Braze Inc. (NASDAQ:BRZE) shares continued to surge in premarket trading on Friday after the company reported fiscal second-quarter 2026 revenue of $180.1 million, up 23.8% from $145.5 million a year earlier, beating the $170.1 million analyst estimate.
Subscription revenue reached $171.8 million, while professional services and other revenue totaled $8.3 million. The remaining performance obligations were $862.2 million, with $558.2 million currently.
The company posted a GAAP net loss of $27.9 million, or 26 cents per share, compared with a loss of $23.0 million, or 23 cents per share, in the year-ago quarter.
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Non-GAAP net income was $16.9 million, or 15 cents per diluted share, beating the 3-cent estimate and up from $9.1 million, or 9 cents per diluted share, a year earlier.
GAAP operating loss widened to $38.8 million, largely reflecting $39.5 million in stock-based compensation expense, while non-GAAP operating income rose to $6.0 million from $4.2 million.
Non-GAAP gross margin slipped to 69.3% from 70.9%. Dollar-based net retention declined to 108% from 114% for all customers, and to 111% from 117% for customers with annual recurring revenue of $500,000 or more.
Total customers increased to 2,422 from 2,163 a year ago, including 282 with ARR above $500,000 compared with 222 a year earlier.
Operating cash flow was $7.0 million, down from $11.6 million, and free cash flow was $3.5 million versus $7.2 million. The company ended the quarter with $368.3 million in cash, cash equivalents, restricted cash, and marketable securities.
Recent wins and expansions included DocMorris, Fogo de Chão, Gopuff, Kleinanzeigen, Laundryheap, Little Caesars, Metcash, Saily, Sweetgreen, and Wix. Braze also launched the Model Context Protocol Server to connect large language models with Braze data and published its 2025 ESG Report.
Outlook
For the fiscal third quarter, Braze expects revenue of $183.5 million to $184.5 million, above the $178.6 million estimate, and non-GAAP net income of $6.5 million to $7.5 million, or 6 cents to 7 cents per diluted share, above the 2-cent estimate.
For the full year ending January 31, 2026, the company raised its outlook, now projecting revenue of $717.0 million to $720.0 million, above the $697.7 million estimate, and non-GAAP net income of $45.5 million to $46.5 million, or 41 cents to 42 cents per diluted share, compared with prior guidance of 15 cents to 18 cents and ahead of the 17 cents estimate.
"Looking ahead, Braze is focused on AI solutions that will empower brands to transform the customer engagement experience for marketers and end users alike, driving high ROI for our customers and Braze," commented cofounder and CEO Bill Magnuson.
Following the results, Piper Sandler analyst Brent Bracelin maintained an Overweight rating on Braze and raised the price forecast from $38 to $50.
Price Action: At last check Friday, BRZE shares were trading higher by 21.11% to $33.50 premarket.
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