TechDogs-"Braze Reports Fiscal Year and Fourth Quarter 2023 Results"

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Braze Reports Fiscal Year and Fourth Quarter 2023 Results

By Business Wire

Business Wire
Overall Rating

Fourth quarter revenue grew 40% year-over-year to $98.7 million

Achieved dollar-based net retention of 124% for the trailing 12 months

Introduced first quarter and full year fiscal 2024 guidance

Entered into an agreement to acquire North Star, Braze’s exclusive reseller in the Australia and New Zealand markets

NEW YORK--(BUSINESS WIRE)--$BRZE--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 year ended January 31, 2023.

“In the past year, we continued to strengthen our position as a market leader by finding the opportunities in change, expanding our customer base by 29% and our revenue by nearly 50%,” said Bill Magnuson, cofounder and CEO of Braze. “Customer engagement is a universal business imperative, and Braze innovations such as Cloud Data Ingestion, native support for WhatsApp, and AI enhancements to our Predictive Suite enable our customers to evolve their strategies and expand to new use cases.”

Fiscal Fourth Quarter 2023 Financial Highlights

  • Revenue was $98.7 million compared to $70.4 million in the fourth quarter of the fiscal year ended January 31, 2022, up 40% year-over year, driven primarily by new customers, upsells, and renewals.
  • Subscription revenue in the quarter was $94.8 million compared to $65.9 million in the fourth quarter of the fiscal year ended January 31, 2022, and professional services and other revenue was $3.9 million compared to $4.5 million in the fourth quarter of the fiscal year ended January 31, 2022.
  • Remaining performance obligations as of January 31, 2023 was $455.7 million, of which $312.6 million is current, which we define as less than one year.
  • GAAP gross margin was 66.1% compared to 64.8% in the fourth quarter of the fiscal year ended January 31, 2022.
  • Non-GAAP gross margin was 67.0% compared to 67.2% in the fourth quarter of the fiscal year ended January 31, 2022.
  • Dollar-based net retention for all customers for the trailing 12 months ended January 31, 2023 and January 31, 2022 was 124% and 128%, respectively; dollar-based net retention for customers with annual recurring revenue (ARR) of $500,000 or more was 126% compared to 136% for the fiscal year ended January 31, 2022.
  • Total customers increased to 1,770 as of January 31, 2023 from 1375 as of January 31, 2022; 156 of our customers had ARR of $500,000 or more as of January 31, 2023, compared to 107 customers as of January 31, 2022.
  • GAAP operating loss was $36.5 million compared to an operating loss of $42.6 million in the fourth quarter of the fiscal year ended January 31, 2022. Operating loss in the quarter included $18.8 million of stock-based compensation expense.
  • Non-GAAP operating loss was $16.7 million compared to a loss of $13.4 million in the fourth quarter of the fiscal year ended January 31, 2022.
  • GAAP net loss per basic and diluted share attributable to Braze common stockholders was $(0.35) compared to $(0.55) in the fourth quarter of the fiscal year ended January 31, 2022.
  • Non-GAAP net loss per basic and diluted share attributable to Braze common stockholders was $(0.14) compared to $(0.18) in the fourth quarter of the fiscal year ended January 31, 2022.
  • Net cash provided by operating activities was $0.01 million compared to net cash used in operating activities of $24.5 million in the fourth quarter of the fiscal year ended January 31, 2022.
  • Free cash flow was $(1.9) million compared to $(26.0) million in the fourth quarter of the fiscal year ended January 31, 2022.
  • Total cash and cash equivalents, restricted cash, and marketable securities was $482.7 million as of January 31, 2023 compared to $518.1 million as the fiscal year ended January 31, 2022.

