Slides
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December 9, 2024 Q3 Fiscal 2025 Earnings Results
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Data as of October 31, 2024 or the three months ended, as applicable 1. Represents quarterly GAAP revenue multiplied by 4 2 $608M QUARTERL Y REVENUE RUN RATE 1 23% YoY REVENUE GROWTH 2,211 CUSTOMERS IN OVER 75 COUNTRIES 113% DOLLAR-BASED NET RETENTION RATE 96% SUBSCRIPTION REVENUE $28M GAAP NET LOSS Braze Financial Highlights
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Forward-Looking Statements This presentation contains, and statements made during this presentation contain, “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding Braze’s financial outlook for the fourth quarter of and the full fiscal year ended January 31, 2025. These forward-looking statements are based on current expectations, estimates, forecasts and projections. Words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “goal,” “hope,” “intend,” “may,” might,” “potential,” “predict,” “project,” “shall,” “should,” “target,” “will,” and variations of these terms and similar expressions are intended to identify these forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are based on Braze’s current assumptions, expectations and beliefs and are subject to substantial risks, uncertainties, assumptions and changes in circumstances that may cause Braze’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These risks include, but are not limited to, risks and uncertainties related to: (1) unstable market and economic conditions may have serious adverse consequences on Braze’s business, financial condition and share price; (2) Braze’s recent rapid revenue growth may not be indicative of its future revenue growth; (3) Braze’s history of operating losses; (4) Braze’s limited operating history at its current scale; (5) Braze’s ability to successfully manage its growth; (6) the accuracy of estimates of market opportunity and forecasts of market growth and the impact of global and domestic socioeconomic events on Braze’s business; (7) Braze’s ability and the ability of its platform to adapt and respond to changing customer or consumer needs, requirements or preferences; (8) Braze’s ability to attract new customers and renew existing customers; (9) the competitive markets in which Braze participates and the intense competition that it faces; (10) Braze’s ability to adapt and respond effectively to rapidly changing technology, evolving cybersecurity and data privacy risks, evolving industry standards or changing regulations; and (11) Braze’s reliance on third-party providers of cloud-based infrastructure; as well as other risks and uncertainties discussed in the “Risk Factors” section of Braze’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on April 1, 2024 and other subsequent filings Braze makes with the SEC from time to time, including Braze’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2024 that will be filed with the SEC. The forward-looking statements included in this press release represent Braze’s views only as of the date of this press release and Braze assumes no obligation, and does not intend to update these forward-looking statements, except as required by law. Use of Non-GAAP Financial Measures This presentation contains the following non-GAAP financial measures: non-GAAP gross profit and margin, non-GAAP sales and marketing expense, non-GAAP research and development expense, non-GAAP general and administrative expense, non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share, basic and diluted, and non-GAAP free cash flow. Braze defines non-GAAP gross profit and margin, non-GAAP sales and marketing expense, non-GAAP research and development expense, non-GAAP general and administrative expense, non-GAAP operating income (loss), non-GAAP operating margin, and non-GAAP net income (loss) as the respective GAAP balances, adjusted for stock-based compensation expense, employer taxes related to stock-based compensation, charitable contribution expense, contingent consideration adjustments, acquisition related expense, amortization of intangible assets, and restructuring expense. Prior to the fourth quarter of the fiscal year ended January 31, 2023, Braze did not