BRZE Q2 Deep Dive: AI Integration and Operational Discipline Drive Outlook Upgrade

Customer engagement platform Braze (NASDAQ:BRZE) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 23.8% year on year to $180.1 million. Guidance for next quarter’s revenue was optimistic at $184 million at the midpoint, 2.1% above analysts’ estimates. Its non-GAAP profit of $0.15 per share was significantly above analysts’ consensus estimates.

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StockStory’s Take

Braze’s second quarter results were met with a distinctly positive market reaction, reflecting management’s emphasis on operational discipline and expanding product capabilities. CEO William Magnuson credited the strong performance to improved execution in global sales, enhanced competitive win rates in enterprise segments, and ongoing customer demand for Braze’s AI-powered engagement solutions. The company highlighted solid bookings across key verticals, successful integration of the OfferFit acquisition, and continued growth in large enterprise clients. CFO Isabelle Winkles noted, “Sustained performance in net retention and disciplined resource deployment gave us greater confidence into the back half of the year.”

Looking ahead, Braze’s updated guidance is underpinned by accelerated AI product integration and an expanding enterprise pipeline, especially with the rollout of OfferFit by Braze. Management pointed to heightened interest from large organizations in combining first-party data capabilities with scalable AI-driven personalization. Magnuson described the upcoming Forge conference as a platform to unveil new product innovations and deepen partnerships, stating, “We are eager to unlock the promise of our sophisticated vision for customer engagement with the rapidly advancing power of AI.” The company’s focus remains on balancing reinvestment in technology with a disciplined approach to profitability and margin improvement.

Key Insights from Management’s Remarks

Management attributed Q2’s outperformance to robust enterprise customer wins, advances in AI product offerings, and operational improvements following the OfferFit acquisition.

• Enterprise segment momentum: Large customer additions continued, with a 27% year-over-year rise in accounts spending over $500,000 annually. Management attributed this to effective alignment in sales, marketing, and product targeting within retail, e-commerce, and financial services verticals.
• OfferFit integration progress: The acquisition of OfferFit, an AI decisioning engine provider, was quickly integrated, leading to new cross-regional wins and accelerating AI-driven product expansion. Magnuson described OfferFit as "a best-of-breed platform for autonomous one-on-one personalization."
• AI feature adoption: Rapid uptake of Braze’s AI and machine learning tools was reported across customer segments, particularly in verticals such as retail and media. These tools have lowered barriers to advanced analytics and improved marketer productivity, enhancing Braze’s differentiation.
• Sales execution improvements: Management highlighted increased sales productivity and improved pipeline qualification, supported by a more judicious allocation of sales resources across geographies and verticals. This has led to higher win rates against both legacy marketing clouds and point solutions.
• Premium messaging and channel innovation: Growth in premium messaging channels, especially outside the U.S., was supported by the introduction of flexible credits and new channel capabilities, such as landing pages and content cards. This multichannel adoption was cited as a key factor in customer retention and account expansion.

Drivers of Future Performance

Braze expects product innovation in AI and continued enterprise adoption to underpin its growth outlook, while disciplined cost management aims to support rising profitability.

• AI-led product expansion: Management believes the integration of OfferFit’s reinforcement learning and Braze’s own generative AI capabilities will drive higher customer value, with new offerings and deployment models set to be announced at the Forge conference. The company anticipates high attach rates in its enterprise segment.
• Operating leverage focus: CFO Isabelle Winkles cited ongoing efficiency gains from cost-optimized locations and disciplined hiring as key to improving non-GAAP margins, though she noted that internal AI tools are “still early days” in driving material cost savings.
• Retention and macro risks: While recent stabilization in net retention rates is encouraging, management acknowledged that macroeconomic caution and lingering switching costs may continue to dampen deal cycles and upsell velocity, especially in less expansionary environments.

Catalysts in Upcoming Quarters

Looking forward, StockStory analysts will be closely monitoring (1) the pace of OfferFit by Braze adoption and its impact on upsell opportunities; (2) customer engagement with new AI-driven features announced at the Forge conference; and (3) further expansion in large enterprise accounts across international markets. The trajectory of net revenue retention rates and ongoing sales productivity improvements will also be key indicators of Braze’s ability to sustain profitable growth.

Braze currently trades at $31.94, up from $27.70 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).

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