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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 April 30, 2022
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) 
(609964-0585
(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  x    No  o 
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 June 6, 2022, there were 49,022,752 shares of the registrant’s Class A and 44,992,577 shares of the registrant’s Class B common stock, each with a par value of $0.0001 per share, outstanding.


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Braze, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended April 30, 2022
TABLE OF CONTENTS
Page No.
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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:

unstable market and economic conditions may have serious adverse consequences on our business, financial condition and share price;
our expectations regarding our revenue and the timing of revenue recognition under our customer contracts, 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
3

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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.

Unless the context otherwise indicates, references in this Quarterly Report on Form 10-Q to the terms “Braze,” “the Company,” “we,” “our” and “us” refer to Braze, Inc. and its subsidiaries.

“Braze,” “Braze Currents” and other trade names and trademarks of ours appearing in this Quarterly Report on Form 10-Q are our property. This Quarterly Report on Form 10-Q contains trade names and trademarks of other companies, which are the property of their respective owners. We do not intend our use or display of other companies’ trade names or trademarks to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies.

We may announce material business and financial information to our investors using our investor relations website (www.investors.braze.com). We therefore encourage investors and others interested in Braze to review the information that we make available on our website, in addition to following our filings with the Securities and Exchange Commission, or the SEC, webcasts, press releases and conference calls.
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Part 1 – Financial Information
Item 1.    Financial Statements
BRAZE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share and per share amounts)
April 30,
2022
January 31,
2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$90,610 $478,937 
Accounts receivable, net of allowance of $646 and $743 at April 30, 2022 and January 31, 2022, respectively
42,663 64,504 
Marketable securities439,486 35,156 
Prepaid expenses and other current assets26,006 29,588 
Total current assets598,765 608,185 
Restricted cash, noncurrent4,036 4,036 
Property and equipment, net9,497 7,393 
Operating lease right-of-use assets    54,804  
Deferred contract costs44,488 41,689 
Other assets4,708 4,959 
TOTAL ASSETS$716,298 $666,262 
LIABILITIES, CONVERTIBLE PREFERRED STOCK, REDEEMABLE NON-CONTROLLING INTEREST, AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable$2,680 $2,083 
Accrued expenses and other current liabilities28,870 31,623 
Deferred revenue139,437 126,260 
Operating lease liabilities, current9,992  
Total current liabilities180,979 159,966 
Operating lease liabilities, noncurrent47,392  
Other long-term liabilities383 1,478 
TOTAL LIABILITIES228,754 161,444 
COMMITMENTS AND CONTINGENCIES (Note 13)
Redeemable non-controlling interest (Note 4)2,871 3,235 
STOCKHOLDERS’ EQUITY
Class A common stock, $0.0001 par value; 2,000,000,000 shares authorized as of April 30, 2022 and January 31, 2022; 47,078,151 and 18,549,183 shares issued and outstanding as of April 30, 2022 and January 31, 2022, respectively
5 1 
Class B common stock, $0.0001 par value; 110,000,000 shares authorized as of April 30, 2022 and January 31, 2022; 46,728,599 and 74,418,847 shares issued and outstanding as of April 30, 2022 and January 31, 2022, respectively
4 8 
Additional paid-in capital741,291 717,175 
Accumulated other comprehensive loss(2,397)(640)
Accumulated deficit(254,230)(214,961)
TOTAL STOCKHOLDERS’ EQUITY484,673 501,583 
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK, REDEEMABLE NON-CONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY$716,298 $666,262 
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 amounts)
Three Months Ended
April 30,
20222021
Revenue$77,495 $47,877 
Cost of revenue25,906 15,807 
Gross profit51,589 32,070 
Operating expenses:
Sales and marketing46,044 24,351 
Research and development21,620 11,797 
General and administrative23,574 8,947 
Total operating expenses91,238 45,095 
Loss from operations(39,649)(13,025)
Other income, net30 32 
Loss before provision for income taxes(39,619)(12,993)
Provision for income taxes14 160 
Net loss(39,633)(13,153)
Net loss attributable to redeemable non-controlling interest(364)(319)
Net loss attributable to Braze, Inc.$(39,269)$(12,834)
Net loss per share attributable to Braze, Inc. common stockholders, basic and diluted$(0.42)$(0.65)
Weighted-average shares used to compute net loss per share attributable to Braze, Inc. common stockholders, basic and diluted93,250 19,669 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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BRAZE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)
(in thousands)
Three Months Ended
April 30,
20222021
Net loss$(39,633)$(13,153)
Other comprehensive loss:
Change in foreign currency translation adjustments(562)(130)
Unrealized losses on marketable securities(1,195)(40)
Other comprehensive loss, net(1,757)(170)
Comprehensive loss, net(41,390)(13,323)
Less: comprehensive loss, net, attributable to redeemable non-controlling interest(364)(319)
Comprehensive loss attributable to Braze, Inc.$(41,026)$(13,004)
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’ EQUITY (DEFICIT) (UNAUDITED)
(in thousands)
Redeemable Non-controlling InterestClass A and Class B Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total Stockholders' Equity
SharesAmount
Balance at January 31, 2022
$3,235 92,968 $9 $717,175 $(214,961)$(640)$501,583 
Issuance of common stock for options exercised— 667 — 2,630 — — 2,630 
Vesting of early exercised options— — — 54 — — 54 
Vesting of restricted stock units— 77 — — — — — 
Repurchase of unvested shares related to early exercised options— (1)— — — — — 
Stock-based compensation— — — 17,172 — — 17,172 
Other comprehensive loss— — — — — (1,757)(1,757)
Net loss attributable to redeemable non-controlling interests(364)— — — — — — 
Charitable donation of stock— 96 — 4,260 — — 4,260 
Net loss attributable to Braze, Inc.— — — — (39,269)— (39,269)
Balance at April 30, 2022
$2,871 93,807 $9 $741,291 $(254,230)$(2,397)$484,673 


