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What changed in Braze, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Braze, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+289 added−312 removedSource: 10-K (2024-04-01) vs 10-K (2023-03-31)

Top changes in Braze, Inc.'s 2024 10-K

289 paragraphs added · 312 removed · 232 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

156 edited+48 added−47 removed333 unchanged
Biggest changeOur estimates and forecasts relating to the size and expected growth of our market may prove to be inaccurate, and our ability to produce accurate estimates and forecasts may be impacted by economic uncertainty that is outside our control, including the uncertainty associated with (1) global and domestic disruptions, such as the COVID-19 19 Table of Contents pandemic, the emergence of new variant strains of COVID-19 or any future similar pandemic and any uncertainties related to the recovery therefrom, (2) international conflicts that may impact international trade and global economic performance, such as the ongoing conflict between Russia and Ukraine and the related economic sanctions imposed by the United States and its trading partners against Russia and Belarus, and (3) other macroeconomic trends, such as instability among financial institutions, international and domestic supply chain risks, inflationary pressure, interest rate increases and declines in consumer confidence, that impact us and our customers.
Biggest changeOur estimates and forecasts relating to the size and expected growth of our market may prove to be inaccurate, and our ability to produce accurate estimates and forecasts may be impacted by economic uncertainty that is outside our control, including as a result of 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.
We track certain operational metrics, including the number of customers, monthly active users, platform enabled interactions, consumer generated data points, customer messages, annual recurring revenue and dollar-based net retention rate and Non-GAAP free cash flow.
We track certain operational metrics, including the number of customers, monthly active users, platform enabled interactions, consumer generated data points, customer messages, annual recurring revenue, dollar-based net retention rate and Non-GAAP free cash flow.
In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, and consumer protection laws.
In the United States, federal, state, and local governments have enacted numerous privacy, data security and data protection laws, including data breach notification laws, personal data privacy laws, and consumer protection laws.
Our obligations related to data privacy and security are quickly changing in an increasingly stringent fashion. These obligations may be subject to differing applications and interpretations, which may be inconsistent or in conflict among jurisdictions. Preparing for and complying with these obligations requires us to devote significant resources (including, without limitation, financial and time-related resources).
Our obligations related to privacy, data protection and data security are quickly changing in an increasingly stringent fashion. These obligations may be subject to differing applications and interpretations, which may be inconsistent or in conflict among jurisdictions. Preparing for and complying with these obligations requires us to devote significant resources (including, without limitation, financial and time-related resources).
Any of these security incidents could result in unauthorized access or damage to, or the disablement, encryption, use or misuse, disclosure, modification, destruction or loss of our data or our partners’ data, including personal information, or disrupt our ability to provide our platform or services. Our platform’s continuing and uninterrupted performance is critical to our success.
Any of these security incidents could result in unauthorized access or damage to, or the disablement, encryption, use or misuse, disclosure, modification, destruction or loss of our data or our partners’ data, including personal data, or disrupt our ability to provide our platform or services. Our platform’s continuing and uninterrupted performance is critical to our success.
Even if we are successful, it is not assured that these relationships will result in increased customer usage of our platform or increased revenue. Risks Related to Privacy, Data Security and Data Protection Laws We are subject to stringent and changing laws and regulations, industry standards and contractual obligations related to privacy, data security and data protection.
Even if we are successful, it is not assured that these relationships will result in increased customer usage of our platform or increased revenue. Risks Related to Privacy, Data Security and Data Protection Laws We are subject to stringent and changing laws, regulations, rules, industry standards and contractual obligations related to privacy, data security and data protection.
Although we endeavor to comply with all applicable data privacy and security obligations, we may at times fail (or be perceived to have failed) to do so. Moreover, despite our efforts, our personnel or third-parties upon whom we rely may fail to comply with such obligations which could impact our compliance posture.
Although we endeavor to comply with all applicable privacy, data security and data protection obligations, we may at times fail (or be perceived to have failed) to do so. Moreover, despite our efforts, our personnel or third parties upon whom we rely may fail to comply with such obligations which could impact our compliance posture.
Operating our business and platform involves the collection, processing, storage and transmission of sensitive, regulated, proprietary and confidential information, including personal information of our customers, their users and our personnel and our customers’ proprietary and confidential information. We may rely upon third-parties (such as service providers) for our data processing–related activities.
Operating our business and platform involves the collection, storage, transmission and other processing of sensitive, regulated, proprietary and confidential information, including personal data of our customers, their users and our personnel and our customers’ proprietary and confidential information. We may rely upon third parties (such as service providers) for our data storage- and data processing–related activities.
If we, our customers or our third-party service providers suffer, or are perceived to have suffered, a security breach or other security incident, we may experience adverse consequences. Applicable data privacy and security obligations may require us to notify relevant stakeholders of security incidents.
If we, our customers or our third-party service providers suffer, or are perceived to have suffered, a security breach or other security incident, we may experience adverse consequences. Applicable data privacy and security obligations may require us to notify relevant stakeholders or regulators of security incidents.
Factors that may affect the market price of our Class A common stock include: • actual or anticipated fluctuations in our financial condition and results of operations; • variance in our financial performance from expectations of securities analysts; • changes in the prices of our products and services; • changes in our projected financial condition and results of operations; • changes in laws or regulations applicable to the provision of our products and services; • announcements by us or our competitors of significant business developments, acquisitions or new offerings; • security breaches impacting us or similar companies; • our involvement in any material litigation; 43 Table of Contents • future sales of our Class A common stock by us or our stockholders or our sales of other securities in the future; • changes in senior management or key personnel; • the trading volume of our Class A common stock; • changes in the anticipated future size and growth rate of our market; • general economic, regulatory and market conditions; and • technical factors in the public trading market for our Class A common stock that may produce price movements that may or may not comport with macro, industry, or company-specific fundamentals, including, without limitation, the sentiment of retail investors, the amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our Class A common stock and other technical trading factors.
Factors that may affect the market price of our Class A common stock include: • actual or anticipated fluctuations in our financial condition and results of operations; • variance in our financial performance from expectations of securities analysts; • changes in the prices of our products and services; • changes in our projected financial condition and results of operations; • changes in laws or regulations applicable to the provision of our products and services; • announcements by us or our competitors of significant business developments, acquisitions or new offerings; • security breaches impacting us or similar companies; • our involvement in any material litigation; • future sales of our Class A common stock by us or our stockholders or our sales of other securities in the future; • changes in senior management or key personnel; • the trading volume of our Class A common stock; • changes in the anticipated future size and growth rate of our market; • general economic, regulatory and market conditions; and • technical factors in the public trading market for our Class A common stock that may produce price movements that may or may not comport with macro, industry, or company-specific fundamentals, including, without limitation, the sentiment of retail investors, the amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our Class A common stock and other technical trading factors.
Moreover, we or our third-party service providers may be more vulnerable to such attacks in remote work environments, which have increased in response to the COVID-19 pandemic and will likely continue into the foreseeable future.
Moreover, we or our third-party service providers may be more vulnerable to such attacks in remote work environments, which have increased in response to, and following, the COVID-19 pandemic and will likely continue into the foreseeable future.
Any of these events could have a material adverse effect on our reputation, business, or financial condition, including, but not limited to, loss of customers, interruptions or stoppages in our business operations, inability to process personal data or to operate in certain jurisdictions, limited ability to develop or commercialize our products, expenditure of time and resources to defend any claim or inquiry, adverse publicity or revision or restructuring of our operations.
Any of these events could have a material adverse effect on our reputation, business, or financial condition, including, but not limited to, loss of customers, interruptions or stoppages in our business operations, inability to process personal data or to operate in certain jurisdictions, limited ability to develop or commercialize our products, expenditure of time and resources to defend any claim or action, adverse publicity or revision or restructuring of our operations.
The restrictions and costs imposed by these requirements and our actual or perceived failure to comply with them, could harm our business. Operating our business and platform involves the collection, use, processing, storage, transfer and sharing of sensitive, proprietary, confidential, regulated and personal information, including such information that we handle on behalf of our customers.
The restrictions and costs imposed by these requirements and our actual or perceived failure to comply with them, could harm our business. Operating our business and platform involves the collection, use, storage, transfer, sharing and other processing of sensitive, proprietary, confidential, regulated and personal data, including such information that we handle on behalf of our customers.
Certain data privacy and security obligations may require us to implement and maintain specific security measures, industry-standard or reasonable security measures to protect our information technology systems and data.
Certain data privacy and security obligations require us to implement and maintain specific security measures, industry-standard or reasonable security measures to protect our information technology systems and data.
If we fail, or are perceived to have failed, to address or comply with data privacy and security obligations, we could face significant consequences.
If we fail, or are perceived to have failed, to address or comply with privacy, data security and data protection obligations, we could face significant consequences.
Additionally, AWS or other cloud providers may experience threats or attacks from computer malware, ransomware, viruses, social engineering (including phishing attacks), denial of service or other attacks, employee error, theft or misuse and general hacking, including from state-sponsored or criminal hacking groups, which have become more prevalent in our industry.
Additionally, AWS or other cloud providers may experience threats, attacks or security breaches from computer malware, ransomware, viruses, social engineering (including phishing attacks), denial-of-service or other attacks, employee error, theft or misuse and general hacking, including from state-sponsored or criminal hacking groups, which have become more prevalent in our industry.
Our amended and restated certificate of incorporation as currently in effect provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware be the sole and exclusive forum for: • any derivative claim or cause of action brought on our behalf; 42 Table of Contents • any claim or cause of action asserting a breach of fiduciary duty; • any claim or cause of action against us arising under the DGCL; • any claim or cause of action arising under or seeking to interpret our amended and restated certificate of incorporation or our amended and restated bylaws; and • any claim or cause of action against us that is governed by the internal affairs doctrine.
Our amended and restated certificate of incorporation as currently in effect provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware be the sole and exclusive forum for: • any derivative claim or cause of action brought on our behalf; • any claim or cause of action asserting a breach of fiduciary duty; • any claim or cause of action against us arising under the DGCL; • any claim or cause of action arising under or seeking to interpret our amended and restated certificate of incorporation or our amended and restated bylaws; and • any claim or cause of action against us that is governed by the internal affairs doctrine.
Additional factors that may influence the length and variability of our sales cycle include: • the effectiveness of our sales team as we hire and train our new salespeople to sell to large enterprise customers; • our ability to meet with customers in person during a sales cycle; • the discretionary nature of purchasing and budget cycles and decisions; • the obstacles placed by customers’ procurement process; • economic conditions and other factors impacting customer budgets; • customers’ familiarity with our products; • customers’ evaluation of competing products during the purchasing process; and • evolving customer demands.
Additional factors that may influence the length and variability of our sales cycle include: • the effectiveness of our sales team as we hire and train our new salespeople to sell to large enterprise customers; • our ability to meet with customers in person during a sales cycle; 24 Table of Contents • the discretionary nature of purchasing and budget cycles and decisions; • the obstacles placed by customers’ procurement process; • economic conditions and other factors impacting customer budgets; • customers’ familiarity with our products; • customers’ evaluation of competing products during the purchasing process; and • evolving customer demands.
