Prospectus Summary
PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our Class A common stock. You should read this entire prospectus carefully, including the sections titled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and our consolidated financial statements and the related notes included elsewhere in this prospectus, before making an investment decision. Unless the context otherwise requires, all references in this prospectus to “Braze,” the “company,” “we,” “our,” “us” or similar terms refer to Braze, Inc. and its subsidiaries. Our fiscal year ends January 31.Mission
Our mission is to forge human connections between consumers and the brands they love through relevant and memorable experiences.
Overview
Braze is a leading comprehensive customer engagement platform that powers customer-centric interactions between consumers and brands. Our platform empowers brands to listen to their customers better, understand them more deeply and act on that understanding in a way that is human and personal. Using our platform, brands ingest and process customer data in real time, orchestrate and optimize contextually relevant, cross-channel marketing campaigns and continuously evolve their customer engagement strategies. As of July 2021, more than 1,000 customers around the world trust Braze with their most valuable assets: their customer relationships. Over the past three years, the scale of our platform has grown substantially. Our platform enabled interactions with 3.3 billion monthly active users via our customers’ apps, websites and other digital interfaces in July 2021, up from 2.3 billion in January 2020 and 1.6 billion in January 2019. In fiscal year 2021 alone, we processed over seven trillion consumer-generated data points on our platform, and our customers sent approximately one trillion messages to their consumers using our platform.
Today, consumers can interact with a seemingly unlimited number of brands anytime, anywhere, resulting in a dramatic increase in competitive pressure among brands. At the same time, the data generated from digital experiences and the increased number of consumer touchpoints have provided brands with new opportunities to reach consumers and personalize consumer experiences. But with this opportunity comes greater consumer expectations for highly relevant and seamless cross-channel interactions. These trends have led brands to increase their focus and investment on customer experience – the holistic impression that brands create across the customer journey – to differentiate themselves and form long-lasting customer relationships.
Most marketing platforms available today approach customer engagement on a channel-by-channel basis. Channel-centric strategies often lead to disjointed customer experiences that destroy brand equity and diminish customer loyalty.
We offer a new and different way of thinking about customer engagement. We built our platform on the premise that in order to foster positive customer experiences and long-lasting customer relationships, brands must communicate with consumers in human-like ways. To ensure that interactions between brands and consumers have the same relevance and cross-channel continuity as human interactions, we avoid channel silos so that each channel is aware of activity occurring in other channels and is able to react to that activity in real time.
The real-time nature of the interactions we enable is made possible by our proprietary, enterprise-grade stream processing architecture. This architecture receives, contextualizes and responds to first-party customer data in the moment. We have designed it to mimic the human ability to listen, process new information in context and react instantaneously.
We vertically integrate our orchestration, classification and personalization capabilities such that coordinating between them is simple and fast. Meanwhile, we decouple our data ingestion and message sending capabilities from the channels they support. This enables our capabilities to be centralized and available across channels and easily extensible to new channels. We support interactions across in-product and out-of-product messaging channels. Today, our in-product messaging channels consist of Content Cards, which are pieces of personalized content embedded into a brand’s website or application, and in-app and in-browser messages. Our out-of-product channels include, but are not limited to, mobile push notifications, web push notifications, email, SMS and MMS messages, webhooks, Facebook and Google advertisements and multiple over-the-top, or OTT, media services and connected TV channels.
Braze unleashes the power of interdisciplinary teams by serving numerous stakeholders, beyond traditional marketers, including product and engineering teams and business intelligence teams. Our platform produces valuable data that informs decisions and actions across the entire customer engagement spectrum. Our messaging capabilities transcend marketing use cases, often being used for product or transactional use cases that facilitate or enhance the consumer’s experience with the brand or product.
We enable brands to easily integrate our platform with both their in-house technical infrastructure and our expanding partner ecosystem of best-in-class technologies. Our customers can import data from other systems into any layer of our technology stack via our application programming interfaces, or APIs. They can also use Braze Currents to stream data in real time to those systems, which increases the return on our customers’ other technology investments. We support direct integrations with cloud data service providers such as Snowflake, customer data management platforms such as Segment, analytic solutions such as Amplitude, and other components of the modern marketing technology ecosystem.
