First quarter revenue grew 31.3% year-over-year
to $101.8 million
Achieved dollar-based net retention of 122% for
the trailing 12 months
Net cash provided by operating activities of
$22.5 million; $21.7 million of Free Cash Flow in the first
quarter
Braze (Nasdaq: BRZE), a leading comprehensive customer
engagement platform that powers interactions between consumers and
the brands they love, today announced results for its fiscal
quarter ended April 30, 2023.
“We are off to a great start to fiscal 2024, delivering
impressive results driven by strong demand for the Braze Customer
Engagement Platform,” said Bill Magnuson, cofounder and CEO of
Braze. “As we move forward this year, we will continue developing
exceptional, industry-leading solutions that drive high ROI for our
customers while simultaneously upholding our commitment to
cost-discipline and efficiency, driving value for our
shareholders.”
Fiscal First Quarter 2024 Financial
Highlights
- Revenue was $101.8 million compared to $77.5 million in the
first quarter of the fiscal year ended January 31, 2023, up 31.3%
year-over year, driven primarily by new customers, upsells and
renewals.
- Subscription revenue in the quarter was $97.1 million compared
to $72.8 million in the first quarter of the fiscal year ended
January 31, 2023, and professional services and other revenue was
$4.6 million compared to $4.7 million in the first quarter of the
fiscal year ended January 31, 2023.
- Remaining performance obligations as of April 30, 2023 was
$477.5 million, of which $325.4 million is current, which we define
as less than one year.
- GAAP Gross Margin was 67.9% compared to 66.6% in the first
quarter of the fiscal year ended January 31, 2023.
- Non-GAAP Gross Margin was 68.8% compared to 67.8% in the first
quarter of the fiscal year ended January 31, 2023.
- Dollar-based net retention for all customers for the trailing
12 months ended April 30, 2023 and April 30, 2022 was 122% and
127%, respectively; dollar-based net retention for customers with
annual recurring revenue (ARR) of $500,000 or more was 124%
compared to 133% in the first quarter of the fiscal year ended
January 31, 2023.
- Total customers increased to 1,866 as of April 30, 2023 from
1,503 as of April 30, 2022; 164 of our customers had ARR of
$500,000 or more as of April 30, 2023, compared to 129 customers as
of April 30, 2022.
- GAAP operating loss was $41.9 million compared to an operating
loss of $39.6 million in the first quarter of the fiscal year ended
January 31, 2023. Contributors to the operating loss in the quarter
included $24.1 million on stock-based compensation expense.
- Non-GAAP operating loss was $16.0 million compared to a loss of
$18.0 million in the first quarter of the fiscal year ended January
31, 2023.
- GAAP net loss per basic and diluted share attributable to Braze
common stockholders was $0.40 compared to $0.42 in the first
quarter of the fiscal year ended January 31, 2023.
- Non-GAAP net loss per basic and diluted share attributable to
Braze common stockholders was $0.13 compared to $0.19 in the first
quarter of the fiscal year ended January 31, 2023.
- Net cash provided by operating activities was $22.5 million
compared to net cash provided by operating activities of $17.9
million in the first quarter of the fiscal year ended January 31,
2023.
- Free cash flow was $21.7 million compared to $15.7 million in
the first quarter of the fiscal year ended January 31, 2023.
- Total cash and cash equivalents, restricted cash, and
marketable securities was $507.4 million as of April 30, 2023
compared to $482.7 million as of January 31, 2023.
Recent Business
Highlights
- Notable new business wins and upsells in the quarter included
Procore Technologies, Sonos, Sweetgreen, and Swimply.
- Launched a suite of new and enhanced products designed to help
marketers drive efficiency, team collaboration, and creativity to
drive ROI.
- Announced exclusive partnership with Stitch, a boutique
consultancy focused on innovative marketing solutions, as its
customer engagement platform of choice.
- Completed the acquisition of North Star, launching Braze
Australia.
Financial Outlook
Braze is initiating guidance for the fiscal second quarter
ending July 31, 2023, and updating guidance for the fiscal year
ending January 31, 2024.
Metric (in millions,
except per share amounts)
FY 2024 Q2 Guidance
FY 2024 Guidance
Revenue
$108.0 - 109.0
$442.5 - 446.5
Non-GAAP operating loss
$(15.0) - (16.0)
$(54.0) - (58.0)
Non-GAAP net loss
$(13.0) - (14.0)
$(50.0) - (54.0)
Non-GAAP net loss per share
$(0.13) - (0.14)
$(0.51) - (0.55)
Weighted average shares outstanding
~97.4
~97.8
Braze also reiterated guidance on its non-GAAP operating loss
margin, which it believes will be negative 7% or better during the
fourth quarter of the fiscal year ending January 31, 2024.
