Braze, Inc. Q1 FY2026 earnings call

• Delivered strong first quarter financial results with a 20% year-over-year revenue growth to $162.1 million. • Achieved the fourth consecutive quarter of non-GAAP net income profitability, with over $7 million in net income and nearly $23 million in free cash flow during the quarter. • Secured a diverse set of new business wins and upsells, including companies like Beyond Inc., Chamberlain Group, etc. • The customer count rose to 2,342, and the number of large customers ($500,000+ ARR) increased 24% year-over-year to 262. • Continued replacing legacy marketing clouds across various verticals and geographies worldwide. • Announced the general availability of RCS messaging, in-product banners, and canvas context. • Successfully closed the acquisition of OfferFit, a leading AI decisioning company, to integrate its multi-agent decisioning engine into Braze's platform. • Ed McDonnell is set to join as the new Chief Revenue Officer in early July.

Braze generated $162.1 million in revenue for the fiscal first quarter 2026, a nearly 20% year-over-year increase. Subscription revenue contributed 96% of the first quarter's revenue. The non-GAAP operating margin rose by over 900 basis points year-over-year. The total customer count climbed to 2,342, with a sequential increase of 46 and a year-over-year rise of 240. The number of large customers (spending at least $500,000 annually) grew 24% year-over-year to 262. Non-GAAP gross profit in the quarter was $112 million, resulting in a non-GAAP gross margin of 69.3%. Non-GAAP sales and marketing expenses were $64 million, accounting for 39% of revenue. Non-GAAP R&D expense was $25 million, representing 15% of revenue. Non-GAAP G&A expense was $21 million, making up 13% of revenue. Non-GAAP operating income was $3 million, or 2% of revenue. Non-GAAP net income attributable to Braze shareholders was $7 million, or $0.07 per share.

• For the second quarter of fiscal 2026, revenue is expected to be in the range of $171 million to $172 million, representing a year-over-year growth rate of approximately 18% at the midpoint. Second quarter non-GAAP operating income is anticipated to be between $0.5 million and $1.5 million. Second quarter non-GAAP net income is expected to be $2.5 million to $3.5 million, and second quarter non-GAAP net income per share is projected to be in the range of $0.02 to $0.03 per share. • For the full fiscal year 2026, total revenue is expected to be in the range of $702 million to $706 million, which is a year-over-year growth rate of approximately 19% at the midpoint. OfferFit is expected to contribute approximately $11 million to $12 million to the year-over-year revenue growth. Fiscal year 2026 non-GAAP operating income is expected to be between $5.5 million and $9.5 million. Non-GAAP net income for the full fiscal year is expected to be in the range of $17 million to $21 million, and net income per share is expected to be $0.15 to $0.18 per share.

• The economic and geopolitical environment remains dynamic, which could have an impact on deal cycles. • Legacy competitors are not innovating or adapting, falling behind in the modern customer engagement landscape. • There may be challenges in integrating OfferFit successfully.

Q: Will and Isabelle, I was hoping to reconcile some of your prepared remarks. On the one hand, the sequential growth in the quarter was lower than what it has been in the last couple of years. You've got the uneven macro. You've got the NRR dynamic. But on the other hand, the CRPO number actually looks pretty good, and it sounds like the competitive environment continues to accrue in your favor. So my question is, when do you think some of these positive company-specific dynamics start to more than offset some of the more uneven macro pieces that you've talked about? And what kind of metrics should we be looking at, whether it's revenue acceleration or maybe the CRPO number? How are you tracking that internally in your business?

A: Isabelle Winkles addressed the numbers, stating that CRPO is sensitive to renewal dollars and revenue is a key indicator. William Magnuson spoke about competitive results, verticalization efforts, and churn trends.

Q: Bill I want to ask you one on Project Catalyst and realizing it's still in private beta. But when you see customers that are using Project Catalyst and maybe testing it against more hardwired Canvas flows, what is the performance or ROI delta look like, right? And how is that informing your view of what Catalyst adoption may look like over time?

A: William Magnuson discussed Project Catalyst using reinforcement learning, an example of a customer achieving 5x uplift, and the automation goals of Project Catalyst.

Q: Isabelle, I wanted to just start with you. Obviously, pretty strong backlog build in the quarter. It sounds like maybe there's some renewal activity that helped. But maybe if you could just talk about linearity that you saw, particularly as you think about exiting April? And then one quick follow-up for Bill.

A: Isabelle Winkles talked about normal linearity in business, and William Magnuson spoke about OfferFit's early payback, customer interest, and integration learnings.