adjust non-GAAP gross profit and margin, non-GAAP sales and marketing expense, non-GAAP research and development expense, non-GAAP general and administrative expense, non-GAAP operating income (loss) and margin or non-GAAP net income (loss) for acquisition related expense, because there was not acquisition activity by Braze in prior periods. Additionally, prior to the second quarter of the fiscal year ended January 31, 2024, Braze did not adjust non-GAAP gross profit and margin, non-GAAP sales and marketing expense, non-GAAP research and development expense, non-GAAP general and administrative expense, non-GAAP operating income (loss) and margin or non-GAAP net income (loss) for amortization of intangible assets, because there were no such amortizations in prior periods, or for restructuring expense, because such amounts were not material in prior periods. Further, prior to the fourth quarter of the fiscal year ended January 31, 2024, Braze did not adjust non-GAAP gross profit and margin, non-GAAP sales and marketing expense, non-GAAP research and development expense, non-GAAP general and administrative expense, non-GAAP operating income (loss), non-GAAP operating margin or non-GAAP net income (loss) for contingent consideration adjustments, because there were no such adjustments in prior periods. Braze defines non-GAAP free cash flow as net cash provided by/(used in) operating activities, minus purchases of property and equipment and minus capitalized internal-use software costs. Investors are encouraged to review the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measures. Braze uses this non-GAAP financial information internally in analyzing its financial results and believes that this non-GAAP financial information, when taken collectively with GAAP financial measures, may be helpful to investors because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. The non-GAAP financial information is presented for supplemental informational purposes only, and should not be considered a substitute for financial information presented in accordance with generally accepted accounting principles in the United States (GAAP), and may be different from similarly-titled non-GAAP measures used by other companies. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses that are required by GAAP to be recorded in Braze’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by Braze’s management about which expenses are excluded or included in determining these non-GAAP financial measures. A reconciliation is provided at the end of this presentation for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Braze encourages investors to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, which it includes in press releases announcing quarterly and fiscal year financial results, including this presentation, and not to rely on any single financial measure to evaluate Braze’s business. Braze has not reconciled its guidance as to non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP net income (loss) or non-GAAP net income (loss) per share to their most directly comparable GAAP measure as a result of uncertainty regarding, and the potential variability of, reconciling items such as stock-based compensation expense specific to equity compensation awards that are directly impacted by unpredictable fluctuations in Braze’s stock price. Accordingly, reconciliation is not available without unreasonable effort, although it is important to note that these factors could be material to Braze’s results calculated in accordance with GAAP. Customer Metrics and Market Data Unless otherwise noted, information in this presentation concerning Braze’s industry, including industry statistics and forecasts, competitive position and the markets in which Braze operates is based on information from independent industry and research organizations, other third-party sources and management estimates. Management estimates are derived from publicly available information released by independent industry analysts and other third party sources, as well as data from Braze's internal research, and are based on assumptions made by Braze upon reviewing such data, and Braze’s experience in, and knowledge of, such industry and markets, which it believes to be