Our platform is designed to serve the needs of customers across sizes, stages of growth, industries and geographies. As of July 31, 2021, we had 1,119 customers, up from 890 customers as of January 31, 2021 and 728 customers as of January 31, 2020. Our customers include many established global enterprises and leading technology innovators. We employ a land-and-expand business model centered around offering products that are easy to adopt and have a rapid time to value. We expand our reach within existing customers when our customers add new channels, purchase additional subscription products such as Braze Currents, implement new engagement strategies or onboard new business units and geographies. We also grow as our customers grow because our pricing is based in large part on the number of consumers that our customers reach and the volume of messages our customers send. We believe our successful land-and-expand strategy is evidenced by our dollar-based net retention rate, which for the trailing 12 months ended July 31, 2021, January 31, 2021 and January 31, 2020 was 125%, 123% and 126%, respectively, for all our customers, and 135%, 133% and 127%, respectively, for our customers with annual recurring revenue, or ARR, of $500,000 or more. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors Affecting Our Performance” for additional information regarding our customers and our dollar-based net retention rate.
We have grown significantly in recent periods. We generated revenue of $150.2 million and $96.4 million in fiscal year 2021 and fiscal year 2020, respectively, representing year-over-year growth of 56%. We generated revenue of $103.6 million and $67.9 million in the six months ended July 31, 2021 and 2020, respectively, representing period-over-period growth of 53%. We had net losses of $32.0 million, $31.8 million, $25.8 million and $12.4 million in fiscal year 2021, fiscal year 2020 and the six months ended July 31, 2021 and 2020, respectively. We had net cash used in operating activities of $6.1 million, $7.4 million, $8.4 million and $0.2 million in fiscal year 2021, fiscal year 2020 and the six months ended July 31, 2021 and 2020, respectively. Our free cash flow was $(10.4) million, $(9.9) million, $(10.3) million and $(3.0) million in fiscal year 2021, fiscal year 2020 and the six months ended July 31, 2021 and 2020, respectively. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Free Cash Flow” for additional information about how we calculate free cash flow, a non-GAAP financial metric.
Industry Trends
Consumers Expect Real-Time, Personalized Brand Interactions Across Channels
In the last decade, rapid innovations in consumer communication technologies, primarily mobile devices and mobile applications, have enabled brands to increase their understanding of and access to consumers. These innovations have also raised consumer expectations around messaging relevance. Expectations for relevance are no longer limited to including the customer’s name in the subject line of an email. Consumers now expect brands to recognize them as individuals with constantly evolving needs and desires, not as static database entries.
Meeting consumers’ expectations for messaging relevance is not only more difficult but also more critical than ever. As consumers become increasingly inundated with marketing emails, text messages and other digital communications, generic information blasts are less likely to be effective and may put a brand’s most valuable asset — their customer relationships — at serious risk.
Delivering customer experiences relevant to individual consumers requires a customer engagement strategy that is customer-centric rather than channel-centric. Channel-centric strategies often lead to a siloed understanding of customers, resulting in disjointed customer experiences that destroy brand equity and diminish customer loyalty.
A customer-centric customer engagement strategy requires customer-centric technology. When consumer profiles or customer journey management are decentralized across channels, brands are unable to deliver cohesive customer experiences. A siloed understanding of consumers also limits a brand’s ability to deliver relevant messages since a single channel represents only a small portion of a consumer’s attention and behavior.
Customer Experience is the New Battleground for Brands
Given the permanent shift in consumer behavior toward digital and mobile transactions, which was significantly accelerated by the COVID-19 pandemic, today’s consumers can transact with a seemingly unlimited number of brands anytime, anywhere. The abundance of options available to consumers has resulted in a dramatic increase in competitive pressure among brands. Meanwhile, the data generated from digital experiences provides brands with new opportunities to enhance customer experience via real-time personalization. Together, these forces have brought the customer experience to the forefront of brands’ strategic focus.
