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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________________
FORM 10-Q
______________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from     to     
Commission File Number: 001-41065
______________________________________________________________
Braze, Inc.
(Exact name of Registrant as specified in its charter)
______________________________________________________________
Delaware45-2505271
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
330 West 34th Street, Floor 18
New YorkNew York 10001
(Address of principal executive offices, including zip code) 
(609964-0582
(Registrant’s telephone number, including area code)
______________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per shareBRZEThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  o    No  x 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x   No  o 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  ☒
At December 15, 2021, there were 9,943,054 shares of the registrant’s Class A and 82,166,554 shares of the registrant’s Class B common stock, each with a par value of $0.0001 per share, outstanding.


Table of Contents
Braze, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended October 31, 2021
TABLE OF CONTENTS
2

Table of Contents
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

our expectations regarding our revenue, expenses and other operating results;
our ability to acquire new customers and successfully retain existing customers;
our ability to increase usage of our platform and upsell and cross-sell additional products;
our ability to achieve or sustain our profitability;
future investments in our business, our anticipated capital expenditures and our estimates regarding our capital requirements;
the costs and success of our marketing efforts, and our ability to promote our brand;
our reliance on key personnel and our ability to identify, recruit and retain skilled personnel;
our growth strategies for our platform and our ability to effectively manage our growth, including any international expansion;
the estimated addressable market opportunity for our platform;
our ability to protect and enforce our intellectual property rights and any costs associated therewith;
the effect of COVID-19, including the emergence of new variant strains of COVID-19, or other public health crises on our business, industry and the global economy;
our ability to compete effectively with existing competitors and new market entrants; and
the size and growth rates of the markets in which we compete.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this report. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q and are inherently uncertain. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.
3