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— — — 914 — 2,432 — — 2,432 
Vesting of early exercised options— — — — — 115 — — 115 
Stock-based compensation— — — — — 6,967 — — 6,967 
Other comprehensive loss— — — — — — — (170)(170)
Net loss attributable to redeemable non-controlling interests— — (319)— — — — — — 
Net loss attributable to Braze, Inc.— — — — — — (12,834)— (12,834)
Balance at April 30, 2021
62,831 $174,229 $1,914 20,412 $ $39,291 $(151,076)$(212)$(111,997)


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)
Three Months Ended
April 30,
20222021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss (including amounts attributable to redeemable non-controlling interests)$(39,633)$(13,153)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation16,971 6,956 
Amortization of deferred contract costs5,407 3,800 
Depreciation and amortization965 588 
Provision for credit losses(143)(210)
Value of common stock donated to charity4,260  
Amortization of discount/premium on marketable securities13 160 
Non-cash foreign exchange loss 505 75 
Deferred income taxes4 1 
Changes in operating assets and liabilities:
Accounts receivable21,984 8,355 
Prepaid expenses and other current assets3,615 (1,576)
Deferred contract costs(8,205)(5,666)
ROU Assets and liabilities879  
Other assets614 (1,892)
Accounts payable28 119 
Accrued expenses and other current liabilities(2,530)(7,463)
Deferred revenue13,177 6,157 
Other long-term liabilities10 (58)
Net cash provided by/(used in) operating activities17,921 (3,807)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment(1,960)(298)
Capitalized internal-use software costs(306)(498)
Purchases of marketable securities(421,537)(8,059)
Maturities of marketable securities16,000 26,008 
Net cash (used in)/provided by investing activities(407,803)17,153 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of common stock options2,630 2,184 
Payment of deferred offering costs (219)
Repurchase of shares related to early exercised options  
Net cash provided by financing activities2,630 1,965 
Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash(1,075)(134)
Net change in cash, cash equivalents, and restricted cash(388,327)15,177 
Cash, cash equivalents, and restricted cash, beginning of period482,973 33,018 
Cash, cash equivalents, and restricted cash, end of period$94,646 $48,195 
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)
Three Months Ended
April 30,
20222021
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for income taxes, net of refunds$172 $ 
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Stock-based compensation capitalized to internal-use software$232 $11 
Net change in capitalized internal-use software development costs in accrued expenses$21 $(56)
Unrealized net loss on marketable investment securities$(1,195)$(40)
Net change to property and equipment (included in accounts payable / accrued liabilities)$623 $(49)
Vesting of early exercised options$54 $115 
Asset retirement obligation$365 $ 
Common stock option receivables$ $245 
Deferred offering costs included in accounts payable and accrued expenses and other current liabilities$ $224 
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 Austin, Berlin, Chicago, London, San Francisco, Singapore, and Tokyo.

