Braze Q2 Revenue Beats Estimates, Full-Year Guidance Raised
Braze posted Q2 revenue of $227.2M, beating consensus, and lifted full-year targets as AI module adoption drives enterprise growth.
Braze (NASDAQ:BRZE) reported second-quarter CY2026 revenue of $227.2 million, exceeding analyst estimates of $220.4 million by 3.1%. The customer engagement platform achieved 26.2% year-over-year growth, driven by strong adoption of its AI-powered modules and increased billings. According to data from GN stocks/nasdaq, the company also surpassed non-GAAP profit expectations, posting $0.19 per share against a consensus of $0.16.
Despite the operational beat, market reaction was mixed as investors weighed evolving customer spending patterns. Braze ended the quarter with 2,789 customers, a slight increase from the prior period, while net revenue retention held steady at 110%. Annual recurring revenue grew 20.9% year-over-year to $830.8 million, indicating sustained underlying demand for its platform services.
AI Adoption Drives Revenue Growth
Management attributed the quarter's outperformance primarily to the rapid uptake of BrazeAI products, including Operator, Agent Console, and Decisioning Studio. Paid adoption of these tools reached approximately one-third of large enterprise customers, leading to deeper platform usage and higher engagement metrics. CEO William Magnuson noted that these AI capabilities are replacing legacy marketing clouds, allowing Braze to capture competitive wins across various industries.
The shift toward AI-driven solutions has also impacted support costs, with usage of the Operator tool correlating with a significant decline in customer support tickets. This efficiency gain contributes to improved operating margins, which improved to negative 8% from negative 21.5% in the same quarter last year. The company is leveraging these tools to deepen partnerships, particularly with AWS, to support international expansion.
Forward Guidance Reflects Confidence
Braze raised its full-year revenue guidance to $911.5 million at the midpoint, up from the previous target of $897 million. This represents a 1.6% increase in the annual outlook, signaling management's confidence in continued pipeline growth. For the immediate future, next quarter's revenue is guided to $229.5 million at the midpoint, slightly above analyst expectations.
Full-year adjusted EPS guidance was also lifted to $0.65 at the midpoint, a 2.4% increase. CFO Pankaj Malik indicated that ongoing transitions in pricing and packaging, alongside cost management efforts, underpin the path to improved profitability. The company continues to prioritize investments in product innovation and sales capacity to support its strategic goals.
Operational Metrics Show Stability
Quarter-end billings reached $231.4 million, a 30.6% increase year-over-year, reflecting strong new bookings and contract expansions. Adjusted operating income was $21.96 million, beating estimates by 24.3% and resulting in a 9.7% margin. These figures suggest that Braze is effectively managing its cost structure while scaling its AI-driven product offerings.
