Braze, Inc.

1. Company Overview

Description of Business

Braze, Inc., together with its subsidiaries (collectively, the “Company,” “we,” “us,” “our,” or “Braze”), is a cloud-based customer engagement platform that delivers customer-centric experiences across push notifications, email, in-product messaging, SMS, MMS and RCS messages, and more. Customers use the Braze platform to facilitate real-time experiences between brands and customers in a more authentic and human way.

We began operations in 2011 and are incorporated in the state of Delaware. Our headquarters are located in New York City. As of July 31, 2025, we also lease additional office space in over 10 cities across North America, South America, Europe, Asia-Pacific, and the Middle East.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, and variable interest entities (“VIE”) for which we are the primary beneficiary. Intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Certain reclassifications and immaterial changes have been made to prior-period financial statements to conform to the current-period presentation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reported period. We evaluate estimates based on historical and anticipated results, trends, and various other assumptions. Significant items subject to such estimates and assumptions include, but are not limited to, the standalone selling price for separate performance obligations in our revenue arrangements, expected period of benefit for deferred contract costs, the valuation of common stock and stock-based compensation, the allocation of overhead costs between cost of revenue and operating expenses, the estimated useful lives of intangible and depreciable assets, the fair value of acquired assets and assumed liabilities from business combinations, valuation of long-lived assets and their recoverability, including goodwill, the incremental borrowing rate, the valuation of deferred tax assets and liabilities and other tax estimates including our ability to utilize net operating losses.

Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments as facts and circumstances dictate. As future events and their effects, including the uncertainty surrounding rapidly changing market and economic conditions from global or domestic macroeconomic and socioeconomic conditions such as, among others, instability in the banking and financial services sector, international and domestic supply chain risks, inflationary pressure, interest rate increases, declines in consumer confidence, international conflicts and domestic and foreign political unrest, that impact us and our customers, cannot be determined with precision, actual results could differ from those estimates and many of our estimates and assumptions have required increased judgment and carry a higher degree of variability and volatility.

Significant Accounting Policies

Our significant accounting policies are detailed in “Note 2. Summary of Significant Accounting Policies" of the audited annual consolidated financial statements for the fiscal year ended January 31, 2025 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on March 31, 2025 (the “Annual Report”). There have been no material changes to our significant accounting policies with the exception of the below:

Derivative Financial Instruments

When deemed appropriate, we will use derivative instruments to manage exposure to fluctuation in market risks primarily associated with cash flows denominated in foreign currencies. We do not use derivative instruments for trading or speculative purposes.

For our forward exchange contracts that have been designated and qualify as cash flow hedges, the derivative instruments are carried at fair value in our consolidated balance sheets, primarily in the following line items, as applicable: Prepaid expenses and other current assets, Other assets, Accrued expenses and other current liabilities, and Other long-term liabilities. The gains and losses that result from changes in fair value of the derivative instruments for hedges that have been designated and qualify as cash flow hedges are recorded in Accumulated other comprehensive income and are reclassified to earnings in the same period as the underlying hedged item affects earnings. The reclassification from Accumulated other comprehensive income is to the same line item on the consolidated statements of operations to which the hedged items are recorded, typically expected to be within operating expenses. If applicable, the changes in the fair values of derivatives that were not designated and/or did not qualify as hedging instruments are immediately recognized in earnings.

For derivative instruments that will be accounted for as hedging instruments, we formally designate and document, at inception, the financial instrument as a hedge of a specific underlying exposure, the risk management objective and the strategy for undertaking the hedge transaction. In addition, we formally assess, both at inception and quarterly thereafter, whether the financial instruments used in hedging transactions are effective at offsetting changes in the cash flows of the related underlying exposures.

We determine the fair value of our derivatives based on quoted market prices or pricing models using current interest rates. The notional amounts of the derivative financial instruments do not necessarily represent amounts exchanged by the parties and, therefore, are not a direct measure of our exposure to the financial risks described above. The amounts exchanged are calculated by reference to the notional amounts and by other terms of the derivatives, such as foreign currency exchange rates. We do not view the fair values of our derivatives in isolation, but rather in relation to the cash flows of the underlying hedged transactions. Virtually all of our derivatives are straightforward over-the-counter instruments with liquid markets.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentration of credit risk consist primarily of cash and cash equivalents, restricted cash, marketable securities, and accounts receivable. Restricted cash consists of letters of credit related to our leased properties and funds held in escrow corresponding to acquisition related activities. For cash, cash equivalents, restricted cash, and marketable securities, we are exposed to credit risk in the event of default by the financial institutions to the extent of the amounts recorded on the consolidated balance sheets in excess of the Federal Deposit Insurance Corporation (“FDIC”) limits. Cash, cash equivalents, restricted cash, and marketable securities balances are maintained at financial institutions that management believes are of high-credit, quality financial institutions, where deposits, at times, exceed the FDIC limits.