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 in the past, as many public health regulations transformed or even halted daily operations, and similar adverse effects may re-occur if any state mandated lockdowns are reinstated in the future. 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 variable interest entities (“VIE”) for which we are the primary beneficiary. Intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Certain reclassifications and immaterial changes have been made to prior-period financial statements to conform to the current-period presentation.
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
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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 incremental borrowing rate for operating leases, 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, 2022 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on March 31, 2022 (the “Annual Report”). There have been no material changes to our significant accounting policies with the exception of the below:

Accounts Receivable, Net and Credit Losses

Accounts receivable consists of customer obligations due under normal trade terms and are recorded at amounts billed and unbilled to customers, net of allowance for any potential uncollectible accounts. Unbilled amounts are 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. Trade accounts receivable are recorded at invoiced amounts and do not bear interest.

We maintain an allowance for credit losses for accounts receivable, net which is recorded as an offset to accounts receivable, net and changes in this allowance are recorded as general and administrative expenses in the consolidated statements of operations. We assess collectability by reviewing accounts receivable on a collective basis when similar characteristics exist and on an individual basis when we identify specific customers with known disputes or collectability issues. In determining the amount of the allowance for credit losses, we consider historical collectability based on past due status and make judgements about the creditworthiness of customers based on ongoing credit evaluations. A receivable is considered past due if we have not received payment based on agreed-upon terms. We also consider customer-specific information, current market conditions, and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data. No material write-offs of accounts receivable have been recognized in any of the periods presented.

Leases

We determine if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether we have the right to control the identified asset. Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the lease term. ROU assets are based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude lease incentives and initial direct costs incurred, as applicable.

As the implicit rate in our leases is generally unknown, we use the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The lease terms may include options to extend or terminate the lease when it is reasonably certain we will exercise any such options. Lease costs for our operating leases are recognized on a straight-line basis over the lease term. Finance lease assets are amortized on a straight-line basis over the shorter of the estimated useful lives of the assets or the lease term. The interest component of finance leases is included in interest expense and recognized using the effective interest method over the lease term. We did not have any finance leases in the periods presented.

We have elected to not separate lease and non-lease components for any leases within our existing classes of assets and, as a result, we account for any lease and non-lease components as a single lease component. We have also elected to not apply the recognition requirement to any leases within our existing classes of assets with a term of 12 months or less (short-term leases). Variable lease costs are comprised primarily of our proportionate share of operating expenses, property taxes, and insurance and is classified as lease cost due to our election to not separate lease and non-lease components.
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Operating leases are included in operating lease right-of-use assets, current operating lease liabilities, and non-current in our consolidated balance sheets. Refer to Note 14. Leases, for further information.
Concentration of Credit Risk

Financial instruments that potentially subject us to concentration of credit risk consist primarily 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 consolidated balance sheets 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 months ended April 30, 2022 and April 30, 2021, no customer accounted for 10% or more of our 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 consolidated balance sheets. No customers accounted for 10% or more of our total accounts receivable balance as of April 30, 2022 and January 31, 2022, respectively.

Marketable Securities

We classify our investments in marketable securities within current assets on the consolidated balance sheets as the investments are available for use, if needed, in current operations as we may sell our marketable securities at any time, without significant penalty, even if they have not yet reached maturity. These investments are carried at fair value, based on quoted market rates when observable or utilizing data points that are observable, such as quoted prices, interest rates and yield curves. Gains and losses are determined based on the specific identification method and are recognized when realized as a component of Other income, net in our consolidated statement of operations.

We review our securities on a regular basis to evaluate if any security has experienced an other-than temporary decline in fair value. We consider an available-for-sale security to be impaired if the fair value of the investment is less than its amortized cost basis, our intent to sell, or whether it is more likely than not that we are required to sell the security before recovery of its amortized cost basis. If we believe that an other-than-temporary decline exists in one of the securities, we will write down these investments to fair value. To the extent that the decline in fair value is related to credit losses, such as changes to the rating of the security by third-party rating agencies, and adverse conditions specific to the security, among other factors, the write-down related to credit loss would be recorded in Other income, net in our consolidated statements of operations. Impairments related to factors other than credit losses are recognized in accumulated other comprehensive income (loss), net of tax. As of April 30, 2022, the Company had not recorded any credit impairments.

