What Management Said

Read the full Q3 2026 transcript ↗

Please refer to the Investor Relations section of our website at investors.braze.com for more information and a supplemental presentation related to today's earnings announcement. GAAP included in our earnings release under the Investor Relations section of our website. We're pleased to report strong third-quarter results, generating $191 million of revenue, up 25.5% year-over-year and 6% from the prior quarter. We also continue to drive efficiency in our business, improving non-GAAP operating margins by over 400 basis points year-over-year and generating $18 million of free cash flow.

Pipeline generation was solid, indicating continued market demand while customers continue to adopt more channels and AI solutions, driving optimism as we look ahead to fiscal year 2027. During the Black Friday to Cyber Monday period, Braze orchestrated a 90% increase in SMS and WhatsApp message sends, a 55% increase in content cards impressions, and a 32% increase in email messages. This pattern is a driver of the vendor consolidation motion that we've highlighted in past earnings. As Bill stated, we reported a strong third quarter with revenue increasing 25.5% year-over-year to $191 million, driven by a combination of existing customer contract expansions, renewals, and new business.

Braze AI Decisioning Studio, formerly known as OfferFit, contributed $4.8 million of revenue in the quarter. This implies an organic revenue growth rate of 22.3% year-over-year, which represents the second sequential quarter of organic revenue growth acceleration. This sequential growth reflects the largest quarter-over-quarter increase in customer count since the third quarter of fiscal year 2023. contributed 45% of our total revenue in the third quarter, in line with the second quarter of this year and the prior year quarter.

What went well
  • Braze generated $191 million of revenue in fiscal Q3 2026, up 25.5% year-over-year and 6% sequentially, with organic revenue growth of 22.3% marking the second sequential quarter of organic acceleration.
  • The company improved non-GAAP operating margin by over 400 basis points year-over-year and generated $18 million of free cash flow, reaching four straight quarters of non-GAAP operating income and six straight quarters of non-GAAP net income.
  • Braze achieved its strongest quarter of customer additions in three years, adding 106 sequentially and 317 year-over-year to 2,528, while $500,000-plus ARR customers grew 29% year-over-year to 303.
  • Organic in-quarter dollar-based net retention rose for the second straight quarter to over 107%, slightly above the Q2 level, reflecting continued stabilization as downsell moderated.
  • During Cyber Week, Braze delivered 102.5 billion messages with peak throughput of about 28.5 million messages per minute, and orchestrated a 90% increase in SMS and WhatsApp sends during the Black Friday to Cyber Monday period with 100% uptime.
  • Cash provided by operations swung to $21 million from $11 million used a year earlier, and management raised full-year revenue guidance to approximately 23% growth at the midpoint.
What went wrong
  • Non-GAAP gross margin declined to 69.1% from 70.5% a year earlier, driven primarily by higher premium messaging volume and hosting costs.
  • Trailing dollar-based net retention held at 108%, still below historical peaks, and remains a lagging indicator that has not yet inflected on a reported basis.
  • Switching costs continued to weigh on enterprise deal cycles, with management noting there is still no excess budget to finance platform migrations in the current environment.
  • AI Decisioning Studio (formerly OfferFit) remained an enterprise sale with longer cycles, requiring customer education and not yet included in every deal conversation.

Guidance Changes

MetricPeriodCurrent guidance
RevenueQ4 FY2026$197.5M-$198.5M (~23% YoY at midpoint) (New)
Non-GAAP operating incomeQ4 FY2026$12M-$13M (~6% margin at midpoint) (New)
Non-GAAP net incomeQ4 FY2026$15M-$16M ($0.13-$0.14/sh) (New)
RevenueFY2026$730.5M-$731.5M (~23% YoY at midpoint) (Raised)

Performance Breakdown

MetricYoYNote
Revenue +25.5% to $191M Existing customer expansions, renewals, and new business; Decisioning Studio (OfferFit) contributed $4.8M, implying 22.3% organic growth
Non-GAAP gross margin 69.1% vs 70.5% Higher premium messaging volume and hosting costs, partially offset by improved personnel cost efficiencies
Non-GAAP operating income $5M (2.7% margin) vs -$2M (-1.4%) Improved sales and marketing efficiency (40% of revenue vs 43%) and disciplined investment as the business scaled
Non-GAAP net income $7M ($0.06/sh) vs $2M ($0.02/sh) Revenue growth and operating leverage across the P&L
Total customer count +317 to 2,528 (+14%) Largest sequential customer add since Q3 FY2023, driven by legacy replacement cycle and reduced churn
$500K+ ARR customers +29% to 303 Strong upsell momentum from sub-$500K customers and reduced downsell/churn
Total RPO +24% to $891M Contract renewals, upsells, and new customer contracts
Current RPO +25% to $573M Renewals, upsells, and new customer contracts

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Organic revenue growthInflected to low 20s in Q2Accelerated for second straight quarter to 22.3%Improving
Downsell / dollar churn mitigationBeginning to attenuateContinued moderation enabling stronger net customer adds and retentionImproving
Premium / multi-channel messagingHigher adoption via flexible creditsSharp Cyber Week growth in SMS, WhatsApp, and content cards; channels moving up the value curveImproving
Legacy enterprise replacement cycleSlow due to switching costsConversations shifting from 'if' to 'when' as competitors stagnateImproving
AI monetizationAI features largely embedded in platformDecisioning Studio monetized per use case; real-time always-on AI to enter credits framework over timeImproving

Q&A Summary

Why might Braze Canvas be an easier starting point for organizations building new AI use cases?
Management cited a healthcare customer who prototyped an AI agent in Canvas while waiting at an airport gate, leveraging Agent Console, Canvas Context, and built-in first-party data, experimentation, and reporting. Canvas lets customers run agents head-to-head against business-as-usual and promote winning experiments into production rapidly.
What is driving the improving metrics and the stronger-than-historical Q4 guide?
Ongoing sales productivity enhancements and downsell/dollar-churn mitigation efforts have come to fruition, combining to retain more dollars and sell more effectively, which drove the Q3 overachievement and Q4 guide.
How can AI impact the growth algorithm of the business?
Beyond directly monetized Decisioning Studio, management splits AI into occasionally-invoked workflow features (largely included in the platform, not charged per invocation) and always-on real-time AI that will enter the credits framework and be charged on LLM usage, representing potential upside not yet realized.
What is driving the inflection in new customer generation?
Not specifically OfferFit, which has longer cycles; rather the legacy replacement cycle remaining in Braze's favor, strong competitive position, regional and verticalization investments, and churn mitigation that retains more customers.
What drove the much-better Q4 RPO and CRPO?
Continued strength across the legacy replacement cycle, a strengthened competitive position, retention investments benefiting revenue, and regional and verticalization efforts, all approached with a risk-adjusted guidance position.
How are customers receiving AI Decisioning Studio and what does the pipeline look like?
Integration is progressing well, pipeline generation is strong, and the cross-sell thesis is bearing fruit even among sophisticated customers. It remains an enterprise deal cycle requiring customer education, but proof points like uplift not initially believed by a customer's CEO are aiding deal velocity.

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Q3 2026 call
Reported 2025-12-09 · figures from the Braze, Inc. Q3 2026 earnings call.

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