Customer engagement software provider Braze (NASDAQ: BRZE) announced better-than-expected revenue in Q1 CY2025, with sales up 19.6% year on year to $162.1 million. Guidance for next quarter’s revenue was better than expected at $171.5 million at the midpoint, 1.6% above analysts’ estimates. Its non-GAAP profit of $0.07 per share was 50.8% above analysts’ consensus estimates.
Is now the time to buy Braze? Find out by accessing our full research report, it’s free.
Braze (BRZE) Q1 CY2025 Highlights:
- Revenue: $162.1 million vs analyst estimates of $158.6 million (19.6% year-on-year growth, 2.2% beat)
- Adjusted EPS: $0.07 vs analyst estimates of $0.05 (50.8% beat)
- Adjusted Operating Income: $2.84 million vs analyst estimates of $781,170 (1.8% margin, significant beat)
- The company lifted its revenue guidance for the full year to $704 million at the midpoint from $688.5 million, a 2.3% increase
- Management lowered its full-year Adjusted EPS guidance to $0.16 at the midpoint, a 50% decrease
- Operating Margin: -24.8%, up from -29.6% in the same quarter last year
- Free Cash Flow Margin: 14.1%, up from 9.5% in the previous quarter
- Customers: 2,342, up from 2,296 in the previous quarter
- Net Revenue Retention Rate: 109%, down from 111% in the previous quarter
- Billings: $186.6 million at quarter end, up 16.3% year on year
- Market Capitalization: $3.84 billion
“We are off to a good start in fiscal year 2026, delivering strong revenue growth, profitability, and free cash flow in an ever-changing environment,” said Bill Magnuson, Cofounder and CEO of Braze.
Company Overview
Founded in 2011 after the co-founders met at NYC Disrupt Hackathon, Braze (NASDAQ: BRZE) is a customer engagement software platform that allows brands to connect with customers through data-driven and contextual marketing campaigns.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Braze’s 32.3% annualized revenue growth over the last three years was excellent. Its growth beat the average software company and shows its offerings resonate with customers, a helpful starting point for our analysis.
This quarter, Braze reported year-on-year revenue growth of 19.6%, and its $162.1 million of revenue exceeded Wall Street’s estimates by 2.2%. Company management is currently guiding for a 17.9% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 15.5% over the next 12 months, a deceleration versus the last three years. Still, this projection is healthy and indicates the market is forecasting success for its products and services.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Braze’s billings punched in at $186.6 million in Q1, and over the last four quarters, its growth was impressive as it averaged 18.8% year-on-year increases. This alternate topline metric grew slower than total sales, meaning the company recognizes revenue faster than it collects cash - a headwind for its liquidity that could also signal a slowdown in future revenue growth. 
Customer Retention
One of the best parts about the software-as-a-service business model (and a reason why they trade at high valuation multiples) is that customers typically spend more on a company’s products and services over time.
Braze’s net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 112% in Q1. This means Braze would’ve grown its revenue by 11.7% even if it didn’t win any new customers over the last 12 months.
Despite falling over the last year, Braze still has a good net retention rate, proving that customers are satisfied with its software and getting more value from it over time, which is always great to see.
Key Takeaways from Braze’s Q1 Results
It was encouraging to see Braze’s full-year revenue guidance beat analysts’ expectations. We were also glad its revenue guidance for next quarter exceeded Wall Street’s estimates. On the other hand, its full-year EPS guidance missed and its EPS guidance for next quarter fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 8.7% to $33 immediately following the results.
Braze may have had a tough quarter, but does that actually create an opportunity to invest right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