Table of Contents
Part 1 – Financial Information
Item 1.    Financial Statements
BRAZE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share and per share amounts)
October 31,
2021
January 31,
2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$41,976 $28,509 
Restricted cash, current 472 
Accounts receivable, net of allowance for doubtful accounts of $746 and $934 at October 31, 2021 and January 31, 2021, respectively
36,026 34,771 
Marketable securities34,906 58,004 
Prepaid expenses and other current assets17,691 12,202 
Total current assets130,599 133,958 
Restricted cash, noncurrent4,036 4,037 
Property and equipment, net6,293 5,486 
Deferred contract costs35,176 27,433 
Other assets7,982 480 
TOTAL ASSETS$184,086 $171,394 
LIABILITIES, CONVERTIBLE PREFERRED STOCK, REDEEMABLE NON-CONTROLLING INTEREST, AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable$1,203 $439 
Accrued expenses and other current liabilities22,809 25,904 
Deferred revenue98,427 74,789 
Total current liabilities122,439 101,132 
Deferred tax liabilities57 80 
Other long-term liabilities2,204 2,227 
TOTAL LIABILITIES124,700 103,439 
COMMITMENTS AND CONTINGENCIES (Note 13)
Convertible preferred stock, $0.0001 par value; 65,318,250 shares authorized as of October 31, 2021 and January 31, 2021; 62,830,697 shares issued and outstanding as of October 31, 2021 and January 31, 2021
174,229 174,229 
Redeemable non-controlling interest (Note 4)3,643 2,233 
STOCKHOLDERS’ DEFICIT
Common stock, $0.0001 par value; 100,000,000 and 98,500,000 shares authorized as of October 31, 2021 and January 31, 2021, respectively; 21,413,059 and 19,498,295 shares issued and outstanding as of October 31, 2021 and January 31, 2021, respectively
2  
Additional paid-in capital53,832 29,777 
Accumulated other comprehensive loss(294)(42)
Accumulated deficit(172,026)(138,242)
TOTAL STOCKHOLDERS’ DEFICIT(118,486)(108,507)
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK, REDEEMABLE NON-CONTROLLING INTEREST AND STOCKHOLDERS’ DEFICIT$184,086 $171,394 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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BRAZE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
Three Months Ended
October 31,
Nine Months Ended
October 31,
2021202020212020
Revenue$63,968 $39,332 $167,601 $107,261 
Cost of revenue19,174 14,431 53,736 39,232 
Gross Profit44,794 24,901 113,865 68,029 
Operating expenses:
Sales and marketing29,568 19,137 81,411 50,198 
Research and development12,738 7,410 36,130 20,169 
General and administrative12,936 7,142 31,947 19,296 
Total operating expenses55,242 33,689 149,488 89,663 
Loss from operations(10,448)(8,788)(35,623)(21,634)
Other income (expense):
Investment income18 147 104 736 
Other (expense) income, net(236)(63)(587)22 
Loss before provision for income taxes(10,666)(8,704)(36,106)(20,876)
(Benefit from) provision for income taxes(1,608)118 (1,282)341 
Net loss(9,058)(8,822)(34,824)(21,217)
Net loss attributable to redeemable non-controlling interest(336)(9)(1,040)(9)
Net loss attributable to Braze, Inc.$(8,722)$(8,813)$(33,784)$(21,208)
Net loss per share attributable to Braze, Inc. common stockholders, basic and diluted$(0.42)$(0.47)$(1.67)$(1.21)
Weighted-average shares used to compute net loss per share attributable to Braze, Inc. common stockholders, basic and diluted20,717 18,633 20,244 17,559 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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BRAZE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)
(in thousands)
Three Months Ended
October 31,
Nine Months Ended
October 31,
2021202020212020
Net loss$(9,058)$(8,822)$(34,824)$(21,217)
Other comprehensive loss:
Change in foreign currency translation adjustments(183)49 (208)(92)
Unrealized losses on marketable securities(9)(93)(44)(4)
Other comprehensive loss, net(192)(44)(252)(96)
Comprehensive loss, net(9,250)(8,866)(35,076)(21,313)
Less: comprehensive loss, net, attributable to redeemable non-controlling interest(336)(9)(1,040)(9)
Comprehensive loss attributable to Braze, Inc.$(8,914)$(8,857)$(34,036)$(21,304)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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BRAZE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK, REDEEMABLE NON-CONTROLLING INTEREST AND STOCKHOLDERS’ DEFICIT (UNAUDITED)
(in thousands)
Convertible Preferred StockRedeemable Non-controlling InterestCommon StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total Stockholders' Deficit
SharesAmountSharesAmount
Balance at July 31, 2021
62,831 $174,229 $1,529 20,657 $ $45,947 $(163,304)$(102)$(117,459)
Issuance of common stock for options exercised— — — 756 2 2,286 — — 2,288 
Vesting of early exercised options— — — — — 132 — — 132 
Repurchase of shares related to early exercised options— — — — — 3 — — 3 
Stock-based compensation— — — — — 5,464 — — 5,464 
Investment in redeemable non-controlling interests— — 2,450 — — — — — — 
Other comprehensive loss— — — — — — — (192)(192)
Net loss attributable to redeemable non-controlling interests— — (336)— — — — — — 
Net loss attributable to Braze, Inc.— — — — — — (8,722)— (8,722)
Balance at October 31, 2021
62,831 $174,229 $3,643 21,413 $2 $53,832 $(172,026)$(294)$(118,486)
Convertible Preferred StockRedeemable Non-controlling InterestCommon StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total Stockholders' Deficit
SharesAmountSharesAmount
Balance at July 31, 2020
62,831 $174,229 $ 17,341 $ $22,883 $(118,885)$(18)$(96,020)
Issuance of common stock for options exercised— — — 2,057 — 1,857 — — 1,857 
Vesting of early exercised options— — — — — 52 — — 52 
