Braze Q3 FY26 Earnings Preview: High Expectations, Crowded Calls, and a Vol-Rich Tape

1. Market & Expectations

Braze reports Q3 FY26 results on Tuesday, December 9, 2025 after the close, with the street looking for roughly 21% year-over-year revenue growth and another quarter of positive non-GAAP profitability. Consensus centers around EPS of about $0.06–$0.07 and revenue near $184 million, broadly in line with the company’s prior guidance range for the quarter. The bar is not heroic in absolute terms, but it comes on the heels of a very strong beat-and-raise earlier this year, which already reset expectations higher.

The stock itself is still working off prior excess. Over the past year Braze is down roughly the high-20s percent, versus a 52-week range of about $23.9 to $48.3, putting the current price near the lower half of that band rather than at euphoria levels. At the same time, recent momentum has turned constructive: the shares are up double digits over the last month and mid-teens over three months, modestly outperforming the broader market. That combination – long-term drawdown but short-term strength into the print – suggests some positioning has been rebuilt on the long side ahead of earnings.

On valuation, Braze screens as a mid-growth SaaS name that has de-rated from peak multiples but still carries a clear growth premium. The stock trades around 4.5–5.0x trailing sales and a forward P/E in the mid-40s on non-GAAP numbers, with negative GAAP earnings due to continued investment. Peer customer-engagement and mid-cap SaaS names often trade closer to 6–7x sales, so Braze looks moderately cheap on revenue versus its group, but less so when you adjust for still-negative margins and decelerating net revenue retention. With 20%+ top-line growth and a visible path to sustained profitability, the current multiple feels fair to slightly supportive rather than obviously mispriced.

The recent earnings track record is strong on the headline numbers but more mixed on the stock reactions. Over the last several quarters Braze has repeatedly beaten consensus on revenue and (on a non-GAAP basis) EPS, while occasionally missing on GAAP EPS. Price reactions, however, have ranged from a roughly mid-teens rally after the September Q2 FY26 report to double-digit drops when guidance or net revenue retention disappointed in prior years. Historical one-day moves around earnings have frequently landed in the mid- to high-teens percent range, with direction closer to a coin flip. That backdrop – big absolute moves, inconsistent directional follow-through – argues for caution when leaning too hard either way.

2. Business & Balance Sheet

Braze runs a customer engagement platform that helps brands orchestrate personalized, real-time messaging across channels. The core engine is a high-margin SaaS model with strong expansion into larger enterprise accounts and ongoing integration of AI-driven features and the OfferFit acquisition. Revenue growth remains healthy in the 20–25% range year-over-year, and gross margins hover in the high-60s, leaving plenty of room for operating leverage as the company scales.

Profitability is still a work in progress, but the trajectory has improved. Braze has turned in several quarters of positive non-GAAP operating income while GAAP margins remain negative in the mid-teens. Management has been willing to guide to higher operating profit for FY26, signaling confidence in both growth and cost discipline. The main fundamental controversy is around net revenue retention: NRR has drifted down from the mid-teens-above-100% to around the high single digits above 100%, reflecting slower expansion in existing customers. That’s still solid, but the downtrend makes investors hypersensitive to any further slippage or commentary about macro-driven deal compression.

The balance sheet is a relative strength. Leverage is low, with debt-to-equity around 0.1, and liquidity is healthy with current and quick ratios comfortably above 1x. There’s no dividend, and dilution risk is the usual SaaS stock-based compensation story rather than a balance-sheet-driven concern. This gives Braze plenty of flexibility to keep investing in product and go-to-market even if macro softens, which underpins the longer-term bull case.

For this print, the key business questions are: (1) Can Braze sustain 20%+ revenue growth into FY26 while stabilizing NRR? (2) Does operating leverage continue to improve at least in line with the upgraded guidance it issued after Q2? and (3) How does management frame the competitive environment versus larger marketing clouds and other engagement platforms? If they can show NRR stabilization and consistent margin progress, the fundamentals support the stock working higher over time. But with the multiple already reflecting a clear growth premium, any mixed signals on NRR or pipeline could quickly overwhelm an in-line quarter.