Significant customers are those which represent 10% or more of our total revenue for the period, or accounts receivable at the balance sheets dates. For the three and six months ended July 31, 2025 and July 31, 2024, no customer accounted for 10% or more of our total revenue.

For accounts receivable, we are exposed to credit risk in the event of nonpayment by customers to the extent of the amounts recorded on the consolidated balance sheets. As of July 31, 2025, no customers accounted for 10% or more of our total accounts receivable balance. As of January 31, 2025, one customer accounted for approximately 12% of accounts receivable; no other customer accounted for more than 10% of total accounts receivable balance.

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances reportable segment disclosure requirements primarily through expanded disclosures around significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company adopted ASU 2023-07 as of the fiscal year ended January 31, 2025. The adoption of ASU 2023-07 did not have a material impact on the Company's consolidated financial statements.

In August 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which made targeted improvements to the hedge accounting model with the objective of improving the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The Company adopted ASU 2017-12 as of the three months ended April 30, 2025. The adoption of ASU 2017-12 coincided with the first period of derivative related activities within the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update No. 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures, (“ASU 2023-09”), which requires public business entities on an annual basis to disclose specific categories in a tabular rate reconciliation and provide additional information for reconciling items that meet a five percent quantitative threshold. Additionally, the ASU requires all entities to disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes, as well as individual jurisdictions where income taxes paid are equal to or greater than five percent of total income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted and the updated should be applied on a prospective basis, with a retrospective application permitted in the financial statements. The Company is currently evaluating the impact of the new standard on its consolidated financial statements and related disclosures.

In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update No. 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, (“ASU 2024-03”), which is intended to provide enhanced transparency into the nature of expenses and requires more detailed information on specific expense categories included in certain expense captions presented on the face of the income statement. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The standard may be applied either (1) on a prospective basis or (2) retrospectively to all periods presented in the consolidated financial statements. The Company is currently evaluating the impact of the new standard on the consolidated financial statements and related disclosures.

No other new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material impact on the consolidated financial statements or disclosures.

3. Revenue from Contracts with Customers

Disaggregated Revenue Streams

The following disaggregation depicts the nature, amount, timing and uncertainty of cash flows related to the primary types of revenue from contracts with customers.

The following table presents total revenue by type (in thousands):

The following table presents total revenue by geography (in thousands):

Revenue by geography is determined based on the location of our users. Other than the United States, no other individual country accounted for 10% or more of total revenue for any of the periods presented.

Unbilled Accounts Receivable

Unbilled accounts receivable included in trade accounts receivable, net, which generally arise from our contractual right to bill our customers in advance of services on the contract effective date, were $1.8 million and $1.6 million as of July 31, 2025 and January 31, 2025, respectively.

Contract Balances

Contract Assets

Contract assets as of July 31, 2025 and January 31, 2025 were $1.0 million and $0.8 million, respectively. The change in contract assets for all periods presented primarily reflects revenue recognized in excess of billings partially offset by contract assets earned during the period.

Deferred Revenue

The change in deferred revenue for all periods presented primarily reflects cash payments received during the period for which the performance obligation was not satisfied prior to the end of the period, partially offset by revenues recognized during the period. Revenue recognized during the three and six months ended July 31, 2025 from amounts included in deferred revenue at January 31, 2025, was $71.4 million and $188.1 million, respectively. Revenue recognized during the three and six months ended July 31, 2024 from amounts included in deferred revenue at January 31, 2024, was $59.9 million and $158.3 million, respectively.

Credit Losses

The following table presents a reconciliation of the allowance for credit losses on accounts receivable (in thousands):

Remaining Performance Obligations

The transaction price allocated to remaining performance obligations represents amounts under non-cancelable contracts expected to be recognized as revenue in future periods, and may be influenced by several factors, including seasonality, the timing of renewals, the timing of service delivery and contract terms. Unbilled portions of the remaining performance obligations are subject to future economic risks including bankruptcies, regulatory changes and other market factors.

