What happened

Shares of customer-engagement software company Braze (BRZE -4.89%) were on fire on Friday after the company reported financial results for the fourth quarter of its fiscal 2023. As of 10:15 a.m. ET, Braze stock was up about 16% for the day and is now up about 35% year to date.

So what

In Q4, Braze generated revenue of $98.7 million, firmly ahead of management's guidance range of $95 million to $96 million. The company tends to report a lot of adjusted numbers not in accordance with generally accepted accounting principles (non-GAAP). It gave guidance for a non-GAAP operating loss of $18.5 million to $19.5 million. But Q4 results were better than expected here as well, with a non-GAAP operating loss of $16.7 million.

Investors were pleased to see Braze outperform guidance on the top and bottom lines. But they may also be intrigued by the company's acquisition of North Star. North Star is a reseller of Braze's software in Australia and New Zealand. For an undisclosed amount, Braze's management is bringing North Star in-house, giving it a bigger international presence.

Now what

In fiscal 2023, Braze's full-year revenue of $355 million was up 49% year over year. But top-line growth is poised to slow considerably in fiscal 2024, with management guiding for 23% growth at the midpoint of its guidance. Moreover, Braze expects to remain unprofitable in fiscal 2024, with positive quarterly non-GAAP operating income and positive quarterly free cash flow coming at some point in fiscal 2025. And slowing growth and lack of profitability might concern some investors.

However, Braze is progressing in important areas. Specifically, it added 55 new customers during the quarter, which is about 3% growth quarter over quarter. Moreover, its remaining performance obligations (backlog) currently sits at $456 million, up from $409 million last quarter.

In summary, Braze is acquiring new customers. And because 96% of revenue is on a subscription, its recurring revenue is also growing nicely. However, growth is slowing, which is something investors will need to keep in mind.