Table of Contents
Overview of Financial Performance
Braze, Inc. (Ticker: BRZE), a customer engagement platform provider, has reported significant operational updates in its latest SEC filing. Amid the challenges posed by intense competition, regulatory changes, and market risk, Braze has strategically emphasized managing free cash flow and liquidity to ensure continued operational performance and progress towards its goal of positive free cash flow.
Improvement in Non-GAAP Free Cash Flow
In the three months ended April 30, 2023, Braze, Inc. witnessed an improvement in its non-GAAP free cash flow, which increased from $15,655 thousand in 2022 to $21,657 thousand in 2023. This increase primarily owed to higher collections aligned with seasonal billings and renewals. The company outlines the importance of free cash flow as a liquidity indicator and a measure of its ability to generate or necessitate additional cash sources for operations and investment.
Free Cash Flow Reconciliation
Braze also presented a reconciliation of free cash flow to the most directly comparable GAAP measure — net cash provided by operating activities — highlighting the $4.9 million improvement year-over-year. While free cash flow is an essential non-GAAP metric for investors, Braze cautions against considering it in isolation and emphasizes understanding its limitations as an analytical tool.
Liquidity and Capital Resources
On the liquidity front, Braze maintains that its available cash, cash equivalents, and marketable securities, which stood at $507.4 million as of April 30, 2023, will be sufficient to meet working capital and capital expenditure requirements for at least the next twelve months. The management’s discussion of liquidity considers various factors, including revenue growth and costs to support customer and business growth.
Facing Existing Commitments
Additionally, Braze faces significant commitments, including employee compensation and non-cancelable purchase commitments for clouds hosting and infrastructure services, totaling $239.6 million. Also highlighted are the seasonality impacts on its cost of revenue and the effects of foreign exchange rates on international funding requirements for foreign jurisdiction obligations.
Addressing Material Weakness in Internal Controls
The company also notes that despite having a material weakness in internal controls over financial reporting related to revenue recognition, there have been no material misstatements in current or previously reported financial statements. Braze is actively working on remediation efforts to enhance its revenue process controls, including developing IT general controls and enhancing review procedures for applications used in recording revenue.
Conclusion
In conclusion, Braze, Inc.’s SEC report details the company’s diligent focus on non-GAAP financial measures like free cash flow and liquidity assessment, essential for evaluating operational performance and investment potential. Despite challenges in an uncertain environment with seasonality effects and foreign currency exchange risks, Braze is focused on ensuring financial stewardship, managing its substantial commitments, and enhancing internal financial controls for future fiscal robustness and corporate integrity.
Income Statement
Financials in millions USD. Fiscal year is February – January. source
| Year | 2022 | 2021 | 2020 | 2019 | |
|---|---|---|---|---|---|
| 0 | Revenue | 355.43 | 238.04 | 150.19 | 96.36 |
| 1 | Revenue Growth (YoY) | 49.32% | 58.49% | 55.86% | – |
| 2 | Cost of Revenue | 115.82 | 78.51 | 54.51 | 35.69 |
| 3 | Gross Profit | 239.61 | 159.52 | 95.68 | 60.68 |
| 4 | Selling, General & Admin | 290.46 | 178.7 | 98.62 | 73.87 |
| 5 | Research & Development | 97.29 | 59.03 | 29.21 | 20.34 |
| 6 | Operating Expenses | 387.75 | 237.74 | 127.83 | 94.21 |
| 7 | Operating Income | -148.14 | -78.21 | -32.15 | -33.53 |
| 8 | Other Expense / Income | -9.76 | -1.33 | -0.94 | -2.18 |
| 9 | Pretax Income | -138.38 | -76.88 | -31.22 | -31.36 |
| 10 | Income Tax | 0.58 | -0.17 | 0.54 | 0.45 |
| 11 | Net Income | -138.97 | -76.72 | -31.75 | -31.81 |
| 12 | Shares Outstanding (Basic) | 95 | 35 | 18 | 16 |
| 13 | Shares Outstanding (Diluted) | 95 | 35 | 18 | 16 |
| 14 | Shares Change | 170.99% | 94.17% | 11.01% | – |
| 15 | EPS (Basic) | -1.47 | -2.20 | -1.77 | -1.96 |
| 16 | EPS (Diluted) | -1.47 | -2.20 | -1.77 | -1.96 |
| 17 | Free Cash Flow | -39.01 | -39.77 | -10.43 | -9.92 |
| 18 | Free Cash Flow Per Share | -0.41 | -1.14 | -0.58 | -0.61 |
| 19 | Gross Margin | 67.41% | 67.02% | 63.71% | 62.97% |
| 20 | Operating Margin | -41.68% | -32.86% | -21.41% | -34.80% |
| 21 | Profit Margin | -39.10% | -32.23% | -21.14% | -33.01% |
| 22 | Free Cash Flow Margin | -10.98% | -16.71% | -6.95% | -10.29% |
| 23 | EBITDA | -133.77 | -74.11 | -29.63 | -30.71 |
| 24 | EBITDA Margin | -37.64% | -31.13% | -19.73% | -31.87% |
| 25 | Depreciation & Amortization | 4.62 | 2.77 | 1.59 | 0.65 |
| 26 | EBIT | -138.38 | -76.88 | -31.22 | -31.36 |
| 27 | EBIT Margin | -38.93% | -32.30% | -20.78% | -32.54% |
Note that we may hold securities mentioned in this article. All data is based on recent SEC filings. Even though we have implemented various manual and automatic fact-checking and data acquisition processes, some incorrect information may have slipped through (false positive). Let us know if you find any inconsistencies!