The following table presents remaining performance obligations as of the dates indicated below (in millions):

4. Variable Interest Entity and Redeemable Non-Controlling Interest

On September 14, 2020, we, along with Japan Cloud Computing Co., Ltd., and M30 LLC, (the “Investors”), entered into an agreement, whereby each Investor agreed to purchase shares of common stock of Braze Kabushiki Kaisha (“Braze KK” and “Braze KK Shares”) for a total purchase price of $10.0 million in two tranches of $5.0 million per tranche in September 2020 and September 2021, to engage in the investment, organization, management and operation of Braze KK focused on the distribution of our products in Japan. The purpose of this arrangement was to further expand our business in the Japanese market.

In March 2022, we consented to the periodic issuance of stock options to purchase Braze KK Shares by certain employees of Braze KK. These options cannot be exercised by the holders thereof prior to the exercise of the call or put options described in more detail below. The Company considers the stock options to be a substantive class of equity, classified as a liability within other long-term liabilities on the consolidated balance sheets. As of July 31, 2025, the liability balance was $1.6 million. The issuance of stock options does not impact our majority stake in Braze KK, as none of the vesting criteria of the options were met as of the balance sheet date. The issuance of stock options did not result in a reconsideration event and therefore Braze KK still met the criteria of a Variable Interest Entity as Braze KK did not have sufficient equity at risk to finance their activities. As a result, we continue to operate Braze KK as a subsidiary, exposing us to business and foreign exchange risk. We consolidate Braze KK and present the results within the consolidated balance sheets, consolidated statements of operations, and consolidated statements of cash flows.

The common stock held by the Investors is callable by us or puttable by the Investors upon certain contingent events. Should the call or put option be exercised, the redemption value would be determined based on a prescribed formula derived from the discrete revenues of Braze KK and the Company and may be settled, at our discretion, with our stock or cash. The non-controlling interest in Braze KK is classified in mezzanine equity as redeemable non-controlling interest as a result of the put right available to the Investors in the future, an event that is not solely in our control. The non-controlling interest is not accreted to redemption value because it is currently not probable that the non-controlling interest will become redeemable.

The following table summarizes the activity in the redeemable non-controlling interests for the periods indicated below (in thousands):

5. Fair Value Measurements

The following table sets forth our financial instruments that were measured at fair value on a recurring basis at the periods indicated below, by level within the fair value hierarchy (in thousands):

Our money market funds and financial instruments are classified as Level 1 within the fair value hierarchy, because they are valued using quoted prices in active markets as of July 31, 2025 and January 31, 2025. Financial instruments, including derivative instruments, are classified as Level 2 within our fair value hierarchy are valued on the basis of prices from an orderly transaction between market participants provided by reputable dealers or pricing services. Prices of these securities are obtained through independent, third-party pricing services and include market quotations that may include both observable and unobservable inputs. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrices and market transactions in comparable investments and various relationships between investments.

There were no transfers of financial instruments among Level 1, Level 2 and Level 3 during the periods presented.

The following table summarizes the fair value changes in the contingent consideration liability in connection with the acquisition of North Star Y, Pty Ltd (in thousands):

(1) Includes measurement period adjustments related to the Company’s preliminary fair values of the assets acquired and liabilities assumed in business combinations, which did not have a material impact on goodwill.

6. Marketable Securities

Marketable securities consist of the following for the periods presented (in thousands):

Accrued interest receivables related to our available-for-sale securities of $3.0 million as of July 31, 2025 and $4.6 million as of January 31, 2025, were included within prepaid expenses and other current assets on the consolidated balance sheets.

The Company’s short-term investments consist of available-for-sale debt securities and term deposits. The term deposits are at cost, which approximates fair value. The weighted-average remaining maturity of the Company’s investment portfolio is approximately one year as of the periods presented. No individual security incurred continuous unrealized losses for greater than 12 months as of July 31, 2025.

The following table summarizes the fair value and gross unrealized losses aggregated by category of individual securities that have been in a continuous unrealized loss position for greater than 12 months (in thousands):

The Company purchases investment grade marketable debt securities which are rated by nationally recognized statistical credit rating organizations in accordance with its investment policy. This policy is designed to minimize the Company's exposure to credit losses. As of July 31, 2025, the credit-quality of the Company’s marketable available-for-sale debt securities had remained stable. The unrealized losses recognized on marketable available-for-sale debt securities as of July 31, 2025 was primarily related to the continued market volatility associated with market expectations in the current interest rate environment. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments and it is not expected that the investments would be settled at a price less than their amortized cost basis. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis. The Company is not aware of any specific event or circumstance that would require the Company to change its assessment of credit losses for any marketable available-for-sale debt security as of July 31, 2025. These estimates may change, as new events occur and additional information is obtained, and will be recognized on the consolidated financial statements as soon as they become known. No credit losses were recognized as of July 31, 2025 for the Company’s marketable debt securities.

The contractual maturities of the investments classified as available-for-sale marketable securities are as follows (in thousands):

Investment Income

Investment income consists of interest income and accretion income/amortization expense on our cash, cash equivalents, restricted cash, and marketable securities. Investment income is included within other income, net on the consolidated statements of operations. The primary components of investment income from marketable securities were as follows (in thousands):

7. Property and Equipment, Net

Property and equipment, net, consist of the following (in thousands):

The total depreciation expense and amortization expense for property and equipment was $2.6 million and $2.4 million during the three months ended July 31, 2025 and 2024, respectively, and $5.3 million and $4.6 million during the six months ended July 31, 2025 and 2024, respectively.

In the three and six months ended July 31, 2025, the Company removed $0.6 million and $0.8 million, respectively, of fixed assets. The remaining movement relates to the impact of foreign currency exchange rate fluctuations.

During the three and six months ended July 31, 2024, the Company removed $0.2 million and $2.3 million, respectively, of fixed assets. In the three months ended July 31, 2024, the fixed assets removed had minimal net impact on the Company’s consolidated financial result. During the six months ended July 31, 2024, the fixed assets removed had a net book value of $0.3 million.

We capitalized internal-use software of $1.3 million and $1.7 million during the three months ended July 31, 2025 and 2024, respectively, and $2.9 million and $3.3 million during the six months ended July 31, 2025 and 2024, respectively. Amortization for capitalized internal-use software costs recognized within cost of revenue on the consolidated statements of operations was $1.1 million and $0.8 million for the three months ended July 31, 2025 and 2024, respectively, and $2.0 million and $1.5 million during the six months ended July 31, 2025 and 2024, respectively.

8. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):

9. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consists of the following (in thousands):

10. Employee Benefit Plans

We sponsor a 401(k) defined contribution plan covering all eligible U.S. employees. Contributions to the 401(k) plan are discretionary. Matching contributions under the plan were $3.7 million and $1.1 million for the three months ended July 31, 2025 and 2024, respectively, and $6.0 million and $3.7 million during the six months ended July 31, 2025 and 2024, respectively.

11. Stockholders’ Equity

Class A and Class B Common Stock

The Company hastwo classes of common stock, Class A and Class B. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting, conversion and transfer rights. Each share of Class A common stock is entitled toone vote. Each share of Class B common stock is entitled toten votes and may be converted at the option of the holder intoone share of Class A common stock. In addition, all shares of Class B common stock will automatically convert into shares of Class A common stock in certain circumstances, including on the earlier of (i) the last trading day of the fiscal quarter during which the number of shares of Class B common stock then outstanding represents less than 10% of the aggregate number of shares of Class A common stock and Class B common stock then outstanding, or (ii) the last trading day of the fiscal quarter immediately following the fifth anniversary of the initial public offering. All shares of the Company’s capital stock outstanding immediately prior to our initial public offering, including all shares held by its executive officers, directors and their respective affiliates, and all shares issuable upon the conversion of our then outstanding convertible preferred stock, were reclassified into shares of Class B common stock immediately prior to the completion of the initial public offering.

Charitable Contributions

In connection with our Pledge 1% commitment, we donated 24,116 and 32,155 shares of our Class A common stock to a charitable donor-advised fund that resulted in the recognition of $0.8 million and $1.3 million of expense within general and administrative in the consolidated statements of operations during the three months ended July 31, 2025 and 2024, respectively.

We donated 48,232 and 32,155 shares of our Class A common stock that resulted in the recognition of $1.9 million and $1.3 million of expense within general and administrative in the consolidated statements of operations during the six months ended July 31, 2025 and 2024, respectively.

12. Employee Stock Plans

We have historically issued equity awards under our Amended and Restated 2011 Equity Incentive Plan (the “2011 Plan”) and our 2021 Equity Incentive Plan (the “2021 Plan”).

Amended and Restated 2011 Equity Incentive Plan

Our 2011 Plan provides for the award of stock options and restricted stock units (“RSUs”) to employees, officers, directors, advisors and other service providers of Braze. The terms of each award and the exercise price of awards under the 2011 Plan are determined by our board of directors. Following effectiveness of the 2021 Plan in connection with our initial public offering, no further awards were made under the 2011 Plan.

2021 Equity Incentive Plan

In November 2021, our board of directors and our stockholders approved the 2021 Plan, which became effective on November 16, 2021. No grants were made under the 2021 Plan prior to its effectiveness. No further grants will be made under the 2011 Plan. At effectiveness, we reserved 25,660,249 shares of our Class A common stock to be issued under the 2021 Plan. In addition, the number of shares of our Class A common stock reserved for issuance under the 2021 Plan will automatically increase on February 1 of each year for a period often years, beginning on February 1, 2022 and continuing through February 1, 2031, in an amount equal to (1)5% of the total number of shares of our common stock (both Class A and Class B) outstanding on the preceding January 31, or (2) a lesser number of shares determined by our board of directors no later than the February 1 increase. On February 1, 2025, the number of shares of our Class A common stock reserved for issuance under our 2021 Plan increased by an additional 5,197,568 shares.

Restricted Stock, Restricted Stock Units, and Performance Stock Units

The following table summarizes unvested RSU and performance stock unit (“PSU”) award activity and related information:

RSUs granted during the six months ended July 31, 2025 contained a service-based vesting condition of up to approximately afour year period. RSUs typically vest on a quarterly basis or have aone year cliff vesting period with quarterly vesting thereafter.

PSUs granted to key executive employees will vest upon achievement of specified performance targets and are subject to continuous service throughout the applicable vesting date. The PSU awards include aone-year performance period within athree-year total requisite service vesting period. The achievement levels range from 0% to 200% of the target award value on the date of grant.

In connection with the OfferFit, Inc. (“OfferFit”) acquisition, the Company issued replacement stock awards in the form of restricted stock. The restricted stock had a total fair value of approximately $67.1 million based on the quoted price of the stock on acquisition date. A portion of the restricted stock was attributed to consideration transferred and was recorded in additional paid-in capital on the consolidated statements of redeemable non-controlling interest and stockholders’ equity in the fiscal quarter ended July 31, 2025. The portion of the restricted stock attributable to post-combination service will be recognized as stock-based compensation expense over the remaining vesting period.

Stock-based Compensation Expense

The following table summarizes stock-based compensation expense, which was included in the consolidated statements of operations as follows (in thousands):

As of July 31, 2025, total compensation cost not yet recognized related to unvested equity awards and the weighted-average remaining period over which these costs are expected to be realized were as follows:

Employee Stock Purchase Plan

In November 2021, our board of directors and our stockholders approved the 2021 Employee Stock Purchase Plan (the “ESPP”), which became effective on November 16, 2021. Following completion of our initial public offering, the ESPP authorized the issuance of 1,825,000 shares of our Class A common stock under purchase rights granted to our employees or to employees of any of our designated affiliates. The number of shares of our Class A common stock reserved for issuance will automatically increase on February 1 of each year for a period often years, beginning on February 1, 2022 and continuing through February 1, 2031, by the lesser of (i)1% of the total number of shares of our common stock (both Class A and Class B) outstanding on the preceding January 31; and (ii)2,737,000 shares, except before the date of any such increase, our board of directors may determine that such increase will be less than the amount set forth in clauses (i) and (ii) above. On February 1, 2025, the number of shares of our Class A common stock reserved for issuance under our ESPP increased by an additional 1,039,513 shares.

The ESPP is implemented through a series of offerings under which eligible employees are granted purchase rights to purchase shares of the Company’s Class A common stock on specified dates during such offerings. Under the ESPP, our board of directors will be permitted to specify offerings with durations of not more than 27 months, and may specify shorter purchase periods within each offering. Each offering will have one or more purchase dates on which shares of our Class A common stock will be purchased for employees participating in the offering. On each purchase date, eligible employees will purchase the shares at a price per share equal to 85% of the lesser of (1) the fair market value of the Company’s Class A common stock on the first trading day of the offering period or (2) the fair market value of the Company’s Class A common stock on the last day of the offering period, as defined by the ESPP.

The Company recognized $1.3 million and $0.5 million of stock-based compensation expense related to the ESPP in the three months ended July 31, 2025 and 2024, respectively, and $2.2 million and $1.3 million during the six months ended July 31, 2025 and 2024, respectively.

As of July 31, 2025, $1.3 million has been withheld on behalf of our employees for a future purchase and is classified as accrued expenses and other current liabilities on the consolidated balance sheets.

During the three months ended July 31, 2025, the Company issued 196,304 shares of Class A common stock under the ESPP. As of July 31, 2025,4,966,315 shares of Class A common stock remain available for issuance under the ESPP.

13. Commitments and Contingencies

Indirect Taxes

We are subject to indirect taxation in some, but not all, of the various U.S. states and foreign jurisdictions in which we conduct business. Therefore, we have an obligation to charge, collect and remit Value Added Tax (“VAT”) or Goods and Services Tax (“GST”) in connection with certain of our foreign sales transactions and sales and use tax in connection with eligible sales to subscribers in certain U.S. states. On June 21, 2018, the U.S. Supreme Court issued an opinion in South Dakota v. Wayfair. The State of South Dakota alleged that U.S. constitutional law should be revised to permit South Dakota to require remote sellers to collect and remit sales tax in South Dakota in accordance with South Dakota’s sales tax statute. Under the U.S. Supreme Court’s ruling, the longstanding Quill Corp v. North Dakota sales tax case was overruled, and states may now require remote sellers to collect sales tax under certain circumstances. We began collecting sales tax in relevant jurisdictions for the fiscal year ended January 31, 2019. As a result of this ruling and given the scope of our operations, taxing authorities continue to provide regulations that increase the complexity and risks to comply with such laws and could result in substantial liabilities, prospectively as well as retrospectively. Based on the information available, we continue to evaluate and assess the jurisdictions in which indirect tax nexus exists and believe that the indirect tax liabilities are adequate and reasonable. Due to the complexity and uncertainty around the application of these rules by taxing authorities, results may vary materially from expectations, and we have recognized liabilities for contingencies related to state sales and use tax, VAT, and GST deemed probable and estimable totaling $3.8 million and $2.9 million as of July 31, 2025 and January 31, 2025, respectively, which is included in accrued expenses and other current liabilities on the consolidated balance sheets.

Legal Contingencies

From time to time, in the ordinary course of business, we are or may be involved in various legal or regulatory proceedings, claims or purported class actions related to, among other things, alleged infringement of third-party patents and other intellectual property rights, commercial, labor and employment, wage and hour and other claims. We have been, and may in the future be, put on notice or sued by third-parties for alleged infringement of their proprietary rights, including patent infringement. We accrue a liability when we believe that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. We believe we have recorded adequate provisions for any such matters and, as of July 31, 2025, we believe that no material loss will be incurred in excess of the amounts recognized in our financial statements.

14. Leases

Leases

The Company’s lease portfolio consists solely of office space with lease terms ranging from approximatelyone toten years. Certain lease agreements include options to renew or terminate the lease, which are not reasonably certain to be exercised and therefore are not factored into the determination of lease payments.

The components of lease cost reflected on the consolidated statements of operations were as follows (in thousands):

The future maturities of the Company’s operating lease liabilities by fiscal year are as follows (in thousands):

The Company's lease terms and discount rates are as follows:

Other information for the Company's leases is as follows (in thousands):

15. Income Taxes

The Company computes its provision for interim periods by applying an estimated annual effective tax rate to anticipated annual pretax income or loss as directed by ASC 740. The estimated annual effective tax rate is applied to the Company’s year-to-date income or loss, and is adjusted for discrete items recorded in the period. The Company recorded an income tax (benefit) expense of $(7.0) million and $0.7 million for the three months ended July 31, 2025 and 2024, respectively. The effective tax rate for the three months ended July 31, 2025 and 2024 was 20.2% and (3.1)%, respectively. The effective tax rate for the six months ended July 31, 2025 and 2024 was 8.6% and (2.6)%, respectively. The decrease in the effective tax rate was primarily due to the impact related to the release of the valuation allowance from the acquisition of OfferFit.

The provision for income taxes and a benefit related to the release of the valuation allowance due to the acquisition of OfferFit recorded for the three and six months ended July 31, 2025 consists of income taxes in state jurisdictions and foreign jurisdictions in which the Company conducts business. The primary difference between the effective tax rate and the statutory rate is the change in the valuation allowance recorded. The Company continues to maintain a valuation allowance against its net deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized. When the Company determines that it will be able to realize some portion or all of its deferred tax assets, an adjustment to its valuation allowance on its deferred tax assets would have the effect of increasing net income in the period such determination is made.

On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes several tax provisions that may impact the Company's future tax position. These provisions include, but are not limited to, the permanent restoration of immediate expensing of domestic research and experimentation expenditures and modifications to the international tax framework. Certain provisions of the legislation are effective in 2025 while others will become effective in 2026. The impacts of OBBBA on our financial statements for the three months ended July 31, 2025 were not material; however, as our business operations or financial results change, or as additional regulations and administrative guidance are issued, we will evaluate any further impacts to our consolidated financial statements.

16. Net Loss per Share

We compute the basic and diluted net loss per share of our Class A common stock and Class B common stock. The rights, including the liquidation and dividend rights, of the Class A common stock and Class B common stock are substantially identical, other than voting rights. Accordingly, the Class A common stock and Class B common stock share in the Company’s net loss.

The following table sets forth the computation of basic and diluted net loss per share attributable to Braze, Inc. common stockholders during the periods presented (in thousands, except per share amounts):

The following outstanding shares of potentially dilutive securities have been excluded from diluted net loss per share attributable to Braze, Inc. common stockholders for the periods presented, because their inclusion would be anti-dilutive (in thousands):

17. Related Party Transactions

In May 2021, the Chief Financial Officer of Datadog, Inc., one of our vendors, joined our board of directors. We have purchased services from Datadog, Inc. in the aggregate amount of approxi mately $0.5 million and $1.7 million during the three and six months ended July 31, 2025, of which $0.5 million was included within accrued expenses and other current liabilities on the consolidated balance sheets. During the three and six months ended July 31, 2024, we purchased $0.4 million and $1.8 million, respectively, of services from Datadog.

18. Derivative Financial Instruments

The Company will use derivative instruments, specifically foreign currency forward contracts, to hedge certain portions of forecasted cash flows denominated in foreign currencies. The foreign currency forward contracts have maturities of up to 12 months or less. The fair value of the derivatives are disclosed on a gross basis on the consolidated balance sheets. Unrealized foreign exchange gains or losses related to those designated cash flow hedge contracts are recorded in Accumulated other comprehensive income and are reclassified into the consolidated statements of operations in the same period when the hedged transaction is recognized in earnings. Cash flows from the settlement of these forward contracts are classified as operating activities on the consolidated statements of cash flows. As of July 31, 2025, the Company had designated cash flow hedge forward contracts with sell notional amounts equivalent to $20.5 million.

The Company will discontinue the cash flow hedges in the event it becomes probable that the underlying forecasted hedged transaction will not occur. The Company did not discontinue any cash flow hedges in the three months ended July 31, 2025. The Company does not anticipate any such discontinuance in the normal course of business.

The following table presents the fair value of the Company’s derivative financial instruments, as well as their classification on the consolidated balance sheets (in thousands):

(1) The Company did not have any active derivative financial instruments in the fiscal year ended January 31, 2025.

The following table presents the impact that changes in fair values of derivatives designated as cash flow hedges had on other comprehensive income, accumulated other comprehensive income, and earnings (in thousands):

(1) The Company did not have any active derivative financial instruments in the fiscal year ended January 31, 2025.

19. Business Combination

Acquisition of OfferFit, Inc.

On June 2, 2025 the Company acquired OfferFit, Inc. The acquisition aims to deepen the integration of OfferFit’s multi-agent decisioning engine into Braze’s Customer Engagement Platform. The total preliminary purchase price consideration of $304.0 million consisted of cash payments of $195.3 million, and $108.7 million in issuances of Braze Class A common stock. The purchase price accounting adjustments primarily included the adjustment to reflect the portion of the fair value of the replacement awards attributable to post-combination service as compensatory. Refer to Note 12 for further details of the replacement awards.

Due to the proximity of the closing date of the acquisition to the balance sheet date, the preliminary purchase price was allocated to the assets acquired and liabilities assumed based on the Company’s best estimate of the fair value at the acquisition date. The Company recognized the estimated fair value of $(1.9) million of net tangible assets. The preliminary purchase price was allocated to intangible assets in the amount of $66.6 million and goodwill in the amount of $239.3 million based on the respective estimated fair values.

The intangible assets acquired in the business combination were developed technology, $56.7 million, customer relationships, $9.0 million, and trademarks, $0.9 million.

The developed technology was valued using an excess earnings method and the key assumptions include the estimates of forecasted sales to be generated from the acquired business, expected obsolescence rate, and technology related expenses. The Company began amortizing the acquired technology on the date of acquisition over a period ofsix years on a straight-line basis. The amortization expense is recorded to cost of revenue in the consolidated statements of operations.