Repurchase of shares related to early exercised options— — — (1)— (1)— — (1)
Stock-based compensation— — — — — 2,319 — — 2,319 
Investment from redeemable non-controlling interest— — 2,450 — — — — — — 
Other comprehensive loss— — — — — — — (44)(44)
Net loss attributable to redeemable non-controlling interests— — (9)— — — — — — 
Net loss attributable to Braze, Inc.— — — — — — (8,813)— (8,813)
Balance at October 31, 2020
62,831 $174,229 $2,441 19,397 $ $27,110 $(127,698)$(62)$(100,650)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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BRAZE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK, REDEEMABLE NON-CONTROLLING INTEREST AND STOCKHOLDERS’ DEFICIT (UNAUDITED) (cont.)
(in thousands)
Convertible Preferred StockRedeemable Non-controlling InterestCommon StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total Stockholders' Deficit
SharesAmountSharesAmount
Balance at January 31, 2021
62,831 $174,229 $2,233 19,498 $ $29,777 $(138,242)$(42)$(108,507)
Issuance of common stock for options exercised— — — 1,917 2 5,587 — — 5,589 
Vesting of early exercised options— — — — — 380 — — 380 
Repurchase of shares related to early exercised options— — — (2)— — — — — 
Stock-based compensation— — — — — 18,088 — — 18,088 
Investment in redeemable non-controlling interest— — 2,450 — — — — — — 
Other comprehensive loss— — — — — — — (252)(252)
Net loss attributable to redeemable non-controlling interests— — (1,040)— — — — — — 
Net loss attributable to Braze, Inc.— — — — — — (33,784)— (33,784)
Balance at October 31, 2021
62,831 $174,229 $3,643 21,413 $2 $53,832 $(172,026)$(294)$(118,486)
Convertible Preferred StockRedeemable Non-controlling InterestCommon StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total Stockholders' Deficit
SharesAmountSharesAmount
Balance at January 31, 2020
62,831 $174,229 $ 17,180 $ $19,580 $(106,490)$34 $(86,876)
Issuance of common stock for options exercised— — — 2,220 — 2,269 — — 2,269 
Vesting of early exercised options— — — — — 149 — — 149 
Repurchase of shares related to early exercised options— — — (3)— (2)— — (2)
Stock-based compensation— — — — — 5,114 — — 5,114 
Investment from redeemable non-controlling interest— — 2,450 — — — — — — 
Other comprehensive loss— — — — — — — (96)(96)
Net loss attributable to redeemable non-controlling interests— — (9)— — — — — — 
Net loss attributable to Braze, Inc.— — — — — — (21,208)— (21,208)
Balance at October 31, 2020
62,831 $174,229 $2,441 19,397 $ $27,110 $(127,698)$(62)$(100,650)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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BRAZE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Nine Months Ended October 31,
20212020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss (including amounts attributable to redeemable non-controlling interests)$(34,824)$(21,217)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation18,036 5,002 
Amortization of deferred contract costs13,173 7,575 
Depreciation and amortization2,123 1,012 
Provision for bad debt(98)1,644 
Amortization of discount/premium on marketable securities313 189 
Unrealized foreign exchange loss (gain)391 (52)
Deferred income taxes(23) 
Changes in operating assets and liabilities:
Accounts receivable(1,157)1,388 
Prepaid expenses and other current assets(4,358)961 
Deferred contract costs(20,917)(12,224)
Other assets(3,993)(22)
Accounts payable784 (783)
Accrued expenses and other current liabilities(3,933)4,458 
Deferred revenue23,638 4,385 
Other long-term liabilities(23)1,584 
Net cash used in operating activities(10,868)(6,100)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment(1,110)(2,050)
Capitalized internal-use software costs(1,842)(1,674)
Purchases of marketable securities(32,868)(48,987)
Maturities of marketable securities55,609 72,355 
Net cash provided by investing activities19,789 19,644 
CASH FLOWS FROM FINANCING ACTIVITIES:
Investment from redeemable non-controlling interest2,450 2,450 
Proceeds from exercise of common stock options4,641 2,652 
Payment of deferred offering costs(2,484) 
Repurchase of shares related to early exercised options(3)(2)
Net cash provided by financing activities4,604 5,100 
Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash(531)119 
Net change in cash, cash equivalents, and restricted cash12,994 18,763 
Cash, cash equivalents, and restricted cash, beginning of period33,018 11,602 
Cash, cash equivalents, and restricted cash, end of period$46,012 $30,365 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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BRAZE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SUPPLEMENTAL CASH FLOWS DISCLOSURE
(in thousands)
Nine Months Ended October 31,
20212020
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for income taxes, net of refunds$191 $21 
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Stock-based compensation capitalized to internal-use software$54 $112 
Net change in capitalized internal-use software development costs in accrued expenses$(51)$49 
Unrealized net loss on marketable investment securities$(44)$(4)
Net change to property and equipment (included in accounts payable)$(24)$53 
Vesting of early exercised options$380 $149 
Deferred offering costs included in accounts payable and accrued expenses and other current liabilities$1,045 $ 
Common stock option receivables$1,177 $ 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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BRAZE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Company Overview
Description of Business