reasonable. Projections, forecasts, assumptions and estimates of the future performance of the industry in which Braze operates and Braze’s future performance are necessarily subject to uncertainty and risk due to a variety of factors. Braze has not independently verified the accuracy or completeness of the information provided by independent industry and research organizations, other third parties or other publicly available information. Accordingly, Braze makes no representations as to the accuracy or completeness of that information nor does Braze undertake to update such information after the date of this presentation. Trademarks All third-party trademarks, including names, logos and brands, referenced by Braze in this presentation are property of their respective owners. All references to third-party trademarks are for identification purposes only. Such use should not be construed as an endorsement of the products or services of us. 3 Forward Looking Statements and Disclaimer 3
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● Revenue of $152.1 million, up 22.7% YoY and 4.5% sequentially ● GAAP gross margin of 69.8%, down 90 basis points YoY; non-GAAP gross margin of 70.5%, down 90 basis points YoY ● Dollar-based net retention rate of 113% compared to 118% in the prior year quarter and 114% in Q2 of FY’25 ● GAAP operating loss of $32.6 million compared to a loss of $35.1 million in the prior year quarter; non-GAAP operating loss of $2.2 million compared to a loss of $8.9 million in the prior year quarter ● GAAP net loss per share attributable to Braze common stockholders, basic and diluted, was $0.27 based on 102.1 million weighted average shares outstanding in the third quarter of fiscal year ended January 31, 2025, compared to GAAP net loss per share attributable to Braze common stockholders, basic and diluted, of $0.31 based on 97.9 million weighted average shares outstanding in the third quarter of the fiscal year fiscal year ended January 31, 2024 ● Non-GAAP net income per share attributable to Braze common stockholders, diluted, was $0.02 based on 106.8 million weighted average shares outstanding in the third quarter of the fiscal year ended January 31, 2025, compared to non-GAAP net loss per share attributable to Braze common stockholders, basic and diluted, of $0.05 based on 97.9 million weighted average shares outstanding in the third quarter of the fiscal year ended January 31, 2024 ● Net cash used in operating activities was $11.4 million compared to net cash used in operating activities of $2.0 million in the prior year quarter ● Free cash flow was ($14.2) million compared to ($5.9) million in the prior year quarter ● Customer count increased to 2,211 as of October 31, 2024 from 2,011 in the prior year quarter 4 Q3’25 Financial Results Highlights
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● Notable new business wins and upsells in the quarter included AEON Financial Services Co. Ltd, Burpple, Crumbl Cookies, E.On Next, Exact Sciences, Hugo Boss, Ippen Digital, Kurt Geiger, Love’s Travel Stops & Country Stores, LUSH Cosmetics, Rightmove, SMARTNEWS, INC., Telstra, and WeatherBug, a leading consumer weather company, along with many others. ● Hosted over 1,000 attendees, including over 750 customers and prospects, and nearly 250 partners at its annual customer conference, Forge 2024, in Las Vegas. ● Announced BrazeAITM agent, codenamed Project Catalyst (in development), designed to deliver 1:1 customer engagement by rapidly creating, testing, and optimizing thousands of experience variations. ● Debuted additional Canvas template and BrazeAITM assistant features to help marketers more easily start and deliver sophisticated customer experiences. ● Expanded channel offerings to include LINE (generally available now) and RCS Business (in Beta), as well as new WhatsApp features such as dynamic images, click tracking, and commerce support. ● Named a Leader in the 2024 Gartner® Magic QuadrantTM for Multichannel Marketing Hubs for second consecutive year. ● For the third consecutive year, Braze was named by Deloitte as one of the fastest growing technology, media, telecommunications, life sciences, fintech, and energy tech companies in North America in the 2024 Deloitte Technology Fast 500TM. ● Partnered with streaming network BET+ to help expand the Braze Tech for an Equitable Future Grant program, which offers companies of underrepresented founders 12 months of free access to Braze technology and supporting resources. 5 Q3’25 Recent Business Highlights