Braze has not reconciled its guidance as to non-GAAP operating
loss, non-GAAP operating loss margin, non-GAAP net loss, non-GAAP
net loss per share or free cash flow 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.
Conference Call
Information:
What: Braze First Quarter Fiscal Year 2024 Financial
Results Conference Call When: Thursday, June 8th at 5:00 pm
EDT / 2:00 pm PDT Webcast & Supplemental Data:
investors.braze.com Replay: A webcast replay will be
available on Braze’s investor site at investors.braze.com.
Supplemental and Other Financial
Information
Supplemental information, including an accompanying financial
presentation and other information can be accessed through Braze’s
investor website at investors.braze.com
Non-GAAP Financial
Measures
This press release and the accompanying tables contain 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 loss, non-GAAP operating income margin, non-GAAP
net loss, non-GAAP net 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 loss, non-GAAP operating income margin, and
non-GAAP net loss as the respective GAAP balances, adjusted for
stock-based compensation expense, employer taxes related to
stock-based compensation, charitable contribution expense and
acquisition related 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 loss, non-GAAP operating
income margin, or non-GAAP net loss for acquisition related
expense, because there was not acquisition activity by Braze in
prior periods. Braze defines non-GAAP free cash flow as net cash
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 below in the financial statement tables
included below in this press release 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 press release, and not to
rely on any single financial measure to evaluate Braze’s
business.
Definition of Other Business
Metrics
Customer: Braze defines a customer, as of period end, as the
separate and distinct, ultimate parent-level entity that has an
active subscription with Braze to use its products. A single
organization could have multiple distinct contracting divisions or
subsidiaries, all of which together would be considered a single
customer.
Annual Recurring Revenue (ARR): Braze defines 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 Braze
is negotiating a renewal). Braze’s 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. ARR may decline or fluctuate as a result of a number of
factors, including customers’ satisfaction or dissatisfaction with
Braze’s products and professional services, pricing, competitive
offerings, economic conditions or overall changes in Braze’s
customers’ spending levels. ARR should be viewed independently of
revenue and does not represent Braze’s GAAP revenue on an
annualized basis or a forecast of revenue, as it is an operating
metric that can be impacted by contract start and end dates and
renewal rates.
Dollar-Based Net Retention Rate: Braze calculates 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). Braze then calculates 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. Braze then
divides the total Current Period ARR by the total Prior Period ARR
to arrive at the point-in-time dollar-based net retention rate.
Braze then calculates 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.
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.
Forward-Looking
Statements
This press release contains “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 second
quarter of and full fiscal year ended January 31, 2024. 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 March
31, 2023 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 April 30, 2023 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.
About Braze
Braze is a leading comprehensive customer engagement platform
that powers interactions between consumers and brands they love.
With Braze, global brands can ingest and process customer data in
real time, orchestrate and optimize contextually relevant,
cross-channel marketing campaigns and continuously evolve their
customer engagement strategies. Braze has been recognized as one of
Fortune’s 2022 Best US Workplaces in Technology, Fortune’s 2022
Best US Workplaces for Women, 2022 UK Best Workplaces for Women by
Great Place to Work, and Fortune's 2022 Best US Workplace for
Millennials. The company is headquartered in New York with 10+
offices across North America, Europe and APAC. Learn more at
braze.com.
Braze uses its Investor website at investors.braze.com as a
means of disclosing material non-public information, announcing
upcoming investor conferences and for complying with its disclosure
obligations under Regulation FD. Accordingly, you should monitor
its investor relations website in addition to following its press
releases, SEC filings and public conference calls and webcasts.
Selected Financial
Data
BRAZE, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per
share amounts)
Three Months Ended
April 30,
2023
2022
Revenue
$
101,780
$
77,495
Cost of revenue (1)(2)
32,687
25,906
Gross Profit
69,093
51,589
Operating expenses:
Sales and marketing (1)(2)
57,262
46,044
Research and development (1)(2)
29,745
21,620
General and administrative
(1)(2)(3)(4)
23,983
23,574
Total operating expenses
110,990
91,238
Loss from operations
(41,897
)
(39,649
)
Other income, net
3,459
30
Loss before provision for income taxes
(38,438
)
(39,619
)
Provision for income taxes
388
14
Net loss
(38,826
)
(39,633
)
Net loss attributable to redeemable
non-controlling interest
(372
)
(364
)
Net loss attributable to Braze, Inc.