These consequences may include, but are not limited to, government enforcement actions (for example, investigations, fines, penalties, audits, and inspections), additional reporting requirements or oversight, restrictions on processing data (including personal data), litigation (including class action claims), indemnification obligations, negative publicity, reputational harm, monetary fund diversions, interruptions in our operations (including availability of data to us and our customers), financial loss and other similar harms.
These consequences may include, but are not limited to, government enforcement actions 33 Table of Contents (for example, investigations, fines, penalties, audits, and inspections), additional reporting requirements or oversight, restrictions on processing data (including personal data), litigation (including class action claims), indemnification obligations, negative publicity, reputational harm, monetary fund diversions, interruptions in our operations (including availability of data to us and our customers), financial loss and other similar harms.
While we have taken steps designed to protect the proprietary, regulated, sensitive, confidential and personal information in our control, our security measures or those of the third-parties on which we rely may not be effective against current or future security risks and threats.
While we have taken steps designed to protect the proprietary, regulated, sensitive, confidential and personal data in our control, our security measures or those of the third parties on which we rely may not be effective against current or future security risks and threats.
These activities subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contracts, and other obligations that govern the processing of personal data by us and on our behalf.
These activities subject us to numerous privacy, data security and data protection obligations, such as various laws, regulations, rules, guidance, industry standards, external and internal policies, contracts, and other obligations that govern the processing of personal data by us and on our behalf.
For example, any anti-tracking features adopted by Apple or Google that require applications to obtain additional permissions to track end user data may impact our customers’ decisions relating to how to interact with users on our platform.
For example, any anti-tracking features adopted by Apple or Google that require applications to obtain additional permissions to track end user data may impact our customers’ decisions relating to how to interact with end users through our platform.
The market for customer engagement products is evolving and highly competitive. There are several established and emerging competitors that address specific aspects of customer engagement. We face intense competition from software companies that offer marketing solutions, such as legacy marketing clouds like Adobe and Salesforce, and point solutions like Airship, Iterable, Leanplum (CleverTap), MailChimp (Intuit) and MoEngage.
The market for customer engagement products is evolving and highly competitive. There are several established and emerging competitors that address specific aspects of customer engagement. We face intense competition from software companies that offer marketing solutions, such as legacy marketing clouds like Adobe and Salesforce, and point solutions like Airship, Iterable, Klaviyo, CleverTap (Leanplum) and MoEngage.
Each provider’s respective facilities may be vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, cybersecurity attacks, terrorist attacks, power losses, telecommunications failures and other events beyond our or their control.
Each provider’s respective facilities may be vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, cybersecurity attacks, security breaches, terrorist attacks, power losses, telecommunications failures and other events beyond our or their control.
We will also face similar risks as we add new channels to our platform that are supported by third-parties if such third-parties were to face similar challenges or disruptions with regard to their respective channels.
We will also face similar risks as we add new channels and integrations to our platform that are supported by third parties if such third parties were to face similar challenges or disruptions with regard to their respective channels or integrations.
As new mobile devices and mobile, web and email platforms are released, there is no guarantee that these mobile devices and platforms will continue to support our platform or effectively roll out updates to our customers’ applications.
As new mobile devices and mobile, web, email and other messaging platforms are released, there is no guarantee that these mobile devices and platforms will continue to support our platform or effectively roll out updates to our customers’ applications.
Any disruption in the operations of these third-party providers or limitations on capacity or interference with our use could adversely affect our business, financial condition and results of operations. 16 Table of Contents • We are subject to stringent and changing laws and regulations, industry standards and contractual obligations related to privacy, data security and data protection.
Any disruption in the operations of these third-party providers or limitations on capacity or interference with our use could adversely affect our business, financial condition and results of operations. • We are subject to stringent and changing laws and regulations, industry standards and contractual obligations related to privacy, data security and data protection.
In the event that AWS’s or any other third-party provider’s systems or service abilities are hindered 29 Table of Contents by any of the events discussed above, our ability to operate our platform may be impaired, our customers may be impacted, we may be subject to claims for refunds or terminations under our contracts, and our reputation and brand may be harmed.
In the event that AWS’s or any other third-party provider’s systems or service abilities are hindered by any of the events discussed above, our ability to operate our platform may be impaired, our customers may be impacted, we may be subject to claims for refunds or terminations under our contracts, and our reputation and brand may be harmed.
Intellectual property claims could also result in our having to stop making, selling, offering for sale or using technology found to be in violation of a third party’s rights. We might be required to seek a license for the third-party intellectual property rights, which may not be available on 38 Table of Contents reasonable terms or at all.
Intellectual property claims could also result in our having to stop making, selling, offering for sale or using technology found to be in violation of a third party’s rights. We might be required to seek a license for the third-party intellectual property rights, which may not be available on reasonable terms or at all.
If the financial, equity or credit markets deteriorate, including as a result of the measures taken to combat inflation, volatility in the banking sector, political unrest or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive.
If the financial, equity or credit markets further deteriorate, including as a result of the measures taken to combat inflation, volatility in the banking and financial services sector, political unrest or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive.
Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our platform, impair the functionality of our platform, delay introductions of new functionality to our platform, result in our substituting inferior or more costly technologies into our platform or injure our reputation.
Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our 38 Table of Contents management’s attention and resources, could delay further sales or the implementation of our platform, impair the functionality of our platform, delay introductions of new functionality to our platform, result in our substituting inferior or more costly technologies into our platform or injure our reputation.
There are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. We have registered the “Braze” name, logo, and/or other marks as trademarks in the United Kingdom, United States, EU, Japan, Singapore, Canada and Tonga.
There are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. We have registered the “Braze” name, logo, and/or other marks as trademarks in the United Kingdom, United States, EU, Japan, Singapore, Canada, Australia, New Zealand, and Tonga.
Few of the licenses applicable to open-source software have been interpreted by courts, and there is a risk 36 Table of Contents that these licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our products or to maintain the confidentiality of our proprietary source code.
Few of the licenses applicable to open-source software have been interpreted by courts, and there is a risk that these licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our products or to maintain the confidentiality of our proprietary source code.
In addition, pending or recently adopted legislation in the EU may impose additional obligations or liability on us associated with content uploaded by users to our platform. Laws governing these activities are unsettled in many international jurisdictions, or may prove difficult or impossible for us to comply with in some international jurisdictions.
In addition, pending or recently adopted legislation in the European Union may impose additional obligations or liability on us associated with content uploaded by users to our platform. Laws governing these activities are unsettled in many international jurisdictions, or may prove difficult or impossible for us to comply with in some international jurisdictions.
This development effort may require significant engineering, sales and marketing resources, all of which could adversely affect our 21 Table of Contents business. Any failure of our platform to operate effectively with customer infrastructures could reduce the demand for our platform, and our business, financial condition and results of operations may be adversely affected.
This development effort may require significant engineering, sales and marketing resources, all of which could adversely affect our business. Any failure of our platform to operate effectively with customer infrastructures could reduce the demand for our platform, and our business, financial condition and results of operations may be adversely affected.
However, if they cease to be considered “publicly available,” then these encryption products and underlying technology may be exported outside of the United States 34 Table of Contents only with the required export authorizations, including by license, a license exception or other appropriate government authorizations.
However, if they cease to be considered “publicly available,” then these encryption products and underlying technology may be exported outside of the United States only with the required export authorizations, including by license, a license exception or other appropriate government authorizations.
We may be subject to a variety of evolving threats, including, but not limited to, social-engineering attacks (including through phishing, vishing and hybrid phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar threats.
We may be subject to a variety of evolving threats, including, but not limited to, social-engineering attacks (including through phishing, vishing and hybrid phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), personnel misconduct or error by us or third-party service providers, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar threats.
In addition, we may not achieve anticipated revenue growth from expanding our sales team if we are unable to hire, develop and retain talented sales personnel, if our new sales personnel are unable to achieve desired productivity levels in a reasonable period of time, or if our sales and marketing 22 Table of Contents programs are not effective.
In addition, we may not achieve anticipated revenue growth from expanding our sales team if we are unable to hire, develop and retain talented sales personnel, if our new sales personnel are unable to achieve desired productivity levels in a reasonable period of time, or if our sales and marketing programs are not effective.
We will require significant capital expenditures and valuable management resources to grow without undermining our culture of innovation, teamwork and attention to customer success, which has been central to our growth so far. We intend to continue to expand our international operations in the future.
We will require significant capital 25 Table of Contents expenditures and valuable management resources to grow without undermining our culture of innovation, teamwork and attention to customer success, which has been central to our growth so far. We intend to continue to expand our international operations in the future.
Failure to manage growth could result in difficulty or delays in launching our platform, declines in quality or customer satisfaction, increases in costs, difficulties in 25 Table of Contents introducing new features, or other operational difficulties. Any of these could adversely impact our business, financial condition and results of operations.
Failure to manage growth could result in difficulty or delays in launching our platform, declines in quality or customer satisfaction, increases in costs, difficulties in introducing new features, or other operational difficulties. Any of these could adversely impact our business, financial condition and results of operations.
We may share or receive sensitive data with or from third-parties. Cyberattacks, malicious internet-based activity, and online and offline fraud are prevalent and continue to increase. These threats are becoming increasingly difficult to detect. These threats come from a variety of sources.
We may share or receive sensitive data with or from third parties. Cyberattacks, malicious internet-based activity, and online and offline fraud are prevalent and continue to increase in frequency and severity. These threats are becoming increasingly difficult to detect. These threats come from a variety of sources.
Moreover, policing unauthorized use of our technologies, trade secrets and intellectual property is difficult, expensive and time-consuming, particularly in countries where the laws may not be as 37 Table of Contents protective of intellectual property rights as those in the United States and where mechanisms for enforcement of intellectual property rights may be weak.
Moreover, policing unauthorized use of our technologies, trade secrets and intellectual property is difficult, expensive and time-consuming, particularly in countries where the laws may not be as protective of intellectual property rights as those in the United States and where mechanisms for enforcement of intellectual property rights may be weak.
Accordingly, $242.2 million of our NOLs may be carried forward indefinitely for federal tax purposes and various states have enacted tax policies or rules that conform to federal tax laws. A lack of future taxable income would adversely affect our ability to utilize NOLs incurred in tax years beginning on or before December 31, 2017, before they expire.
Accordingly, $316.0 million of our NOLs may be carried forward indefinitely for federal tax purposes and various states have enacted tax policies or rules that conform to federal tax laws. A lack of future taxable income would adversely affect our ability to utilize NOLs incurred in tax years beginning on or before December 31, 2017, before they expire.
In addition, the growth of our remote workforce may impact our ability to preserve our culture and core values. 26 Table of Contents Any failure to preserve our culture or core values could negatively affect our future success, including our ability to retain and recruit personnel, and to effectively focus on and pursue our corporate objectives.
In addition, the growth of our remote workforce may impact our ability to preserve our culture and core values. Any failure to preserve our culture or core values could negatively affect our future success, including our ability to retain and recruit personnel, and to effectively focus on and pursue our corporate objectives.
