Driven by evolving customer expectations for personalized, real-time brand experiences, the rising prevalence of advertisements across various mediums has caused brands to gradually acknowledge the need for systems that enhance seamless and channel-centric customer interactions. Traditional marketing platforms, however, lack the technology to meet these growing demands, thereby paving the way for end-to-end vertically integrated platforms like Braze (NASDAQ:BRZE) to gain a larger market share. The company recently exceeded top and bottom-line expectations and is well-positioned for ongoing growth, making it a solid option for tech-centric investors.
Braze Multichannel Marketing Platform
Braze provides a customer engagement platform that fuels enduring relationships between consumers and their favorite brands. Its unique feature lies in empowering marketers to gather and act on unlimited data from multiple sources. This approach enables innovative, real-time customer engagement across various channels, all from a single platform. Brand growth and customer loyalty are fostered through a combination of cross-channel messaging, journey orchestration, AI-based experimentation, and optimization.
It distinguishes itself from traditional marketing engagement solutions that typically focus on single channels and batch processes, resulting in context-less customer engagement. Instead, the company facilitates customer engagement in the client’s preferred channel using real-time data, thereby enhancing customer acquisition and retention. The company’s primary revenue streams are subscription revenue, which accounts for 96% of total revenue, and service revenue, which accounts for the remaining 4%.
With 51% of companies (and climbing) today using at least eight channels to interact with customers, the multichannel marketing industry is expected to grow at a CAGR (compound annual growth rate) of 22.3% by 2030.
Analysis of Braze’s Recent Financial Results
Braze reported an optimistic start to FY 2025, with revenue growing 33.1% year-over-year to $135.46 million in Q1 and beating analysts’ expectations of $131.69 million. This growth stemmed from the acquisition of new customers and improved renewals and upsells. Subscription revenue also saw healthy growth, rising from $97.1 million to $130.1 million, while professional services and other revenue increased slightly from $4.6 million to $5.4 million. Earnings per share (EPS) of -$0.05 also beat analysts’ estimate of -$0.10.
At the end of April 2024, total cash and equivalents, restricted cash, and marketable securities stood at $487.7 million, showing an increase from the $480 million recorded at the end of January 2024.
What is the Price Target for BRZE Stock?
Analysts following Braze are constructive on the stock. For instance, Oppenheimer analyst Brian Schwartz recently reiterated an Outperform rating and $60 price target on the shares, noting the company’s competitive positioning against legacy suppliers, improving sales efficiency, under-penetrated international opportunities, and nearing profitability inflection.
Overall, Braze is rated a Strong Buy based on 17 Buy recommendations versus only one Hold rating over the past three months. The average price target for BRZE stock is $61.44, which represents a potential upside of 74.89% from current levels.
The stock is highly volatile, sporting a beta of 2.14, though the overall trend lately has been downward, with the stock shedding a third of its value year to date. Shares trade at the bottom of their 52-week price range of $34.56 – $61.53 and show ongoing negative price momentum, trading below the 20-day (37.64) and 50-day (40.64) moving averages. With a P/S ratio of 6.87x, BRZE stocks appear a tad richly valued compared to the Software Application industry average of 5.98x.
Bottom Line on Braze
With the strong Q1 FY25 top and bottom-line performance, driven by a growing customer base and better renewal rates, Braze has caught the eyes of forward-thinking investors. The strong trends in multichannel marketing coupled with Braze’s technology and customer-centric approach indicate a promising future for the company in a rapidly growing industry. BRZE’s Q1 results suggest a strong upside potential for the stock. Investors may want to keep their eyes on the opportunity and wait for signs of positive momentum in the share price before establishing a position.