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), (“ASC 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 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 ending January 31, 2022 and interim periods beginning February 1, 2023 with early adoption permitted. While we have generally elected to take advantage of the extended transition period available to emerging growth companies for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended, we decided to early adopt Topic 842. We adopted this standard under the modified-retrospective approach, using the practical expedients allowing us to not reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired leases, and (iii) indirect costs for any existing leases. Additionally, any lease arrangements with a term of 12 months or less will be recognized on the consolidated statement of
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operations on a straight-line basis over the lease term and any non-lease components shall not be separated from the lease components, but instead accounted for as a single lease component. Upon adoption of ASC 842, we recognized a right-of-use asset of $59.6 million and a lease liability of $61.3 million at February 1, 2022 on our consolidated balance sheets. Prior period amounts were not restated and are reported in accordance with ASC 840. Refer to Note 14. Leases, for further information.

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 and early adoption is permitted. While we have generally elected to take advantage of the extended transition period available to emerging growth companies for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended, we decided to early adopt Topic 326. We determined that the adoption of this ASU did not have a material impact on our consolidated financial statements. As such, we adopted this ASU prospectively on February 1, 2022.

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 adopted ASU 2019-12 on February 1, 2022 and determined that the adoption of this ASU had no material impact 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 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 adopted ASU 2020-10 prospectively on February 1, 2022 and determined that this ASU does not have a material impact on our consolidated financial statements.
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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
April 30,
20222021
Subscription$72,836 $44,708 
Professional services and other4,659 3,169 
Total$77,495 $47,877 

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

Three Months Ended
April 30,
20222021
United States$45,352 $28,865 
International32,143 19,012 
Total$77,495 $47,877 

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 $5.6 million and $2.2 million as of April 30, 2022 and January 31, 2022, respectively.

Contract Balances

Contract Assets

Contract assets as of April 30, 2022 and January 31, 2022 were $0.5 million and $0.8 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 months ended April 30, 2022 from amounts included in deferred revenue at January 31, 2022, was $59.5 million. Revenue recognized during the three months ended April 30, 2021 from amounts included in deferred revenue at January 31, 2021, was $35.9 million.
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Credit Losses

The following table presents a reconciliation of the allowance for credit losses on accounts receivable (in thousands):

Allowance for Credit Losses
Balance at January 31, 2022$743 
Reserve:
Credit losses(143)
Deferred revenue164 
Write-offs(137)
Recoveries19 
Balance at April 30, 2022$646 

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
April 30, 2021$249.6 $163.7 $85.9 
July 31, 2021268.2 180.5 87.7 
October 31, 2021304.0 199.1 104.9 
January 31, 2022373.6 237.8 135.8 
April 30, 2022390.9 255.1 135.8 
4. Variable Interest Entity and Redeemable Non-Controlling Interest

On September 14, 2020, we, along with Japan Cloud Computing Co., Ltd., and M30 LLC, (the “Investors”), entered into an 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 in September 2020 and September 2021, 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.

In March 2022, we consented to the issuance of stock options to purchase Braze KK Shares by certain employees of Braze KK. These options will vest in full in March 2027 and, other than the options held by one officer of Braze KK, cannot be exercised by the holders thereof prior to the exercise of the call or put options described in more detail below. The issuance of stock options did not impact our majority stake in Braze KK, as none of the vesting criteria of the options were met as of the balance sheet date. The issuance of stock options did not result in a reconsideration event and therefore 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 consolidated balance sheets, consolidated statements of operations, and consolidated statements of cash flows.

The common stock held by the Investors is callable by us or puttable by the Investors upon certain contingent events. 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 or cash. 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 Investors 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.

The following table summarizes the activity in the redeemable non-controlling interests for the periods indicated below (in thousands):
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Balance as of January 31, 2022
$3,235
Net loss attributable to redeemable non-controlling interest(364)
Balance as of April 30, 2022
$2,871
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):
April 30, 2022
Level 1Level 2Level 3Total
Cash equivalents
Money market funds$619 $ $ $619 
U.S. government bonds28,719   28,719 
Commercial paper3,998   3,998 
$33,336 $ $ $33,336 
Marketable securities
U.S. government bonds$353,913 $ $ $353,913 
Foreign government bonds 2,020  2,020 
Commercial paper 9,699  9,699 
Corporate debt securities 70,949  70,949 
Asset-backed securities 2,905  2,905 
Total marketable securities353,913 85,573  439,486 
Total$387,249 $85,573 $ $472,822 
January 31, 2022
Level 1Level 2Level 3Total
Cash equivalents
Money market funds$439,627 $ $ $439,627 
439,627   439,627 
Marketable securities
U.S. government bonds$4,006 $ $ $4,006 
Foreign government bonds 3,203  3,203 
Commercial paper 18,993  18,993 
Corporate debt securities 3,020  3,020 
Asset-backed securities 5,934  5,934 
Total marketable securities4,006 31,150  35,156 
Total$443,633 $31,150 $ $474,783 