If AWS or other infrastructure providers increase the costs of their services, our business, financial condition and results of operations could be adversely affected. Our growth depends in part on the success of our strategic relationships with third-parties.
If AWS or other infrastructure providers increase the costs of their services, our business, financial condition and results of operations could be adversely affected. 30 Table of Contents Our growth depends in part on the success of our strategic relationships with third parties.
We have experienced ownership changes in the past and we may experience a future ownership change under Section 382 of the Code that could affect our ability to utilize the NOLs to offset 35 Table of Contents our income, some of which may be outside of our control.
We have experienced ownership changes in the past and we may experience a future ownership change under Section 382 of the Code that could affect our ability to utilize the NOLs to offset our income, some of which may be outside of our control.
There are certain statutory and common law frameworks and doctrines that offer defenses against liability for customer activities, including the Digital Millennium Copyright Act, the Communications Decency Act, the fair use doctrine in the United States and the Electronic Commerce Directive in the EU.
There are certain statutory and common law frameworks and doctrines that offer defenses against liability for customer activities, including the Digital Millennium Copyright Act, the Communications Decency Act and the fair use doctrine in the United States and the Electronic Commerce Directive in the European Union.
If we are not able to grow in an efficient manner, our business, financial condition and results of operations could be harmed. • Failure to effectively develop our sales and marketing capabilities could harm our ability to expand our customer base and achieve broader market adoption of our platform and products. • We are dependent on a single platform, and the failure to achieve continued market acceptance of our platform could cause our results of operations to suffer. • If our platform fails to perform properly or there are defects or disruptions in the rollout of our platform updates or enhancements, our reputation could be adversely affected, our market share could decline, and we could be subject to liability claims. • We may need to reduce prices or change our pricing model to remain competitive. • Our business depends on our ability to send consumer engagement messages, including email, SMS and mobile and web notifications, and any significant disruption in service with our third-party providers or on mobile operating systems could result in a loss of customers or less effective consumer-brand engagement, which could harm our business, financial condition and results of operations. • We rely upon third-party providers of cloud-based infrastructure, including Amazon Web Services, to host our products.
If we are not able to grow in an efficient manner, our business, financial condition and results of operations could be harmed. • Failure to effectively develop our sales and marketing capabilities could harm our ability to expand our customer base and achieve broader market adoption of our platform and products. • We are dependent on a single platform, and the failure to achieve continued market acceptance of our platform could cause our results of operations to suffer. • If our platform fails to perform properly or there are defects or disruptions in the rollout of our platform updates or enhancements, our reputation could be adversely affected, our market share could decline, and we could be subject to liability claims. • We may need to reduce prices or change our pricing model to remain competitive. • Our business depends on our ability to send consumer engagement messages over a number of different channels and any significant disruption in service with our third-party providers or on mobile operating systems could result in a loss of customers or less effective consumer-brand engagement, which could harm our business, financial condition and results of operations. 16 Table of Contents • We rely upon third-party providers of cloud-based infrastructure, including Amazon Web Services, to host our products.
The parties that control the operating systems for mobile devices and mobile, web and email platforms. have no obligation to test the interoperability of new mobile devices or platforms with our platform, and third-parties may produce new products that are incompatible with or not optimal for the operation of our platform.
The parties that control the operating systems for mobile devices and such platforms have no obligation to test the interoperability of new mobile devices or platforms with our platform, and third parties may produce new products that are incompatible with or not optimal for the operation of our platform.
Although we believe these provisions benefit us by providing increased consistency in the application of applicable law in the types of lawsuits to which they apply, the provisions may have the effect of discouraging lawsuits against our directors and officers.
Although we believe these provisions benefit us by providing increased consistency in the application of applicable law in the types of lawsuits to which they apply, the provisions may have the effect of discouraging lawsuits against our directors 43 Table of Contents and officers.
Similarly, any incident broadly affecting the interaction of Apple or Android devices with necessary Apple or Google services (e.g., iCloud or Apple push notifications), including any delays or interruptions in such Apple or Google services, could adversely affect our business.
For instance, any incident broadly affecting the interaction of Apple or Android devices with necessary Apple or Google services (e.g., iCloud or Apple push notifications), including any delays or interruptions in such Apple or Google services, could adversely affect our business.
Our inability to comply with agreements we enter into with our customers regarding the collection, processing, use and disclosure of personal information could result in additional costs and liabilities to us or inhibit sales of our products.
Our inability to comply with agreements we enter into with our customers regarding the collection, use, disclosure and other processing of personal data could result in additional costs and liabilities to us or inhibit sales of our products.
In addition, some of our 20 Table of Contents competitors may enter into new alliances with each other or may establish or strengthen cooperative relationships with agency partners, technology and application providers in complementary categories, or other parties.
In addition, some of our competitors may enter into new alliances with each other or may establish or strengthen cooperative relationships with agency partners, technology and application providers in complementary categories, or other parties.
The inability to import personal data to the United States could significantly and negatively impact our business operations, including by limiting our ability to offer our full range of services in Europe and elsewhere; limiting our ability to collaborate with parties that are subject to European and other data privacy and security laws or requiring us to increase our personal data processing capabilities in Europe and elsewhere at significant expense.
The inability to import personal data to the United States could significantly and negatively impact our business operations, including by limiting our ability to offer our full range of services in the EEA and elsewhere, limiting our ability to collaborate with parties that are subject to EU and other privacy, data security and data protection laws or requiring us to increase our personal data processing capabilities in the EEA and elsewhere at significant expense.
Any failure to protect our proprietary technology and intellectual property rights could substantially harm our business, financial condition and results of operations. Our success and ability to compete depend in part on our ability to protect our proprietary technology and intellectual property.
Any failure to protect our proprietary technology and intellectual property rights could substantially harm our business, financial condition and results of operations. 37 Table of Contents Our success and ability to compete depend in part on our ability to protect our proprietary technology and intellectual property.
The activities of our customers or the content of our customers’ messages may lead us to experience adverse political, business and reputational consequences, especially if such use is high profile.
The activities of our customers or the content of our customers’ messages may lead us to experience adverse political, business and reputational consequences, especially if such use is high 39 Table of Contents profile.
As a result, our competitors may respond to market conditions by lowering prices and attempting to lure away our current and potential customers. With the introduction of new technologies and the entry of new competitors into the market, we expect competition to persist and intensify in the future.
As a result, our competitors have in the past responded, and may continue in the future to respond, to market conditions by lowering prices and attempting to lure away our current and potential customers. With the introduction of new technologies and the entry of new competitors into the market, we expect competition to persist and intensify in the future.
An active public trading market for our Class A common stock may not develop or be sustained. Prior to the closing of our initial public offering in November 2021, no public market for our Class A common stock existed.
An active public trading market for our Class A common stock may not develop or be sustained. Prior to the closing of our initial public offering, no public market for our Class A common stock existed.
In particular, we intend to continue to expend substantial financial and other resources on: • our technology infrastructure and operations, including systems architecture, scalability, availability, performance and security; • our sales and marketing organization, to engage our existing and prospective customers, increase brand awareness and drive adoption of our products; • platform development, including investments in our platform development team and the development of new products and functionality for our platform as well as investments in further improving our existing platform and infrastructure; • acquisitions or strategic investments; • international expansion; and • general administration, including increased insurance, legal and accounting expenses associated with being a public company and transitioning from an emerging growth company to a large accelerated filer.
In particular, we intend to continue to expend substantial financial and other resources on: • our technology infrastructure and operations, including systems architecture, scalability, availability, performance and security; • our sales and marketing organization, to engage our existing and prospective customers, increase brand awareness and drive adoption of our products; • platform development, including investments in our platform development team and the development of new products and functionality for our platform, as well as investments in further improving our existing platform and infrastructure; • acquisitions or strategic investments; • international expansion; and • general administration, including increased insurance, legal and accounting expenses associated with being a public company.
Some of our larger competitors also have substantially broader product lines and market focus and therefore may not be as susceptible to downturns in a particular market.
Some of our larger competitors also have substantially broader product 20 Table of Contents lines and market focus and therefore may not be as susceptible to downturns in a particular market.
We also engage with industry analysts, consulting firms, marketing service providers, data and technology partners, marketing agencies and other solution partners, business and trade press, and other industry experts who exert considerable influence in our market to promote our platform and our brand.
We also engage with 22 Table of Contents industry analysts, consulting firms, marketing service providers, data and technology partners, marketing agencies and other solution partners, business and trade press, and other industry experts who exert considerable influence in our market to promote our platform and our brand.
Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the 27 Table of Contents U.S. Travel Act, the U.K. Bribery Act of 2010, the U.K.
Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the U.K. Bribery Act of 2010, the U.K.
Our current international operations and future initiatives involve a variety of risks, including: • changes in a country’s or region’s political or economic conditions; • the need to adapt and localize our platform for specific countries; • greater difficulty collecting accounts receivable and longer payment cycles; • unexpected changes in laws, regulatory requirements, taxes or trade laws; • more stringent regulations relating to privacy and data security and the unauthorized collection, processing, transmission or use of, or access to, commercial and personal information, particularly in Europe; • differing labor regulations, especially in regions where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in some of these locations; • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems and regulatory systems; • increased travel, real estate, infrastructure and legal compliance costs associated with international operations; • currency exchange rate fluctuations and the resulting effect on our revenue and expenses and the cost and risk of entering into hedging transactions if we chose to do so in the future; • laws and business practices favoring local competitors or general preferences for local vendors; • limited or insufficient intellectual property protection or difficulties enforcing our intellectual property; • political instability, economic sanctions, terrorist activities, or international conflicts, including the ongoing conflict between Russia and Ukraine, which may impact the operations of our business or the businesses of our customers; • risks related to global health epidemics, such as the COVID-19 pandemic, including the emergence of new variant strains of COVID-19, and related restrictions on our ability and our customers’ ability to travel; • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
Our current international operations and future initiatives involve a variety of risks, including: • changes in a country’s or region’s political or economic conditions; • the need to adapt and localize our platform for specific countries; • greater difficulty collecting accounts receivable and longer payment cycles; • unexpected changes in laws, regulatory requirements, taxes or trade laws; • more stringent regulations relating to privacy, data security and data protection and the collection, transmission, use or other processing of, or access to, sensitive, proprietary, confidential, regulated and personal data, particularly in Europe; • differing labor regulations, especially in regions where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in some of these locations; • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems and regulatory systems; 27 Table of Contents • increased travel, real estate, infrastructure and legal compliance costs associated with international operations; • currency exchange rate fluctuations and the resulting effect on our revenue and expenses and the cost and risk of entering into hedging transactions if we chose to do so in the future; • laws and business practices favoring local competitors or general preferences for local vendors; • limited or insufficient intellectual property protection or difficulties enforcing our intellectual property; • political instability, economic sanctions, terrorist activities, or international conflicts, including the ongoing conflicts between Israel and Hamas and between Russia and Ukraine, which may impact the operations of our business or the businesses of our customers; • risks related to global health epidemics and related restrictions on our ability and our customers’ ability to travel; • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
We enter into agreements with our customers regarding our collection, processing, use, and disclosure of personal information in relation to the services we provide to them.
