What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-25 compared with 2025-03-31 · 53 added, 57 removed, 294 unchanged (27% of the section changed)

7 unchanged sentences

Braze is a leading customer engagement platform that empowers brands to Be Absolutely Engaging.

Our platform empowers brands to listen to their customers better, understand them more deeply, and act on that understanding in a way that is human and personal.

Our platform brings together rich, first-party context, transforms that context with composable intelligence (models, agents, and operators), and delivers continuous, and personally relevant interactions across channels.

Using our platform, brands ingest and process customer data in real time, orchestrate and optimize contextually relevant marketing campaigns across multiple channels.

Our platform is designed so that interactions between brands and consumers have the same relevance and cross-channel continuity as human interactions.

Our customers include many established global enterprises and leading technology innovators, and span a wide variety of sizes and industries, including retail and consumer goods, media and entertainment, telecommunications, restaurants and on-demand services, healthcare and life sciences, technology, manufacturing, education, government and public services, and financial services.

Our customers include many established global enterprises and leading technology innovators, and span a wide variety of sizes and industries, including retail and consumer goods, media and entertainment, gaming, sports, restaurants and on-demand services, healthcare and life sciences, technology, and financial services.

We primarily generate revenue from the sale of subscriptions to customers for the use of our platform.

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We had net losses of $130.8 million, $104.0 million and $130.4 million, in the fiscal years ended January 31, 2026, 2025, and 2024, respectively.

We had net cash provided by operating activities of $36.7 million in the fiscal year ended January 31, 2025.

We had net cash provided by operating activities of $6.9 million and net cash used in operating activities of $22.3 million in the fiscal years ended January 31, 2024 and 2023, respectively.

We had net cash provided by operating activities of $71.4 million, $36.7 million, and $6.9 million in the fiscal years ended January 31, 2026, 2025, and 2024, respectively.

Our non-GAAP free cash flow was $58.1 million, $19.6 million and $(6.5) million in the fiscal years ended January 31, 2026, 2025, and 2024, respectively.

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We believe we can achieve significant growth by expanding sales within our existing customer base.

We expand the use of our platform by existing customers by, among others, adding new channels and increasing the messaging volume we sell to our customers as their businesses and needs continue to grow and as they connect directly with additional consumers, which in turn leads to a need for greater messaging capacity.

We expand the use of our platform by existing customers by, among others, adding new channels and increasing the messaging volume we sell to

our customers as their businesses and needs continue to grow and as they connect directly with additional consumers, which in turn leads to a need for greater messaging capacity.

We intend to continue to invest in developing and enhancing our products and functionality.

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For the fiscal years ended January 31, 2026, 2025, and 2024, approximately 45%, 45%, and 43%, of our revenue was generated outside of the United States, respectively.

We expect to increase market penetration in regions including Europe and Asia-Pacific and to further capitalize on the greenfield opportunity in regions such as Latin America.

We expect to increase market penetration in regions including Europe and Asia-Pacific and to further capitalize on greenfield opportunities globally.

Although these investments in geographic regions may negatively affect our operating results in the near term, we believe that they will contribute to our long-term growth.

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For additional details, see the section titled “Risk Factors” in Item 1A of Part I of this Annual Report on Form 10-K.

Tax legislation continues to evolve globally with new laws and regulations that create uncertainty in the global economy.

The Organization for Economic Cooperation and Development reached agreement among over 140 countries to implement a minimum 15% tax rate on certain multinational enterprises, commonly referred to as the Pillar Two framework.

Many countries continue to announce changes in their tax laws and regulations based on the Pillar Two framework.

Additionally, the U.S Congress enacted the One Big Beautiful Bill Act, or the OBBBA, which includes significant provisions, including tax cut extensions and modifications to the international tax framework.

While we continue to evaluate the impact of these legislative changes as additional guidance becomes available, uncertainty remains regarding the timing and interpretation by tax authorities in affected jurisdictions.

These legislative changes could have an adverse impact on our future effective tax rate, tax liabilities, and cash tax.

Components of Results of Operations

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Cost of revenue consists of direct costs related to providing platform access to our customers and to performing onboarding and professional services including consulting services.

compensation, and overhead cost allocations, including rent, utilities, depreciation, information technology costs, amortization of internal use software and certain administrative personnel costs.