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YoY Revenue Growth DOLLARS IN MILLIONS Reported Revenue 6 Quarterly Revenue 22.7% Q3’25 YoY REVENUE GROWTH
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Non-GAAP Gross Margin 7 70.5% Q3’25 NON-GAAP GROSS MARGIN
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Dollar-Based Net Retention 8 113% Q3’25 NET DOLLAR- BASED RETENTION RATE
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Braze Customers 9 10% Q3'25 YoY CUSTOMER GROWTH Q3’25 YoY GROWTH OF $500K+ ARR CUSTOMERS Total Customers Customers with over $500K ARR 24% Customers with $500K+ ARRTotal Customers Customers with $500K+ ARR YoY GrowthTotal Customers YoY Growth
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DOLLARS IN MILLIONS FY’23 Q3 FY’23 Q4 FY’24 Q1 FY’24 Q2 FY’24 Q3 FY’25 Q1 FY’25 Q2 Free Cash Flow Free Cash Flow Margin % 21.3% (1.9)% (30.1)% $15.7 ($28.1) ($1.9) FY’24 Q4 (16.2)% ($18.7) Free Cash Flow ($5.9) (4.8)% $21.7 10 ($14.2)M Q3’25 FREE CASH FLOW ($3.5) (2.7)% $11.4 8.4% FY’25 Q3 $7.2 5.0% ($14.2) (9.4)%
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+24% YoY +28% YoY Less than 1 year Total RPO Remaining Performance Obligations DOLLARS IN MILLIONS 11
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DOLLARS AND SHARES IN MILLIONS, EXCEPT PER SHARE AMOUNTS Metric Q4’25 Guidance FY’25 Guidance Revenue $155.0 - 156.0 $588.0 - 589.0 Non-GAAP Operating Income (Loss) $2.0 - 3.0 $(5.0 - 6.0) Non-GAAP Net Income $5.0 - 6.0 $11.0 - 12.0 Non-GAAP Net Income Per Share $0.05 - 0.06 $0.10 - 0.11 Weighted Average Shares Outstanding, Diluted ~107.5M ~107.0M Guidance 12
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Appendix
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Number of Customers: We define a customer as the separate and distinct, ultimate parent-level entity that has an active subscription with us to use our products. A single organization could have multiple distinct contracting divisions or subsidiaries, all of which together would be considered a single customer. Monthly Active User: A monthly active user is an end user of a customer who has engaged with the customer’s applications and websites in the previous 30-day period. We include each distinguishable end user in our calculation of monthly active users, even though some users may access our customers’ applications and websites using more than one device, and multiple users may gain access using the same device. Dollar-based Net Retention Rate: We calculate our dollar-based net retention rate as of a period end by starting with the ARR from a cohort of customers as of 12 months prior to such period-end (the Prior Period ARR). We then calculate the ARR from the same cohort of customers as of the end of the current period (the Current Period ARR). Current Period ARR includes any expansion and is net of contraction or attrition over the last 12 months, but excludes ARR from new customers in the current period. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at the point-in-time dollar-based net retention rate. We then calculate the weighted average point-in-time dollar-based net retention rates as of the last day of each month in the current trailing 12-month period to arrive at the dollar-based net retention rate. Annual Recurring Revenue (ARR): We define ARR as the annualized value of customer subscription contracts, including certain premium professional services that are subject to contractual subscription terms, as of the measurement date, assuming any contract that expires during the next 12 months is renewed on its existing terms (including contracts for which we are negotiating a renewal). Our calculation of ARR is not adjusted for the impact of any known or projected future events (such as customer cancellations, expansion or contraction of existing customers relationships or price increases or decreases) that may cause any such contract not to be renewed on its existing terms. Remaining Performance Obligations: The transaction price allocated to remaining performance obligations represents amounts under non-cancelable contracts expected to be recognized as revenue in future periods, and may be influenced by several factors, including seasonality, the timing of renewals, the timing of service delivery and contract terms. Unbilled portions of the remaining performance obligation are subject to future economic risks including bankruptcies, regulatory changes and other market factors. Operating Metrics - Definitions 14
