Braze Delivers 25.5% Revenue Growth, Swings to Non-GAAP Profit as Large Customer Base Expands
Non-GAAP Profitability Returns on Strong Revenue and Operational Leverage
Braze (NASDAQ: BRZE) released its fiscal third quarter 2026 results, reporting a significant 25.5% year-over-year increase in revenue to $190.8 million, fueled by robust new customer additions, renewals, and upsells. The company swung to non-GAAP operating income of $5.08 million, compared to a non-GAAP loss of $2.18 million in the same quarter last year, reflecting strong operating leverage and discipline amid continued growth investments.
Large Customer Segment Surges 29%, Underpinning Revenue Stability
Braze’s enterprise momentum continued with total customers rising 14% year-over-year to 2,528, and large customers (those with over $500,000 ARR) growing an impressive 29% to 303. Notably, the company’s trailing 12-month dollar-based net retention rate stabilized at 108%, indicating that Braze continues to effectively upsell and retain its base, even as overall macroeconomic headwinds and cautious spending among digital clients persist. Large customers specifically posted a net retention rate of 110%.
| Metric | Q3 FY2026 | Q3 FY2025 | Y/Y Change |
|---|---|---|---|
| Revenue ($M) | 190.8 | 152.1 | +25.5% |
| Non-GAAP Operating Income ($M) | 5.08 | -2.18 | +7.26 |
| Customers (Total) | 2,528 | 2,211 | +14.3% |
| Customers (>$500K ARR) | 303 | 234 | +29.5% |
| TTM Dollar-Based Net Retention (All) | 108% | 113% | -5pp |
| GAAP Gross Margin | 67.2% | 69.8% | -2.6pp |
| Non-GAAP Net Income per Share, Diluted | 0.06 | 0.02 | +0.04 |
Free Cash Flow Rebounds and Financial Outlook Improves
Braze reported free cash flow of $17.78 million for the quarter, a substantial swing from a $14.25 million outflow a year ago. Total cash and marketable securities now stand at $387.3 million. Looking ahead, Braze guided for Q4 FY2026 revenue between $197.5 and $198.5 million, and raised full-year non-GAAP net income guidance to $46–47 million (non-GAAP EPS of $0.42–0.43). The company’s remaining performance obligations reached $891.4 million, underpinning forward revenue visibility.
Innovation in AI-Powered Marketing Remains a Competitive Advantage
Braze rolled out major new AI-powered offerings, including BrazeAI Operator™, Agent Console™, and Decisioning Studio™. These tools, along with the first-of-its-kind integration with ChatGPT apps, aim to boost marketers’ ability to create personalized campaigns, optimize engagement, and continuously test against business KPIs. The company also led industry innovation with Braze Web SDK for OpenAI's ChatGPT Atlas browser, underscoring its positioning at the intersection of marketing technology and generative AI.
Industry Leadership Further Solidified by Key Wins and Recognition
The company’s platform handled a record 102.5 billion messages over Cyber Week and maintained 100% uptime, demonstrating both technical resilience and enterprise readiness. High-profile customer wins—including Grubhub, Linktree, and Vivid Seats—support ongoing growth. Braze was also named a Leader in Gartner’s Magic Quadrant for Multichannel Marketing Hubs for the third consecutive year, and a Strong Performer in Forrester’s Wave for Real-Time Interaction Management Software in Q4 2025.
What to Watch: Operating Leverage, Retention, and Execution
Braze’s strong top-line expansion and swing to non-GAAP profitability are underpinned by growth in high-value customers and relentless product innovation. The dip in dollar-based net retention reflects some normalization following a period of strong expansion, but current rates remain solid for a SaaS platform at Braze’s scale. Investors will be monitoring Braze’s ability to sustain operating margin gains, maintain large-customer momentum, and further integrate generative AI to differentiate its offerings in an increasingly competitive landscape.
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