First-Party Data is Critical for Effective Customer Engagement
First-party data includes information consumers share directly with a brand, as well as individual behaviors and interests demonstrated through the actions consumers take within a brand’s applications, websites and other digital interfaces. Such data is typically reliable because a brand knows how it is collected and relevant because it relates directly to the consumer’s use of a brand’s products. It is also typically more current than third-party data because it does not need to travel through multiple parties. Importantly, use of first-party data tends to be more respectful of consumers because it is held only by brands with whom consumers have chosen to engage. As a result, brands who design their data-driven marketing strategies to leverage first-party sources may be more likely to maintain consumer trust and are better prepared to navigate the ever-evolving, privacy-focused regulatory environment. Moreover, third-party data is becoming increasingly aggregated or anonymized due to privacy concerns, devaluing it further. This increases the competitive advantage that first-party data provides.
Customer Engagement Demands Cross-Functional Collaboration
Delivering a cohesive customer journey in a world of vast and competing consumer touchpoints demands sophisticated technology in the hands of interdisciplinary teams. For example, in order for a brand’s out-of-product communications to be consistent and work in concert with its in-product content, marketing and product teams must collaborate and share customer data.
Further, we believe that organizations that embrace a culture of experimentation, and use our platform to continuously test the efficacy of these experiments, see improved customer engagement and greater return on investment.
Challenges with Existing Solutions
Legacy marketing clouds and emerging customer engagement technologies generally suffer from several of the following limitations:
The Braze Platform
Our comprehensive customer engagement platform enables authentic, real-time relationships between consumers and the brands they love. We enable brands to perform three core functions: listen to their customers better, understand them more deeply and act on that understanding by communicating with them in a way that is human, relevant and personal.
Our platform facilitates these core functions through five functional layers that are unified by an interactive feedback loop of continuously flowing data. Brands can easily and securely supplement that data by plugging into any layer of the technology stack via APIs. Additionally, using Braze Currents, they can continuously and automatically export consumer event and campaign interaction data to their internal data storage systems and to Braze partners.
Listen
Data Ingestion: We enable brands to listen to their consumers. To implement our platform, brands integrate software directly into their digital consumer interfaces, such as their websites and mobile applications, enabling consumer data to flow automatically into our platform. Brands can then understand where, when and how consumers interact with them. This helps them to build comprehensive consumer profiles that evolve alongside each individual consumer’s personal journey.
Understand
Classification: Our customers can build granular audience segments based upon each consumer’s demographics, past behaviors, and current actions. Once created, audience segments in our platform are continuously updated in real time to reflect each consumer’s ongoing behaviors. This is designed to ensure that consumers receive only messages that are likely to be relevant to them at a particular point in time.
Orchestration: Brands use our orchestration capabilities to deliver contextually relevant messages, whether as part of a single campaign or as part of a broader effort to engage with consumers throughout their brand relationships.
Personalization: Brands use our platform to customize their messaging content based on the information they learn in real time and on what they know already about each individual consumer, resulting in messages that are human, relevant and personal.
Act
Action: Having listened to and understood their consumers, brands are then able to use our platform to execute marketing strategies that are focused and relevant. Brands can send messages to their consumers via both in-product and out-of-product channels.
We have a vertically integrated technical infrastructure that encompasses all of the engagement functionality between data ingestion and action. By tightly integrating layers of product functionality into a single, comprehensive platform, we can optimize the relationships between layers to minimize latency and complexity.
Our technology is built on a unified stream processing architecture. This architecture enables us to turn data into action and action back into data in real time. This provides a significant advantage over architectures that rely on batch processing technology. Any action taken by a consumer in response to a brand’s message flows immediately back into the data ingestion layer of our platform (thus serving as an input to subsequent interactions), creating a real-time interactive feedback loop.
Data created and processed by our platform can also be streamed to third-party partners. Braze Currents facilitates continuous and automatic high-volume data exports and extends the ability to stream data in real time through our customers’ technology stacks and through our third-party data partners.
Our Competitive Strengths
Cross-Channel Approach, Enabling Customer-Centric Experiences
Our cross-channel engagement approach enables customer-centric experiences. We build a more complete picture of the customer and draw insights from data to inform strategy, enabling brands to tactically deploy channels according to each channel’s strengths and proven customer preferences.
Our architecture ensures that our capabilities can be used across all of our channels, maximizing the impact of new feature development. Additionally, when we add new channels, they immediately benefit from all of the existing features that we have already built, which makes them fully robust from the outset.