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

We began operations in 2011 and are incorporated in the state of Delaware. Our headquarters are located in New York, New York. We also lease additional office space in San Francisco, London, Singapore, Tokyo, and Berlin, and have a significant presence in Austin and Chicago.

Initial Public Offering

On November 19, 2021, the Company completed an initial public offering (“IPO”) of its Class A common stock. As part of the IPO, the Company issued and sold 7,500,000 shares of its Class A common stock at a public offering price of $65.00 per share, including 800,000 shares pursuant to the underwriters’ overallotment option to purchase additional shares of its Class A common stock. The Company received net proceeds of approximately $457.1 million from the IPO, after deducting the underwriting discounts, commissions, and related offering expenses. In addition, the selling stockholders, named in the Company’s final prospectus that forms a part of the Registration Statement on Form S-1 (File No. 333-260428) for the IPO filed with the Securities and Exchange Commission (“SEC”) pursuant to Rule 424(b)(4) on November 18, 2021 (the “Final Prospectus”), sold an additional 1,300,000 shares of Class A common stock, for which the Company did not receive any proceeds. In connection with the IPO, all then outstanding shares of convertible preferred stock automatically converted into an aggregate of 62,830,697 shares of Class B common stock. See Note 17, Subsequent Events, for further information.

Emerging Growth Company Status

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and, for so long as we continue to be an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, pursuant to Section 107 of the JOBS Act, as an emerging growth company, we have elected to take advantage of the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies. If we cease to be an emerging growth company, we will no longer be able to take advantage of these exemptions or the extended transition period for complying with new or revised accounting standards.

Impact of COVID-19

Beginning in January 2020, the outbreak of the novel Coronavirus Disease 2019 (“COVID-19”) pandemic caused general business disruption worldwide. COVID-19 is considered to be highly contagious and poses a serious public health threat. Although certain restrictions are being lifted, state mandated lockdowns have adversely impacted many companies and may be reinstated in the future, as many public health regulations transformed or even halted daily operations. We have not experienced a materially negative impact from COVID-19 and continue to monitor the global situation and the potential impact on our financial condition, liquidity, operations, suppliers, industry, and workforce. Given the continued evolution of the COVID-19 outbreak, including the emergence of new variant strains of COVID-19, and the global responses to curb its spread, we are not able to estimate the ongoing effects on our results of operations, financial condition, or liquidity.

2. Summary of Significant Accounting Policies
Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, and
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variable interest entities (“VIE”) for which we are the primary beneficiary. Intercompany balances and transactions have been eliminated in consolidation. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes included in the Final Prospectus. The condensed consolidated financial statements are unaudited and have been prepared on a basis consistent with that used to prepare the audited annual consolidated financial statements and include, in the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair statement of the condensed consolidated financial statements. The condensed consolidated balance sheet at January 31, 2021 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The operating results for the three and nine months ended October 31, 2021 are not necessarily indicative of the results expected for the full fiscal year ending January 31, 2022.
Use of Estimates

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

Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments as facts and circumstances dictate. As future events and their effects, including the uncertainty surrounding rapidly changing market and economic conditions from the outbreak of COVID-19, cannot be determined with precision, actual results could differ from those estimates and many of our estimates and assumptions have required increased judgement and carry a higher degree of variability and volatility.
Significant Accounting Policies
Our significant accounting policies are detailed in “Note 2, Summary of Significant Accounting Policies" of the audited annual consolidated financial statements for the fiscal year ended January 31, 2021 included in the Final Prospectus. There have been no material changes to our significant accounting policies with the exception of the below:

