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Braze delivered double-digit growth, beat Q3 expectations, and raised Q4 guidance. Large customers showed up in force, and AI moved from narrative to measurable contribution. At the same time, gross margins slipped, likely driven by WhatsApp’s mix, retention stabilized but did not rebound, and the AI cost model remains carefully fenced.
The Good — Double-Digit Growth, Improved CRPO
Revenue grew 25.5% YoY to $191M, with organic growth accelerating for the second straight quarter to 22.3% when excluding OfferFit.
Braze added 106 net new customers sequentially and 21 new $500k-plus customers this quarter, up 29% YoY. Large customers now represent 63% of ARR, up from 61% a year ago. That mix shift continues to be the most reliable indicator of platform depth and durability.
CRPO (see discussion on ARR and CRPO) rose to $573M, up 25% YoY and 3% sequentially. Total RPO reached $891M. Contract lengths remain steady at just over two years, suggesting growth is not being pulled forward by longer deal terms. Bookings, backlog, and revenue continue to move together.
Profitability continued to improve. Non-GAAP operating income reached $5M, a 2.7% margin, versus a loss a year ago. Free cash flow was $18M in the quarter, supported by $21M in operating cash flow. Sales and marketing efficiency improved meaningfully, falling to 46% of revenue from 49% a year ago.
OfferFit, now branded as BrazeAI Decisioning Studio, contributed $4.8M in revenue and roughly two points of YoY growth.
The Interesting — WhatsApp and BFCM
From Black Friday through Cyber Monday, WhatsApp message volume grew more than 90% YoY. Combined with management’s explicit comment that brands do not scale WhatsApp spend unless ROI is working, it is telling that WhatsApp emerged as a meaningful driver of growth this quarter. More telling, there was no mention of RCS.
WhatsApp growth also helps explain why gross margin slipped again. As premium channels become central to conversion strategy, they push Braze up the value curve while pulling margins down, at least in the near term.
The Unknown — Retention, AI-as-Enabler
Retention is stable, not rebounding. Dollar-based net retention held at 108% overall and 110% for large customers. In-quarter organic net retention ticked slightly above 107% for the second straight quarter, but the recovery remains slow. The company is still not back to its heyday of 117%.
AI efficiency gains remain mostly theoretical. Management acknowledged that internal AI has not yet driven meaningful cost leverage. Most margin improvement is still coming from headcount placement and operating discipline, not automation.
Decisioning Studio is clearly resonating, but it remains an enterprise sale with long cycles and education overhead. While the pipeline is strong, deals are still driven by replacement cycles and multi-year contracts.
Customers are buying closer to actual usage again and upselling credits earlier when campaigns perform, which is healthier behavior. Switching costs still matter. The replacement cycle is moving from if to when, but timing remains uneven.
Finally
Q3 confirmed the direction Braze set in Q2, and the raised Q4 guidance signals confidence. Given that earnings were released on December 9, that confidence likely reflects concrete wins already in hand. Braze is executing well in a cautious market. Alongside fellow podium leaders Twilio and Klaviyo, it remains one of the few companies reporting double-digit growth. How these leaders convert momentum into durable margins and renewed expansion in 2026 will say a lot about where the rest of the industry is headed.