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GAAP to Non-GAAP Reconciliation Three Months Ended October 31, Nine Months Ended October 31, 2024 2023 2024 2023 GAAP sales and marketing expense $74,658 $66,395 $213,054 $184,074 Less: Stock-based compensation expense 9,608 7,899 28,945 23,554 Employer taxes related to stock-based compensation expense 247 245 1,070 609 Restructuring expense - - - 541 Non-GAAP sales and marketing $64,803 $58,251 $183,039 $159,370 GAAP research and development expense $32,855 $29,872 $100,369 $88,749 Less: Stock-based compensation expense 10,343 9,479 32,623 29,251 Employer taxes related to stock-based compensation expense 220 199 1,400 721 Non-GAAP research and development $22,292 $20,194 $66,346 $58,777 GAAP general and administrative expense $31,199 $26,448 $86,309 $75,884 Less: Stock-based compensation expense 7,364 5,761 21,805 17,466 Employer taxes related to stock-based compensation expense 127 84 567 239 1% Pledge charitable contribution expense 1,417 1,427 2,764 2,391 Acquisition related expense - - - 1,946 Amortization of intangibles expense 101 215 459 363 Restructuring expense - - - 103 Contingent consideration adjustment (86) - (223) - Non-GAAP general and administrative $22,276 $18,961 $60,937 $53,376 Three Months Ended October 31, Nine Months Ended October 31, 2024 2023 2024 2023 Gross Profit $106,142 $87,582 $299,132 $236,308 Plus: Stock-based compensation expense 1,003 900 3,045 2,690 Employer taxes related to stock-based compensation expense 42 29 156 81 Non-GAAP Gross Profit $107,187 $88,511 $302,333 $239,079 GAAP Gross Margin 69.8% 70.7% 69.1% 69.3% Non-GAAP Gross Margin 70.5% 71.4% 69.8% 70.1% Reconciliation of GAAP to Non-GAAP Gross Margin Reconciliation of GAAP to Non-GAAP Operating Expenses DOLLARS IN THOUSANDS 15
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GAAP to Non-GAAP Reconciliation Three Months Ended October 31, Nine Months Ended October 31, 2024 2023 2024 2023 Net loss attributable to Braze, Inc. ($27,911) ($30,741) ($86,551) ($100,889) Plus: Stock-based compensation expense 28,318 24,039 86,418 72,961 Employer taxes related to stock-based compensation expense 636 557 3,193 1,650 1% Pledge charitable contribution expense 1,417 1,427 2,764 2,391 Acquisition related expense - - - 1,946 Amortization of intangibles expense 101 215 459 363 Restructuring expense - - - 644 Contingent consideration adjustment (86) - (223) - Non-GAAP net income (loss) attributable to Braze, Inc.1 $2,475 ($4,503) $6,060 ($20,934) Non-GAAP net income (loss) per share attributable to Braze, Inc. common stockholders, basic $0.02 ($0.05) $0.06 ($0.21) Non-GAAP net income (loss) per share attributable to Braze, Inc. common stockholders, diluted $0.02 ($0.05) $0.06 ($0.21) Weighted-average shares used to compute net income (loss) per share attributable to Braze, Inc. common stockholders, basic 102,146 97,880 101,714 97,615 Weighted-average shares used to compute net income (loss) per share attributable to Braze, Inc. common stockholders, diluted 106,820 97,880 106,614 97,615 1 Assumes no non-GAAP tax expenses associated with the non-GAAP adjustment due to the Company’s historical non-GAAP net loss position and available deferred tax assets sufficient to offset such non-GAAP tax expense. Three Months Ended October 31, Nine Months Ended October 31, 2024 2023 2024 2023 Loss from operations ($32,570) ($35,133) ($100,600) ($112,399) Plus: Stock-based compensation expense 28,318 24,039 86,418 72,961 Employer taxes related to stock-based compensation expense 636 557 3,193 1,650 1% Pledge charitable contribution expense 1,417 1,427 2,764 2,391 Acquisition related expense - - - 1,946 Amortization of intangibles expense 101 215 459 363 Restructuring expense - - - 644 Contingent consideration