Deferred Offering Costs

Deferred offering costs consist primarily of accounting, legal, and other fees related to the IPO, were capitalized and recorded in other assets on the condensed consolidated balance sheets. As of October 31, 2021 and January 31, 2021, $3.7 million and $0.2 million, respectively, of deferred offering costs were capitalized. Upon completion of the IPO, these deferred costs were reclassified to stockholders’ equity and recorded against the proceeds from the IPO.
Concentration of Credit Risk

Financial instruments that potentially subject us to credit risk primarily consist of cash and cash equivalents, restricted cash, marketable securities, and accounts receivable. Restricted cash consists of letters of credit related to our leased properties. For cash, cash equivalents, restricted cash, and marketable securities, we are exposed to credit risk in the event of default by the financial institutions to the extent of the amounts recorded on the accompanying unaudited condensed consolidated balance sheets that are in excess of federal insurance limits.

Significant customers are those which represent 10% or more of our total revenue for the period or accounts receivable at the balance sheets dates. For the three and nine months ended October 31, 2021 and October 31, 2020, no customer accounted for 10% or more of total revenue.

For accounts receivable, we are exposed to credit risk in the event of nonpayment by customers to the extent of the amounts recorded on the accompanying unaudited condensed consolidated balance sheets. Our accounts receivable are derived from revenue contracts with customers. We maintain reserves for potential credit losses on customer accounts when deemed
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necessary. As of October 31, 2021, no customer accounted for 10% or more of our total accounts receivable balance, and as of January 31, 2021, one customer accounted for 11% of our total accounts receivable balance.

Recently Adopted Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). This ASU is designed to reduce complexity for accounting for costs of implementing a cloud computing service arrangement. This standard aligns the accounting for implementation costs of hosting arrangements, regardless of whether they convey a license to the hosted software. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2020, and early adoption is permitted. We adopted ASU 2018-15 prospectively on February 1, 2021, and the adoption of this update did not have a material impact on our consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) and issued certain transitional guidance and subsequent amendments between January 2018 and February 2020 within ASU No. 2017-13, ASU No. 2018-01, ASU No. 2018-10, ASU No. 2018-11, ASU No. 2018-20, ASU No. 2019-01, ASU No. 2019-10, ASU No. 2020-02, and ASU No. 2020-05 (collectively, “Topic 842”). The guidance in Topic 842 supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the audited consolidated statements of operations. Per ASU No. 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities, issued June 2020, Topic 842, as amended, is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Topic 842 is effective for our fiscal year beginning February 1, 2022. Early adoption is permitted. We expect to adopt Topic 842 under the private company transition guidance beginning February 1, 2022. We expect the adoption of Topic 842 to have a material impact on our consolidated financial statements. Based on ongoing evaluations, we currently expect the most significant changes will be related to the recognition of new right-of-use assets and lease liabilities on our consolidated balance sheets.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement on Credit Losses on Financial Instruments, and issued subsequent amendments to the initial guidance and transitional guidance between November 2018 and February 2020 within ASU No. 2018-19, ASU No. 2019-04, ASU No. 2019-05, ASU No. 2019-10, ASU No. 2019-11 and ASU No. 2020-02 (collectively, “Topic 326”). Topic 326 introduces new guidance for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade and other receivables, held-to-maturity debt securities, loans and net investments in leases. The new guidance also modifies the impairment model for available-for-sale debt securities and requires entities to determine whether all or a portion of the unrealized loss on an available-for-sale debt security is a credit loss. Further, the new guidance indicates that entities may not use the length of time a security has been in an unrealized loss position as a factor in concluding whether a credit loss exists. Per ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), Topic 326, as amended, is effective for (1) public business entities that meet the definition of an SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and (2) all other entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Topic 326 is effective for our fiscal year beginning February 1, 2023. Early adoption is permitted. We expect to adopt Topic 326 under the private company transition guidance beginning February 1, 2023. We are currently evaluating the impact of the new guidance on our consolidated financial statements and do not expect the adoption to have a material impact on our consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) (“Topic 740”), which removes certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify U.S. GAAP for other areas of Topic 740 by clarifying and amending existing guidance. For public companies, the guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption of the amendments is permitted, including adoption in any interim period for (1) public business entities for periods for which financial statements have not yet been issued and (2) all other entities for periods for which financial statements have not yet been made available for issuance. We expect to adopt ASU 2019-12 beginning February 1, 2022, and are currently evaluating the accounting and disclosure requirements and impacts on our consolidated financial statements.