$
(38,454
)
$
(39,269
)
Net loss per share attributable to Braze,
Inc. common stockholders, basic and diluted
$
(0.40
)
$
(0.42
)
Weighted-average shares used to compute
net loss per share attributable to Braze, Inc. common stockholders,
basic and diluted
96,353
93,250
(1) Includes stock-based compensation as
follows:
Three Months Ended
April 30,
2023
2022
Cost of revenue
$
889
$
920
Sales and marketing
7,848
5,667
Research and development
9,843
6,173
General and administrative
5,566
4,211
Total stock-based compensation expense
$
24,146
$
16,971
(2) Includes employer taxes related to
stock-based compensation as follows:
Three Months Ended
April 30,
2023
2022
Cost of revenue
$
22
$
16
Sales and marketing
117
167
Research and development
256
127
General and administrative
90
65
Total employer taxes related to
stock-based compensation
$
485
$
375
(3) Includes 1% Pledge charitable donation
expense as follows:
Three Months Ended
April 30,
2023
2022
General and administrative
$
—
$
4,260
(4) Includes acquisition related expense
as follows:
Three Months Ended
April 30,
2023
2022
General and administrative
$
1,268
$
—
BRAZE, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
(in thousands, except share
and per share amounts)
April 30, 2023
January 31,
2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
116,932
$
68,587
Restricted cash, current
3,373
—
Accounts receivable, net of allowance of
$1,881 and $1,613 at April 30, 2023 and January 31, 2023,
respectively
66,649
78,338
Marketable securities
385,869
410,083
Prepaid expenses and other current
assets
25,285
26,163
Total current assets
598,108
583,171
Restricted cash, noncurrent
1,193
4,036
Property and equipment, net
20,433
20,339
Operating lease right-of-use assets
46,623
46,261
Deferred contract costs
51,229
48,451
Other assets
3,707
3,148
TOTAL ASSETS
$
721,293
$
705,406
LIABILITIES, REDEEMABLE NON-CONTROLLING
INTEREST, AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
$
3,571
$
3,101
Accrued expenses and other current
liabilities
47,018
37,415
Deferred revenue
181,216
166,092
Operating lease liabilities, current
13,231
10,695
Total current liabilities
245,036
217,303
Operating lease liabilities,
noncurrent
39,211
40,590
Other long-term liabilities
814
755
TOTAL LIABILITIES
285,061
258,648
COMMITMENTS AND CONTINGENCIES (Note
13)
Redeemable non-controlling interest (Note
4)
1,083
1,455
STOCKHOLDERS’ EQUITY
Class A common stock, $0.0001 par value;
2,000,000,000 and 2,000,000,000 shares authorized as of April 30,
2023 and January 31, 2023, respectively; 63,118,499 and 61,585,973
shares issued and outstanding as of April 30, 2023 and January 31,
2023, respectively
6
6
Class B common stock, $0.0001 par value;
110,000,000 and 110,000,000 shares authorized as of April 30, 2023
and January 31, 2023, respectively; 33,745,938 and 34,389,453
shares issued and outstanding as of April 30, 2023 and January 31,
2023, respectively
4
4
Additional paid-in capital
832,831
806,044
Accumulated other comprehensive loss
(5,311
)
(6,824
)
Accumulated deficit
(392,381
)
(353,927
)
TOTAL STOCKHOLDERS’ EQUITY
435,149
445,303
TOTAL LIABILITIES, REDEEMABLE
NON-CONTROLLING INTEREST, AND STOCKHOLDERS’ EQUITY
$
721,293
$
705,406
BRAZE, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Three Months Ended
April 30,
2023
2022
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss (including amounts attributable
to redeemable non-controlling interests)
$
(38,826
)
$
(39,633
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation
24,179
16,971
Amortization of deferred contract
costs
6,660
5,407
Depreciation and amortization
1,526
965
Provision for credit losses
594
(143
)
Value of common stock donated to
charity
—
4,260
Amortization of discount/premium on
marketable securities
471
13
Non-cash foreign exchange loss
310
505
Other
20
4
Changes in operating assets and
liabilities:
Accounts receivable
11,046
21,984
Prepaid expenses and other current
assets
745
3,615
Deferred contract costs
(9,479
)
(8,205
)
ROU assets and liabilities
705
879
Other assets
(380
)
614
Accounts payable
405
28
Accrued expenses and other current
liabilities
9,364
(2,530
)
Deferred revenue
15,228
13,177
Other long-term liabilities
(19
)
10
Net cash provided by operating
activities
22,549
17,921
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property and equipment
(40
)
(1,960
)
Capitalized internal-use software
costs
(852
)
(306
)
Purchases of marketable securities
(46,297
)
(421,537
)
Maturities of marketable securities
71,486
16,000
Net cash provided by/(used in) investing
activities
24,297
(407,803
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from exercise of common stock
options
2,211
2,630
Net cash provided by financing
activities
2,211
2,630
Effect of foreign currency exchange rate
changes on cash, cash equivalents, and restricted cash
(180
)
(1,075
)
Net change in cash, cash equivalents, and
restricted cash
48,877
(388,327
)
Cash, cash equivalents, and restricted
cash, beginning of period
72,623
482,973
Cash, cash equivalents, and restricted
cash, end of period
$
121,500
$
94,646
BRAZE, INC.