Our money market funds are classified as Level 1 within the fair value hierarchy, because they are valued using quoted prices in active markets as of April 30, 2022 and January 31, 2022. 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.
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6. Marketable Securities

Marketable securities consist of the following for the periods presented (in thousands):
April 30, 2022
Cost or Amortized CostGross Unrealized GainsGross Unrealized LossesTotal Estimated Fair Value
U.S. government securities$354,781 $2 $(870)$353,913 
Foreign bonds2,035  (15)2,020 
Commercial paper9,699   9,699 
Corporate debt securities71,279 14 (344)70,949 
Asset-backed securities2,914  (9)2,905 
Total$440,708 $16 $(1,238)$439,486 
January 31, 2022
Cost or Amortized CostGross Unrealized GainsGross Unrealized LossesTotal Estimated Fair Value
U.S. government securities$4,021 $ $(15)$4,006 
Foreign bonds3,203   3,203 
Commercial paper18,993   18,993 
Corporate debt securities3,025  (5)3,020 
Asset-backed securities5,941  (7)5,934 
Total$35,183 $ $(27)$35,156 

Accrued interest receivables related to our available-for-sale securities of $1.3 million as of April 30, 2022 and $0.1 million as of January 31, 2022 were included within Prepaid expenses and other assets on our consolidated balance sheets.

The Company’s short-term investments consist of available-for-sale debt securities and term deposits. The term deposits are at cost, which approximates fair value.

The weighted-average remaining maturity of the Company’s investment portfolio was less than one year as of the periods presented. No individual security incurred continuous unrealized losses for greater than 12 months.

The Company purchases investment grade marketable debt securities which are rated by nationally recognized statistical credit rating organizations in accordance with its investment policy. This policy is designed to minimize the Company's exposure to credit losses. As of April 30, 2022, the credit-quality of the Company’s marketable available-for-sale debt securities had remained stable. The unrealized losses recognized on marketable available-for-sale debt securities as of April 30, 2022 was primarily related to the continued market volatility associated with market expectations of an aggressive pace of interest rate increases by the Federal Reserve. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments and it is not expected that the investments would be settled at a price less than their amortized cost basis. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis. The Company is not aware of any specific event or circumstance that would require the Company to change its assessment of credit losses for any marketable available-for-sale debt security as of April 30, 2022. These estimates may change, as new events occur and additional information is obtained, and will be recognized on the consolidated financial statements as soon as they become known. No credit losses were recognized as of April 30, 2022 for the Company’s marketable and non-marketable debt securities.

The contractual maturities of the investments classified as available-for-sale marketable securities are as follows (in thousands):
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April 30, 2022
Amortized CostEstimated Fair Value
Due within 1 year$267,854 $267,605 
Due in 1 year through 5 years172,854 171,881 
Total$440,708 $439,486 
January 31, 2022
Amortized CostEstimated Fair Value
Due within 1 year$33,671 $33,646 
Due in 1 year through 5 years1,512 1,510 
Total$35,183 $35,156 
Investment Income

Investment income consists of interest income and accretion income/amortization expense on our cash, cash equivalents and marketable securities. Investment income is included within Other income, net on the consolidated statement of operations. The components of investment income were as follows (in thousands):
Three Months Ended
April 30,
20222021
Interest income$443 $223 
Amortization of discount/premium, net13 (160)
Investment income$456 $63 
7. Property and Equipment, Net

Property and equipment, net, consist of the following (in thousands):
April 30,
2022
January 31,
2022
Capitalized internal-use software$5,837 $5,353 
Computer equipment and software4,701 3,833 
Leasehold improvements4,085 2,470 
Furniture and fixtures964 966 
15,587 12,622 
Less: accumulated depreciation and amortization(6,090)(5,229)
Total property and equipment, net$9,497 $7,393 

The total depreciation expense and amortization expense for property and equipment was $1.0 million and $0.6 million during the three months ended April 30, 2022 and 2021, respectively.

We capitalized internal-use software of $0.5 million and $0.5 million during the three months ended April 30, 2022 and 2021, respectively. Amortization for capitalized internal-use software costs recognized within cost of revenue on the consolidated statements of operations was $0.5 million and $0.2 million for the three months ended April 30, 2022 and 2021, respectively.