The applicability of features across all channels, combined with our intuitive user interface, allows our customers to quickly and easily construct cross-channel consumer journeys without the need to learn different skills for each channel or be constantly retrained. This is accomplished without sacrificing the unique qualities or capabilities associated with each individual channel that we support.
Data Streaming Architecture Processes First-Party Data in Real Time
The real-time nature of the interactions we enable is made possible by our proprietary, enterprise-grade stream processing architecture. This architecture receives, contextualizes, and responds to first-party customer data in the moment. Our platform allows for high-volume, continuous data streaming, providing a live view of the various interactions that consumers are having with a brand. Unlike batch processing, where data is processed only when a specific time or threshold is hit, our data streaming architecture processes each unit of data as it is created. Real-time data processing enhances messaging relevance, while delayed data processing often leads to irrelevant messages and frustrated consumers.
We not only process data but also create analytical data. When a consumer interacts with an out-of-product marketing campaign or a website or application with the Braze SDK embedded, that consumer generates data that is processed and contextualized with existing data in real time.
Value Propositions Across the Organization
While for many brands the marketing organization has traditionally owned overall responsibility for customer engagement, cross-functional collaboration enhances the experience for the customer and improves the return on investment for the marketing organization. For brands that take a collaborative approach, marketing teams work hand-in-hand with other groups within the organization, including data, product and engineering teams to optimize customer engagement.
Braze unleashes the power of interdisciplinary teams by serving numerous stakeholders, beyond traditional marketers, including product and engineering teams, and business intelligence teams. Our platform produces valuable data that informs decisions and actions across the entire customer engagement spectrum. Our messaging capabilities transcend marketing use cases, often being used for product or transactional use cases that facilitate or enhance the customer’s experience with the brand or product.
Rapid Time to Value
Our platform’s ease of use and seamless integration into existing technologies, coupled with the high value data and insights that it generates, enables brands to develop and run campaigns that meet their strategic goals quickly and efficiently. Using our intuitive user interface, individuals across all roles and technical skill levels can design and quickly deploy multi-message, multi-channel, A/B-tested strategies, with the process of new campaign creation accelerating over time.
High Performance at Scale
As brands continue to globalize and conduct more of their business digitally, they need a scalable customer engagement platform. Our platform enabled interactions with 3.3 billion monthly active users via our customers’ applications, websites and other digital interfaces in July 2021, up from 2.3 billion in January 2020 and 1.6 billion in January 2019. Our scalability distinguishes our platform from point solutions, and we can handle the biggest of enterprise needs. We facilitate the rapid delivery of a high volume of messages, which enables us to power a brand’s highest-volume events, whether they are expected, like Black Friday, or unexpected, like the sudden surge of food delivery demand during the COVID-19 pandemic. Forrester Research, Inc., or Forrester, has recognized the company as a Leader in “The Forrester Wave™: Cross-Channel Campaign Management (Independent Platforms), Q3 2021.” Braze received the highest score in the Strategy category. The company was also named a Leader in “The Forrester Wave™: Mobile Engagement Automation, Q3 2020,” where it earned the highest scores in both the Current Offering and Strategy (tied) categories.
Seamless, Real-Time Interoperability across the Customer Engagement Technology Stack
Our open APIs support easy-to-implement integrations with an expanding selection of technology partners, which we refer to as Braze Alloys, other third-party technology providers and in-house systems. These integrations allow our platform to import and export data to and from a wide variety of sources.
These seamless integrations with technology partners not only enrich the consumer insights collected by our platform but also increase the return on other technology investments by allowing other systems and tools to benefit from or add to the data and insights collected by our platform.
For example, a food delivery app may combine a consumer’s food preferences with weather data to either send a campaign to encourage a consumer to order in their favorite foods when a blizzard is forecasted or skip the “order-in tonight” discount on days when the weather is sunny. A retailer might reach out to a consumer when a favorite article of clothing goes on sale after confirming with their inventory management technology that the particular article of clothing is in stock in the consumer’s size and color preference.
Customer Engagement Expertise and Highly Engaged Community
When brands partner with us, they get access to strategic and technical advice from our experts and from a community of like-minded, forward-thinking marketers and product leaders.