Marketing-platform provider Braze (NASDAQ: BRZE) reported fiscal second-quarter revenue of $227.2 million on September 8, up 26.2% year-over-year and 7.7% sequentially, representing a $909 million revenue run rate.
Subscription revenue accounted for 91% of total revenue. Adjusted earnings per share came in at $0.19 on 114.2 million weighted-average diluted shares, beating consensus estimates of $0.15 by roughly 27%. Revenue also exceeded forecasts by about 3.2%.
Non-GAAP operating income rose to $22.0 million, or 9.7% of revenue, compared with $6.0 million, or 3.4% of revenue, a year earlier. Non-GAAP operating expenses declined to 58.9% of revenue from 66.0% in the prior-year quarter. GAAP operating loss narrowed to $18.1 million from $38.8 million a year earlier.
Margins, however, came under pressure. Non-GAAP gross margin slipped 70 basis points year-over-year to 68.6%, while GAAP gross margin fell 90 basis points to 66.8%. The company has been investing in its product line and cloud infrastructure, which weighed on profitability even as growth remained robust.
Free cash flow surged to $21.7 million from $3.5 million a year earlier, and net cash provided by operating activities climbed to $24.2 million from $7.0 million. Braze ended the quarter with $414 million in cash, cash equivalents, restricted cash and marketable securities.
Customer metrics strengthened. Total customers grew 15% year-over-year to 2,789 as of July 31, 2026, and high-value customers with $500,000 or more in annual recurring revenue increased 28% to 361, now representing 65% of total ARR. The dollar-based net retention rate was stable at 110%, up 200 basis points from 108% a year earlier. Remaining performance obligations rose 27% to $1,092.5 million, with current RPO of $691.1 million expected within the next 12 months.
The company raised its full-year FY2027 revenue guidance to $910 million–$913 million, implying approximately 23% growth at the midpoint. Non-GAAP operating income is projected at $75.5 million–$76.5 million, and non-GAAP net income per diluted share is expected to be $0.64–$0.65. Third-quarter revenue guidance is $229 million–$230 million, with non-GAAP operating income of $16 million–$17 million.
Shares sold off sharply despite the strong beat. Braze closed regular trading down 5.16% at $30.31 and retreated an additional 12.11% in after-hours trading to $26.64, a total decline of roughly 17% from the prior session's close. The stock trades within a 52-week range of $15.26 to $37.33.
On the leadership front, chief product officer Pearce Dolan joined the company on August 24. Braze also highlighted integrations with Amazon Web Services, Databricks through its CustomerLake platform, and Snowflake, alongside recent wins at Chime, Insurify, Wilson Sporting Goods, Boots Thailand, David Jones, Foxtel Group, Omaze UK and Property Finder. The company's Forge 2026 conference is scheduled for September 28–30 in Las Vegas.