8. Prepaid Expenses and Other Current Assets
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Prepaid expenses and other current assets consist of the following (in thousands):
April 30,
2022
January 31,
2022
Prepaid software subscriptions$12,531 $19,396 
Prepaid advertising1,192 704 
Prepaid insurance3,501 4,372 
Prepaid events1,146 428 
Other7,636 4,688 
Total prepaid expenses and other current assets$26,006 $29,588 
9. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consists of the following (in thousands):
April 30,
2022
January 31,
2022
Accrued compensation costs$14,269 $14,075 
Accrued software subscriptions2,458 3,217 
Accrued commissions4,060 5,961 
Accrued professional service fees2,451 2,218 
Other5,632 6,152 
Total accrued expenses and other current liabilities$28,870 $31,623 
10. Employee Benefit Plans

We sponsor a 401(k) defined contribution plan covering all eligible U.S. employees. Contributions to the 401(k) plan are discretionary. Matching contributions under the plan were $1.8 million and $1.2 million for the three months ended April 30, 2022 and 2021, respectively.

11. Stockholder’s Equity (Deficit)

Class A and Class B Common Stock

We have two classes of common stock, Class A and Class B. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting, conversion and transfer rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to ten votes and may be converted at the option of the holder into one share of Class A common stock. In addition, all shares of Class B common stock will automatically convert into shares of Class A common stock in certain circumstances, including on the earlier of (i) the last trading day of the fiscal quarter during which the number of shares of Class B common stock then outstanding represents less than 10% of the aggregate number of shares of Class A common stock and Class B common stock then outstanding, or (ii) the last trading day of the fiscal quarter immediately following the fifth anniversary of the Initial Public Offering (“IPO”). All shares of the Company’s capital stock outstanding immediately prior to our initial public offering, including all shares held by our executive officers, directors and their respective affiliates, and all shares issuable upon the conversion of our then outstanding convertible preferred stock, were reclassified into shares of Class B common stock immediately prior to the completion of the initial public offering.

Charitable Contributions

In connection with our Pledge 1% commitment, we donated 96,465 shares of our Class A common stock to a charitable donor-advised fund that resulted in the recognition of a $4.3 million expense within general and administrative in our consolidated statements of operations during the three months ended April 30, 2022.
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12. Employee Stock Plans

We have historically issued equity awards under our Amended and Restated 2011 Equity Incentive Plan (the “2011 Plan”) and our 2021 Equity Incentive Plan (the “2021 Plan”).

Amended and Restated 2011 Equity Incentive Plan

Our 2011 Plan provides for the award of stock options and restricted stock units (“RSUs”) to employees, officers, directors, advisors and other service providers of Braze. The terms of each award and the exercise price of awards under the 2011 Plan are determined by our board of directors. Following effectiveness of the 2021 Plan in connection with our initial public offering, no further awards were made under the 2011 Plan.

2021 Equity Incentive Plan

In November 2021, our board of directors and our stockholders approved the 2021 Plan, which became effective on November 16, 2021. No grants were made under the 2021 Plan prior to its effectiveness. No further grants will be made under the 2011 Plan. At effectiveness, we reserved 25,660,249 shares of our Class A common stock to be issued under the 2021 Plan. In addition, the number of shares of our Class A common stock reserved for issuance under the 2021 Plan will automatically increase on February 1 of each year for a period of ten years, beginning on February 1, 2022 and continuing through February 1, 2031, in an amount equal to (1) 5% of the total number of shares of our common stock (both Class A and Class B) outstanding on the preceding January 31, or (2) a lesser number of shares determined by the Board no later than the February 1 increase. On February 1, 2022, the number of shares of our Class A common stock reserved for issuance under our 2021 Plan increased by an additional 4,648,401 shares.

Stock Options

There were zero stock options granted during the three months ended April 30, 2022. During the three months ended April 30, 2021, we granted stock options to purchase up to 3,116,716 shares of common stock at a weighted average exercise price of $35.01 and a weighted average grant date fair value of $24.53. Stock-based compensation expense related to these stock options granted will be recognized over the requisite service period of four years.