These costs primarily include payments to third-party cloud infrastructure providers for hosting software solutions, costs associated with application service providers utilized to deliver the platform, personnel-related costs, including salaries, cash-based performance compensation, benefits and stock-based compensation, and overhead cost allocations, including rent, utilities, information technology costs, depreciation and amortization related to the amortization of acquired intangibles and internal use software and certain administrative personnel costs.

We intend to continue to invest additional resources in our platform infrastructure and our customer support and success organizations to expand the capabilities of our platform.

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Additionally, from time to time general and administrative expenses may include expenses associated with our donation of shares of Class A common stock to a charitable donor-advised fund in connection with our Pledge 1% commitment.

We expect that general and administrative expenses will increase in absolute dollars and vary from period to period as a percentage of revenue for the foreseeable future but decrease as a percentage of revenue over the long term, as we focus on processes, systems, and controls to enable our internal support functions to scale with the growth of our business.

processes, systems, and controls to enable our internal support functions to scale with the growth of our business.

We have incurred, and expect to continue to incur, additional expenses as a result of operating as a public company, including expenses to comply with the rules and regulations applicable to companies listed on The Nasdaq Stock Market LLC, expenses related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, and higher expenses for insurance, investor relations and professional services.

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Provision for Income Taxes

Provision for income taxes consists of state income taxes and income taxes in certain foreign jurisdictions in which we conduct business.

We maintain a full valuation allowance in jurisdictions where we had net deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized.

The provision for income taxes consist of the release of the valuation allowance due to the acquisition of Offerfit and income taxes in state and foreign jurisdictions in which we conduct business.

We maintain a valuation allowance in jurisdictions where we had net deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized.

Results of Operations

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General and administrative 39,239 29,067 23,432

Total $ 114,261 $ 97,177 $ 72,217

Total stock-based compensation expense

$ 144,901 $ 114,261 $ 97,177

The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue for each of the periods indicated:

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Loss before provision for income taxes (18) % (17) % (27) %

Provision for income taxes 1 % — % — %

Provision for (benefit from) income taxes

Net loss (18) % (18) % (27) %

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Revenue $ 738,182 $ 593,410 $ 144,772 24.4 %

The increase in revenue of $121.6 million, or 25.8%, for the fiscal year ended January 31, 2025 compared to the fiscal year ended January 31, 2024 was primarily driven by an $119.2 million, or 26.4%, increase in subscription revenue.

Approximately 73.8% of the increase in subscription revenue was attributable to the growth from existing customers increase in monthly active users, expansion across channels and committed entitlements and features, and the remaining 26.2% was attributable to new customers.

Total customers grew to 2,296 as of January 31, 2025 from 2,044 as of January 31, 2024.

Professional services revenue increased $2.4 million, or 11.6%, due to an increase in deliverability services, technical account management, and support engagement services.

These increases were partially offset by the decline in onboarding revenue as a result of the continued engagement of new customers with third-party partner-led onboarding.

Additionally, in the fiscal year ended January 31, 2025, our international revenue increased by $62.4 million as we continued to expand market penetration in regions such as Europe and the Asia-Pacific region.

Revenue increased by $144.8 million, or 24.4%, for the fiscal year ended January 31, 2026 compared to the fiscal year ended January 31, 2025.

Approximately 65.5% of the increase in revenue was attributable to growth from existing customers, and the remaining 34.5% was attributable to growth from new customers.

Cost of Revenue, Gross Profit and Gross Margin

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Gross margin 67.1 % 69.1 %

T he increase in co st of revenue of $35.7 million, or 24.2%, for the fiscal year ended January 31, 2025 compared to the fiscal year ended January 31, 2024 was primarily driven by an increase of $7.5 million in hosting, infrastructure, and other third-party fees associated with delivering our platform and a $24.0 million increase in third-party messaging fees associated with growth in premium messaging channels.

In addition, we had an increase in personnel and overhead costs of $3.2 million.

Co st of revenue increased by $59.3 million, or 32.4%, for the fiscal year ended January 31, 2026 compared to the fiscal year ended January 31, 2025.

