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Item 9A. Controls and Procedures

2024-04-01 compared with 2023-03-31 · 44 added, 64 removed, 132 unchanged (45% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

We maintain “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or Exchange Act), that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of January 31, 2023, the end of the period covered by this Annual

Report on Form 10-K.

Our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of January 31, 2023 because of the material weakness in our internal control, discussed below.

Notwithstanding the material weakness in internal control over financial reporting described below, our management has concluded that our consolidated financial statements included in this Annual Report on Form 10-K are fairly stated in all material respects in accordance with accounting principles generally accepted in the United States of America.

Our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of January 31, 2024.

Management’s Report on Internal Control Over Financial Reporting

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Our management, with participation of our Chief Executive Officer and our Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of January 31, 2024, based on the guidelines established in the Internal Control—Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Management identified the material weakness in internal control over financial reporting described below.

Solely as a result of this material weakness, management has concluded that our internal control over financial reporting was not effective as of January 31, 2023.

The material weakness did not result in any identified material misstatements in the current period consolidated financial statements, nor in any restatements of consolidated financial statements previously reported by us, and there were no changes in previously released financial results.

We have developed remediation plans for the material weakness, described below.

The effectiveness of our internal control over financial reporting has been audited by Ernst & Young LLP, an independent registered public accounting firm, and as part of the audit, has issued an adverse opinion on the effectiveness of our internal control over financial reporting as of January 31, 2023, which is included in Item 8 of this Annual Report on Form 10-K.

In accordance with guidance issued by the SEC, companies are permitted to exclude acquisitions from their final assessment of internal control over financial reporting for the first fiscal year in which the acquisition occurred.

Our management's evaluation of internal control over financial reporting excluded Braze Australia, formally known as North Star, which we acquired on June 1, 2023.

Total assets (excluding acquired goodwill and intangible assets) and total revenues related to Braze Australia collectively represented approximately 1% and 6% of our consolidated total assets and total revenues as of and for the fiscal year ended January 31, 2024, respectively.

Based on the results of our evaluation, management concluded that our internal control over financial reporting was effective as of January 31, 2024.

The effectiveness of our internal control over financial reporting as of January 31, 2024 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their audit report, included in Item 8 of this Annual Report on Form 10-K.

Material Weakness

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.

As previously disclosed in our final IPO prospectus dated November 16, 2021 and within our Annual Report on Form 10-K for the fiscal year ended January 31, 2022, we had identified three material weaknesses in our internal control over financial reporting.

One material weakness was over the financial reporting close process specifically related to insufficient written policies and procedures for accounting and financial reporting and related controls, the second over the lack of properly designed controls related to accounting for revenue recognition in accordance with standards under Accounting Standards Codification Topic 606, Revenue from Contracts with Customers and the third related to our inadequate information technology controls for systems that are relevant to the preparation of financial statements.

During the fiscal year ended January 31, 2023, we undertook a series of activities to remediate two of the three material weaknesses to strengthen the financial reporting process and information technology control environment:

• Expanded the finance team by hiring internal resources with appropriate knowledge and expertise to effectively operate financial reporting processes and internal controls;

• Engaged external resources to assist with the remediation efforts and internal control execution, including the development of policies and procedures in certain areas;

• Reviewed and strengthened information security policies and procedures and trained users to further educate them on best practices for information security procedures;

• Developed program change management controls to ensure that IT program and data changes affecting financial IT applications and underlying accounting records are authorized and implemented appropriately;

• Implemented financial application user access controls designed to ensure appropriate segregation of duties, restriction and privileges to personnel;

• Implemented computer operations controls designed to ensure system interfaces and batch jobs process completely and accurately.

Management has concluded that the material weakness related to the lack of properly designed controls related to accounting for revenue recognition in accordance with standards under Accounting Standards Codification Topic 606, Revenue from Contracts with Customers , was unremediated as of January 31, 2023.

Specifically, adequate controls are not in place related to:

• Maintaining IT General controls over applications and tools used for order management, provisioning, and revenue recognition;

• Reviewing of information generated from application and tools that are used in operation of recording revenue;

• Reconciling the provisioning of platform stand ready access with underlying accounting records.

Remediation Plan

We are working to remediate the material weakness through the development and implementation of processes and controls over the revenue process.

Specifically, we have:

• Begun developing user access, program change management and computer operation controls for revenue applications and tools;

• Begun enhancing review procedures over information generated from applications that are utilized in operation of revenue schedules and controls;

• Begun developing reporting to reconcile the provisioning of platform stand ready access with underlying accounting records.

While we have performed certain remediation activities to strengthen our controls to address the identified material weakness, control weaknesses are not considered remediated until new internal controls have been operational for a period of time, are tested, and management concludes that these controls are operating effectively.

We will continue to monitor the effectiveness of our remediation measures in connection with our future assessments of the effectiveness of internal control over financial reporting and disclosure controls and procedures, and we will make any changes to the design of our plan and take such other actions that we deem appropriate given the circumstances.

As previously disclosed within our Annual Report on Form 10-K for the fiscal year ended January 31, 2023, we had identified one material weakness in our internal control over financial reporting.

The material weakness was over the lack of properly designed controls related to accounting for revenue recognition in accordance with standards under Accounting Standards Codification Topic 606, Revenue from Contracts with Customers.

We have completed execution of our remediation plan for this material weakness and, as of January 31, 2024, successfully remediated this material weakness by implementing the following measures:

• Implemented the revenue management dashboard to support timely provisioning of Braze products;

• Enhanced business process review controls over the dashboard to identify delays in provisioning;

• Remediated IT control deficiencies over applications and tools used for order management, provisioning and revenue recognition;

• Strengthened review and validation procedures over information produced by systems and applications used in the operation of revenue controls.

