Q2 2027 Braze Inc Earnings Call Transcript
Key Points
- Braze Inc (BRZE) delivered a strong second quarter with revenue of $227 million, up 26% year-over-year, and raised its full-year revenue guidance.
- Dollar-based net retention for large customers (spending at least $500,000 annually) improved to 112%, up 100 basis points sequentially, and the number of these customers grew 28% year-over-year.
- Adoption of BrazeAI tools is accelerating, with paid adoption reaching roughly one-third of the large customer cohort, up 900 basis points from the prior quarter.
- The new three-year strategic collaboration agreement with AWS establishes a dedicated co-sell motion and incentives for AWS sellers, expanding Braze Inc (BRZE)'s market reach.
- The company achieved record second-quarter free cash flow of $22 million and improved non-GAAP operating margin by over 600 basis points year-over-year.
- Operator, the AI-powered builder, is showing strong engagement, with nearly 80% of accounts using it more than 10 times in the last 90 days and driving record declines in customer support tickets.
- Non-GAAP gross margin slightly decreased year-over-year to 68.6% from 69.3%, driven by high premium messaging volumes and headcount additions for Decisioning Studio.
- Current RPO growth moderated to 24% year-over-year, impacted by lapping the OfferFit acquisition and seasonality in renewal cohorts.
- The company is only about 50% through migrating customers to its new pricing and packaging structure, which is causing a reclassification of revenue from subscription to professional services and may create near-term reporting noise.
- Third-quarter operating income guidance is expected to be affected by the costs of Forge, its annual customer conference, and other global events, implying a lower operating margin of approximately 7%.
- The company faces headwinds from increasing premium messaging volumes and the need to invest in new sales capacity, which could pressure gross margins and operating income in the near term.
- While AI adoption is growing, monetization is still early, and the company is navigating a complex landscape where customers are cost-conscious and require significant education and training to adopt new AI capabilities.
Welcome to the Braze fiscal second-quarter 2027 earnings conference call. My name is Layla, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. After the speaker's presentation, we will conduct a question-and-answer session.
I'll now turn the call over to Christopher Ferris, Vice President of Braze Investor Relations.
Thank you, operator. Good afternoon and thank you for joining us today to review Braze's results for the fiscal second-quarter 2027. I'm joined by our Co-Founder and Chief Executive Officer, Bill Magnuson; and our Interim Chief Financial Officer, Pankaj Malik. We announced our results in a press release issued after the market closed today. Please refer to the Investor Relations section of our website at investors.braze.com for more information and a supplemental presentation related to today's earnings announcement.
During this call, we will make statements related to our business that are forward-looking under
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