8-K: Braze Reports Strong Fiscal Year and Q4 2024 Results, Revenue Up 33%

Braze's fiscal year 2024 saw a 33% revenue increase, reaching $471.8 million, with Q4 revenue growing 33% year-over-year to $131.0 million.

Summary

• Braze reported its fiscal year and fourth quarter results for the period ended January 31, 2024.
• The company's revenue for the fourth quarter grew by 33% year-over-year to $131.0 million, compared to $98.7 million in the same quarter of the previous year.
• Subscription revenue for the quarter was $125.9 million, up from $94.8 million year-over-year, while professional services and other revenue reached $5.1 million, compared to $3.9 million.
• For the full fiscal year, revenue increased by 32.7% to $471.8 million, up from $355.4 million in the previous year.
• Subscription revenue for the full year was $451.1 million, compared to $338.4 million, and professional services and other revenue was $20.7 million, compared to $17.1 million.
• The company achieved a dollar-based net retention rate of 117% for the trailing 12 months, with a 120% retention rate for customers with annual recurring revenue (ARR) of $500,000 or more.
• Braze's total customer base grew to 2,044, with 202 customers having ARR of $500,000 or more.
• GAAP operating loss for the quarter was $32.3 million, an improvement from $36.5 million in the prior year, while the non-GAAP operating loss was $7.5 million, compared to $16.7 million.
• The GAAP net loss per share was $0.29, compared to $0.35 in the prior year, and the non-GAAP net loss per share was $0.04, compared to $0.14.
• The company's remaining performance obligations were $639.2 million, with $409.1 million considered current.
• Braze provided guidance for the first quarter of fiscal year 2025, projecting revenue between $131.0 and $132.0 million and a non-GAAP operating loss between $13.0 and $14.0 million.
• For the full fiscal year 2025, Braze anticipates revenue between $570.0 and $575.0 million and a non-GAAP operating loss between $20.0 and $24.0 million.

Sentiment

Score: 7

Explanation: The document presents a positive outlook with strong revenue growth and improving financial metrics, but the company is still operating at a loss. The sentiment is cautiously optimistic.

Positives

• Revenue growth was strong, with a 33% increase in Q4 and 32.7% for the full fiscal year.
• Dollar-based net retention remained high at 117%, indicating strong customer loyalty and expansion.
• The company's customer base grew significantly, reaching 2,044 total customers.
• Operating losses improved both on a GAAP and non-GAAP basis, showing progress towards profitability.
• Braze launched new AI features, enhancing its product offering.
• The company received multiple awards, demonstrating industry recognition.
• Net cash provided by operating activities was $6.9 million compared to net cash used in operating activities of $22.3 million in the fiscal year ended January 31, 2023.
• Free cash flow improved to $(6.5) million compared to $(39.0) million in the fiscal year ended January 31, 2023.

Negatives

• The company reported a GAAP operating loss of $32.3 million for the quarter and $144.7 million for the full year.
• Free cash flow was negative at $(3.5) million for the quarter and $(6.5) million for the full year.
• Dollar-based net retention decreased from 124% to 117% year-over-year.
• The company is still experiencing net losses, although they are improving.

Risks

• The company is still operating at a loss, and while improving, profitability is not yet achieved.
• The company's future performance is subject to risks related to market conditions, competition, and technological changes.
• The company's reliance on third-party cloud providers could pose a risk.
• The company's stock price is subject to unpredictable fluctuations which can impact stock based compensation expenses.

Future Outlook

Braze provided guidance for Q1 2025, projecting revenue between $131.0 and $132.0 million and a non-GAAP operating loss between $13.0 and $14.0 million. For the full fiscal year 2025, Braze anticipates revenue between $570.0 and $575.0 million and a non-GAAP operating loss between $20.0 and $24.0 million.

Management Comments

• Fiscal 2024 marked another significant year for Braze, as we strengthened our position as the leading customer engagement platform and grew revenue by 33%, helping over 2,000 global brands foster growth, loyalty, and retention, said Bill Magnuson, cofounder and CEO of Braze.
• In 2023, we orchestrated the delivery of over 2.6 trillion outgoing actions, including message sends, webhook executions, and Canvas actions taken to transform data and manage audiences, demonstrating the performance, reliability, and scalability of the Braze Customer Engagement Platform.
• We remain committed to helping brands embrace the craft of customer engagement by harnessing the power of rich first-party data, advanced machine learning, and artificial intelligence to create brilliant, meaningful experiences at scale.

Industry Context

The results indicate Braze's continued growth in the competitive customer engagement platform market, with a focus on leveraging AI and data to enhance its offerings. The company's growth is in line with the broader trend of businesses investing in customer engagement solutions to drive loyalty and retention.

Comparison to Industry Standards

• Braze's revenue growth of 33% in Q4 and 32.7% for the full year is strong compared to other SaaS companies in the marketing technology space, such as Twilio which reported 17% growth in Q4 2023 and Hubspot which reported 24% growth in Q4 2023.
• The dollar-based net retention rate of 117% is a good indicator of customer satisfaction and expansion, although it is slightly lower than the 124% reported in the previous year. Companies like Snowflake have reported net retention rates above 130%, setting a high benchmark in the industry.
• Braze's operating losses, while improving, are still significant, which is common for growth-stage SaaS companies. However, companies like Salesforce have achieved profitability, indicating a potential long-term goal for Braze.
• The launch of new AI features aligns with the industry trend of integrating AI into marketing platforms to enhance personalization and efficiency. Competitors like Adobe and Salesforce are also heavily investing in AI capabilities.

Stakeholder Impact

• Shareholders will likely react positively to the strong revenue growth and improving financial metrics.
• Employees may be encouraged by the company's growth and industry recognition.
• Customers will benefit from the company's continued investment in its platform and new features.
• Suppliers and creditors may view the company as a stable and growing business.

Next Steps

• Braze will continue to focus on growing its customer base and expanding its product offerings.
• The company will work towards achieving profitability by improving cost management and increasing revenue.
• Braze will continue to invest in AI and machine learning to enhance its platform.
• The company will host a conference call to discuss the results on March 27th.

Key Dates

Keywords

customer engagement, SaaS, subscription revenue, ARR, net retention, AI, marketing, cloud, software, digital advertising