Changes in Internal Control Over Financial Reporting

Other than the remediation efforts noted above, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal year ended January 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We are continuing to take steps to remediate the material weakness in our internal control over financial reporting, as discussed above.

Other than the remediation efforts noted above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal year ended January 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitation on the Effectiveness of Internal Controls

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Other Information

On March 27, 2023, the compensation committee of our board of directors adopted our Senior Leadership Performance-Based Compensation Plan, or the PBC Plan.

The purpose of the PBC Plan is to provide incentives for the participants to exert maximum efforts for the success of Braze and its affiliates and to provide a means by which the participants may earn cash payments upon the achievement of performance goals.

Participants under the PBC Plan include our chief executive officer, our other executive officers and other members of our leadership team designated as participants by our compensation committee.

The PBC Plan is effective as of the date of adoption.

The compensation committee, as the administrator of the PBC Plan, has full power to interpret the PBC Plan, including the authority to (a) select the participants, (b) establish the terms and conditions applicable to any award opportunity under the PBC Plan, (c) establish the performance goals applicable to award opportunities under the PBC Plan, and (d) adopt or amend

rules, regulations, forms, instruments and guidelines for administering the PBC Plan as the compensation committee may deem necessary or proper.

Under the PBC Plan, the participants will be eligible to receive performance awards, based on attainment of certain performance goals.

Our compensation committee, in its sole discretion, may establish performance goals that may relate to our financial, operational or other performance to individual performance objectives of the participant, or to any other performance goal established by the compensation committee in connection with a potential payment under the PBC Plan.

The compensation committee will determine the amount of any award payable to each participant based on the actual performance during the applicable performance period compared to the designated performance goals;

provided, that the compensation committee, in its discretion, may cancel, decrease or increase the amount of any award calculated under the PBC Plan.

Unless otherwise determined by the compensation committee, an award under the PBC Plan will be earned as of the end of the performance period and generally will be paid to the participant if the participant remains employed through the payment date.

Any amounts paid or payable under the PBC Plan will be subject to any clawback policy developed by our board of directors or the compensation committee that is consistent with applicable law.

The compensation committee may amend, suspend or terminate the PBC Plan at any time.

The foregoing description of the PBC Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the PBC Plan, which is filed as Exhibit 10.16 to this Annual Report on Form 10-K and is incorporated by reference in this Item 9B.

On December 29, 2023 , Jonathan Hyman , our Chief Technology Officer , entered into a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act.

The trading plan provides for the sale of, in the aggregate, up to 292,000 shares of our Class A common stock, subject to the satisfaction of specified price conditions.

The plan will terminate on December 31, 2024, subject to early termination for certain specified events set forth in the plan.

On December 29, 2023 , Myles Kleeger , our President and Chief Commercial Officer , entered into a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act.

The trading plan provides for the sale of, in the aggregate, up to 310,000 shares of our Class A common stock, subject to the satisfaction of specified price conditions, and all shares received upon the settlement of Mr.

Kleeger’s then outstanding restricted stock unit awards during the duration of the plan, excluding any shares withheld or sold by the company to satisfy its income tax withholding and remittance obligations in connection with the settlement of such equity awards.

The plan will terminate on March 15, 2025, subject to early termination for certain specified events set forth in the plan.

On January 11, 2024 , Isabelle Winkles , our Chief Financial Officer , entered into a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act.

The trading plan provides for the sale of, in the aggregate, up to 130,169 shares of our Class A common stock, subject to the satisfaction of specified price conditions, and all the shares received upon the settlement of certain of Ms.

Winkles’ outstanding restricted stock unit awards during the duration of the plan, excluding any shares withheld or sold by the company to satisfy its income tax withholding and remittance obligations in connection with the settlement of such equity awards.

The plan will terminate on December 31, 2024, subject to early termination for certain specified events set forth in the plan.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

32 unchanged sentences

3.2 Amended and Restated Bylaws of Braze, Inc.

November 23, 2021

8-K 001-41065 3.2 November 23, 2021

4.1 Form of Class A Common Stock Certificate .

38 unchanged sentences

and Nestle USA , Inc., dated November 17 , 20 22 .

10.16* Senior Leadership Performance-Based Compensation Plan

001-41065 10.15 March 31, 2023

S enior Leadership Performance-Based C ompensation Plan

001-41065 10.16 March 31, 2023

21.1* List of Subsidiaries of the Company.

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Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Compensation Recoupment Policy .

101.INS* Inline XBRL Instance Document

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Form 10-K Summary

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on March 30, 2023.

/s/ William Magnuson

7 unchanged sentences

(Principal Executive Officer)

March 30, 2023

April 1, 2024

William Magnuson

2 unchanged sentences

(Principal Financial Officer)

March 30, 2023

April 1, 2024

Isabelle Winkles

2 unchanged sentences

(Principal Accounting Officer)

March 30, 2023

April 1, 2024

/s/ Neeraj Agrawal

March 30, 2023

April 1, 2024

Neeraj Agrawal

/s/ Phillip M.

March 30, 2023

/s/ Matthew Jacobson

March 30, 2023

Matthew Jacobson

April 1, 2024

/s/ Tara Levy

March 30, 2023

April 1, 2024

/s/ David Obstler

March 30, 2023

April 1, 2024

David Obstler

/s/ Doug Pepper

March 30, 2023

April 1, 2024

/s/ Fernando Machado

April 1, 2024

Fernando Machado

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures