Braze Inc (BRZE) Q3 2025 Earnings Call Highlights: Strong Revenue Growth Amidst Cash Flow Challenges

Braze Inc (BRZE), a leading customer engagement platform, reported strong revenue growth in its fiscal third quarter of 2025, despite facing cash flow challenges. The company's earnings call highlighted its impressive performance and strategic initiatives to address its cash flow concerns.

Strong Revenue Growth

Braze's revenue surged by 22.7% year-over-year to $152.1 million in Q3 2025, driven primarily by new customer acquisitions, upsells, and renewals. The company added 200 new customers, bringing its total to 2,211, with 234 customers having annual recurring revenue (ARR) of $500,000 or more. Subscription revenue increased to $146.3 million, up 22.7% year-over-year, reflecting the platform's growing appeal and effectiveness.



Cash Flow Challenges

Despite its impressive revenue growth, Braze faces cash flow challenges. Net cash used in operating activities totaled $11.4 million in Q3 2025, compared to $2.0 million in the same period last year. Free cash flow stood at $(14.2) million. The company's cash flow issues can be attributed to increased stock-based compensation expenses, which contributed significantly to its operating loss.



Strategic Initiatives for Cash Flow Improvement

To address its cash flow concerns, Braze is exploring several strategic initiatives:

1. Optimize pricing strategy: Braze could review its pricing strategy to ensure it aligns with the value it provides to customers. This could involve adjusting pricing tiers, introducing new plans, or offering discounts for long-term commitments to boost revenue and improve cash flow.
2. Reduce customer acquisition costs (CAC): Braze could focus on reducing CAC by leveraging its existing customer base for referrals, improving marketing efficiency, or exploring partnerships to acquire customers at a lower cost. This would help maintain revenue growth while improving cash flow.
3. Improve customer retention: Braze could invest in customer success and retention strategies to reduce churn and increase the lifetime value of its customers. This could involve enhancing customer support, offering personalized experiences, or providing additional value-added services to drive revenue growth and improve cash flow.
4. Explore strategic partnerships: Braze could form strategic partnerships with complementary businesses to expand its customer base, enter new markets, or offer bundled services. These partnerships could help drive revenue growth and improve cash flow by leveraging the partner's resources and customer base.
5. Review stock-based compensation: Braze could review its stock-based compensation expenses, which contributed significantly to its operating loss in Q3 2025. By optimizing these expenses, the company could improve its operating margin and cash flow without compromising its ability to attract and retain talent.

Braze's strong revenue growth in Q3 2025 is a testament to the platform's ability to attract and retain clients. However, the company must address its cash flow challenges to ensure sustainable growth and maintain investor confidence. By implementing the strategic initiatives outlined above, Braze can work towards improving its free cash flow while maintaining its impressive revenue growth.