Braze, Inc.

Welcome to the Braze Fiscal First Quarter 2026 Earnings Conference Call. My name is Luke 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'll 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 first quarter of 2026. I'm joined by our co-founder and chief executive officer, Bill Magnuson, and our chief financial officer, Isabel Winkles. 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 federal securities laws and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding our financial outlook for the second quarter ended July 31, 2025, and the fiscal year ended January 31, 2026, our ability to integrate and realize the benefits of the acquisition of OfferFit, our anticipated product development and performance, our expectations concerning new customer verticals, our anticipated customer behaviors, including vendor consolidation and replacement trends and their impact on Braze, our potential market opportunity and our ability to effectively execute on such opportunity, and our long-term financial targets and goals. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations and reflect our views only as of today. We assume no obligation to update any such forward-looking statements. For a discussion of the material risks and uncertainties that could affect our actual results, please refer to the risks identified in today's press release and our SEC filings, both available on the Investor Relations section of our website. I'd also like to remind you that today's call will include certain non-GAAP financial measures used by management to evaluate our ongoing operations and to aid investors in further understanding the company's fiscal first quarter 2026 performance in addition to the impact these items have on the financial results. Please refer to the reconciliations of our non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with U.S. GAAP included in our earnings release under the investor relations section of our website. The non-GAAP financial measures provided should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with U.S. GAAP. And now, I'd like to turn the call over to Bill.

Thank you, Chris, and good afternoon, everyone. We delivered strong first quarter results, generating $162.1 million of revenue, up nearly 20% year over year. That top-line growth continues to be paired with efficiency improvements as we increased our non-GAAP operating margin by over 900 basis points year-over-year and realized our four-straight quarter of non-GAAP net income profitability, achieving over $7 million of net income and nearly $23 million of free cash flow in the quarter. We are proud of our financial success as we continue our mission to become the leading customer engagement platform on a global scale and look forward to achieving sustained profitable growth in the coming quarters and years, while thoughtfully reinvesting in our business and building our competitive moat. Despite an environment that remains noisy and uneven, we continued our momentum from Q4. achieving strong bookings as we got off to a good start in fiscal 2026. Thus far, global trade concerns have yet to materially affect deal cycles, and in the first quarter, we secured a diverse set of new business wins and upsells, including Beyond Inc., Chamberlain Group, Evite, Freshket, Fubo, Lush Cosmetics, Nouchekolo, ThredUp, and many others. Our customer count rose to 2,342, up 46 sequentially, and up 240 versus the prior year. Our large customer additions were again strong, with $500,000-plus ARR customers rising 24% year-over-year to 262, demonstrating the need for enterprises to deploy AI-based solutions and leverage first-party data to drive sophisticated cross-channel customer engagement at scale. We also continue to replace legacy marketing clouds across verticals and around the world, including at a North American fintech, a global luxury retail brand, an EMEA insurance comparison firm, a North American amusement park chain, an EMEA fashion house, an APAC tourism board, a North American clothing marketplace, a U.S. healthcare company, a construction equipment rental firm in APAC, a U.S. gaming company, and an EMEA professional sports organization, among many others. We also continued to win against both channel-specific point solutions and homegrown tools across a diverse set of industries, geographies, and use cases. And it's that diversification which supports our results even as the economic and geopolitical environment remains dynamic. As we continue our substantial and focused investment on our journey to become the recognized leader in customer engagement, we are confident that the legacy replacement cycle and vendor consolidation trends will persist, presenting Braves with opportunities to increase market share as brands increasingly seek to improve their customer engagement strategies and leverage new AI-driven advancements to simultaneously achieve better results and higher levels of productivity. Meanwhile, our legacy competitors continue to stand still, failing to innovate or adapt as the modern customer engagement landscape continues to forge ahead in both scope and sophistication. Braze remains focused and forward-looking as we deploy AI in tandem with first-party data activation, applying leading-edge reinforcement learning and generative AI technology to an ever-evolving set of messaging channels and product interfaces to help our customers deliver more relevant customer experiences and grow their businesses. This multifaceted strategy was on display just a few weeks ago, as we announced the general availability of RCS messaging, in-product banners, and Canvas context. Separately, these are important upgrades to our channel offerings, orchestration environment, and visual programming language. but it's a combination of these capabilities with our increasingly robust Braze AI suite that really makes our product roadmap shine. Whether a brand is orchestrating a dynamic customer journey, initiating an interactive conversational experience, or enhancing core product offerings, the tools and skills of customer engagement