Learnings from a SaaS IPO - Braze


Braze is a software company that went public in 2021. Below are some of the highlights and learnings from their prospectus.

What they do. “Braze is a leading comprehensive customer engagement platform” and “empowers brands to listen to their customers better, understand them more deeply and act on that understanding in a way that is human and personal. Using our platform, brands ingest and process customer data in real time, orchestrate and optimize contextually relevant, cross-channel marketing campaigns and continuously evolve their customer engagement strategies.”

Long contracts, complex pricing. “The terms of our subscription agreements are primarily annual with a dollar weighted-average contract length of 24 months as of July 31, 2021. 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.”

Big customers move the needle. “82, 71 and 45 of our customers had annual recurring revenue, or ARR, of $500,000 or more (inclusive of customers with ARR of $1.0 million or more, described below) as of July 31, 2021, January 31, 2021 and January 31, 2020, respectively, accounting for approximately 50%, 50% and 41% of our ARR, respectively. Further, as of July 31, 2021, we had 41 customers with ARR of $1.0 million or more, up from 31 and 18 customers as of January 31, 2021 and 2020, respectively, accounting for approximately 37%, 33% and 25% of our ARR, respectively.”

But no customer concentration. “As of July 31, 2021, January 31, 2021 and January 31, 2020, no single customer represented more than 5% of our ARR.”

Land and expand. “We expand our reach within existing customers when our customers add new channels, purchase additional subscription products such as Braze Currents, implement new engagement strategies, or onboard new business units and geographies. We also grow as our customers grow because our pricing is based in large part on the number of consumers that our customers reach and the volume of messages our customers send.”

Very nice net dollar retention. “We believe our successful land-and-expand strategy is evidenced by our dollar-based net retention rate, which for the trailing 12 months ended July 31, 2021, January 31, 2021 and January 31, 2020 was 125%, 123% and 126%, respectively, for all our customers, and 135%, 133% and 127%, respectively, for our customers with ARR of $500,000 or more.”

And cohort performance. “Each cohort in the chart below represents customers that made their initial purchase from us in a given fiscal year. For example, the 2016 cohort includes all customers that had their initial purchase within the fiscal year 2016. This cohort increased their ARR from $6.4 million as of January 31, 2016 to $20.1 million as of January 31, 2021, representing a multiple of approximately 3.2x since fiscal year 2016.”

Not profitable. “We have grown significantly in recent periods. We generated revenue of $150.2 million and $96.4 million in fiscal year 2021 and fiscal year 2020, respectively, representing year-over-year growth of 56%. We had net losses of $32.0 million, $31.8 million in fiscal year 2021, fiscal year 2020”

International expansion is critical. “For each of the fiscal year ended January 31, 2021 and the six months ended July 31, 2021, approximately 40% of our revenue was generated outside of the United States”

Customers drive the roadmap. “We believe our market-driven product development approach maximizes the return on new feature development and channel expansion. Our customers consistently volunteer to participate in the testing of new products, which indicates their appetite for new and innovative functionality.”

Shameless plug. We have a portfolio company called Cordial.com which beats Braze constantly for new clients. Consider Cordial if you’re looking for a better solution.

Visit us at blossomstreetventures.com and email me directly at sammy@blossomstreetventures.com. All founders and funds welcome! We invest in companies with run rate revenue of $3mm to $30mm, with year over year growth of 20% to 50%+ depending on revenue. We lead or follow in growth rounds and special situations like inside rounds, small rounds, rushed rounds, corralling investors with our term sheet, bridges, inbetweeners, cap table clean up, and extensions. We can commit in 3 weeks and our check is $1mm to $4mm. Also visit https://blossomstreetventures.com/metrics/ for always up-to-date SaaS metrics.