Fiscal Year 2023 Financial Highlights

  • Revenue was $355.4 million compared to $238.0 million in the fiscal year ended January 31, 2022, up 49.3% year-over year, driven primarily by new customers, upsells, and renewals.
  • Subscription revenue was $338.4 million compared to $221.7 million in the fiscal year ended January 31, 2022, and professional services and other revenue was $17.1 million compared to $16.4 million in the fiscal year ended January 31, 2022.
  • GAAP gross margin was 67.4% compared to 67.0% in the fiscal year ended January 31, 2022.
  • Non-GAAP gross margin was 68.5% compared to 67.9% in the fiscal year ended January 31, 2022.
  • GAAP operating loss was $148.1 million compared to a loss of $78.2 million in the fiscal year ended January 31, 2022.
  • Non-GAAP operating loss was $69.5 million compared to a loss of $31.0 million in the fiscal year ended January 31, 2022.
  • GAAP net loss per basic and diluted share attributable to Braze common stockholders was $(1.47) compared to $(2.20) in the fiscal year ended January 31, 2022.
  • Non-GAAP net loss per basic and diluted share attributable to Braze common stockholders was $(0.64) compared to $(0.85) in the fiscal year ended January 31, 2022.
  • Net cash used in operating activities was $22.3 million compared to net cash used in operating activities of $35.4 million in the fiscal year ended January 31, 2022.
  • Free cash flow was $(39.0) million compared to $(39.8) million in the fiscal year ended January 31, 2022.

Recent Business Highlights

  • Notable new business wins and upsells in the quarter included Warner Bros. Discovery, Finish Line, McClatchy Media Company, MyFitnessPal, Sonic Drive-In, and Heycar.
  • Published third annual Customer Engagement Report, which combines data from over 1,500 marketing decision makers across 14 global markets to detail how customer engagement has evolved over the past year, and highlights opportunities for improvement and growth in 2023.
  • Named as a leader in The Forrester WaveTM for Cross-Channel Marketing Hubs, Q1 2023.
  • Launched WhatsApp Messaging to help brands build deeper customer relationships.
  • Announced strategic partnership with WPP to better serve existing customers and drive adoption of the Braze Customer Engagement Platform.
  • Entered into an agreement to acquire North Star, Braze’s exclusive reseller in Australia and New Zealand.

Financial Outlook

Braze is initiating guidance for the fiscal first quarter ending April 30, 2023 and fiscal year ending January 31, 2024.

Metric
(in millions, except per share amounts)

 FY 2024 Q1 Guidance

 FY 2024 Guidance

Revenue

$98.5 - 99.5

$433.0 - 438.0

Non-GAAP operating loss

$(19.0) - (20.0)

$(57.0) - (61.0)

Non-GAAP net loss

$(17.0) - (18.0)

$(53.0) - (57.0)

Non-GAAP net loss per share

$(0.18) - (0.19)

$(0.55) - (0.59)

Weighted average shares outstanding

~96.2

~97.1

Braze is also providing 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 net loss, non-GAAP net loss per share or non-GAAP operating loss margin 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 Fiscal Year and Fourth Quarter 2023 Financial Results Conference Call
When: Thursday, March 30th 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 and charitable contribution expense. Prior to the first 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 employer taxes related to stock-based compensation or charitable contribution expense, because these amounts were immaterial 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 first 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 macroeconomic uncertainty, including from global and domestic disruptions, such as the instability among financial institutions, the COVID-19 pandemic, the ongoing conflict between Russia and Ukraine, and other general market, political, economic and business conditions, that could affect Braze’s or its customers’ businesses, financial condition and results of operations; (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 Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (SEC) on December 14, 2022 and other subsequent filings Braze makes with the SEC from time to time, including Braze’s Annual Report on Form 10-K for the fiscal quarter ended January 31, 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 2021 Best Workplaces in New York, Fortune's 2021 Best Workplace for Millennials, and 2021 UK Best Workplaces for Women by Great Place to Work. The company is headquartered in New York with offices in Austin, Berlin, Chicago, Jakarta, London, Paris, San Francisco, Singapore, and Tokyo. 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
(in thousands, except per share amounts)

Three Months Ended
January 31,

Fiscal Year Ended
January 31,

2023

2022

2023

2022

Revenue

$

98,675

$

70,434

$

355,426

$

238,035

Cost of revenue (1)(2)

33,425

24,775

115,818

78,511

Gross Profit

65,250

45,659

239,608

159,524

Operating expenses:

Sales and marketing (1)(2)

52,792

45,726

201,684

127,137

Research and development (1)(2)

26,754

22,904

97,293

59,034

General and administrative (1)(2)(3)(4)

22,224

19,617

88,771

51,564

Total operating expenses

101,770

88,247

387,748

237,735

Loss from operations

(36,520

)

(42,588

)

(148,140

)

(78,211

)

Other income (expense), net

3,637

362

7,977

(121

)

Loss before provision for income taxes

(32,883

)

(42,226

)

(140,163

)

(78,332

)

Provision for (benefit from) income taxes

925

1,117

583

(165

)

Net loss

(33,808

)

(43,343

)

(140,746

)

(78,167

)

Net loss attributable to redeemable non-controlling interest

(357

)

(408

)

(1,780

)

(1,448

)

Net loss attributable to Braze, Inc.