We enter into agreements with our customers regarding our collection, use, disclosure and other processing of personal data in relation to the services we provide to them.
Work-from-home arrangements resulting from, and continuing after, the COVID-19 pandemic may cause a lengthening of these sales cycles or a reduction in sales cycle win rates as we have historically benefited from using face-to-face selling techniques.
Work-from-home arrangements resulting from, and continuing after, the COVID-19 pandemic may cause a lengthening of these sales cycles or a reduction in sales cycle win rates as we have historically benefited from using face-to-face selling techniques and generating pipeline via in-person events.
Any regulatory restrictions on the use of customer engagement tools from the SEC or other domestic or foreign regulators could have the effect of reducing demand for our platform in this and other markets. Further, recent major advances in, and the public availability of, generative artificial intelligence is likely to be a major disruptor in consumer engagement and marketing strategies.
Any regulatory restrictions on the use of customer engagement tools from the SEC or other domestic or foreign regulators could have the effect of reducing demand for our platform in this and other markets. Further, recent advances in, and the public availability of, generative artificial intelligence may be a significant disruptor in consumer engagement and marketing strategies.
The restrictions and costs imposed by these requirements and our actual or perceived failure to comply with them, could harm our business. • If we or our third-party service providers experience a security breach or unauthorized parties otherwise obtain access to our customers’ data, our data or our platform, our solution may be perceived as not being secure, our reputation may be harmed, demand for our platform and products may be reduced and we may incur significant liabilities. • Changes in laws and regulations related to the internet or changes in the internet infrastructure itself may diminish the demand for our platform and could have a negative impact on our business. • We employ third-party licensed software for use in or with our platform, and the inability to maintain these licenses or errors or vulnerabilities in the software we license could result in increased costs, or reduced service levels, which would adversely affect our business. • We have identified one material weakness in our internal control over financial reporting, and if we are unable to achieve and maintain effective internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected. • The dual class structure of our common stock has the effect of concentrating voting control with our executive officers, directors and significant holders of our capital stock, which limits the ability of holders of our Class A common stock to influence the outcome of important transactions.
The restrictions and costs imposed by these requirements and our actual or perceived failure to comply with them, could harm our business. • If we or our third-party service providers experience a security breach or unauthorized parties otherwise obtain access to our customers’ data, our data or our platform, our solution may be perceived as not being secure, our reputation may be harmed, demand for our platform and products may be reduced and we may incur significant liabilities. • Changes in laws and regulations related to the internet or changes in the internet infrastructure itself may diminish the demand for our platform and could have a negative impact on our business. • We employ third-party licensed software for use in or with our platform, and the inability to maintain these licenses or errors or vulnerabilities in the software we license could result in increased costs, or reduced service levels, which would adversely affect our business. • The dual class structure of our common stock has the effect of concentrating voting control with our executive officers, directors and significant holders of our capital stock, which limits the ability of holders of our Class A common stock to influence the outcome of important transactions.
Some of these agreements provide for uncapped liability for losses caused by intellectual property infringement or gross negligence or willful misconduct, and some indemnity provisions survive termination or expiration of the applicable agreement.
Some of these agreements provide for uncapped liability for losses caused by claims alleging gross negligence or willful misconduct, or claims alleging third party intellectual property infringement, and some indemnity provisions survive termination or expiration of the applicable agreement.
The estimates of market opportunity and forecasts of market growth may prove to be inaccurate. Even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all. Market estimates and growth forecasts are uncertain and based on assumptions and estimates that may be inaccurate.
Even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all. 19 Table of Contents Market estimates and growth forecasts are uncertain and based on assumptions and estimates that may be inaccurate.
Our rapid revenue growth may not be indicative of our future revenue growth. Our rapid revenue growth also makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful. 17 Table of Contents Our revenue was $355.4 million and $238.0 million for the fiscal years ended January 31, 2023 and 2022, respectively.
Our rapid revenue growth may not be indicative of our future revenue growth. Our rapid revenue growth also makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful. 17 Table of Contents Our revenue was $471.8 million and $355.4 million for the fiscal years ended January 31, 2024 and 2023, respectively.
In addition, recently, there has been significant merger and acquisition activity among our competitors, including the acquisition of MailChimp by Intuit and the acquisition of Leanplum by CleverTap. Continued merger and acquisition activity in the technology industry could further increase the likelihood that we compete with other large technology companies.
In addition, in recent years, there has been significant merger and acquisition activity among our competitors, including the acquisition of Leanplum by CleverTap. Continued merger and acquisition activity in the technology industry could further increase the likelihood that we compete with other large technology companies.
Many of our agreements with customers and certain other third-parties include indemnification provisions under which we agree to indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement, violation of privacy and other applicable law or breaches of information security obligations, or other liabilities relating to or arising from our platform, products or other contractual obligations.
Many of our agreements with customers and certain other third parties include indemnification provisions under which we agree to indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement, violation of applicable privacy, data protection or other laws, regulations or contractual obligations, data breaches or other liabilities relating to or arising from our platform, products or other contractual obligations.
These consequences may include, but are not limited to, government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar), litigation (including class-related claims), additional reporting requirements or oversight, bans on processing personal data and orders to destroy or not use personal data.
These consequences may include, but are not limited to, government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar actions), litigation 32 Table of Contents (including class-related claims), additional reporting requirements or oversight, bans on processing personal data and orders to delete or not use personal data.
As of January 31, 2023, we had net operating loss, or NOL, carryforwards for federal and state income tax purposes of approximately $281.6 million and $182.4 million, respectively, some of which may be available to offset taxable income in the future, and which expire in various years beginning in 2035 for federal purposes and 2026 for state purposes if not utilized.
As of January 31, 2024, we had net operating loss, or NOL, carryforwards for federal and state income tax purposes of approximately $355.4 million and $248.4 million, respectively, some of which may be available to offset taxable income in the future, and which expire in various years beginning in 2035 for federal purposes and 2026 for state purposes if not utilized.
We have a history of operating losses and may not achieve or sustain profitability in the future. We have experienced net losses in each of our last several fiscal years. We generated a net loss of $140.7 million and $78.2 million for the fiscal years ended January 31, 2023 and 2022, respectively.
We have a history of operating losses and may not achieve or sustain profitability in the future. We have experienced net losses in each of our last several fiscal years. We generated a net loss of $130.4 million and $140.7 million for the fiscal years ended January 31, 2024 and 2023, respectively.
Various governmental agencies have proposed additional regulation of encryption technology, including the escrow and government recovery of private encryption keys.
Various governmental agencies have proposed additional regulation of 35 Table of Contents encryption technology, including the escrow and government recovery of private encryption keys.
As a result, as of January 31, 2023, holders of our Class B common stock collectively beneficially owned, in the aggregate, shares representing approximately 84.8% of the voting power of our outstanding capital stock, and our executive officers, directors and holders of 5% or more of our common stock (by voting power) collectively beneficially owned, in the aggregate, outstanding shares representing approximately 87.0% of the total voting power of our outstanding capital stock.
As a result, as of January 31, 2024, holders of our Class B common stock collectively beneficially owned, in the aggregate, shares representing approximately 78.8% of the voting power of our outstanding capital stock, and our executive officers, directors and holders of 5% or more of our common stock (by voting power) collectively beneficially owned, in the aggregate, outstanding shares representing approximately 84.2% of the total voting power of our outstanding capital stock.
Changes to developer platform policies related to third-party software, such as Apple or 30 Table of Contents Google, creating restrictions that limit the ability of our existing or potential customers to use SDKs or that further limit the use of cookies could similarly adversely affect our business.
Changes to developer platform policies related to third-party software, such as Apple or Google, creating restrictions that limit the ability of our existing or potential customers to use software development kits or that further limit the use of cookies could similarly adversely affect our business.
If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.
If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline. Item 1B. Unresolved Staff Comments None.
If we cannot implement a workable, valid compliance mechanism for cross-border privacy and security transfers, we may face increased exposure to regulatory actions, substantial fines, and injunctions against processing or transferring personal data from Europe or elsewhere.
If we cannot implement a workable, valid compliance mechanism for cross-border transfers of personal data, we may face increased exposure to regulatory actions, substantial fines, and injunctions against processing or transferring personal data from the EEA or elsewhere.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThis new lease commences in October 2023 and will terminate in January 2034. We also lease additional office space in Austin, Berlin, Chicago, Jakarta, London, Paris, San Francisco, Singapore, and Tokyo. These offices are leased, and we do not own any real property. We believe that our current facilities are generally suitable to meet our needs for the foreseeable future.
Biggest changeThis new lease commenced in October 2023 and will terminate in January 2034. We also lease additional office space in Austin, Berlin, Chicago, Jakarta, London, Paris, San Francisco, Singapore, Sydney, and Tokyo. These offices are leased, and we do not own any real property.
Item 2. Properties Our headquarters is located in New York City, where we lease approximately 84,000 square feet pursuant to two leases that expire in April 2024. We have also leased approximately 92,300 square feet of general office space in in New York City to act as our headquarters once these leases expire.
Item 2. Properties Our headquarters is located in New York City, where we lease approximately 84,000 square feet pursuant to two leases that expire in April 2024. We have also leased approximately 92,300 square feet of general office space in New York City to act as our headquarters once these leases expire.
In addition, to the extent we require additional space in the future, we believe that it would be readily available on commercially reasonable terms.
We believe that our current facilities are generally suitable to meet our needs for the foreseeable future. In addition, to the extent we require additional space in the future, we believe that it would be readily available on commercially reasonable terms.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Safety Disclosures Not applicable. 45 Table of Contents PART II
Biggest changeMine Safety Disclosures Not applicable. 46 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe payment of any future dividends will be at the discretion of our board of directors and will depend on our results of operations, capital requirements, financial condition, prospects, contractual arrangements, any limitations on payment of dividends present in any debt agreements, and other factors that our board of directors may deem relevant. Unregistered Sales of Equity Securities None.
Biggest changeThe payment of any future dividends will be at the discretion of our board of directors and will depend on our results of operations, capital requirements, financial condition, prospects, contractual arrangements, any limitations on payment of dividends present in any debt agreements, and other factors that our board of directors may deem relevant.
As of March 24, 2023, there were approximately 32 stockholders of record of our Class B common stock. Dividend Policy We have never declared or paid any dividends on our Class A common stock or Class B common stock. We currently intend to retain all available funds and any future earnings for the operation and expansion of our business.
As of March 20, 2024, there were approximately 25 stockholders of record of our Class B common stock. Dividend Policy We have never declared or paid any dividends on our Class A common stock or Class B common stock. We currently intend to retain all available funds and any future earnings for the operation and expansion of our business.
Holders of Record As of March 24, 2023, there were 20 stockholders of record of our Class A common stock.
Holders of Record As of March 20, 2024, there were 14 stockholders of record of our Class A common stock.