Q: Maybe one Isabelle, one for Bill. Isabelle first for you. Can you just walk us through what the renewal cadence is like of some of the post-ZIRP cohorts through the year? It sounded like Q1 was a heavy renewal quarter. Are there others this year that we should expect to be larger? Or was that the largest one. And then maybe for Bill, you touched on this a little bit, but I'm curious, as the OfferFit cross-sell plays out, how your pricing OfferFit, it sounded like -- I don't want to put words in your math, but it may sound like it separate pricing compared with Braze's AI capabilities today, but moving to a single pricing model over time. If you could just elaborate on that, that would be super helpful.

A: Isabelle Winkles talked about renewal cadence and ZIRP cohorts, and William Magnuson discussed OfferFit pricing, packaging, and cross-sell potential.

Q: Congrats on the quarter. Bill, one for you, one for Isabelle. We heard from the channel that there are some consternations around pricing of data points within Braze. Do you see an opportunity to change pricing and packaging around how you price data points below kind of the MAU-based pricing? And then Isabelle, is it possible to kind of split out the impact on EBIT from OfferFit to your full year guidance?

A: William Magnuson talked about pricing and packaging changes to address data point concerns, and Isabelle Winkles discussed EBIT impact from OfferFit.

Q: Can you hear me now? Two quick ones. Congrats on a nice quarter. First, for Bill, investors that we talk with still have a hard time wrapping their heads around the really uncertain macro yet marketing dollars continue to seem to be being spent. So I wondered if you had an anecdote or 2 that could help square that circle. I think just being a little more concrete would help -- certainly help me and maybe others. And then Elizabeth (sic) [ Isabelle ] any commentary on how FX assumptions changed on the full year rev guide, we can understand kind of what the organic underlying guide was?

A: William Magnuson talked about macro spending on consolidation and optimization, and Isabelle Winkles discussed minimal FX impact.

Q: You kind of just touched on it there, but I wanted to double click on the SI channel. I know it's earlier days there, but here that it's a difficult environment from a marketing budget perspective and your commentary on the competitive environment, sounds encouraging. So I'm curious what impact, a more fluid macro has on that channel? And does that influence the momentum for Braze engagements to those integration partners? And then just a quick follow-up for Isabelle, housekeeping wise, in terms of the impact from OfferFit, I know you mentioned some gross margin impact. Is there anywhere else you can break out within the OpEx lines, line by line, where we should see the biggest impact there?

A: William Magnuson talked about SI channel momentum and Isabelle Winkles discussed OpEx impact distribution from OfferFit.

Q: Bill, first for you, just wanted to ask you a little more color on OfferFit on the pace of the integration plans. Specifically, how quickly can you achieve the growth and cost synergies with this acquisition? How should we think about time lines for success with the acquisition? And then I have one follow-up for Isabelle.

A: William Magnuson talked about OfferFit integration plans and Isabelle Winkles discussed revenue growth assumption distribution.

Q: I guess when you look at maybe the integration of the sales team for OfferFit, curious on sort of the size and scale of the number of core carrying reps they have there? And at what point do you anticipate sort of synthesizing those so that of your sellers are selling both products even before the integrations of the products are fully complete. So how much capacity are you sort of adding? And when would you expect the cross-sell that really kind of take hold?

A: William Magnuson talked about OfferFit sales team integration and cross-sell momentum.

Q: First question for Bill. Just go-to-market update. It was great to see the hiring of Myles' replacement. Can you talk about any changes that you intend to make throughout the rest of the year? And then you talked about some of these verticalization strategies around things like financial services. Just curious what type of traction you're seeing there and in regulated industries.

A: William Magnuson talked about go-to-market updates, verticalization strategies, and churn prevention efforts.

Q: I wanted to circle back to Brian's question, but just going off of strong CRPO and RPO growth in Q1, is Isabelle, I know you said that the strength was broad-based. It was a strong renewal quarter. But just any mix shift in terms of the new ACV in the quarter from net new customers versus cross-sell and upsell.

A: Isabelle Winkles talked about mix variability in new ACV between net new and upsell.

Q: Awesome. I wanted to circle back to Brian's question, but just going off of strong CRPO and RPO growth in Q1, is Isabelle, I know you said that the strength was broad-based. It was a strong renewal quarter. But just any mix shift in terms of the new ACV in the quarter from net new customers versus cross-sell and upsell.

A: Isabelle Winkles talked about normal mix variability in new ACV.

Q: I wanted to ask one more on OfferFit given that they have large professional services, is there anything to assess in terms of the mix between subscription revenue and professional services as it relates to the OfferFit revenue you're taking on Isabelle?

A: Isabelle Winkles and William Magnuson discussed the mix between subscription and professional services in OfferFit's revenue.