We estimate the fair value of stock options using the Black-Scholes option-pricing model on the date of grant. The assumptions used in the Black-Scholes option-pricing model were as follows:
Three Months Ended
April 30,
20222021
Dividend yield (in percentage)n/a%
Expected volatility (in percentage)
n/a
61.8% - 65.1%
Expected term (in years)
n/a
5.9 - 6.7
Risk-free interest rate (in percentage)
n/a
1.0% - 1.2%
Fair value of common stockn/a
$65.00
Restricted Stock Units

The following table summarized unvested and outstanding RSU award activity and related information:
SharesWeighted-Average Grant Date Fair Value
Balance as of January 31, 2022
1,355,065
Granted1,594,649$41.97 
Vested(77,281)$44.88 
Forfeited(66,983)$45.08 
Balance as of April 30, 2022
2,805,450

RSUs granted during the three months ended April 30, 2022 contained a service-based vesting condition of up to approximately a four year period. RSUs typically vest on a quarterly basis or have a one year cliff vesting period with quarterly vesting thereafter.

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Stock-based Compensation Expense

The following table summarizes stock-based compensation expense, which was included in the unaudited condensed consolidated statements of operations as follows (in thousands):

Three Months Ended,
April 30,
20222021
Cost of revenue$920 $190 
Sales and marketing5,667 2,338 
Research and development6,173 2,587 
General and administrative4,211 1,841 
Stock-based compensation, net of amounts capitalized$16,971 $6,956 
Capitalized stock-based compensation expense232  
Total stock-based compensation expense$17,203 $6,956 

As of April 30, 2022, total compensation cost not yet recognized related to unvested equity awards and the weighted-average remaining period over which these costs are expected to be realized were as follows:

Stock OptionsRSUs
Unrecognized compensation costs (in thousands)$61,764$82,930
Weighted-average remaining recognition period (years)3.042.72

Secondary Transaction

In March 2021, certain existing investors entered into an arms-length transaction to purchase 292,486 shares of our common stock from certain of our current employees (the “2021 Secondary Transaction”). The purchase price paid was in excess of the fair value of the common stock on the purchase date. In connection with the 2021 Secondary Transaction, we recognized $3.0 million of stock-based compensation expense which represented the amounts paid above fair value of common stock. The expense is included in the same financial statement line items as the employees’ other compensation. No secondary transactions involving employees occurred during the three months ended April 30, 2022.

Employee Stock Purchase Plan

In November 2021, our board of directors and our stockholders approved the 2021 Employee Stock Purchase Plan (the “ESPP”), which became effective on November 16, 2021. Following completion of our initial public offering, the ESPP authorized the issuance of 1,825,000 shares of our Class A common stock under purchase rights granted to our employees or to employees of any of our designated affiliates. The number of shares of our Class A common stock reserved for issuance will automatically increase on February 1 of each year for a period of ten years, beginning on February 1, 2022 and continuing through February 1, 2031, by the lesser of (i) 1% of the total number of shares of our common stock (both Class A and Class B) outstanding on the preceding January 31; and (ii) 2,737,000 shares, except before the date of any such increase, our board of directors may determine that such increase will be less than the amount set forth in clauses (i) and (ii). On February 1, 2022, the number of shares of our Class A common stock reserved for issuance under our ESPP increased by an additional 929,680 shares.

Our compensation committee has approved an offering under the ESPP, with terms that generally provide for an annual offering period beginning on January 15 and ending on December 15 of each year, with each offering period consisting of two purchase periods on June 15 and December 15, except for the initial offering period which will begin on June 15, 2022, and will end on December 15, 2022. The second offering period will begin on January 15, 2023. On each purchase date, eligible employees will purchase Class A common stock at a price per share equal to 85% of the lesser of (1) the fair market value of our Class A common stock as of the beginning of the offering period or (2) the fair market value of our Class A common stock on the purchase date, as defined in the ESPP.
13. Commitments and Contingencies

Indirect Taxes

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We are subject to indirect taxation in some, but not all, of the various U.S. states and foreign jurisdictions in which we conduct business. Therefore, we have an obligation to charge, collect and remit Value Added Tax (“VAT”) or Goods and Services Tax (“GST”) in connection with certain of our foreign sales transactions and sales and use tax in connection with eligible sales to subscribers in certain U.S. states. On June 21, 2018, the U.S. Supreme Court issued an opinion in South Dakota v. Wayfair. The State of South Dakota alleged that U.S. constitutional law should be revised to permit South Dakota to require remote sellers to collect and remit sales tax in South Dakota in accordance with South Dakota’s sales tax statute. Under the U.S. Supreme Court’s ruling, the longstanding Quill Corp v. North Dakota sales tax case was overruled, and states may now require remote sellers to collect sales tax under certain circumstances. We began collecting sales tax in relevant jurisdictions for the fiscal year ended January 31, 2019. As a result of this ruling and given the scope of our operations, taxing authorities continue to provide regulations that increase the complexity and risks to comply with such laws and could result in substantial liabilities, prospectively as well as retrospectively. Based on the information available, we continue to evaluate and assess the jurisdictions in which indirect tax nexus exists and believe that the indirect tax liabilities are adequate and reasonable. Due to the complexity and uncertainty around the application of these rules by taxing authorities, results may vary materially from expectations, and we have recognized liabilities for contingencies related to state sales and use tax, VAT, and GST deemed probable and estimable totaling $1.3 million and $1.3 million as of April 30, 2022 and January 31, 2022, respectively, which is included in other current liabilities on the consolidated balance sheets. As of fiscal year ended January 31, 2022, we have entered into several voluntary disclosure agreements with jurisdictions where we identified a potential exposure due to not filing prior returns.