U.S. GAAP RECONCILIATION OF
NON-GAAP ADJUSTED RESULTS
(in thousands, except per
share amounts)
The following tables reconcile each
non-GAAP financial measure to its most directly comparable GAAP
financial measure:
Reconciliation of GAAP to Non-GAAP
Gross Margin
Three Months Ended
April 30,
2023
2022
Gross profit
$
69,093
$
51,589
Plus:
Stock-based compensation expense
889
920
Employer taxes related to stock-based
compensation expense
22
16
Non-GAAP gross profit
$
70,004
$
52,525
GAAP gross margin
67.9
%
66.6
%
Non-GAAP gross margin
68.8
%
67.8
%
Reconciliation of GAAP to Non-GAAP
Operating Expenses
Three Months Ended
April 30,
2023
2022
GAAP sales and marketing expense
$
57,262
$
46,044
Less:
Stock-based compensation expense
7,848
5,667
Employer taxes related to stock-based
compensation expense
117
167
Non-GAAP sales and marketing expense
$
49,297
$
40,210
GAAP research and development expense
$
29,745
$
21,620
Less:
Stock-based compensation expense
9,843
6,173
Employer taxes related to stock-based
compensation expense
256
127
Non-GAAP research and development
expense
$
19,646
$
15,320
GAAP general and administrative
expense
$
23,983
$
23,574
Less:
Stock-based compensation expense
5,566
4,211
Employer taxes related to stock-based
compensation expense
90
65
1% Pledge charitable contribution
expense
—
4,260
Acquisition related expense
1,268
—
Non-GAAP general and administrative
expense
$
17,059
$
15,038
Reconciliation of GAAP to Non-GAAP
Operating Loss
Three Months Ended
April 30,
2023
2022
Loss from operations
$
(41,897
)
$
(39,649
)
Plus:
Stock-based compensation expense
24,146
16,971
Employer taxes related to stock-based
compensation expense
485
375
1% Pledge charitable contribution
expense
—
4,260
Acquisition related expense
1,268
—
Non-GAAP loss from operations
$
(15,998
)
$
(18,043
)
Reconciliation of GAAP to Non-GAAP Net
Loss
Three Months Ended
April 30,
2023
2022
Net loss attributable to Braze, Inc.
$
(38,454
)
$
(39,269
)
Plus:
Stock-based compensation expense
24,146
16,971
Employer taxes related to stock-based
compensation expense
485
375
1% Pledge charitable contribution
expense
—
4,260
Acquisition related expense
1,268
—
Non-GAAP net loss attributable to Braze,
Inc.(1)
$
(12,555
)
$
(17,663
)
Non-GAAP net loss per share attributable
to Braze, Inc. common stockholders, basic and diluted
$
(0.13
)
$
(0.19
)
Weighted-average shares used to compute
net loss per share attributable to Braze, Inc. common stockholders,
basic and diluted
96,353
93,250
(1) Assumes no tax impact due to the
Company’s net loss position and deferred tax assets.
Reconciliation of GAAP Cash Flow from
Operating Activities to Non-GAAP Free Cash Flow
Three Months Ended
April 30,
2023
2022
Net cash provided by operating
activities
$
22,549
$
17,921
Less:
Purchases of property and equipment
(40
)
(1,960
)
Capitalized internal-use software
costs
(852
)
(306
)
Non-GAAP free cash flow
$
21,657
$
15,655
Braze is a registered trademark of Braze, Inc.
All product and company names herein may be trademarks of their
registered owners.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230608005655/en/
Investors: Christopher Ferris IR@braze.com (609) 964-0585
Media: Meghan Halaszynski Press@braze.com
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