This increase was primarily driven by a $25.2 million increase in third-party messaging fees associated with growth in premium messaging channels and an increase of $17.9 million in hosting, infrastructure, and other third-party fees associated with delivering our platform and services.

In addition, we had a net increase of $16.2 million in personnel costs, other overhead, and amortization expenses.

The increased infrastructure, messaging, and personnel costs were incurred to support overall revenue growth.

Our gross profit increased $85.9 million, or 26.5%, in the fiscal year ended January 31, 2025 compared to the fiscal year ended January 31, 2024, and our gross margin increased by 0.4% to 69.1% in the fiscal year ended January 31, 2025 from 68.7% in the fiscal year ended January 31, 2024.

These increases were due primarily to improved personnel efficiencies,

economies of scale, and the optimization of costs of our tech stack as our infrastructure costs to support our revenue growth did not increase at the same pace as our revenue.

Our gross profit increased $85.4 million, or 20.8%, in the fiscal year ended January 31, 2026, compared to the fiscal year ended January 31, 2025, and our gross margin decreased by 2.0% to 67.1% in the fiscal year ended January 31, 2026, from 69.1% in the fiscal year ended January 31, 2025.

The decrease was primarily due to acquisition related operating costs, including personnel costs of acquired workforce and amortization expense of acquired technology, in addition to increased costs related to our tech stack.

Operating Expenses

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Sales and marketing $ 327,012 $ 282,316 $ 44,696 15.8 %

The increase in sales and marketing expense of $35.2 million, or 14.2%, for the fiscal year ended January 31, 2025 compared to the fiscal year ended January 31, 2024, was primarily driven by an increase in personnel and overhead costs of $22.9 million, which included $7.0 million of stock-based compensation costs.

Additionally, the increase was driven in part by an increase of $6.4 million in promotional and product marketing, primarily related to the hosting of regional customer events, our annual customer conference, and other sales related events, an increase of $3.7 million in software costs, and an increase of $2.5 million in deferred contract costs as a result of sales growth.

Sales and marketing expense increased by $44.7 million, or 15.8%, for the fiscal year ended January 31, 2026, compared to the fiscal year ended January 31, 2025.

This increase was primarily due to an increase of $34.3 million in personnel costs and allocated overhead costs, for our sales and marketing organization as a result of increased headcount and increased variable compensation for our sales personnel.

Additionally, advertising, sales, marketing and promotional activities increased by $6.6 million.

Research and Development Expense

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Research and development $ 167,143 $ 133,969 $ 33,174 24.8 %

The increase in research and development expense of $14.1 million, or 11.8%, for the fiscal year ended January 31, 2025 compared to the fiscal year ended January 31, 2024, was primarily driven by an increase in personnel and overhead costs of $11.7 million, which included $4.0 million of stock-based compensation costs, an increase of $1.6 million in software costs, and an increase in professional services of $0.7 million.

These increases were primarily due to a period-over-period increase in headcount to support our continued investment in the features and functionality of our platform.

Research and development expense increased by $33.2 million, or 24.8%, for the fiscal year ended January 31, 2026, compared to the fiscal year ended January 31, 2025.

This increase was primarily due to an increase of $28.2 million in personnel costs and allocated overhead costs, for our research and development organization as a result of increased headcount.

General and Administrative Expense

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General and administrative $ 146,259 $ 116,093 $ 30,166 26.0 %

The increase in general and administrative expenses of $14.1 million, or 13.8%, for the fiscal year ended January 31, 2025 compared to the fiscal year ended January 31, 2024 was primarily driven by an increase in personnel and overhead costs of $13.2 million, which included $5.6 million of stock-based compensation costs and $2.3 million of depreciation expense, primarily related to the winding down of our old office as we moved to our new headquarters in the fiscal year.

The increases were primarily due to investments in our finance and administrative functions to continue to scale our processes, systems, and controls, to enable our ongoing compliance with public company legal and regulatory requirements.

The increases in expenses were partially offset by a decrease in professional services costs of $0.5 million related to the acquisition of North Star in the fiscal year ended January 31, 2024.

General and administrative expense increased by $30.2 million, or 26.0%, for the fiscal year ended January 31, 2026, compared to the fiscal year ended January 31, 2025.

