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3 Unique AI Software Plays With Strong Analyst SupportBraze NASDAQ: BRZE reported fiscal second-quarter 2027 revenue of $227 million, up 26% from a year earlier and 8% sequentially, as the customer-engagement software company cited contract expansions, renewals and new business. The company also raised its revenue outlook for the third quarter and full fiscal year and increased its full-year operating income guidance.
Co-Founder and Chief Executive Officer Bill Magnuson said the quarter featured strong bookings, competitive wins against legacy marketing clouds and point solutions, and continued vendor-consolidation activity. He also pointed to rising customer adoption of the company’s artificial intelligence products and an expanding channel-partner strategy.
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Braze Blazes Ahead on Q1 2027 Earnings Beat, Raised Guidance“Brands are adopting ever more sophisticated strategies and racing to deploy AI-driven solutions to leverage their first-party data and direct-to-consumer relationships,” Magnuson said.
Customer growth and retention Total customer count rose 15% year over year to 2,789 as of July 31, 2026, an increase of 367 customers from the prior-year period and 76 from the preceding quarter. The number of customers spending at least $500,000 annually increased 28% year over year to 361. Those larger customers accounted for 65% of annual recurring revenue, compared with 62% a year earlier.
Braze Stock Rallies as Revenue Beats, Buybacks Begin, and Outlook JumpsTrailing 12-month dollar-based net retention was 110% across all customers. For customers spending at least $500,000 annually, net retention rose to 112% from 111% in the prior quarter.
Magnuson said new business and expansions during the quarter included Boots Thailand, Chime, David Jones, Foxtel Group, Insurify, Omaze UK, Property Finder and Wilson Sporting Goods. He said the company also won customers moving from legacy platforms, including a global quick-service restaurant, an Asia-Pacific bank, a European retailer and a U.S. challenger bank.
Remaining performance obligations totaled $1.1 billion, up 27% year over year, while current remaining performance obligations increased 24% to $691 million. Magnuson told analysts that the company’s fourth and first fiscal quarters are typically its largest renewal periods and that current RPO comparisons also reflected lapping the OfferFit acquisition.
AI adoption and product strategy Braze said paid adoption of its AI tools—including Decisioning Studio, Agent Console, AI Item Recommendations and its Predictive Suite—reached roughly one-third of its large-customer cohort during the quarter. That represented an increase of about 900 basis points from the first quarter.
Magnuson said AI monetization remains early, but enterprise customers are seeing returns from the tools. He highlighted Operator, an AI product designed to help marketers create and manage campaigns and workflows, as a driver of adoption of other Braze features.
During the past 90 days, nearly 80% of Braze accounts engaged with Operator more than 10 times, according to Magnuson. More than half of those accounts used it more than 100 times over the same period. He said the product has also reduced customer-support tickets, allowing support staff to focus on more complex issues.
The company said its AI products can support more sophisticated multichannel campaigns, experimentation and personalization. Magnuson said customers that use three, four or five channels and adopt more advanced Braze features historically have shown higher dollar-based net retention than other cohorts.
Braze also introduced Agentic Standards in beta, which allows teams to encode brand guidelines, compliance rules, tracking requirements and content standards for automated checks. The company said it expects to discuss additional developments involving Operator, Content Optimizer, Agent Console and Decisioning Studio at its Forge customer conference.
Magnuson said Decisioning Studio maintained the pricing power discussed when Braze acquired OfferFit, with use-case pricing in the roughly $250,000 to $300,000 range. The company is also developing Decisioning Studio Go, a more self-service offering that will be paid for through Action Credits and have a lower upfront cost than Decisioning Studio Pro.
Profitability, cash flow and capital returns Subscription revenue represented 91% of total second-quarter revenue, while the remaining 9% came from recurring professional services and one-time configuration and onboarding fees. Interim Chief Financial Officer Pankaj Malik said approximately 90% of professional-services revenue is recurring and recognized ratably over the related contract term.
Malik said the company has been shifting some customer-success entitlements that were previously bundled in subscription fees into professional-services arrangements under its newer pricing and packaging structure. Braze has migrated about half of its customer base and expects about 80% of the remaining customers to transition over the next six quarters. He said professional services are expected to represent about 9% to 10% of revenue going forward.
Non-GAAP gross profit was $156 million, with a 68.6% gross margin, compared with 69.3% a year earlier. Non-GAAP operating income was $22 million, or 9.7% of revenue, compared with $6 million, or 3.4% of revenue, in the prior-year quarter. Non-GAAP net income attributable to Braze shareholders was $21 million, or $0.19 per share, compared with $17 million, or $0.15 per share, a year earlier. Cash provided by operations was $24 million, and free cash flow was $22 million, compared with $4 million in the prior-year quarter. Braze ended the quarter with approximately $414 million in cash equivalents, restricted cash and marketable securities. In August, it completed a $50 million accelerated share repurchase program, buying back approximately 2.1 million shares. Another $50 million remains under the board’s authorization.
Raised outlook and AWS partnership For the fiscal third quarter, Braze expects revenue of $229 million to $230 million, representing roughly 20% year-over-year growth at the midpoint. It forecast non-GAAP operating income of $16 million to $17 million, or about a 7% operating margin, and non-GAAP earnings per share of $0.13 to $0.14.
For fiscal 2027, the company now expects revenue of $910 million to $913 million, representing approximately 23% growth at the midpoint. It projected non-GAAP operating income of $75.5 million to $76.5 million, implying an 8% operating margin, and non-GAAP earnings per share of $0.64 to $0.65.
Malik said third-quarter operating income will be affected by the costs of Forge and other global customer events, while Magnuson said the company is also beginning to add sales capacity ahead of the next fiscal year.
Braze additionally announced a three-year strategic collaboration agreement with Amazon Web Services. Magnuson said the agreement establishes a dedicated co-selling motion, joint go-to-market commitments and incentives for AWS sellers to bring Braze into customer accounts. He said the arrangement builds on rising procurement through AWS Marketplace and could extend Braze’s international and industry reach.
About Braze (NASDAQ:BRZE)Braze, Inc is a publicly traded software company NASDAQ: BRZE that offers a customer engagement platform designed to help brands build personalized relationships with their users. Founded in 2011 as Appboy by Bill Magnuson, Jon Hyman and Mark Ghermezian, the company adopted the Braze name in 2017 to underscore its focus on fostering strong connections between businesses and consumers. Its cloud-based platform consolidates messaging channels including push notifications, in-app messages, email and SMS, enabling companies to deliver timely, context-driven communications at scale.
The core functionality of Braze's platform centers on data-driven segmentation, customer journey orchestration and real-time analytics.
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