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With a 23% year-over-year (YoY) increase in revenue and $600M in ARR, Braze rounded out the Q3 2024 (its FY 2025) earnings results for the cohort. It also gave a forecast for the current quarter and a preview of its Black Friday / Cyber Monday (BFCM) traffic.
Disclaimer: This is not stock advice. Everything about the messaging business interests me, including asset pricing. Use your judgment to invest your money.
The Good—Strong Revenue, Messaging, and WhatsApp Growth
Revenue came in at $151M, up 23% YoY, marking the second consecutive quarter of positive operating expenses. Braze achieved notable success in replacing marketing clouds such asSalesforce and Adobe, along with wins against channel-specific point solutions and legacy marketing products. The quarter closed with $600M in ARR.
Customers with $500K ARR were up YoY, as was BFCM volume. Enterprise customers achieved a 116% dollar-based retention rate.
Over the four-day Thanksgiving period, Braze sent over 50 billion messages, a 35% YoY increase. During Q3, rich messaging, including WhatsApp, grew by 36%.
Braze expects Q4 revenue to range between $155M and $156M, a 19% YoY increase. The company also forecasted 25% revenue growth for 2025, likely driven by its enterprise book of business (more on this later).
The Interesting—Data Platform, WhatsApp, RCS
Perhaps the most interesting part was Braze leaning into the Braze Data Platform. Retailers worldwide want first-party data, and there’s a fight among martech vendors to give it to them. Braze, following Klaviyo, is jumping into that fight.
In CPaaS, expanding into more messaging mediums is a margin-expanding opportunity. This quarter, Braze added Line and WhatsApp messaging and announced early access to Premium RCS messaging in the US and UK.
In a reflection of the post-pandemic cleanup that the SaaS industry went through, there has been “a dislocation of marketers” who have switched jobs. This has worked in their favor. Folks who used Braze in their old jobs ended up bringing Braze to their new roles.
And Finally—The Unknown: The Market
During the Q&A, both Bill (CEO) and Isabelle (CFO) addressed the challenging demand environment. The SMB sector continues to pose issues for Braze, to the point that it’sreduced its sales capacity in that area. Even in the enterprise space, renewals are shifting; some contracts are now focused on immediate needs rather than pre-purchasing credits with the expectation of future growth.
Despite being the only player in the cohort to commit to a 2025 revenue target, Braze acknowledges the uncertainty of the times.