$

(33,451

)

$

(42,935

)

$

(138,966

)

$

(76,719

)

Net loss per share attributable to Braze, Inc. common stockholders, basic and diluted

$

(0.35

)

$

(0.55

)

$

(1.47

)

$

(2.20

)

Weighted-average shares used to compute net loss per share attributable to Braze, Inc. common stockholders, basic and diluted

94,966

78,364

94,569

34,897

(1) Includes stock-based compensation expense as follows:

Three Months Ended
January 31,

Fiscal Year Ended
January 31,

2023

2022

2023

2022

Cost of revenue

$

896

$

1,654

$

3,616

$

2,185

Sales and marketing

6,253

10,400

23,871

16,281

Research and development

7,743

9,833

28,897

15,613

General and administrative

3,933

7,257

15,833

13,101

Total

$

18,825

$

29,144

$

72,217

$

47,180

(2) Includes employer taxes related to stock-based compensation as follows:

Three Months Ended
January 31,

Fiscal Year Ended
January 31,

2023

2022

2023

2022

Cost of revenue

$

14

$

$

71

$

Sales and marketing

60

603

Research and development

49

353

General and administrative

67

319

Total employer taxes related to stock-based compensation expense

$

190

$

$

1,346

$

(3) Includes 1% Pledge charitable donation expense as follows:

Three Months Ended
January 31,

Fiscal Year Ended
January 31,

2023

2022

2023

2022

General and administrative

$

$

$

4,260

$

(4) Includes acquisition related expense as follows:

Three Months Ended
January 31,

Fiscal Year Ended
January 31,

2023

2022

2023

2022

General and administrative

$

773

$

$

773

$

BRAZE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

January 31,

2023

2022

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

68,587

$

478,937

Accounts receivable, net of allowance of $1,613 and $743 at January 31, 2023 and January 31, 2022, respectively

78,338

64,504

Marketable securities

410,083

35,156

Prepaid expenses and other current assets

26,163

29,588

Total current assets

583,171

608,185

Restricted cash, noncurrent

4,036

4,036

Property and equipment, net

20,339

7,393

Operating lease right-of-use assets

46,261

Deferred contract costs

48,451

41,689

Other assets

$

3,148

$

4,959

TOTAL ASSETS

$

705,406

$

666,262

LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

3,101

2,083

Accrued expenses and other current liabilities

37,415

31,623

Deferred revenue

166,092

126,260

Operating lease liabilities, current

10,695

Total current liabilities

217,303

159,966

Operating lease liabilities, noncurrent

40,590

Other long-term liabilities

755

1,478

TOTAL LIABILITIES

258,648

161,444

COMMITMENTS AND CONTINGENCIES

Redeemable non-controlling interest

1,455

3,235

STOCKHOLDERS’ EQUITY

Class A common stock, $0.0001 par value; 2,000,000,000 and 2,000,000,000 shares authorized as of January 31, 2023 and January 31, 2022, respectively; 61,585,973 and 18,549,183 shares issued and outstanding as of January 31, 2023 and January 31, 2022, respectively

6

1

Class B common stock, $0.0001 par value; 110,000,000 and 110,000,000 shares authorized as of January 31, 2023 and January 31, 2022, respectively; 34,389,453 and 74,418,847 shares issued and outstanding as of January 31, 2023 and January 31, 2022, respectively

4

8

Additional paid-in capital

806,044

717,175

Accumulated other comprehensive loss

(6,824

)

(640

)

Accumulated deficit

(353,927

)

(214,961

)

TOTAL STOCKHOLDERS’ EQUITY

$

445,303

$

501,583

TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, AND STOCKHOLDERS’ EQUITY

$

705,406

$

666,262


Contacts

Investors:
Christopher Ferris
IR@braze.com
(609) 964-0585

Media:
Meghan Halaszynski
Press@braze.com

Read full story here

First published on Fri, Mar 31, 2023

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