Customer engagement software provider Braze Inc. (NASDAQ: BRZE) reported fiscal second-quarter revenue of $227.2 million, representing 26.2% year-over-year growth and a 7.7% sequential expansion, but the company’s gross margin continued to compress under the weight of premium messaging volumes and artificial-intelligence-related hiring.
Shares of Braze fell 5.16% to $30.31 in regular trading on September 8, 2026, then dropped a further 12.36% to $26.56 in after-hours action following the earnings release covering the quarter ended July 31.
GAAP net loss narrowed to $18 million from $38.8 million a year earlier, while non-GAAP operating income expanded to $22 million from $6 million. Non-GAAP operating margin improved to roughly 9.7% from about 3.3% in the year-ago quarter. Gross margin, however, contracted by 70 basis points to 68.6% from 70.9%, reflecting the mix shift toward higher-cost premium messaging and increased headcount for AI initiatives.
Free cash flow rose to $21.7 million from $3.5 million, and operating cash flow climbed to $24.2 million from $7 million. Revenue run rate, annualized from GAAP figures, reached $909 million. Subscription revenue accounted for 91% of total revenue.
Remaining performance obligations totaled $1.09 billion, up 27% year-over-year, with RPO expected within 12 months growing 24% to $691.1 million. The customer base reached 2,789 across 89 countries, a 15% increase from 2,422 a year earlier. Customers generating more than $500,000 in annual recurring revenue grew 28% to 361, while dollar-based net retention held steady at 110%.
For the third quarter ending October, Braze guided revenue between $229 million and $230 million, implying roughly 20% growth at the midpoint. Non-GAAP operating income is projected at $16 million to $17 million, and non-GAAP EPS at $0.13 to $0.14.
For the full fiscal year, the company raised its outlook. Revenue is now expected between $910 million and $913 million, approximately 23% growth at the midpoint. Full-year non-GAAP operating income is guided at $75.5 million to $76.5 million, with non-GAAP EPS projected at $0.64 to $0.65.
On the product side, Braze expanded its BrazeAI Operator feature across the full platform, enabling marketers to build new Canvas workflow steps through conversational prompts. It also integrated Braze Surveys into landing pages and in-app messages for qualitative feedback collection. Strategic partnerships included a three-year collaboration agreement with Amazon Web Services featuring a co-sell motion and joint go-to-market commitment, a bi-directional integration with Databricks CustomerLake, and Snowflake naming it its 2026 Asia-Pacific and Japan Product Growth Partner of the Year.
Braze also announced the appointment of Pearce Dolan as chief product officer effective August 24, 2026. The company said it will host its Braze Forge customer conference September 28–30 in Las Vegas.