The customer relationships were valued using the with and without method and the key assumptions include the forecasted amount of time and expenses required to recreate the existing customer base. The Company began amortizing the customer relationships on the date of acquisition over a period ofsix years on a straight-line basis. The amortization expense is recorded to sales and marketing expenses in the consolidated statements of operations.

The trademarks were valued using the relief of royalty method and the key assumptions include the forecasted sales to be generated from the acquired business and a comparable royalty rate. The Company began amortizing the customer relationships on the date of acquisition over a period oftwo years on a straight-line basis. The amortization expense is recorded to sales and marketing expenses in the consolidated statements of operations.

The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets and liabilities acquired was recorded as goodwill. The goodwill is primarily attributable to expected synergies to the Company’s ongoing Artificial Intelligence initiatives. The resulting goodwill is not deductible for income tax purposes.

Several indemnification escrows, maintained at an escrow agent, of cash and stock in the total amount of $6.0 million, were recorded within accrued expenses and other current liabilities on the consolidated balance sheets. The indemnification accounts represent security for potential indemnification claims against the seller. The indemnification escrows will be released subject to amounts withheld for actual, pending or potential claims.

A working capital escrow amount of cash and stock in the total amount of $1.3 million, maintained at an escrow agent, has been recorded within accrued expenses and other current liabilities on the consolidated balance sheets. The working capital escrow will be released subject to the completion of post-close adjustment procedures.

Acquisition-related costs totaled $1.4 million and $11.4 million for the three and six months ended July 31, 2025, respectively. These costs are expensed as incurred. Acquisition-related costs are presented within general and administrative expense in the Company’s consolidated statements of operations.

The results of operations of OfferFit from the date of acquisition, which were not material, have been included in the Company’s consolidated statements of operations for the six months ended July 31, 2025.

Acquisition of North Star Y, Pty Ltd

On June 1, 2023, the Company acquired all the outstanding stock of North Star Y, Pty Ltd (“North Star”), Braze’s then exclusive reseller in Australia and New Zealand. The total purchase price consideration, as adjusted, of $26.8 million consisted of cash payments of $20.6 million, $6.1 million in issuances of Braze Class A common stock, and contingent consideration payments, the fair value of which was $1.8 million as of the acquisition date. The preliminary purchase price, as adjusted, was allocated to intangible assets in the amount of $3.8 million and goodwill in the amount of $28.4 million based on the respective estimated fair values. The resulting goodwill is not deductible for income tax purposes. The Company reduced the contingent consideration liability tozero as it was determined that the sellers did not satisfy the earn-out qualifications. The results of operations of North Star, which are not material, have been included in our consolidated financial statements from the date of purchase.

20. Intangible Assets, Net

Intangible assets, net, consisted of the following (in thousands):

Intangible amortization expense was approximately $2.0 million and $0.1 million for the three months ended July 31, 2025 and 2024, respectively, and $2.1 million and $0.3 million during the six months ended July 31, 2025 and 2024, respectively.

The future intangible amortization expense by fiscal year is as follows (in thousands):

21. Goodwill

The changes in the carrying amounts of goodwill were as follows (in thousands):

22. Segments

Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (the “CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. Our Chief Executive Officer is the CODM. The Company derives revenues from customers by providing cloud-based customer engagement platform subscriptions. The Company derives revenue primarily in North America and manages the business activities on a consolidated basis. As such, we haveone operating segment, which is the customer engagement platform segment.

The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. Intra-entity activities are eliminated at the consolidated level. The Company’s method for measuring performance on a single operating and reportable segment basis is net loss. Refer to the consolidated statements of operations. In assessing the performance of the business, the CODM regularly reviews consolidated expense information of both historical and forecasted periods to manage operations of the segment (i.e., the consolidated business).

The CODM reviews assets for Braze’s single reportable segment on a consolidated basis. Refer to the consolidated balance sheets.

23. Subsequent Events

In August 2025, in connection with our Pledge 1% commitment, the Company donated 24,116 shares of our Class A common stock to a charitable donor-advised fund that resulted in the recognition of approximately $0.7 million of operating expense.

In August 2025, the Company granted RSUs for a total of 743,273 shares of Class A common stock to employees pursuant to the 2021 Plan. The RSUs vest over a service period of approximately four years. The grant date fair value of these awards was $19.1 million.