Legal Contingencies

From time to time, in the ordinary course of business, we are or may be involved in various legal or regulatory proceedings, claims or purported class actions related to, among other things, alleged infringement of third-party patents and other intellectual property rights, commercial, labor and employment, wage and hour and other claims. We have been, and may in the future be, put on notice or sued by third-parties for alleged infringement of their proprietary rights, including patent infringement. We accrue a liability when we believe that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. We believe we have recorded adequate provisions for any such matters and, as of April 30, 2022, we believe that no material loss will be incurred in excess of the amounts recognized in our financial statements.
14. Leases

Leases

The Company’s lease portfolio consists solely of office space with lease terms ranging from one to ten years. Certain lease agreements include options to renew or terminate the lease, which are not reasonably certain to be exercised and therefore are not factored into the determination of lease payments.

The following table presents information on our operating leases for the three months ended April 30, 2022 (amounts in thousands):

Three Months Ended
April 30, 2022
Operating lease cost$3,496
Variable lease cost585
Short-term lease cost552
Total net lease cost$4,633
Cash paid for amounts included in the measurement of lease liabilities$2,499
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities$ 
Weighted-average remaining lease term (years)6.8
Weighted-average discount rate5.4 %

The future maturities of the Company’s operating lease liabilities by fiscal year were as follows (in thousands):

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2023$7,274 
202411,413 
202510,695 
20268,422 
20277,446 
Thereafter25,165 
Total future undiscounted lease payments$70,415 
Less: Imputed interest(12,818)
Less: Tenant improvement allowance not yet received(217)
Total reported lease liability$57,380 
15. Income Taxes

The Company computes its provision for interim periods by applying an estimated annual effective tax rate to anticipated annual pretax income or loss as directed by ASC 740. The estimated annual effective tax rate is applied to the Company’s year to date income or loss, and is adjusted for discrete items recorded in the period. The Company recorded an income tax expense of $0.0 million and $0.2 million for the three months ended April 30, 2022 and 2021, respectively. The effective tax rate for the three months ended April 30, 2022 and 2021 was 0.0% and (1.2)%, respectively.

The provision for income taxes recorded for the three months ended April 30, 2022 consists of income taxes in state jurisdictions and foreign jurisdictions in which the Company conducts business. The primary difference between the effective tax rate and the statutory rate is the change in the valuation allowance recorded. The Company continues to maintain a full valuation allowance against its net deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized. When the Company determines that it will be able to realize some portion or all of its deferred tax assets, an adjustment to its valuation allowance on its deferred tax assets would have the effect of increasing net income in the period such determination is made.
16. Net Loss per Share
We compute net loss per share of Class A common stock and Class B common stock under the two-class method required for multiple classes of common stock and participating securities. The rights, including the liquidation and dividend rights, of the Class A common stock and Class B common stock are substantially identical, other than voting rights. Accordingly, the Class A common stock and Class B common stock share in the Company’s net loss. The following table sets forth the computation of basic and diluted net loss per share attributable to Braze, Inc. common shareholders during the periods presented (in thousands, except per share amounts):
Three Months Ended
April 30,
20222021
Numerator:
Net loss attributable to Braze, Inc.$(39,269)$(12,834)
Denominator:
Weighted-average shares of Braze, Inc. common stock outstanding93,295 19,928 
Less: weighted-average unvested shares of Braze, Inc. subject to repurchase(45)(259)
Weighted-average shares used to calculate net loss per share attributable to Braze, Inc. common stockholders, basic and diluted93,250 19,669 
Net loss per share attributable to Braze, Inc. common stockholders, basic and diluted$(0.42)$(