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Braze (BRZE +4%) is starting to cool down after kicking off the day ablaze, spiking to its best levels of the month following better-than-expected Q4 (Jan) earnings and sales and decent guidance. Braze is a customer engagement and marketing platform, that competes in the customer experience management software space, similar to Sprinklr (CXM), and with other customer relationship management platforms, like Salesforce (CRM) and HubSpot (HUBS).

Like its peers, Braze has been working through a tough macroeconomic environment, which has bogged down customer spending and IT budgets. Added uncertainty due to tariff policy only exacerbated the situation. However, amid all of these headwinds, Braze delivered an impressive quarterly performance. Investors are also cheering the $325 mln acquisition of OfferFit, an AI-powered organization that helps marketers test to ensure the best decision for each individual customer.

• Braze ended FY25 on a high note, delivering adjusted EPS of $0.12, well above its $0.05-0.06 forecast and marking its widest earnings beat since going public in late 2021. Braze was laser-focused on extracting additional efficiencies across its business, helping flip non-GAAP operating margins to positive 5.0% from negative 5.7% in the year-ago period.
• The impressive bottom-line results came revenue growth of 22.4% yr/yr to $160.4 mln. While growth is still decelerating, going from +33.1% in Q1, +26.4% in Q2, and +22.7% in Q3, the rate of decline has been slowing. In fact, the market anticipated growth dipping below the 20% mark given Braze's revenue forecast of $155-156 mln.
• Supporting the gains in Q4 was the previously highlighted legacy vendor replacement cycle. Braze is capitalizing on businesses desire to replace legacy marketing clouds, helping secure new business wins ranging from fintech to retail and energy across the U.S., EMEA, and APAC regions. Total customers increased by 12% yr/yr to 2,296, while large customers ($500K+ in annualized recurring revenue) jumped by 22% yr/yr to 247.
  • Management reiterated its confidence in these trends remaining a long-term tailwind, creating further opportunities for Braze to capture market share and continue etching out an economic moat.
• Regarding the OfferFit acquisition, we like the deal for Braze given OfferFit's line of business. The AI company has numerous use cases, from helping increase cross-sell and upsell opportunities to increasing repeat purchase frequency. OfferFit is already used by many prominent logos, such as Wyndham and Brinks.
• Braze's FY26 guidance was decent. The company expects adjusted EPS of $0.31-0.35, highlighting its expectation of achieving positive quarterly non-GAAP operating income going forward. This is an uplifting development given the company's commitment to invest rather aggressively to carve out an economic moat despite unfavorable demand prospects. For revenue, Braze expects $686-691 mln, translating to +16% growth at the midpoint.

With Sprinklr already registering a surprise beat-and-raise in Q4 (Jan) earlier this month, Braze was in no position to miss headline estimates. With its back against the wall, the company performed well, underscoring its technological edge. However, FY26 revenue growth guidance illuminates a tricky economic backdrop which could keep a lid on further stock appreciation in the near term.