In October 2020, FASB issued ASU No. 2020-10, Codification Improvements (“ASU 2020-10”). The amendments in this guidance affect a wide variety of topics in the ASC by either clarifying the codification or correcting unintended application of guidance. The changes are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. For public companies, the guidance is effective for fiscal years, and interim periods within
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those fiscal years, beginning after December 15, 2020. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption of the amendments is permitted, including adoption in any interim period for (1) public business entities for periods for which financial statements have not yet been issued and (2) all other entities for periods for which financial statements have not yet been made available for issuance. We expect to adopt ASU 2020-10 beginning February 1, 2022, and do not expect the adoption to have a material impact on our consolidated financial statements.
3. Revenue from Contracts with Customers

Disaggregated Revenue Streams

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

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

Three Months Ended
October 31,
Nine Months Ended
October 31,
2021202020212020
Subscription$59,309 $36,793 $155,745 $100,518 
Professional Services and Other4,659 2,539 11,856 6,743 
Total$63,968 $39,332 $167,601 $107,261 


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

Three Months Ended
October 31,
Nine Months Ended
October 31,
2021202020212020
United States$38,170 $23,921 $100,628 $65,142 
International25,798 15,411 66,973 42,119 
Total$63,968 $39,332 $167,601 $107,261 

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

Accounts Receivable

Unbilled accounts receivable included in trade accounts receivable, net, which generally arise from our contractual right to bill our customers in advance of services on the contract effective date, were $1.1 million and $3.6 million as of October 31, 2021 and January 31, 2021, respectively.

Contract Balances

Contract Assets

Contract assets as of October 31, 2021 and January 31, 2021 were $1.0 million and $0.4 million, respectively. The change in contract assets for all periods presented primarily reflects revenue recognized in excess of billings partially offset by contract assets earned during the period.

Deferred Revenue

The change in deferred revenue for all periods presented primarily reflects cash payments received during the period for which the performance obligation was not satisfied prior to the end of the period, partially offset by revenues recognized during the period. Revenue recognized during the three and nine months ended October 31, 2021 from amounts included in deferred revenue at January 31, 2021 was $12.3 million and $70.6 million, respectively. Revenue recognized during the three and nine months ended October 31, 2020 from amounts included in deferred revenue at January 31, 2020 was $8.4 million and $48.7 million, respectively.
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Remaining Performance Obligations

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

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

TotalLess than 1 Year1-5 Years
January 31, 2021$234.2 $150.0 $84.2 
April 30, 2021249.6 163.7 85.9 
July 31, 2021268.2 180.5 87.7 
October 31, 2021304.0 199.1 104.9 
4. Variable Interest Entity and Redeemable Non-Controlling Interest

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

On September 23, 2020, the Investors executed a shareholders’ agreement (the “Shareholders Agreement”) in connection with the closing of the first tranche. The Shareholders’ Agreement, along with the Articles of Incorporation, outlines the Investors’ rights, including certain protective provisions of JCC and M30, (together referred to the “Non-controlling Interest Holders”.) All of the common stock held by the Investors is callable by us or puttable by the Non-controlling Interest Holders upon certain contingent events but no later than the eighth anniversary of the Share Purchase Agreement. The price of the put and call option is based on our fair value as of the date of sale. Should the call or put option be exercised, the redemption value would be determined based on a prescribed formula derived from the discrete revenues of Braze KK and the Company and may be settled, at our discretion, with our stock, if we are a publicly traded company at that time, or cash.

We determined that Braze KK was a VIE and we are the primary beneficiary, because Braze KK was dependent on us for ongoing financial support and we have both the power to direct the significant activities that impact the economic performance of Braze KK and the obligation to absorb losses and the right to receive expected benefits that could be significant to Braze KK.