are there to help them identify and optimize every one of the moments that matter in the customer journey. As the Braze product races ahead, we also continue to invest heavily in the community of marketers and agencies that are the foundation of the broader Braze ecosystem. And we firmly believe that now is the ideal moment to elevate the craft of customer engagement as marketers leave behind the drudge work of campaign creation and ascend to being a maestro of experience. By combining the accelerated capabilities of reinforcement learning and generative AI, we believe that marketers can ascend to a strategic conductor role responsible for prioritizing and driving business goals as brands unlock new opportunities for growth on the back of their continued investments in first party data and the building of direct to consumer relationships. The enhanced flexibility of data, expansion of communication channels, rapid advance of AI, and rising skill sets of marketers present brands with an unprecedented opportunity to engage with their customers, fostering enduring relationships that are the foundation of efficient brand growth. This goes beyond the conventional notion of delivering the right message to the right channel at the right moment. It involves gaining a deeper understanding of customers, engaging with them more holistically, and reinforcing customer connections by providing seamlessly integrated messages and product experiences. Agentic AI plays a vital role in enhancing relevance and enabling extensive personalization, as these decision-making agents independently test, learn, and provide highly tailored experiences to customers. To accelerate our progress in this area, earlier this week, we successfully closed the acquisition of OfferFit, a leading AI decisioning company that leverages proprietary reinforcement learning to enable brands to deliver highly relevant and personalized customer engagement at scale. OfferFit has spent the last four and a half years building and deploying a leading multi-agent solution that autonomously explores solution spaces across lifecycle marketing campaigns, creating highly customized recommendations for cross-channel campaign content and delivery strategies. By substituting the manual processes of A-B testing with reinforcement learning agents that independently experiment and identify optimal actions, OfferFit's advanced AI decisioning can be utilized across a diverse range of experimentation and optimization scenarios. This approach has been highly successful, enabling OfferFit to quickly land and expand with large enterprises across a diverse set of industry verticals. After years of successful product partnership, we are now working quickly to fully integrate OfferFit's multi-agent decisioning engine into Braze's customer engagement platform. By leveraging the Braze data platform, dashboard infrastructure, and our already scaled event-driven stream processor, we anticipate that OfferFit will be able to simultaneously accelerate their previously independent roadmap, even while we prioritize the many integration tasks that will lay a strong foundation for future innovation and scaling. Together, we believe we can enable brands to leverage cutting-edge technologies in automation and machine learning, transforming customer relationships and creating shared value for both consumers and businesses. In the short term, we anticipate that OfferFit's solution will enable us to increase deal sizes through their distinctive reinforcement learning products and services, while also setting us apart from competitors by offering a broad range of AI-driven optimization capabilities at various price tiers and service levels. In the medium term, similar to our approach with other key components of Braze AI, we plan to integrate OfferFit's agents and machine learning models throughout the Braze platform. This integration will empower us to collaboratively address new use cases and improve existing features, ultimately helping brands achieve higher uplift with lower effort. The integration of OfferFit also complements Braze's Project Catalyst, a native AI agent aimed at helping brands personalize and optimize experiences through highly relevant journeys and content at scale, which is now available in private beta. Finally, we are confident that over the long term, their solution and AI expertise will help Braze accelerate progress on several long-running initiatives in Braze AI and Canvas, reinforcing our position as a leader in AI and customer engagement. We are thrilled to welcome OfferFit's team and technology to Braze, enabling our combined experience in machine learning and AI to enhance our product ecosystem and create exceptional experiences for our customers and their end consumers. We are excited to build the future of customer engagement together and look forward to unveiling more about the OfferFit integration, Braze AI, and our broader roadmap at Forge, our annual flagship customer conference in September. And before I go, I'm excited to share that when we arrive at Forge in September, I'll be joined by the latest addition to our executive team, as Ed McDonald will be starting at Braves as our new chief revenue officer in early July. Ed brings a wealth of experience and qualifications to this role, with a proven track record of building and scaling revenue at leading SaaS organizations. As a former executive vice president and CRO at Salesforce Marketing Cloud, he developed a deep understanding of the customer engagement landscape and successfully scaled a multi-billion dollar marketing technology business. Most recently, he served as CRO at Asana, where he led revenue growth in the work management sector. His transition back to marketing technology underscores his strong belief in Braze's market position and growth potential in the customer engagement space. We are very excited to have Ed joining us soon, rounding out what we believe to be a best-in-class SaaS leadership team here at Braze. Thank you for your continued interest and support, and now I'll turn the call over to Isabel.