3. Options & Sentiment

The options market is loudly signaling a big move for this report.

As of the latest chain snapshot, Braze is trading around $30.07 with the front monthly expiration on December 19 (11 days out) carrying the earnings event. The at-the-money $30 straddle in that expiry is marked around $4.48 (call and put mids combined), implying an approximate ±14.9% move by expiration. Independent earnings-specific services that map the same monthly options to the event are showing a very similar implied move in the mid-teens percent, consistent with Braze’s high earnings-volatility profile.

That 15% implied move is large versus the stock’s recent realized volatility – roughly three to four times a typical non-event day – but not extreme versus Braze’s own history. Over the last couple of years, one-day post-earnings moves have often landed in the low- to high-teens, and averages across recent reports sit in the high-teens absolute range. The last report saw an actual move of roughly +13–14% against an implied move around 17%, so realized has oscillated around, but not consistently exceeded, the priced-in move.

Positioning around the event is skewed bullish in the near-term options. In the December 19 expiry, call open interest between $25 and $35 totals roughly three times the puts, and call volume in that band is running around ten times put volume. The heaviest concentrations sit in upside calls at $32.5 and $35, where open interest climbs into the mid-thousands of contracts, while a large put line sits at $27.5. Taken together, that looks like a mix of speculative upside exposure (those 32.5–35 calls) and downside hedging anchored around a roughly 9% drop zone. Implied vol by strike is only mildly skewed toward downside protection – out-of-the-money puts are a bit richer than comparable calls, but not dramatically so – which reinforces the idea that the skew in OI and volume is more about upside speculation than panic hedging.

Outside the options pit, sentiment is solidly bullish. The sell side is overwhelmingly positive, with a large majority of analysts rating the stock a Buy/Overweight and average 12-month price targets clustering in the low-40s, implying roughly 40–45% upside from the current quote. Several firms hiked targets after the strong Q2 report and guidance raise, and commentary has highlighted Braze as a relative winner in customer engagement software with improving profitability. At the same time, there has been notable insider selling over the last few months and the stock still sits well below its 52-week high, suggesting that while the analyst community is enthusiastic, the market itself has remained skeptical.

Put together, the options and sentiment picture is: a name with a genuine history of big earnings moves, a vol surface that richly prices that risk, and a positioning setup that leans bullish in calls but retains a respectable put hedge below. That mix tends to increase the odds of a sharp move either way, and in particular heightens the risk of a “good but not great” quarter leading to a downside gap as crowded upside bets unwind.

4. Guidance, Direction & Confidence

There are three main paths for this print:

1. Bullish scenario (beat and raise, NRR stabilizes)
   Braze prints Q3 revenue modestly above consensus (say $186M+), delivers EPS ahead of the ~$0.06–0.07 bar, and nudges full-year FY26 revenue and EPS guidance higher again. NRR stabilizes or ticks up, and management leans into a confident FY27 growth and profitability narrative. In that world, the market could reward the stock with another double-digit gap higher and a full-day move in the 12–18% range, especially given the still-depressed share price versus the 52-week high.

2. Inline scenario (meets guide, incremental progress)
   Revenue lands around the midpoint of guidance and consensus, EPS is very close to expectations, and full-year guidance is largely reiterated with only small tweaks. NRR remains in the high-single-digit expansion zone without a clear inflection. Fundamentally this would be a fine quarter, but not obviously better than what’s already embedded in the stock and the bullish analyst targets. With call positioning crowded, this is the setup most prone to a “sell the news” reaction, where an initially muted response resolves into a mid-single-digit to low-teens downside gap as longs de-risk and vol sellers get paid.

3. Bearish scenario (soft guide, NRR or demand issues)
   If Braze guides Q4/FY26 below the market’s expectations, points to further NRR erosion, or hints at more pronounced deal pressure in enterprise, the stock could easily see a larger air pocket. Given the volatility regime and the options tape, a downside move in the mid-teens or worse would not be surprising in this case.