Added
Unregistered Sales of Equity Securities The following sets forth information regarding all of our unregistered securities sold in the fiscal quarter ended January 31, 2024: • On November 1, 2023, we issued 32,155 shares of our Class A common stock to a charitable donor-advised fund for no consideration in connection with our Pledge 1% commitment pursuant to Section 4(a)(2) of the Securities Act as this issuance did not involve a public offering.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe maintain a full valuation allowance in jurisdictions where we had net deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized. 50 Table of Contents Results of Operations The following table sets forth our consolidated statements of operations data for each of the periods indicated: Fiscal Year Ended January 31, 2023 2022 2021 (in thousands) Revenue $ 355,426 $ 238,035 $ 150,191 Cost of revenue (1) 115,818 78,511 54,511 Gross profit 239,608 159,524 95,680 Operating expenses: Sales and marketing (1) 201,684 127,137 70,661 Research and development (1) 97,293 59,034 29,212 General and administrative (1) 88,771 51,564 27,959 Total operating expenses 387,748 237,735 127,832 Loss from operations (148,140) (78,211) (32,152) Other income (expense), net 7,977 (121) 720 Loss before provision for income taxes (140,163) (78,332) (31,432) Provision for (benefit from) income taxes 583 (165) 537 Net loss $ (140,746) $ (78,167) $ (31,969) (1) Includes stock-based compensation expense, net of amounts capitalized as follows: Fiscal Year Ended January 31, 2023 2022 2021 (in thousands) Cost of revenue $ 3,616 $ 2,185 $ 650 Sales and marketing 23,871 16,281 2,892 Research and development 28,897 15,613 2,102 General and administrative 15,833 13,101 1,896 Total $ 72,217 $ 47,180 $ 7,540 The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue for each of the periods indicated: 51 Table of Contents Fiscal Year Ended January 31, 2023 2022 2021 (as a percentage of revenue) Revenue 100 % 100 % 100 % Cost of revenue 33 % 33 % 36 % Gross profit 67 % 67 % 64 % Operating expenses: Sales and marketing 57 % 53 % 47 % Research and development 27 % 25 % 19 % General and administrative 25 % 22 % 19 % Total operating expenses 109 % 100 % 85 % Loss from operations (42) % (33) % (21) % Other income (expense), net 2 % — % 1 % Loss before provision for income taxes (40) % (33) % (20) % Provision for (benefit from) income taxes — % — % — % Net loss (40) % (33) % (20) % Comparison of the Fiscal Years Ended January 31, 2023 and January 31, 2022 Revenue Fiscal Year Ended January 31, 2023 2022 Change % Change ($ in thousands) Revenue $ 355,426 $ 238,035 $ 117,391 49.3 % The increase in revenue of $117.4 million, or 49.3%, for the fiscal year ended January 31, 2023 compared to the fiscal year ended January 31, 2022 was primarily driven by an $116.7 million or 53% increase in subscription revenue.
Biggest changeWe maintain a full valuation allowance in jurisdictions where we had net deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized. 51 Table of Contents Results of Operations The following table sets forth our consolidated statements of operations data for each of the periods indicated: Fiscal Year Ended January 31, 2024 2023 2022 (in thousands) Revenue $ 471,800 $ 355,426 $ 238,035 Cost of revenue (1) 147,527 115,818 78,511 Gross profit 324,273 239,608 159,524 Operating expenses: Sales and marketing (1) 247,125 201,684 127,137 Research and development (1) 119,863 97,293 59,034 General and administrative (1) 101,977 88,771 51,564 Total operating expenses 468,965 387,748 237,735 Loss from operations (144,692) (148,140) (78,211) Other income (expense), net 16,220 7,977 (121) Loss before provision for income taxes (128,472) (140,163) (78,332) Provision for (benefit from) income taxes 1,957 583 (165) Net loss $ (130,429) $ (140,746) $ (78,167) (1) Includes stock-based compensation expense, net of amounts capitalized as follows: Fiscal Year Ended January 31, 2024 2023 2022 (in thousands) Cost of revenue $ 3,585 $ 3,616 $ 2,185 Sales and marketing 31,198 23,871 16,281 Research and development 38,962 28,897 15,613 General and administrative 23,432 15,833 13,101 Total $ 97,177 $ 72,217 $ 47,180 The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue for each of the periods indicated: 52 Table of Contents Fiscal Year Ended January 31, 2024 2023 2022 (as a percentage of revenue) Revenue 100 % 100 % 100 % Cost of revenue 31 % 33 % 33 % Gross profit 69 % 67 % 67 % Operating expenses: Sales and marketing 52 % 57 % 53 % Research and development 25 % 27 % 25 % General and administrative 22 % 25 % 22 % Total operating expenses 99 % 109 % 100 % Loss from operations (30) % (42) % (33) % Other income (expense), net 3 % 2 % — % Loss before provision for income taxes (27) % (40) % (33) % Provision for (benefit from) income taxes — % — % — % Net loss (27) % (40) % (33) % Comparison of the Fiscal Years Ended January 31, 2024 and January 31, 2023 Revenue Fiscal Year Ended January 31, 2024 2023 Change % Change ($ in thousands) Revenue $ 471,800 $ 355,426 $ 116,374 32.7 % The increase in revenue of $116.4 million, or 32.7%, for the fiscal year ended January 31, 2024 compared to the fiscal year ended January 31, 2023 was primarily driven by an $112.7 million, or 33%, increase in subscription revenue.
We are focused on investing in research and development to continue to enhance our platform. For example, we continue to enable brands to better analyze and act on customer data, to develop our artificial intelligence capabilities, and to expand on channel offerings. We believe our market-driven product development approach maximizes the return on new feature development and channel expansion.
We are focused on investing in research and development to continue to enhance our platform. For example, we continue to develop our artificial intelligence capabilities, to enable brands to better analyze and act on customer data, and to expand our channel offerings. We believe our market-driven product development approach maximizes the return on new feature development and channel expansion.
Additionally, from time to time general and administrative expenses may include expenses associated with our donation of shares of our Class A common stock to a charitable donor-advised fund in connection with our Pledge 1% commitment.
Additionally, from time to time general and administrative expenses may include expenses associated with our donation of shares of Class A common stock to a charitable donor-advised fund in connection with our Pledge 1% commitment.
Investing Activities Net cash used in investing activities was $398.5 million for the fiscal year ended January 31, 2023, primarily consisting of purchases of marketable securities of $638.2 million, partially offset by maturities of marketable securities of $256.4 million.
Net cash used in investing activities was $398.5 million for the fiscal year ended January 31, 2023, primarily consisting of purchases of marketable securities of $638.2 million, partially offset by maturities of marketable securities of $256.4 million.
Some of these limitations are (1) it is not a substitute for net cash used in operating activities, (2) other companies may calculate free cash flow or similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of free cash flow as a tool for comparison, and (3) the utility of free cash flow is further limited as it does not reflect our future contractual commitments and does not represent the total increase or decrease in our cash balance for any given period.
Some of these limitations are (1) it is not a substitute for net cash provided by/(used in) operating activities, (2) other companies may calculate free cash flow or similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of free cash flow as a tool for comparison, and (3) the utility of free cash flow is further limited as it does not reflect our future contractual commitments and does not represent the total increase or decrease in our cash balance for any given period.
As of January 31, 2023, we recorded a full valuation allowance in jurisdictions where we had net deferred tax assets, which consist of net operating loss carryforwards and other basis differences, as we have concluded that it is more likely than not that our deferred tax assets will not be realized. Recently Adopted Accounting Pronouncements Refer t o Note 2.
As of January 31, 2024, we recorded a full valuation allowance in jurisdictions where we had net deferred tax assets, which consist of net operating loss carryforwards and other basis differences, as we have concluded that it is more likely than not that our deferred tax assets will not be realized. Recently Adopted Accounting Pronouncements Refer t o Note 2.
For the fiscal years ended January 31, 2023, 2022, and 2021, approximately 42%, 40%, and 40%, of our revenue was generated outside of the United States, respectively. We expect to increase market penetration in regions including Europe and Asia-Pacific and to further capitalize on the greenfield opportunity in regions such as Latin America.
For the fiscal years ended January 31, 2024, 2023, and 2022, approximately 43%, 42%, and 40%, of our revenue was generated outside of the United States, respectively. We expect to increase market penetration in regions including Europe and Asia-Pacific and to further capitalize on the greenfield opportunity in regions such as Latin America.
We expect our cost of revenue to increase for the foreseeable future as we continue to grow our business. Gross Profit and Gross Margin 49 Table of Contents Gross profit represents revenue less cost of revenue. Gross margin is gross profit expressed as a percentage of revenue.
We expect our cost of revenue to increase for the foreseeable future as we continue to grow our business. Gross Profit and Gross Margin 50 Table of Contents Gross profit represents revenue less cost of revenue. Gross margin is gross profit expressed as a percentage of revenue.
We expect our free cash flow to fluctuate in future periods with changes in our operating expenses and as we continue to invest in our growth. Liquidity Outlook We assess our liquidity primarily through our cash on hand as well as the projected timing of billings under contracts with our paying customers and related collection cycles.
We expect our free cash flow to fluctuate in future periods with changes in our operating expenses and as we continue to invest in our growth. 56 Table of Contents Liquidity Outlook We assess our liquidity primarily through our cash on hand as well as the projected timing of billings under contracts with our paying customers and related collection cycles.
In addition, 156, 107, and 71 of our customers had ARR of $500,000 or more as of January 31, 2023, 2022, and 2021, respectively. Expanding Geographically We believe there is a significant opportunity to continue to expand our presence in international markets we have already penetrated and by entering markets we have not yet penetrated.
In addition, 202, 156, and 107 of our customers had ARR of $500,000 or more as of January 31, 2024, 2023, and 2022, respectively. Expanding Geographically We believe there is a significant opportunity to continue to expand our presence in international markets we have already penetrated and by entering markets we have not yet penetrated.
We review the estimated standalone selling price for our performance obligations periodically and update, if needed, to ensure that the methodology utilized reflects our current pricing practices. The transaction price allocated to each performance obligation is recognized as revenue when or as the products or services are transferred to the customer.
We review the estimated standalone selling price for our performance obligations periodically and update, if needed, to ensure that the methodology 57 Table of Contents utilized reflects our current pricing practices. The transaction price allocated to each performance obligation is recognized as revenue when or as the products or services are transferred to the customer.
Although these investments in geographic regions may negatively affect our operating results in the near term, we believe that they will contribute to our long-term growth. Sustaining Innovation and Technology Leadership Our success is dependent on our ability to sustain innovation and technology leadership in order to maintain our competitive advantage.
Although these investments in geographic regions may negatively affect our operating results in the near term, we believe that they will contribute to our long-term growth. 49 Table of Contents Sustaining Innovation and Technology Leadership Our success is dependent on our ability to sustain innovation and technology leadership in order to maintain our competitive advantage.
Historically, we have experienced significant expansion within a customer’s business once our platform is deployed, with customers typically increasing the number of monthly active users, channels and use cases as well as purchasing additional products. A monthly active user is an end user of a customer who has engaged with the customer’s applications and websites in the previous calendar month.
Historically, we have experienced significant expansion within a customer’s business once our platform is deployed, with customers typically increasing the number of monthly active users, channels and use cases, as well as purchasing additional products. A monthly active user is an end user of a customer who has engaged with the customer’s applications and websites in the previous thirty-day period.
