Braze Plunges 21.8% as Soft Q3 Profit Outlook Overwhelms Fiscal Q2 Beat and Raised Revenue Guide

Braze shares fell 21.8% on September 9, closing at $23.73 and hitting a fresh 52-week low, after investors focused on a weaker-than-expected third-quarter profit outlook that overshadowed an otherwise strong fiscal second-quarter report. The stock had already dropped roughly 10-16% in pre-market trading before the selling intensified through the session.

For its fiscal second quarter ending July 31, 2026, Braze reported revenue of $227 million, up 26% year over year and 8% sequentially, beating consensus. Non-GAAP operating income reached $22 million, or 9.7% of revenue, compared with $6 million, or 3.4%, in the year-ago quarter. Non-GAAP net income came in at $21 million, or $0.19 per share, up from $0.15 per share a year earlier. Free cash flow hit a record $22 million for a second quarter, quadrupling from $4 million the prior year.

The company raised its full-year fiscal 2027 revenue outlook to $910 million to $913 million, implying roughly 23% growth at the midpoint, and guided non-GAAP operating income to $75.5 million to $76.5 million with earnings per share of $0.64 to $0.65. The problem for investors was the third-quarter profit guide: Braze projected adjusted EPS of $0.13 to $0.14, below Street models, even though its Q3 revenue guidance of $229 million to $230 million, representing approximately 20% year-over-year growth, came in above consensus. Management attributed the margin pressure to costs tied to its Forge customer conference and other global events, as well as a planned acceleration of sales capacity hiring ahead of the next fiscal year.

On the operating side, total customers reached 2,789 as of July 31, up 15% year over year, and the number spending at least $500,000 annually grew 28% to 361, accounting for 65% of annual recurring revenue. Dollar-based net retention for that large-customer cohort rose to 112%, up from 111% the prior quarter. BrazeAI tool adoption among large customers reached roughly one-third, up 900 basis points from the prior quarter. The company also announced a three-year strategic collaboration with Amazon Web Services, establishing a co-selling motion and joint go-to-market commitments. Analysts at Raymond James advised investors to buy the dip, characterizing Braze as a secular winner, while peer Klaviyo advanced roughly 3% on the day, underscoring that the selloff was company-specific rather than sector-wide.