This increase was primarily due to an increase of $17.1 million in personnel costs and allocated overhead costs, for our general and administrative organization as a result of increased headcount and an increase of $12.6 million in professional services and legal costs primarily associated with acquisition-related expenses.

Other Income, Net

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Other income, net $ 16,596 $ 21,557 $ (4,961) (23.0) %

The increase in other income, net of $5.3 million, or 32.9%, for the fiscal year ended January 31, 2025, compared to the fiscal year ended January 31, 2024, was attributable to a $5.2 million increase in investment income from marketable securities.

The investment income increase was driven primarily by the graded maturation of the portfolio positions at higher interest rates and the reinvestment of proceeds in a high interest rate environment.

The decrease in other income, net of $5.0 million, or 23.0%, for the fiscal year ended January 31, 2026, compared to the fiscal year ended January 31, 2025, was attributable to a $4.7 million decrease in investment income from marketable securities.

The investment income decrease was driven primarily by the decrease in the marketable securities balance period-over-period to fund acquisition activities.

Liquidity and Capital Resources

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As of January 31, 2026, our principal source of liquidity was cash, cash equivalents, and marketable securities of $415.9 million.

Our cash and cash equivalents consist of deposit accounts, interest-bearing money market accounts, U.S.

government, and corporate securities that are stated at fair value.

Our marketable securities positions consists mostly of highly liquid short-term investments.

Our cash and cash equivalents consist of deposit accounts, interest-bearing money market accounts, and U.S.

government securities that are stated at fair value.

Our marketable securities positions consists mostly of highly liquid short-

term investments.

The investment income that we generate on these investments is not material to our overall cash balance, but may be adversely affected due to volatility in interest rates.

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Deferred revenue consists of the unearned portion of billed fees for our subscriptions, which is recorded as revenue over the term of the subscription agreement.

As of January 31, 2025, we had total deferred revenue of $240.3 million, of which $240.0 million was recorded as a current liability.

As of January 31, 2026, we had total deferred revenue of $304.6 million, recorded as a current liability.

Deferred revenue will be recognized as revenue when all of the revenue recognition criteria are met.

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(in thousands)

Net cash provided by/(used in) operating activities $ 36,680 $ 6,850 $ (22,308)

Net cash provided by operating activities $ 71,438 $ 36,680 $ 6,850

Net cash used in investing activities $ (50,907) $ (36,470) $ (19,976)

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The non-cash adjustments primarily relate to stock-based compensation of $143.7 million, amortization of deferred contract costs of $41.3 million, depreciation and amortization expense of $19.3 million, and expense associated with the donation of our Class A common stock to a charitable donor-advised fund of $3.2 million.

The cash inflows from changes in our operating assets and liabilities were primarily due to an increase in deferred revenue of $35.9 million as a result of increased billings driven by timing of subscriptions and renewals.

The cash inflows were offset by cash outflows primarily from an increase in accounts receivable of $5.4 million and an increase in deferred contract costs of $48.2 million as a result of commissions on new bookings and renewals.

The cash inflows from changes in our operating assets and liabilities were primarily due to an increase in deferred revenue of $57.1 million, as a result of increased billings driven by timing of subscriptions and renewals and an increase of accrued expenses and other current liabilities of $26.2 million.

The cash inflows were offset by cash outflows primarily from an increase in deferred contract costs of $65.2 million as a result of commissions on new bookings and renewals and an increase in accounts receivable of $22.7 million.

For the fiscal year ended January 31, 2025, net cash provided by operating activities was $36.7 million, primarily due to a net loss of $104.0 million adjusted for non-cash charges of $163.4 million and net changes in our operating assets and liabilities of $22.7 million.

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The cash inflows were offset by cash outflows primarily from an increase in deferred contract costs of $45.1 million as a result of commissions on new bookings and renewals.

Investing Activities

Net cash used in investing activities was $50.9 million for the fiscal year ended January 31, 2026, primarily consisting of cash paid for the acquisition of OfferFit, net of cash acquired of $181.9 million, purchases of marketable securities of $151.6 million, purchases of property and equipment of $9.6 million, and capitalization of internal-use software costs of $3.8 million, partially offset by maturities of marketable securities of $175.2 million and a return of principal on marketable securities of $120.7 million.

