revenue growth with a modestly positive-to-neutral non-GAAP margin, while aiming to deliver positive free cash flow from Q4 onward. Investors should monitor the pace of enterprise adoption, AI-driven product monetization (credit models and premium channels), and herding of near-term demand in a still-evolving macro environment.
Key Performance Indicators
QoQ: -17.39% | YoY:12.90%
Key Insights
Revenue: $152.052m in QQ3 2025, up 23% YoY; QoQ growth ~4.5% (per reported data). Gross profit: $106.142m; gross margin 69.81%. Non-GAAP gross margin: 70.5% (vs 71.4% prior year). Operating expenses: R&D $32.855m (15% of revenue), S&M $74.658m (43%), G&A $31.199m (15%). Non-GAAP operating income: -$2.20m (loss of 1% of revenue). Non-GAAP net income: $2.50m; diluted EPS: $0.02. Net GAAP income: -$27.911m; GAAP EPS: -$0.27. Cash flow: operating cash flow -$11.41m; free cash flow -$14.2...
Financial Highlights
Revenue: $152.052m in QQ3 2025, up 23% YoY; QoQ growth ~4.5% (per reported data). Gross profit: $106.142m; gross margin 69.81%. Non-GAAP gross margin: 70.5% (vs 71.4% prior year). Operating expenses: R&D $32.855m (15% of revenue), S&M $74.658m (43%), G&A $31.199m (15%). Non-GAAP operating income: -$2.20m (loss of 1% of revenue). Non-GAAP net income: $2.50m; diluted EPS: $0.02. Net GAAP income: -$27.911m; GAAP EPS: -$0.27. Cash flow: operating cash flow -$11.41m; free cash flow -$14.20m. Ending cash and equivalents: $61.84m; total cash plus short-term investments: $492.57m; net debt: $30.77m. ARR and pipeline: remaining performance obligation (RPO) $717.0m (up 28% YoY, up 4% sequential); current RPO $458.0m (up 24% YoY, up 5% sequential); total ARR >$600m. Customer metrics: total customers 2,211 (up 200 YoY, +48 QoQ); large customers (>$500k ARR) 234 (up 24% YoY); 96% of revenue is subscription-based; international revenue share 45%. Net dollar retention (NDR) 113% overall; large customer NDR 116%. Guidance: Q4 revenue $155–$156m; non-GAAP operating income $2–$3m; non-GAAP net income $5–$6m; non-GAAP EPS $0.05–$0.06; full-year FY2025 revenue $588–$589m; non-GAAP net income $11–$12m; non-GAAP EPS $0.10–$0.11.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
152.05M |
22.67% |
4.50% |
| Gross Profit |
106.14M |
21.19% |
3.98% |
| Operating Income |
-32.57M |
7.30% |
-16.53% |
| Net Income |
-27.91M |
9.21% |
-21.36% |
| EPS |
-0.27 |
12.90% |
-17.39% |
Key Financial Ratios
operatingProfitMargin
-21.4%
operatingCashFlowPerShare
$-0.11
freeCashFlowPerShare
$-0.14
priceEarningsRatio
-28.78
Management Commentary
Key takeaways from Braze management commentary: (1) Revenue growth and ARR momentum: “We generated $152.1 million of revenue, up 23% year-over-year, while driving continued efficiency across our business and improving non-GAAP operating margins by 580 basis points year-over-year.” (Bill Magnuson) (2) ARR milestones and profitability trajectory: “I’m also proud to announce that we passed $600 million of committed annual recurring revenue during the quarter” and “we achieved positive non-GAAP net income for the second quarter in a row and expect to maintain positive quarterly net income moving forward.” (Bill Magnuson) (3) Growth vectors and channel expansion: Braze highlighted ongoing vendor replacement cycles, new wins across industries, and expanding channel offerings (LINE, WhatsApp enhancements, RCS, etc.). It also noted a strong Black Friday to Cyber Monday period: “Over the four-day weekend, Braze delivered over 50 billion messages, up 35% year-over-year with 100% uptime.” (Bill Magnuson) (4) Product roadmap and AI: Project Catalyst (AI-driven agent) is in beta with a plan to be monetized later; Forge/Canvas enhancements and Braze AI capabilities are designed to improve personalization, testing, and cross-channel orchestration. Catalyst is “expected to be available in beta in the first half of next year.” (Bill Magnuson) (5) Financial discipline and guidance: Isabelle Winkles outlined that Q4 revenue would be ~19% YoY growth, with modest non-GAAP operating income and a positive trajectory toward profitability; full-year 2025 forecasts imply mid-teens growth and improved margins. (Isabelle Winkles) (6) Net retention and mix dynamics: “Dollar-based net retention was 113% overall; large customers 116%” and the company remains cautious on the trajectory for NRR given upsell timing and churn dynamics. (Isabelle Winkles) (7) Competitive positioning: Braze positioned as a leader in Gartner’s Magic Quadrant for multichannel marketing hubs, and discussed competitive dynamics with incumbents focusing on agentic AI strategies. (Bill Magnuson).
We generated $152.1 million of revenue, up 23% year-over-year, while driving continued efficiency across our business and improving non-GAAP operating margins by 580 basis points year-over-year.
— William Magnuson
Project Catalyst is expected to be available in beta in the first half of next year, helping our customers deliver tailored one-to-one personalized experiences for their consumers at scale.
— William Magnuson
Forward Guidance
Braze provided quarterly and full-year guidance for FY2025 that implies continued revenue growth and improving profitability dynamics, though within a prudent demand environment. For Q4 FY2025, Braze expects revenue of $155–$156 million (+~19% YoY) with non-GAAP operating income of $2–$3 million (implying a ~1.6% non-GAAP operating margin at the midpoint) and non-GAAP net income of $5–$6 million (EPS $0.05–$0.06) on roughly 107.5 million diluted shares. For the full year, revenue is guided to $588–$589 million (+~25% YoY at the midpoint) with non-GAAP operating loss of $5–$6 million and non-GAAP net income of $11–$12 million (EPS $0.10–$0.11, basis ~107 million diluted shares). Management reiterated a path to positive non-GAAP operating income and free cash flow beginning in Q4 2024 and continuing going forward, supported by product scalability, premium channel monetization (e.g., LINE, WhatsApp, RCS), and a more flexible pricing/credit model (flexible credits) that should accelerate channel expansion and deal velocity. Assessment: The guidance is conservative relative to the magnitude of ARR growth and recent wins, reflecting a cautious demand backdrop but with meaningful improvements in profitability and cash flow as the year progresses. Key levers to watch include (i) successful monetization and uptake of Project Catalyst and premium channels, (ii) expansion of the Braze data platform and Canvas improvements driving higher per-customer value, and (iii) the extent to which the flexible credits model accelerates cross-channel adoption and reduces churn at renewal. Investors should monitor fourth-quarter bookings strength, churn/retention dynamics post-ZIRP cohorts, and the timing of large-enterprise expansions that could drive upside to the stated guide.