We expect to incur additional expenses as a result of operating as a public company, including expenses to comply with the rules and regulations applicable to companies listed on The Nasdaq Stock Market LLC, expenses related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, and higher expenses for directors’ and officers’ insurance, investor relations and professional services.
We have incurred, and expect to continue to incur, additional expenses as a result of operating as a public company, including expenses to comply with the rules and regulations applicable to companies listed on The Nasdaq Stock Market LLC, expenses related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, and higher expenses for insurance, investor relations and professional services.
A substantial source of our cash used in operating activities is our deferred revenue, which is included on our consolidated balance sheets as a liability. Deferred revenue consists of the unearned portion of billed fees for our subscriptions, which is recorded as revenue over the term of the subscription agreement.
A substantial source of our cash provided by operating activities is our deferred revenue, which is included on our consolidated balance sheets as a liability. Deferred revenue consists of the unearned portion of billed fees for our subscriptions, which is recorded as revenue over the term of the subscription agreement.
Non-GAAP Free Cash Flow We report our financial results in accordance with GAAP. To supplement our consolidated financial statements, we provide investors with the amount of free cash flow, which is a non-GAAP financial measure. Our management uses free cash flow to assess our operating performance and our progress towards our goal of positive free cash flow.
To supplement our consolidated financial statements, we provide investors with the amount of free cash flow, which is a non-GAAP financial measure. Our management uses free cash flow to assess our operating performance and our progress towards our goal of positive free cash flow.
We intend to continue to expand our customer base in verticals where we already have a strong presence, such as retail, eCommerce, media, entertainment and on-demand services, and to increase our presence in verticals where we are not yet strongly represented.
We intend to continue to expand our customer base in verticals where we already have a strong presence, such as retail, media and entertainment, on-demand services, gaming, health and lifestyle, and financial services — and to increase our presence in verticals where we are not yet strongly represented.
In addition, we had an increase in personnel and overhead costs of $10.3 million. The increased infrastructure, messaging, and personnel costs were incurred to support overall revenue growth.
In addition, we had an increase in personnel and overhead costs of $2.0 million. The increased infrastructure, messaging, and personnel costs were incurred to support overall revenue growth.
Our dollar-based net retention rate for the trailing 12 months ended January 31, 2023, 2022, and 2021, was 124%, 128%, and 123% respectively, for all our customers, and 126%, 136%, and 133%, respectively, for our customers with ARR of $500,000 or more.
Our dollar-based net retention rate for the trailing 12 months ended January 31, 2024, 2023, and 2022, was 117%, 124%, and 128% respectively, for all our customers, and 120%, 126%, and 136%, respectively, for our customers with ARR of $500,000 or more.
Comparison of the Fiscal Years Ended January 31, 2022 and January 31, 2021 For a discussion regarding our financial condition and results of operations for the fiscal year ended January 31, 2022 compared to the fiscal year ended January 31, 2021, refer to “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for our fiscal year ended January 31, 2022, filed with the SEC on March 31, 2022.
For a discussion regarding our financial condition and results of operations for the fiscal year ended January 31, 2023 compared to the fiscal year ended January 31, 2022, refer to “Management's Discussion and Analysis of Financial Condition 47 Table of Contents and Results of Operations” in our Annual Report on Form 10-K for our fiscal year ended January 31, 2023, filed with the SEC on March 31, 2023.
Additionally, in the fiscal year ended January 31, 2023, our international revenue increased by $55.1 million as we continue to expand market penetration in regions such as Europe and Asia-Pacific.
Additionally, in the fiscal year ended January 31, 2024, our international revenue increased by $54.1 million as we continued to expand market penetration in regions such as Europe and Asia-Pacific.
The non-cash adjustments primarily relate to stock-based compensation of $72.2 million, amortization of deferred contract costs of $23.6 million, depreciation and amortization expense of $4.6 million, and expense associated with the donation of our Class A common stock to a charitable donor-advised fund of $4.3 million.
The non-cash adjustments primarily relate to stock-based compensation of $72.2 million, amortization of deferred contract costs of $23.6 million, depreciation and amortization expense of $4.6 million, and expense associated with the donation of our Class A common stock to a charitable donor-advised fund of $4.3 million as part of our Pledge 1% 55 Table of Contents commitment.
Our ability to increase sales to existing customers will depend on a number of factors, including our customers’ satisfaction with our solutions, the ability of our customers to attract new end users, competition, pricing and overall changes in our customers’ spending levels.
We intend to continue to invest in developing and enhancing our products and functionality. Our ability to increase sales to existing customers will depend on a number of factors, including our customers’ satisfaction with our solutions, the ability of our customers to attract new end users, competition, pricing and overall changes in our customers’ spending levels.
Our most significant funding requirements are principally comprised of employee compensation and related taxes and benefits, non-cancelable purchase commitments, and operating lease obligations. Non-cancelable purchase commitments for business operations and operating lease obligations total $248.6 million and $62.1 million, respectively, as of January 31, 2023, due primarily over the next five years.
Our most significant funding requirements are principally comprised of employee compensation and related taxes and benefits, non-cancelable purchase commitments, and operating lease obligations. Non-cancelable purchase commitments for business operations and operating lease obligations total $255.1 million and $122.9 million, respectively, as of January 31, 2024, due primarily over the next three years.
Our Non-GAAP free cash flow was $(39.0) million, $(39.8) million and $(10.4) million in the fiscal years ended January 31, 2023, 2022, and 2021, respectively.
Our Non-GAAP free cash flow was $(6.5) million, $(39.0) million and $(39.8) million in the fiscal years ended January 31, 2024, 2023, and 2022, respectively.
Cash Flow Overview The following table summarizes our cash flows for the periods presented: Fiscal Year Ended January 31, 2023 2022 2021 (in thousands) Net cash used in operating activities $ (22,308) $ (35,398) $ (6,080) Net cash (used in)/provided by investing activities $ (398,519) $ 18,040 $ 22,472 Net cash provided by financing activities $ 11,332 $ 467,910 $ 4,866 Operating Activities For the fiscal year ended January 31, 2023, net cash used in operating activities was $22.3 million, primarily due to a net loss of $140.7 million adjusted for non-cash charges of $109.0 million and net changes in our operating assets and liabilities of $9.4 million.
Cash Flow Overview The following table summarizes our cash flows for the periods presented: Fiscal Year Ended January 31, 2024 2023 2022 (in thousands) Net cash provided by/(used in) operating activities $ 6,850 $ (22,308) $ (35,398) Net cash (used in)/provided by investing activities $ (19,976) $ (398,519) $ 18,040 Net cash provided by financing activities $ 13,109 $ 11,332 $ 467,910 Operating Activities For the fiscal year ended January 31, 2024, net cash provided by operating activities was $6.9 million, primarily due to a net loss of $130.4 million adjusted for non-cash charges of $136.2 million and net changes in our operating assets and liabilities of $1.1 million.
We generated revenue of $355.4 million, $238.0 million, and $150.2 million in the fiscal years ended January 31, 2023, 2022, and 2021, respectively, representing year-over-year growth of 49% from the fiscal years ended January 31, 2022 to January 31, 2023 and 58% from the fiscal year ended January 31, 2021 to January 31, 2022.
We generated revenue of $471.8 million, $355.4 million, and $238.0 million in the fiscal years ended January 31, 2024, 2023, and 2022, respectively, representing year-over-year growth of 33% from the fiscal years ended January 31, 2023 to January 31, 2024 and 49% from the fiscal year ended January 31, 2022 to January 31, 2023.
We determine the estimated benefit period by considering both qualitative and quantitative factors, including the length of the subscription terms in our customer contracts and the anticipated life of our technology, among other factors.
We determine the estimated benefit period by considering both qualitative and quantitative factors, including the length of the subscription terms in our customer contracts and the anticipated life of our technology, among other factors. Income Taxes We account for income taxes using the asset and liability method.
As of January 31, 2023, we had total deferred revenue of $166.1 million of which substantially all was recorded as a current liability. Deferred revenue will be recognized as revenue when all of the revenue recognition criteria are met.
As of January 31, 2024, we had total deferred revenue of $204.7 million, of which $204.3 million was recorded as a current liability. Deferred revenue will be recognized as revenue when all of the revenue recognition criteria are met.
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.
Overview Braze is a leading customer engagement platform that empowers brands to Be Absolutely Engaging™. 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.
We have generated losses from our operations as reflected in our accumulated deficit of $353.9 million as of January 31, 2023, and cash flows used in operating activities for the fiscal year ended January 31, 2023 of $22.3 million.
We have generated losses from our operations as reflected in our accumulated deficit of $483.1 million as of January 31, 2024, and cash flows provided by operating activities for the fiscal year ended January 31, 2024 of $6.9 million.
Financing Activities Net cash provided by financing activities was $11.3 million for the fiscal year ended January 31, 2023, consisting solely of proceeds from the exercise of common stock options.
Net cash provided by financing activities was $11.3 million for the fiscal year ended January 31, 2023, consisting solely of proceeds from the exercise of common stock options. Non-GAAP Free Cash Flow We report our financial results in accordance with GAAP.
Our gross profit increased $80.1 million, or 50.2%, in the fiscal year ended January 31, 2023 compared to the fiscal year ended January 31, 2022, and our gross margin increased by 0.4% to 67.4% in the fiscal year ended January 31, 2023 from 67.0% in the fiscal year ended January 31, 2022.
Our gross profit increased $84.7 million, or 35.3%, in the fiscal year ended January 31, 2024 compared to the fiscal year ended January 31, 2023, and our gross margin increased by 1.3% to 68.7% in the fiscal year ended January 31, 2024 from 67.4% in the fiscal year ended January 31, 2023.
For the fiscal year ended January 31, 2022, net cash used in operating activities was $35.4 million, primarily due to a net loss of $78.2 million adjusted for non-cash charges of $68.4 million and net changes in our operating assets and liabilities of 54 Table of Contents $25.7 million.
For the fiscal year ended January 31, 2023, net cash used in operating activities was $22.3 million, primarily due to a net loss of $140.7 million adjusted for non-cash charges of $109.0 million and net changes in our operating assets and liabilities of $9.4 million.
We had net losses of $140.7 million, $78.2 million and $32.0 million, in the fiscal years ended January 31, 2023, 2022, and 2021, respectively. We had net cash used in operating activities of $22.3 million, $35.4 million, and $6.1 million in the fiscal years ended January 31, 2023, 2022, and 2021, respectively.
We had net cash provided by operating activities of $6.9 million in the fiscal year ended January 31, 2024 and net cash used in operating activities of $22.3 million and $35.4 million in the fiscal years ended January 31, 2023 and 2022, respectively.
We have also added early access to both WhatsApp and TikTok advertisements to certain customers on our platform. In addition to monthly active users, we have a history of increasing annual recurring revenue, or ARR, from our customers.
In addition to monthly active users, we have a history of increasing annual recurring revenue, or ARR, from our customers.
This is determined by following a five-step process, which includes (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price and (5) recognizing revenue when we satisfy a performance obligation. 56 Table of Contents We identify performance obligations in a contract based on the goods and services that will be transferred to the customer that are identifiable from other promises in the contract, or that are distinct.