In September 2021, following the first anniversary of the execution of the Share Purchase Agreement and pursuant to the terms and conditions of the Shareholders Agreement, the Investors purchased Braze KK Shares in the second tranche for a total purchase price of $5.0 million. The investment did not change the ownership interest between the Investors. The investment resulted in a reconsideration event and we determined that Braze KK still met the criteria of a VIE as Braze KK did not have sufficient equity at risk to finance their activities. As a result, we continue to operate Braze KK as a subsidiary, exposing us to business and foreign exchange risk. We consolidate Braze KK and present the results within our condensed consolidated balance sheets, condensed consolidated statements of operations, and condensed consolidated statements of cash flows.

As of October 31, 2021 and January 31, 2021, the non-controlling interest in Braze KK is classified in mezzanine equity as redeemable non-controlling interest as a result of the put right available to the Non-controlling Interest Holders in the future, an event that is not solely in our control. The non-controlling interest is not accreted to redemption value because it is currently not probable that the non-controlling interest will become redeemable.








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

Balance as of January 31, 2021
$2,233
Investment from redeemable non-controlling interest2,450
Net loss attributable to redeemable non-controlling interest(1,040)
Balance as of October 31, 2021
$3,643
The total combined VIE assets, which represent the maximum exposure to loss, and liabilities were as follows (in thousands):

October 31,
2021
January 31,
2021
Assets:
Cash and cash equivalents$7,645 $4,582 
Accounts receivable, net of allowance for doubtful accounts99  
Prepaid expenses and other current assets137 58 
Total current assets7,881 4,640 
Property and equipment, net24 12 
Deferred contract costs293  
Other assets22 23 
Total assets$8,220 $4,675 
Liabilities:
Accounts payable$31 $19 
Accrued expenses and other current liabilities557 35 
Deferred revenue677  
Total liabilities$1,265 $54 
5. Fair Value Measurements

The following table sets forth our financial instruments that were measured at fair value on a recurring basis at the periods indicated below, by level within the fair value hierarchy (in thousands):
October 31, 2021
Level 1Level 2Level 3Total
Cash equivalents
Money market funds$13,864 $ $ $13,864 
13,864   13,864 
Marketable securities
Foreign government bonds 3,211  3,211 
Commercial paper 20,584  20,584 
Corporate debt securities 5,139  5,139 
Asset-backed securities 5,972  5,972 
Total marketable securities 34,906  34,906 
Total$13,864 $34,906 $ $48,770 

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January 31, 2021
Level 1Level 2Level 3Total
Cash equivalents
Money market funds$12,584 $ $ $12,584 
12,584   12,584 
Marketable securities
U.S. government bonds10,533   10,533 
Commercial paper 17,582  17,582 
Corporate debt securities 20,075  20,075 
Asset-backed securities 9,814  9,814 
Total marketable securities10,533 47,471  58,004 
Total$23,117 $47,471 $ $70,588 

Our money market funds and U.S. government bonds are classified as Level 1 within the fair value hierarchy, because they are valued using quoted prices in active markets as of January 31, 2021 and only our money market funds are classified as Level 1 as of October 31, 2021. Financial instruments classified as Level 2 within our fair value hierarchy are valued on the basis of prices from an orderly transaction between market participants provided by reputable dealers or pricing services. Prices of these securities are obtained through independent, third-party pricing services and include market quotations that may include both observable and unobservable inputs. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrices and market transactions in comparable investments and various relationships between investments. There were no transfers of financial instruments among Level 1, Level 2 and Level 3 during the periods presented.
6. Marketable Securities

Marketable securities consist of the following for the periods presented (in thousands):
October 31, 2021
Cost or Amortized CostGross Unrealized GainsGross Unrealized LossesTotal Estimated Fair Value
Foreign government bonds$3,211 $ $ $3,211 
Commercial paper20,584   20,584 
Corporate debt securities5,143  (4)5,139 
Asset-backed securities5,974  (2)5,972 
Total