Braze stock tumbles 10% on weak third quarter EPS guidance

Investing.com -- Braze Inc (NASDAQ: BRZE) reported second quarter results that exceeded analyst expectations but issued third quarter earnings guidance that fell short of estimates, sending shares down 10% in after-hours trading Tuesday.

The customer engagement platform reported adjusted EPS of $0.19 for the second quarter, beating the analyst estimate of $0.15 by $0.04. Revenue reached $227.2 million, surpassing the consensus estimate of $220.23 million and representing 26% growth YoY from $180.1 million in the prior year period. However, investor focus shifted to the company's third quarter EPS guidance of $0.13-$0.14, which came in below the analyst consensus of $0.16. The midpoint of $0.135 represents a 15.6% shortfall versus expectations.

For the third quarter, Braze projected revenue of $229-230 million, with a midpoint of $229.5 million exceeding the consensus estimate of $227.8 million. For fiscal 2027, the company guided to EPS of $0.64-$0.65, slightly above the consensus of $0.63, and revenue of $910-913 million, ahead of the $898.7 million estimate.

"Our strong second quarter results underscore the essential role Braze plays for brands globally, delivering 26% year-over-year revenue growth alongside improving operating leverage and record second quarter free cash flow," said Bill Magnuson, Cofounder and CEO of Braze.

The company generated record second quarter cash from operations of $24 million and free cash flow of $22 million, compared to $7 million and $3.5 million respectively in the prior year period. Adjusted operating income reached $22 million, up from $6 million in the second quarter of fiscal 2026.

Braze's customer base grew to 2,789 as of July 31, 2026, up from 2,422 a year earlier. Customers with annual recurring revenue of $500,000 or more increased to 361 from 282 YoY. Dollar-based net retention for all customers reached 110% for the trailing 12 months, compared to 108% in the prior year period.

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