This is determined by following a five-step process, which includes (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price and (5) recognizing revenue when we satisfy a performance obligation.
General and Administrative Expense Fiscal Year Ended January 31, 2023 2022 Change % Change ($ in thousands) General and administrative $ 88,771 $ 51,564 $ 37,207 72.2 % The increase in general and administrative expenses of $37.2 million, or 72.2%, for the fiscal year ended January 31, 2023 compared to the fiscal year ended January 31, 2022 was primarily driven by an increase in personnel and overhead costs of $21.8 million , which included $2.7 million of stock-based compensation costs, a nd an increase in legal, regulatory, and professional services costs of $5.9 million.
General and Administrative Expense Fiscal Year Ended January 31, 2024 2023 Change % Change ($ in thousands) General and administrative $ 101,977 $ 88,771 $ 13,206 14.9 % The increase in general and administrative expenses of $13.2 million, or 14.9%, for the fiscal year ended January 31, 2024 compared to the fiscal year ended January 31, 2023 was primarily driven by an increase in personnel and overhead costs of $13.8 million , which included $7.6 million of stock-based compensation costs, and an increase in s oftware costs of $1.0 million .
The following table presents a reconciliation of free cash flow to net cash provided by/(used in) operating activities, the most directly comparable measure calculated in accordance with GAAP, for the periods presented: Fiscal Year Ended January 31, 2023 2022 2021 (in thousands) Net cash used in operating activities $ (22,308) $ (35,398) $ (6,080) Less: Purchases of property and equipment (15,447) (2,310) (2,466) Capitalized internal-use software costs (1,258) (2,065) (1,886) Non-GAAP Free cash flow $ (39,013) $ (39,773) $ (10,432) Net cash (used in)/provided by investing activities $ (398,519) $ 18,040 $ 22,472 Net cash provided by financing activities $ 11,332 $ 467,910 $ 4,866 55 Table of Contents Our free cash flow increased slightly for the fiscal year ended January 31, 2023 from the fiscal year ended January 31, 2022, primarily as a result of continued investment in our sales and marketing function and in our infrastructure to support the growth of our business and our operations as a public company.
The following table presents a reconciliation of free cash flow to net cash provided by/(used in) operating activities, the most directly comparable measure calculated in accordance with GAAP, for the periods presented: Fiscal Year Ended January 31, 2024 2023 2022 (in thousands) Net cash provided by/(used in) operating activities $ 6,850 $ (22,308) $ (35,398) Less: Purchases of property and equipment (9,761) (15,447) (2,310) Capitalized internal-use software costs (3,574) (1,258) (2,065) Non-GAAP Free cash flow $ (6,485) $ (39,013) $ (39,773) Net cash (used in)/provided by investing activities $ (19,976) $ (398,519) $ 18,040 Net cash provided by financing activities $ 13,109 $ 11,332 $ 467,910 Our free cash flow increased for the fiscal year ended January 31, 2024 from the fiscal year ended January 31, 2023, primarily due to higher collections as a result of an increase in billings that are aligned with new contracts and contract renewals.
Net cash provided by investing activities was $18.0 million for the fiscal year ended January 31, 2022, primarily consisting of maturities of marketable securities of $59.3 million, partially offset by purchases of marketable securities of $36.9 million, purchases of property and equipment of $2.3 million and capitalized internal-use software costs of $2.1 million.
Investing Activities Net cash used in investing activities was $20.0 million for the fiscal year ended January 31, 2024, primarily consisting of purchases of marketable securities of $248.1 million, cash paid for the acquisition of North Star of $16.3 million, purchases of property and equipment of $9.8 million, and capitalization of internal-use software costs of $3.6 million, partially offset by maturities of marketable securities of $257.7 million.
Cost of Revenue, Gross Profit and Gross Margin Fiscal Year Ended January 31, 2023 2022 Change % Change ($ in thousands) Cost of revenue $ 115,818 $ 78,511 $ 37,307 47.5 % Gross profit $ 239,608 $ 159,524 $ 80,084 50.2 % Gross margin 67.4 % 67.0 % T he increase in cost of revenue of $37.3 million, or 47.5%, for the fiscal year ended January 31, 2023 compared to the fiscal year ended January 31, 2022 was primarily driven by an increase of $15.4 million in hosting, infrastructure, and other third-party fees associated with delivering our platform and an $11.2 million increase in third-party messaging fees associated with growth in our email and SMS channels.
Cost of Revenue, Gross Profit and Gross Margin Fiscal Year Ended January 31, 2024 2023 Change % Change ($ in thousands) Cost of revenue $ 147,527 $ 115,818 $ 31,709 27.4 % Gross profit $ 324,273 $ 239,608 $ 84,665 35.3 % Gross margin 68.7 % 67.4 % T he increase in cost of revenue of $31.7 million, or 27.4%, for the fiscal year ended January 31, 2024 compared to the fiscal year ended January 31, 2023 was primarily driven by an increase of $15.8 million in hosting, infrastructure, and other third-party fees associated with delivering our platform and a $13.2 million increase in third-party messaging fees associated with growth in channel utilization.
These increases were due primarily to economies of scale as our infrastructure costs to support our revenue growth did not increase at the same pace as our revenue, the increases were partially offset by a 52 Table of Contents one-time vendor charge.
These increases were due primarily to improved personnel efficiencies, 53 Table of Contents economies of scale, a one-time vendor charge recorded in the fiscal year ended January 31, 2023, and the optimization of costs of our tech stack as our infrastructure costs to support our revenue growth did not increase at the same pace as our revenue.
Research and Development Expense Fiscal Year Ended January 31, 2023 2022 Change % Change ($ in thousands) Research and development $ 97,293 $ 59,034 $ 38,259 64.8 % Th e increase in research and development expense of $38.3 million , or 64.8%, for the fiscal year ended January 31, 2023 compared to the fiscal year ended January 31, 2022 was primarily driven by an increase of personnel and overhead costs of $35.8 million , which included $13.3 million of stock-based compensation costs , to support our continued investment in the features and functionality of our platform, coupled with an overall increase in grant date fair value of the equity awards.
Research and Development Expense Fiscal Year Ended January 31, 2024 2023 Change % Change ($ in thousands) Research and development $ 119,863 $ 97,293 $ 22,570 23.2 % Th e increase in research and development expense of $22.6 million, or 23.2%, for the fiscal year ended January 31, 2024 compared to the fiscal year ended January 31, 2023, was primarily driven by an increase of personnel and overhead costs of $22.9 million , which included $10.1 million of stock-based compensation costs , to support our continued investment in the features and functionality of our platform.
We intend to continue to invest in building additional products that expand our capabilities and facilitate the extension of our platform to new channels and use cases.
We intend to continue to invest in building additional products that expand our capabilities and facilitate the extension of our platform to new channels and use cases. Macroeconomic Conditions on Our Business Unfavorable conditions in the economy, both in the United States and abroad, may negatively affect the growth of our business and our results of operations.
Through our sales and marketing efforts, we plan to capitalize on the ongoing digital transformation in regulated industries like healthcare and financial services to further propel adoption of our technology. As of January 31, 2023, we had 1,770 customers across a broad range of sizes and industries.
Through our sales and marketing efforts, we also plan to capitalize on industries subject to ongoing digital transformation and where direct-to-consumer relationships are accelerating, to further propel adoption of our technology. As of January 31, 2024, we had 2,044 customers across a broad range of sizes and industries.
We primarily generate revenue from the sale of subscriptions to customers for the use of our platform. Our subscription fees are principally based on an upfront commitment by our customers for a specific number of monthly active users, on a cost-per-message basis for volume of email and/or SMS messages sent, platform access and/or support and certain add-on products.
Our subscription fees are principally based on an upfront commitment by our customers for messaging volumes, a specific number of monthly active users, platform access and/or support and certain add-on products.
Using our platform, brands ingest and process customer data in real time, orchestrate and optimize contextually relevant, marketing campaigns across multiple channels.
Using our platform, brands ingest and process customer data in real time, orchestrate and optimize contextually relevant, marketing campaigns across multiple channels. Our platform is designed so that interactions between brands and consumers have the same relevance and cross-channel continuity as human interactions.
The non-cash adjustments primarily relate to stock-based compensation of $47.2 million, amortization of deferred contract costs of $17.7 million and depreciation and amortization expense of $2.8 million.
The non-cash adjustments primarily relate to stock-based compensation of $97.2 million, amortization of deferred contract costs of $29.8 million, depreciation and amortization expense of $7.0 million, and expense associated with the donation of our Class A common stock to a charitable donor-advised fund of $3.8 million.
We also grow as our customers grow because our pricing is based in large part on the number of consumers that our customers reach and the volume of messages our customers send.
We expand our reach within existing customers when our customers add new channels, purchase additional subscription products, implement new engagement strategies, or onboard new business units and geographies. We also grow as our customers grow because our pricing is based in large part on the number of consumers that our customers reach and the volume of messages our customers send.
Operating Expenses Sales and Marketing Expense Fiscal Year Ended January 31, 2023 2022 Change % Change ($ in thousands) Sales and marketing $ 201,684 $ 127,137 $ 74,547 58.6 % The increase in sales and marketing expense of $74.5 million, or 58.6%, for the fiscal year ended January 31, 2023 compared to the fiscal year ended January 31, 2022 was primarily driven by an increase in personnel and overhead costs of $47.2 million, which included $7.6 million of stock-based compensation costs, as a result of a year-over-year increase in headcount, coupled with an overall increase in grant date fair value of the equity awards.
Operating Expenses Sales and Marketing Expense Fiscal Year Ended January 31, 2024 2023 Change % Change ($ in thousands) Sales and marketing $ 247,125 $ 201,684 $ 45,441 22.5 % The increase in sales and marketing expense of $45.4 million, or 22.5%, for the fiscal year ended January 31, 2024 compared to the fiscal year ended January 31, 2023, was primarily driven by an increase in personnel and overhead costs of $34.8 million, which included $7.3 million of stock-based compensation costs, as a result of the expansion of equity award grants for existing and new employees.
We expand the use of our platform by existing customers by, among others, adding new channels and increasing the messaging volume we sell to our customers as their businesses and needs continue to grow. We intend to continue to invest in developing and enhancing our products and functionality.
We expand the use of our platform by existing customers by, among others, adding new channels and increasing the messaging volume we sell to our customers as their businesses and needs continue to grow and as they connect directly with additional consumers, which in 48 Table of Contents turn leads to a need for greater messaging capacity.
The increases were primarily due to a period-over-period increase in headcount, coupled with an overall increase in grant date fair value of the equity awards, as well as continued investments in our finance and administrative functions to build processes, systems, and controls to enable our ongoing compliance with public company legal and regulatory requirements.
The increases were primarily due to investments in our finance and administrative functions to continue to scale our processes, systems, and controls to enable our ongoing compliance with public company legal and regulatory requirements.
If not considered distinct, the promised goods or services are combined with other goods or services and accounted for as a combined performance obligation. Determining the distinct performance obligations in a contract requires judgment. Our performance obligations primarily include access to our platform, which includes subscription contracts, technical support and platform updates and professional services, which include onboarding services.