To formalize the view, it’s helpful to think in terms of weighted drivers. Conceptually, we can assign rough weights of 40% to estimate and guidance revisions, 30% to options skew and positioning, 20% to valuation versus growth, and 10% to recent earnings-reaction history:

• Revisions (40%) – Full-year guidance was raised meaningfully after Q2, which is supportive, but the upcoming quarter’s consensus now embeds that strength and at least a small follow-through. This is a mild positive, not an extreme one.
• Skew and positioning (30%) – Near-term options show heavy upside call interest and relatively light put demand, a setup that tends to increase the risk of a downside move if results are anything less than clearly strong.
• Valuation (20%) – Revenue multiples are below many SaaS peers while growth remains >20%, a modest buffer on the downside but not enough to prevent a negative reaction if guidance disappoints.
• History (10%) – Recent earnings have produced large absolute moves in both directions, with no clear directional edge but a pattern of occasional sharp sell-offs even on beats when guidance or NRR underwhelms.

When you run those drivers through a simple scoring framework, the result is effectively a coin flip with a slight tilt toward a downside reaction once you penalize the crowded upside call positioning. In other words, fundamentals and valuation argue for a “fine” quarter, but positioning and the high bar on guidance argue that fine may not be good enough at a 15% implied move.

Base case:

• Braze delivers an essentially in-line to modest beat on Q3 revenue and EPS and keeps FY26 guidance roughly intact, maybe with a small upward tweak.
• Commentary on NRR and demand is constructive but not dramatically better, leaving concerns about expansion momentum only partially answered.
• The stock gaps down moderately on a “good but already priced-in” reaction, with an opening move on the order of 8% lower relative to the pre-earnings close, and realized volatility comes in below the ~15% implied by the near-term straddle.

Translating that into the site’s framework, we are calling for an inline fundamental outcome with a modest downside price gap, and we put our directional confidence at about 0.54 – a slight but real edge toward a down move, acknowledging that the distribution remains wide.

5. Trade Framework

These are example structures consistent with a view of an inline quarter, moderately downside-skewed price risk, and rich implied volatility. They are illustrations only, not recommendations.

1. Bearish vertical put spread (event-focused, limited risk)

   • Buy a near-term at-the-money or small-OTM put (for example, the Dec 19 $30 put).
   • Sell a lower-strike put near the area of large existing OI support (for example, the Dec 19 $27.5 put).
     This structure targets an 8–10% downside move into the $27–28 area. It benefits from a gap down while capping risk to the net premium outlay and partially mitigating implied-volatility decay after the event.

2. Short-vol, mild-bearish iron condor (play for move < implied and downside bias)

   • Sell a put spread below spot (for example, short Dec 19 $27.5 put / long $25 put).
   • Sell a call spread above spot where call OI is heaviest (for example, short Dec 19 $35 call / long $37.5 call).
     The short wings are placed outside the base-case 8% down scenario and around the crowded upside strikes. This collects premium from the rich 15% implied move while keeping risk defined on both sides. It works best if the actual move is smaller than implied, especially if it resolves modestly down rather than violently higher.

3. Contrarian bullish call spread (for readers who disagree with the call)

   • For traders who think Braze will deliver another decisive beat-and-raise, a defined-risk alternative would be buying an upside call spread in the same Dec 19 expiry, for example long $30 calls and short $35 or $37.5 calls.
     This expresses a view that the stock can revisit the mid-30s on a strong print while capping capital at risk and offsetting some of the rich implied volatility with the short leg.

In all cases, key risks include: (a) direction error (a strong beat and aggressive raise could send the stock sharply higher), (b) magnitude error (a small move could hurt long-premium structures even if direction is right), (c) guidance surprises, and (d) macro shocks that swamp single-name setups.

6. TL;DR

Braze heads into Q3 FY26 earnings with solid 20%+ growth, improving non-GAAP profitability, and a valuation that is reasonable for its profile, but expectations and positioning have climbed after a strong prior beat-and-raise. With the front-month straddle implying roughly a 15% move and near-term options positioning clearly skewed toward upside calls, our base case is an essentially inline quarter and steady guidance that triggers a modest downside gap of around 8%, as call buyers take profits and implied volatility collapses. We frame the call as inline fundamentals, down move, with directional confidence at 0.54 and a belief that realized volatility will land below what the options market is currently pricing.