Quick Overview
- Shares of Braze declined 11% following Q2 earnings release that exceeded analyst projections
- Quarterly revenue reached $227 million, marking a 19% annual increase and surpassing the $220 million forecast
- Non-GAAP earnings per share of $0.19 outperformed the anticipated $0.15
- Market reaction was negative due to disappointing remaining performance obligations (RPO) expansion
- Company increased its fiscal year revenue growth outlook to roughly 23% from previous guidance
Shares of Braze were hovering near $30.31 during Wednesday’s trading session, experiencing an approximately 11% decline despite delivering second-quarter financial results that exceeded analyst expectations across key metrics but disappointed on future revenue indicators.
The customer engagement platform provider posted non-GAAP earnings of $0.19 per share alongside revenue totaling $227.2 million. Wall Street analysts had projected earnings of $0.15 per share with revenue of $220 million, according to FactSet data.
Top-line growth reached 19% on a year-over-year basis, while organic revenue climbed 24% compared to the corresponding period last year. Notably, that organic growth figure represented a deceleration from the 27% expansion recorded in the preceding quarter.
The company’s non-GAAP operating margin landed at 9.7%, significantly exceeding the 8.1% analyst consensus and showing meaningful improvement from the 5.0% margin achieved in the previous quarter. Management also lifted its operating margin projections for fiscal 2027.
BRAZE $BRZE Q2’27 EARNINGS HIGHLIGHTS
🔹 Revenue: $227.2M (Est. $220M) 🟢; +26.2% YoY
🔹 Adj. EPS: $0.19 (Est. $0.16) 🟢; +27% YoY
🔹 Non-GAAP Oper Income: $22.0M (Est. $17.6M) 🟢
🔹 FCF: $21.7M (Est. $11.2M) 🟢FY27 Guide:
🔹 Revenue: $910.0-$913.0 (Est. $898M) 🟢
🔹 Non-GAAP… pic.twitter.com/FWFTJdoerv— Wall St Engine (@wallstengine) September 8, 2026
However, the earnings beat wasn’t sufficient to prevent a sharp selloff. Investor disappointment centered on slower-than-anticipated expansion in remaining performance obligations—a critical forward-looking indicator that reflects future revenue Braze expects to recognize from existing contracts.
Artificial Intelligence Revenue Opportunity Remains Unrealized
William Blair’s Arjun Bhatia, who maintained his Outperform recommendation, attributed the negative market reaction “largely due to lighter RPO quarterly growth while investors wait for the AI monetization catalyst to play out.”
While Braze’s artificial intelligence capabilities are seeing increased adoption among its customer base, this engagement hasn’t yet materialized into accelerated revenue growth. This disconnect between early-stage AI product uptake and measurable financial returns is creating anxiety among shareholders.
Mizuho Securities maintained its Outperform rating while keeping its $32 price objective unchanged. Analysts at the firm highlighted robust bookings fueled by competitive displacement wins and successful upselling initiatives as encouraging takeaways from the results.
Canaccord Genuity elevated its price target to $37 from a lower previous level while reaffirming a Buy rating. Needham maintained its Buy recommendation with a $50 target price, emphasizing revenue growth in the low-to-mid 20% range alongside strengthening operational performance.
Citizens JMP Securities retained a Market Outperform rating accompanied by a $35 price target.
Revenue Outlook Improves While Near-Term Expenses Create Headwinds
Braze elevated its fiscal 2027 revenue growth forecast to approximately 23% year-over-year, representing an upward revision from the previous guidance of around 21%.
Nevertheless, the company’s fiscal Q3 operating margin projection fell short of analyst expectations. Leadership attributed this to expenses related to the upcoming Forge user conference as well as investments in expanding sales team capacity.
The stock has experienced significant volatility throughout the current year. Shares plummeted more than 50% from January through late February before reclaiming most of those declines as concerns about widespread software industry disruption subsided.
According to Mizuho’s InvestingPro valuation framework, the stock appears undervalued compared to Fair Value calculations, with the company’s market capitalization currently standing at approximately $3.41 billion.
The combination of below-consensus Q3 margin guidance and softer RPO performance proved sufficient to outweigh what was otherwise a strong quarterly performance from Braze.
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