Determining the distinct performance obligations in a contract requires judgment. Our performance obligations primarily include access to our platform, which includes subscription contracts, technical support and platform updates and professional services, which include onboarding services. We allocate the transaction price of the contract to each distinct performance obligation on a relative standalone selling price basis.
The investment income that we generate on these investments is not material to our overall cash balance, but may be adversely affected due to volatility in interest rates. Since our inception, we have financed our operations primarily through the net proceeds received from the sales of equity securities and cash generated from the sale of subscriptions to our platform.
Since our inception, we have financed our operations primarily through the net proceeds received from the sales of equity securities and cash generated from the sale of subscriptions to our platform.
Our cas h and cash equivalents consist of deposit accounts, interest-bearing money market accounts, and U.S. government securities that are stated at fair value. Our marketable securities positions consists mostly of highly liquid short-term investments.
Liquidity and Capital Resources Sources of Funds As of January 31, 2024, our principal source of liquidity was cash, cash equivalents, and marketable securities of $480.0 million . Our cas h and cash equivalents consist of deposit accounts, interest-bearing money market accounts, and U.S. government securities that are stated at fair value.
Approximately 72.5% of the increase in subscription revenue was attributable to the growth from existing customers due to customer expansion of committed contractual entitlements and features, and the remaining 27.5% was attributable to new customers. Total customers grew to 1,770 as of January 31, 2023 from 1,375 as of January 31, 2022. Professional services revenue increased $0.7 million, or 4%.
Approximately 66.8% of the increase in subscription revenue was attributable to the growth from existing customers increase in monthly active users, expansion across channels and committed entitlements and features, and the remaining 33.2% was attributable to new customers. Total customers grew to 2,044 as of January 31, 2024 from 1,770 as of January 31, 2023.
The cash outflow was offset by cash inflows primarily from an increase in deferred revenue of $51.5 million, as a result of increased billings driven by timing of subscriptions and renewals and an increase in total bookings, and an overall increase in accrued expenses and other current liabilities of $6.0 million related to employee compensation costs.
The cash inflows from changes in our operating assets and liabilities were primarily due to an increase in deferred revenue of $34.1 million as a result of increased billings driven by timing of subscriptions and renewals.
Other Income (Expense) Fiscal Year Ended January 31, 2023 2022 Change % Change ($ in thousands) Other income (expense), net $ 7,977 $ (121) $ 8,098 n/m n/m - not meaningful The increase in other income, net was primarily driven by investment income in marketable securities.
The reduction in value is a result of fluctuations in our stock price on the date of grant. 54 Table of Contents Other Income (Expense), Net Fiscal Year Ended January 31, 2024 2023 Change % Change ($ in thousands) Other income (expense), net $ 16,220 $ 7,977 $ 8,243 103.3 % The increase in other income (expense), net was primarily driven by investment income in marketable securities.
As of January 31, 2023, we had approximately 4.8 billion monthly active users, up from approximately 3.7 billion monthly active users as of January 31, 2022.
As of January 31, 2024, we had approximately 6.2 billion monthly active users, up from approximately 4.8 billion monthly active users as of January 31, 2023. Braze supports interactions across a broad range of both in-product and out-of-product messaging channels.
Our platform is designed so that interactions between brands and consumers have the same relevance and cross-channel continuity as human interactions. 46 Table of Contents Our customers include many established global enterprises and leading technology innovators, and span a wide variety of sizes and industries, including retail, eCommerce, media, entertainment and on-demand services.
Our customers include many established global enterprises and leading technology innovators, and span a wide variety of sizes and industries, including retail, media, entertainment, on-demand services, gaming, health and lifestyle, and financial services. We primarily generate revenue from the sale of subscriptions to customers for the use of our platform.
The increase in personnel costs was primarily due to a year-over-year increase in headcount. In addition, software costs increased $1.5 million as we continue investing in our platform.
The increase in personnel costs was primarily due to a year-over-year increase in headcount. Increases in expenses were partially offset by a decrease of $1.2 million in professional services costs.
Net cash provided by financing activities was $467.9 million for the fiscal year ended January 31, 2022, primarily consisting of the proceeds from the issuance of Class A common stock upon our initial public offering, net of underwriting discounts and offering costs, of $457.1 million, proceeds from the exercise of common stock options of $8.4 million and an investment from our redeemable non-controlling interest in connection with our joint venture Braze KK of $2.5 million.
Financing Activities Net cash provided by financing activities was $13.1 million for the fiscal year ended January 31, 2024, primarily consisting of proceeds from the exercise of common stock options of $7.3 million and proceeds from stock purchases associated with our employee stock purchase plan of $6.0 million, offset by payments of deferred purchase considerations related to the acquisition of North Star of $0.2 million.
In addition, costs increased $1.2 million in travel and entertainment, marketing, and promotion costs due to the loosening of COVID-19 travel and event restrictions which allowed for in-person, internal company meetings and trainings. 53 Table of Contents Additionally, we donated shares of our Class A common stock to a charitable donor-advised fund in connection with our Pledge 1% commitment valued at $4.3 million.
Additionally, increases were offset by a $0.5 million reduction in value of the shares of Class A common stock donated to a charitable donor-advised fund in connection with our Pledge 1% commitment.
The slower acceleration rate in professional services revenue was expected as new customers increasingly engaged with third-party partner-led onboarding services. The overall professional services revenue growth was driven by an increase in premium deliverability service fees, such as email deliverability support and dedicated technical support staff.
Professional services revenue increased $3.6 million, or 21%, due to an increase in deliverability services, technical account management, and support engagement services. These increases were partially offset by the decline in onboarding revenue as a result of the continued engagement of new customers with third-party partner-led onboarding.
The cash outflow from changes in our operating assets and liabilities were primarily due to an increase in deferred contract costs and accounts receivable of $32.0 million and $29.8 million, respectively, as a result of commissions and billings for new bookings and renewals and prepaid expense and other current assets of $17.5 million due to prepayments for third-party software fees, primarily consisting of hosting arrangements.
The cash inflows were offset by cash outflows primarily from an increase in deferred contract costs of $45.1 million as a result of commissions on new bookings and renewals.
Removed
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.
Added
We had net losses of $130.4 million, $140.7 million and $78.2 million, in the fiscal years ended January 31, 2024, 2023, and 2022, respectively.
Removed
Currently, our in-product messaging channels consist of Content Cards, which embed personalized content into a brand’s website or application, and in-app and in-browser messages. 47 Table of Contents 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 media services and connected TV channels.
Added
The flexibility of our platform also allows us to add new channels quickly and efficiently as they become relevant to our customers. The breadth of channels we offer, and our ability to efficiently expand our offering of channels, allows us to expand our reach within existing customers as they purchase additional channels from us.
Removed
Impact of Global Events and Macroeconomic Conditions on Our Business 48 Table of Contents Unfavorable conditions in the economy, both in the United States and abroad, may negatively affect the growth of our business and our results of operations.
Added
General 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 have recently led to increased economic uncertainty.
Removed
For example, global, macroeconomic events such as (1) the COVID-19 pandemic or any other similar health pandemic, including the emergence of new variant strains of COVID-19, and any uncertainties related to the recovery therefrom, (2) international conflicts that may impact international trade and global economic performance, such as the ongoing conflict between Russia and Ukraine and the related economic sanctions imposed by the United States and its trading partners against Russia and Belarus and (3) other macroeconomic trends, such as international and domestic supply chain risks, inflationary pressure, interest rate increases and declines in consumer confidence, that impact us and our customers, have led to economic uncertainty.
Added
Additionally, the increase was driven in part by an increase of $4.0 million in promotional and product marketing, primarily related to the hosting of regional customer events. Further, there was a $2.4 million increase in professional services substantially related to sales team training.
Removed
Additionally, the rapid collapse of Silicon Valley Bank and Signature Bank has raised questions regarding the stability of other U.S. banks.
Added
These increases were offset by a decrease in the fair value measurement of the contingent consideration related to the acquisition of North Star Y, Pty Ltd, or North Star, of $1.6 million as a result of developments in significant inputs, notably new and incremental actual and forecasted deal closings from the Australia-New Zealand region.
Removed
While, to date, we have not been materially impacted by such events, if our primary banking partners, or the banking partners of our customers, were to experience a similar crisis, it may cause a material impact on our liquidity or the liquidity of our customers.
Added
The investment income increase was driven primarily by the strengthening of interest rates related to the graded maturation of the portfolio positions and the reinvestment of proceeds in a rising interest rate environment.
Removed
Further, we cannot predict what effect, if any, the collapse of Silicon Valley Bank and Signature Bank and the current stress on other financial institutions will have on our customers who relied on these institutions as their primary financial institution.
Added
Our marketable securities positions consists mostly of highly liquid short-term investments. The investment income that we generate on these investments is not material to our overall cash balance, but may be adversely affected due to volatility in interest rates.
Removed
If these customers face liquidity challenges as a result of these recent collapses, it may cause such customers to delay, or fail to, make payments to us or otherwise reduce their demand for our products. Historically, during periods of economic uncertainty and downturns, businesses slow spending on information technology, which may impact our business.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur inability or failure to do so could harm our business, financial condition, and results of operations. Interest Rate Risk and Market Risk We had cash, cash equivalents, and marketable securities of $482.7 million as of January 31, 2023, of which $410.1 million was invested in government bonds, foreign bonds, and corporate debt securities.
Biggest changeOur inability or failure to do so could harm our business, financial condition, and results of operations. Interest Rate Risk and Market Risk We had cash, cash equivalents, and marketable securities of $480.0 million as of January 31, 2024, of which $407.9 million was invested in government securities, foreign securities, and corporate debt securities.
Foreign Currency Exchange Rate Risk Our reporting and functional currency is the U.S. dollar, and the functional currency of our foreign subsidiaries is the respective local currency. Substantially all of our sales are denominated in U.S. dollars. Our only sales denominated in a currency other than the U.S. dollars are our sales in Japan, which are denominated in Yen.
Foreign Currency Exchange Rate Risk Our reporting and functional currency is the U.S. dollar, and the functional currency of our foreign subsidiaries is primarily the respective local currency. Substantially all of our sales are denominated in U.S. dollars. Our only sales denominated in a currency other than the U.S. dollars are our sales in Japan, which are denominated in Yen.
Fixed rate securities may have their market value adversely affected due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. As of January 31, 2023, a hypothetical 10% change in interest rates would not have had a material impact on our consolidated financial statements.
Fixed rate securities may have their market value adversely affected due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. As of January 31, 2024, a hypothetical 10% change in interest rates would not have had a material impact on our consolidated financial statements.
Because we classify our debt securities as “available for sale,” no gains or losses are recognized due to changes in interest rates unless such securities are sold prior to maturity or unless declines in fair value are determined to be non-temporary.
Because we classify our debt securities as 58 Table of Contents “available for sale,” no gains or losses are recognized due to changes in interest rates unless such securities are sold prior to maturity or unless declines in fair value are determined to be non-temporary.

Other BRZE 10-K year-over-year comparisons