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BRZE
Earnings call · Jul 2026 (Q2 FY27)

Braze Q2 FY27 earnings call BRZE

Sep 8, 2026 Source

Executive summary

Braze Q2 FY27 — Strong Revenue Growth and AI Adoption

Braze delivered a strong quarter, driven by robust revenue growth and significant improvements in operating efficiency. The company is seeing accelerated adoption and monetization of its AI solutions, particularly with its Agentic harness approach, which is enhancing marketer productivity and driving competitive wins. Management raised full-year guidance, reflecting confidence in continued momentum and strategic investments.

Highlights

5

  • Revenue grew 26% year-over-year to $227 million.

  • Non-GAAP operating margin improved by over 600 basis points year-over-year.

  • Dollar-based net retention for large customers (spending at least $500,000 annually) rose 100 basis points to 112%.

  • Generated a record second quarter free cash flow of $22 million.

  • Total customer count increased 15% year-over-year to 2,789, and large customers grew 28% year-over-year to 361.

Concerns

1

  • Non-GAAP gross margin decreased to 68.6% from 69.3% in the prior year quarter, primarily due to high premium messaging volumes and Decisioning Studio headcount.

Guidance & targets

CategoryTargetConfidence
Q3 FY27 Revenue
$229M-$230M
high materiality
High
Q3 FY27 Non-GAAP Operating Income
$16M-$17M
medium materiality
High
Q3 FY27 Non-GAAP Net Income
$15M-$16M
medium materiality
High
Q3 FY27 Non-GAAP Net Income per share
$0.13-$0.14
medium materiality
High
FY27 Total Revenue
$910M-$913M
high materiality
High
FY27 Non-GAAP Operating Income
$75.5M-$76.5M
high materiality
High
FY27 Non-GAAP Net Income
$72.5M-$73.5M
medium materiality
High
FY27 Non-GAAP Net Income per share
$0.64-$0.65
medium materiality
High
Long-term Operating Margin Improvement
At least 400 bps
high materiality
High

BRZE operating KPIs by quarter

BRZE operating KPIs stated on its earnings calls, by fiscal quarter
KPI Apr 2026 Q1 FY27This call Jul 2026 Q2 FY27Change vs prior quarter
Customers
2,713 Total customer count increased 16% year-over-year to 2,713 customers as of April 30, 2026, up 371 from the same period last year and up 104 from the prior quarter. Source transcript
2,789 Total customer count increased 15% year-over-year to 2,789 customers as of July 31, 2026, up 367 from the same period last year and up 76% from the prior quarter. Source transcript
+2.8%
Customers above an annual spend threshold $500K+
349 Our total number of large customers, which we define as those spending at least $500,000 annually, grew 33% year-over-year to 349. Source transcript
361 Our total number of large customers, we define as those spending at least $500,000 annually grew 28% year-over-year to 361. Source transcript
+3.4%
Net revenue retention rate
110% Measured across all customers, dollar-based net retention was 110%, an improvement of approximately 100 basis points sequentially, while dollar-based net retention for our large customers was 111%, also up approximately 100 basis points from the prior quarter. Source transcript
110% Measured across all customers, trailing 12-month dollar-based net retention was 110% and while trailing 12-month dollar-based net retention for our large customers was 112%, up from 111% in the prior quarter. Source transcript
0 pt
Net revenue retention rate Large customers ($500K+)
111% Measured across all customers, dollar-based net retention was 110%, an improvement of approximately 100 basis points sequentially, while dollar-based net retention for our large customers was 111%, also up approximately 100 basis points from the prior quarter. Source transcript
112% Measured across all customers, trailing 12-month dollar-based net retention was 110% and while trailing 12-month dollar-based net retention for our large customers was 112%, up from 111% in the prior quarter. Source transcript
+1 pt
Remaining performance obligation (RPO)
$1.1B In the first quarter, our total remaining performance obligation was $1.1 billion, up 30% year-over-year and up 4% sequentially. Source transcript
$1.1B In the second quarter, our total remaining performance obligations was $1.1 billion, up 27% year-over-year. Source transcript
0%
Current remaining performance obligation (cRPO)
$670M Current RPO was $670 million, accelerating to 28% year-over-year from 27% in the prior quarter. Source transcript
$691M Current RPO was $691 million, up 24% year-over-year. Source transcript
+3.1%

Operating figures the company states on every call, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Total Remaining Performance Obligations (RPO) $1.1B July 31, 2026

27% YoY

Driven by contract renewals, upsells, and new customer contracts.

Current Remaining Performance Obligations (cRPO) $691M July 31, 2026

24% YoY

Driven by contract renewals, upsells, and new customer contracts.

Product announcements

ProductTypeDetails
Knowledge Sourcesupdate
User Profile Updates in Currentupdate
Agentic Standardslaunch
Decisioning Studio Goroadmap

Deals & partnerships

AWS Strategic Collaboration Agreement 3-year

Establishes a dedicated co-sell motion, a joint go-to-market commitment, and incentives for AWS sellers to bring Braze into their accounts.

Risks & headwinds

Non-GAAP gross margin decrease Q2 FY27

68.6% in Q2 FY27 vs 69.3% in Q2 FY26

Mitigation:Ongoing work on vendor optimization, performance optimization, and gross margin accretive benefits from new product families (Braze AI, new channel expansion, BYO options, Agent Console).

Seasonality in Q3 operating income Q3 FY27

Q3 non-GAAP operating income expected to be $16M-$17M (7% margin at midpoint)

Mitigation:Affected by the cost of Forge (annual customer conference) and several global customer events scheduled during the quarter. Management is balancing investment into the back half of the year with strong performance.

Customer deliverability issues from naive AI content delivery Q2 FY27

One customer faced full deliverability trouble after moving ahead with 'vibe coded' content delivery.

Mitigation:Braze provided deliverability services to help the customer restore their reputation. Emphasizes the need for full end-to-end capability, strong deliverability, and optimization, not just 'dumb pipes'.

What to watch in Q3 FY27

AI product adoption and monetization

Next quarter (Q3 FY27)
Current Paid adoption of AI tools reached ~1/3 of large customers in Q2, up 900 bps from Q1.
Target Continued acceleration in paid adoption and monetization of AI tools.

Why it matters

AI monetization is a key driver of future revenue growth and differentiation for Braze.

Paid adoption of our AI tools, decisioning studio, agent console, AI item recommendations and our predictive suite reached roughly 1/3 of our large customer cohort in Q2, up about 900 basis points from Q1.

Q&A highlights

How can more powerful AI models and agents unlock new use cases for Braze customers, especially with Operator now generally available?

Bill Magnuson highlighted the combination of enhanced capability with ease of use, driven by the vertical integration of the development environment into Operator's intelligence. This allows Operator to deeply understand Braze features and customer integrations, leading to incredible building capability and product-led growth on steroids, as Operator drives adoption of advanced AI features instantaneously.

“When operator runs, it has a deep understanding of all the features available to it in its development environment, similar to how Cursor would integrate with an entire IDE. And it has full access to all of the metadata around how the -- our customers' integrations of Braze set up in the first place.”

asked by Ryan MacWilliams · answered by William Magnuson

2 min read 5 chapters

Detailed narrative

AI-Driven Productivity and Monetization

Braze's AI solutions, including Agent Console, Decisioning Studio, and Operator, are driving significant productivity gains for marketers. Paid adoption of AI tools reached approximately one-third of large customers in Q2, up 900 basis points from Q1, indicating accelerating monetization. The company emphasizes its "Agentic harness" approach, integrating data, decisioning, and AI to deliver reliable business outcomes.

Strategic AWS Partnership

A new 3-year strategic collaboration agreement with AWS establishes a dedicated co-sell motion and joint go-to-market commitment. This partnership is expected to extend Braze's reach, simplify procurement through AWS Marketplace, and deepen collaboration on data and AI, including model integrations for Agent Console on Amazon Bedrock. This formalization builds on existing foundations and aligns with Braze's verticalization efforts.

Customer Adoption and Competitive Wins

Braze continues to see strong customer adoption, with total customer count up 15% YoY to 2,789 and large customers (>$500K annually) up 28% YoY to 361. The company reported strong bookings driven by competitive takeaways from legacy marketing clouds and a vendor consolidation trend, attracting brands across diverse industries and geographies, including a global QSR, an APAC bank, a European retailer, and an American Challenger Bank.

Evolution of Services Revenue

Services revenue is growing due to reclassification from bundled platform fees and increased demand for expertise as AI scales volume and risk. Approximately 90% of professional services revenue is recurring, recognized ratably, with over 80% of new customers leveraging Braze-certified agency partners for long-term engagements. This shift reflects both pricing changes and growing customer investment in expertise to protect ROI.

Operator's Impact on Efficiency

The Operator AI tool is rapidly driving record declines in customer support tickets, allowing premium support to focus on high-complexity challenges. It also helps customers build complex campaigns more quickly, with almost 80% of accounts engaging with Operator more than 10 times in the last 90 days, and over half using it more than 100 times. This tool is making Braze both more powerful and easier to use, inspiring creativity and faster implementation.

AI-generated summary of the company's earnings call. Not investment advice.