Braze Inc. (BRZE) 2025 Q2 Earnings Call Summary
September 5, 2024 
Braze Inc. (BRZE)
| Market Cap | 0.21T |
|---|---|
| Beta | |
| P/E | 39.75452774136047 |
| EPS | 12.247158441111395 |
| Dividend | 0 |
| Dividend Yield | 0.00% |
Optimistic Highlights
Strong Revenue Growth
Generated $145.5 million in revenue, up 26% year-over-year.
Profitability Milestones
Achieved first-ever quarter of non-GAAP operating income profitability and non-GAAP net income profitability.
Customer Growth
Customer count reached 2,163, an increase of 61 during the quarter and 205 year-over-year.
Enterprise Strength
$500,000+ ARR customers grew to 222, up 28% year-over-year.
New Initiatives
Launched Braze for Startups and a free trial program to accelerate customer community growth.
Pessimistic Highlights
Macro Challenges
The macroeconomic environment continues to present challenges.
Dollar-Based Net Retention
Dollar-based net retention was 114%, down from previous quarters.
Deferred Revenue
Deferred revenue impacted by changes in contracting terms, leading to smaller invoices.
Elevated Churn
Churn remains at a more elevated level than desired.
Company Outlook
Q3 Revenue Guidance
Expected revenue for Q3 is $147.5 million to $148.5 million, representing a year-over-year growth rate of approximately 19%.
Full Fiscal Year 2025 Guidance
Total revenue expected to be in the range of $582.5 million to $585.5 million, representing a year-over-year growth rate of approximately 24%.
Operating Loss
Fiscal year 2025 non-GAAP operating loss expected to be in the range of $7.5 million to $8.5 million.
Net Income
Fiscal year 2025 non-GAAP net income expected to be in the range of $6.5 million to $7.5 million.
Q & A Highlights
Q: With Apple supporting RCS in iOS 18, have you seen any customer interest yet on RCS? (Ryan MacWilliams, Barclays)
A: Excited for RCS and actively preparing full support. Some aspects of RCS will be strictly better than SMS. Most R&D needs are already met due to support for WhatsApp and other channels. (Bill Magnuson)
Q: How should we think about member retention for the rest of this year? (Ryan MacWilliams, Barclays)
A: Not quite at the bottom yet. Expect continued pressure on this metric. No significant impact from the acquisition. (Isabelle Winkles)
Q: How often is AI cited by customers in legacy Marketing Cloud replacement deals? (Pinjalim Bora, JPMorgan)
A: AI is an important part of every deal cycle. Customers are looking for future-proof solutions. (Bill Magnuson)
Q: Any noticeable change in the macro environment versus last quarter? (Pinjalim Bora, JPMorgan)
A: No significant change. Deferred revenue impacted by contracting terms. (Isabelle Winkles)
Q: How do you think about the potential for the business to reaccelerate over the next 12 to 18 months? (Gabriela Borges, Goldman Sachs)
A: Focus on improving acquisition efficiency and investing in new frontiers. Balancing growth and profitability. (Bill Magnuson)
Q: What are the next milestones on the product road map? (Gabriela Borges, Goldman Sachs)
A: Continued leadership in customer engagement. Expanding channel offerings and enhancing usability. (Bill Magnuson)
Q: Can you touch on the Braze data platform and its role? (Arjun Bhatia, William Blair)
A: The goal is to ensure data relevant to customer messaging can get to Braze quickly, completely, and with low total cost of ownership. (Bill Magnuson)
Q: Are you making any changes to resource allocation in go-to-market? (Arjun Bhatia, William Blair)
A: Balancing investment in existing strengths and new frontiers. Focus on improving acquisition efficiency. (Bill Magnuson)
Q: How do you expand more data capabilities and win deals via data budgets? (Michael Berg, Wells Fargo)
A: Data platform helps manage complexity. Technical stakeholders are increasingly involved in buying decisions. (Bill Magnuson)
Q: Any noticeable change in the channel mix? (Yun Kim, Loop Capital)
A: No significant shift. WhatsApp adoption is healthy. (Isabelle Winkles)
Q: Any impact of free trials on overall deal sizes? (Matt VanVliet, BTIG)
A: Not expecting material change in average sale prices. Free trials help expand into existing customers more efficiently. (Bill Magnuson)
Q: How do you expand more data capabilities and win deals via data budgets? (Michael Berg, Wells Fargo)
A: Data platform helps manage complexity. Technical stakeholders are increasingly involved in buying decisions. (Bill Magnuson)
Q: Any noticeable change in the channel mix? (Yun Kim, Loop Capital)
A: No significant shift. WhatsApp adoption is healthy. (Isabelle Winkles)
Q: Any impact of free trials on overall deal sizes? (Matt VanVliet, BTIG)
A: Not expecting material change in average sale prices. Free trials help expand into existing customers more efficiently. (Bill Magnuson)