adjustment (86) - (223) - Non-GAAP loss from operations ($2,184) ($8,895) ($7,989) ($32,444) GAAP operating margin (21.4%) (28.3%) (23.2%) (33.0%) Non-GAAP operating margin (1.4%) (7.2%) (1.8%) (9.5%) Reconciliation of GAAP to Non-GAAP Operating Loss Reconciliation of GAAP to Non-GAAP Net Income (Loss) Reconciliation of GAAP to Non-GAAP Net Loss Three Months Ended October 31, Nine Months Ended October 31, 2021 2020 2021 2020 Net loss attributable to Braze, Inc. (9,421) (8,813) (34,483 ) (21,208 ) Plus: Stock-based compensation expense (1) 5,430 2,275 18,036 5,002 Non-GAAP net loss attributable to Braze, Inc. (1) (3,991) (6,538) (16,447) (16,206 ) Non-GAAP net loss per share attributable to Braze, Inc. common stockholders, basic and diluted (0.19) (0.35) (0.81) (0.92) Weighted-average shares used to compute net loss per share attributable to Braze, Inc. common stockholders, basic and diluted 20,729 18,633 20,248 17,559 DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS ($23,456.00) ($23,456.00) 16
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Three Months Ended October 31, Nine Months Ended October 31, 2024 2023 2024 2023 Net cash provided by/ (used in) operating activities ($11,410) ($2,003) $19,597 $3,029 Less: Purchases of property and equipment (1,923) (3,012) (12,147) (3,439) Capitalized internal-use software costs (915) (896) (3,023) (2,536) Non-GAAP Free cash flow ($14,248) ($5,911) $4,427 ($2,946) Reconciliation of GAAP Cash Flow from Operating Activities to Non-GAAP Free Cash Flow GAAP Cash Flows from Operations to Free Cash Flow DOLLARS IN THOUSANDS 17
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FY’23 Q3 FY’23 Q4 FY’24 Q1 FY’24 Q2 FY’24 Q3 FY’24 Q4 FY’25 Q1 FY’25 Q2 FY’25 Q3 Gross Profit $63,990 $65,250 $69,093 $79,633 $87,582 $87,965 $90,911 $102,079 $106,142 Plus: Stock-based compensation expense 889 896 889 901 900 895 964 1,078 1,003 Employer taxes related to stock-based compensation expense 17 14 22 30 29 44 68 46 42 Non-GAAP Gross Profit $64,896 $66,160 $70,004 $80,564 $88,511 $88,904 $91,943 $103,203 $107,187 GAAP Gross Margin 68.7% 66.1% 67.9% 69.2% 70.7% 67.2% 67.1% 70.2% 69.8% Non-GAAP Gross Margin 69.7% 67.0% 68.8% 70.0% 71.4% 67.9% 67.9% 70.9% 70.5% Reconciliation of GAAP to Non-GAAP Net Loss Three Months Ended October 31, Nine Months Ended October 31, 2021 2020 2021 2020 Net loss attributable to Braze, Inc. (9,421) (8,813) (34,483 ) (21,208 ) Plus: Stock-based compensation expense (1) 5,430 2,275 18,036 5,002 Non-GAAP net loss attributable to Braze, Inc. (1) (3,991) (6,538) (16,447) (16,206 ) Non-GAAP net loss per share attributable to Braze, Inc. common stockholders, basic and diluted (0.19) (0.35) (0.81) (0.92) Weighted-average shares used to compute net loss per share attributable to Braze, Inc. common stockholders, basic and diluted 20,729 18,633 20,248 17,559 GAAP to Non-GAAP Gross Margin Reconciliation DOLLARS IN THOUSANDS 18
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FY’23 Q3 FY’23 Q4 FY’24 Q1 FY’24 Q2 FY’24 Q3 FY’24 Q4 FY’25 Q1 FY’25 Q2 FY’25 Q3 Net cash provided by/(used in) operating activities ($23,920) $12 $22,549 ($17,517) ($2,003) $3,821 $19,395 $11,612 ($11,410) Less: Purchases of property and equipment (4,222) (1,381) (40) (387) (3,012) (6,322) (6,915) (3,309) (1,923) Capitalized internal-use software costs 78 (553) (852) (788) (896) (1,038) (1,039) (1,069) (915) Non-GAAP Free Cash Flow ($28,064) ($1,922) $21,657 ($18,692) ($5,911) ($3,539) $11,441 $7,234 ($14,248) Non-GAAP Free Cash Flow Gross Margin (30.1%) (1.9%) 21.3% (16.2%) (4.8%) (2.7%) 8.4% 5.0% (9.4%) Reconciliation of GAAP to Non-GAAP Net Loss Three Months Ended October 31, Nine Months Ended October 31, 2021 2020 2021 2020 Net loss attributable to Braze, Inc. (9,421) (8,813) (34,483 ) (21,208 ) Plus: Stock-based compensation expense (1) 5,430 2,275 18,036 5,002 Non-GAAP net loss attributable to Braze, Inc. (1) (3,991) (6,538) (16,447) (16,206 ) Non-GAAP net loss per share attributable to Braze, Inc. common stockholders, basic and diluted (0.19) (0.35) (0.81) (0.92) Weighted-average shares used to compute net loss per share attributable to Braze, Inc. common stockholders, basic and diluted 20,729 18,633 20,248 17,559 17 GAAP to Non-GAAP Free Cash Flow Reconciliation DOLLARS IN THOUSANDS 19