Net cash used in investing activities was $36.5 million for the fiscal year ended January 31, 2025, primarily consisting of purchases of marketable securities of $218.0 million, purchases of property and equipment of $13.2 million, and capitalization of internal-use software costs of $3.8 million, partially offset by maturities of marketable securities of 195.4 million.

Net cash used in investing activities was $20.0 million for the fiscal year ended January 31, 2024, primarily consisting of purchases of marketable securities of $248.1 million, cash paid for the acquisition of North Star of $16.3 million, purchases of property and equipment of $9.8 million, and capitalization of internal-use software costs of $3.6 million, partially offset by maturities of marketable securities of 257.7 million.

Financing Activities

Net cash provided by financing activities was $11.7 million for the fiscal year ended January 31, 2025, primarily consisting of proceeds from the exercise of common stock options of $6.9 million and proceeds from stock purchases associated with our employee stock purchase plan of $7.7 million, offset by payments of deferred purchase considerations related to the acquisition of North Star of $2.9 million.

Net cash provided by financing activities was $23.0 million for the fiscal year ended January 31, 2026, consisting of proceeds from the exercise of common stock options of $15.9 million and proceeds from stock purchases associated with our employee stock purchase plan of $7.1 million.

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(in thousands)

Net cash provided by/(used in) operating activities $ 36,680 $ 6,850 $ (22,308)

Net cash provided by operating activities $ 71,438 $ 36,680 $ 6,850

Purchases of property and equipment (9,588) (13,234) (9,761)

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We assess our liquidity primarily through our cash on hand as well as the projected timing of billings under contracts with our paying customers and related collection cycles.

While our future capital requirements will depend on many factors, including revenue growth and costs incurred to support customer usage and growth in our customer base, increased research

and development expenses to support the growth of our business and related infrastructure, and increased general and administrative expenses to support being a publicly-traded company, we believe our current cash, cash equivalents and marketable securities will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months.

While our future capital requirements will depend on many factors, including revenue growth and costs incurred to support customer usage and growth in our customer base, increased research and development expenses to support the growth of our business and related infrastructure, and increased general and administrative expenses to support being a publicly-traded company, we believe our current cash, cash equivalents and marketable securities will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months.

Our most significant funding requirements are principally comprised of employee compensation and related taxes and benefits, non-cancelable purchase commitments, and operating lease obligations.

Non-cancelable purchase commitments for business operations and operating lease obligations total $224.4 million and $114.8 million, respectively, as of January 31, 2025.

Purchase commitments for business operations are predominately related to cloud hosting, infrastructure, and other software-based services and due primarily over the next three years.

Purchase commitments for business operations are primarily related to cloud hosting, infrastructure, and other software-based services and due primarily over the next three years.

Our future funding requirements to settle our obligations in foreign jurisdictions are subject to fluctuations due to changes in foreign exchange rates.

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Our actual results could differ from these estimates.

We believe that the following critical accounting policies involve a greater degree of judgement or complexity.

We believe that the following critical accounting policies involve a greater degree of judgment or complexity.

Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations.

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The transaction price allocated to each performance obligation is recognized as revenue when or as the products or services are transferred to the customer.

Cost to Obtain a Contract with a Customer

We capitalize incremental costs of obtaining revenue contracts, which primarily consist of internal sales commissions and agent commissions.

We amortize these commissions on a systematic basis, consistent with the pattern of transfer of the expected benefit period or services to which the contract relates, generally up to four years.

Four years represents the estimated benefit period of the customer relationship taking into account factors such as peer estimates of technology lives and customer lives as well as our own historical data.

Commissions paid for contract renewals are amortized over the renewal period.

Contract costs are amortized on a straight-line basis over up to four years, which reflects the expected period of benefit of the performance obligation, and may be longer than the initial contract period.

We determine the estimated benefit period by considering both qualitative and quantitative factors, including the length of the subscription terms in our customer contracts and the anticipated life of our technology, among other factors.

We account for income taxes using the asset and liability method.

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Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

In evaluating our ability to recover our deferred income tax assets, we consider all available positive and negative evidence, including our operating results, ongoing tax planning, and forecasts of future taxable income on a jurisdiction-by-jurisdiction basis.

jurisdiction basis.

In the event we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance that would reduce the provision for income taxes.

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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 7. Management’s Discussion and Analysis