On Friday, Barclays reiterated its Overweight rating on Braze Inc (NASDAQ:BRZE), maintaining a $70.00 price target. The firm's positive stance is supported by Braze's addition of its second and third eight-figure customers. Barclays highlighted the company's significant growth potential within its largest customers and the contribution of new channels, such as Rich Communication Services (RCS), and new generative AI use cases to increased account spending.
Braze's market share gains were acknowledged, though the analyst noted that a more stable macroeconomic environment might be necessary for further near-term growth. The return of Monthly Active User (MAU) upsells was seen as an encouraging sign. Despite softer Recurring Profitable Obligations (RPO) and billings growth, which can be attributed to acquisition comparisons and contract renewal dynamics, investor feedback appears to be generally understanding.
The analyst's commentary also touched on the ongoing discussions among investors regarding Braze's revenue growth prospects for the end of the fourth quarter and the potential timing for revenue reacceleration. Additionally, the improvement in net new customer additions in the second quarter and the company's achievement of non-GAAP operating profitability for the first time were well-received by investors.
In other recent news, Braze Inc. has been demonstrating robust financial performance, exceeding expectations in its second quarter. The company achieved its first-ever positive Non-GAAP operating income, with revenues growing 26.4% year-on-year to reach $145.5 million, surpassing the projected $141.3 million.
Adjusted earnings per share were $0.09, outperforming analyst expectations of a $0.03 loss. Goldman Sachs, Canaccord Genuity, and DA Davidson have all maintained a Buy rating on Braze, reflecting confidence in the company's growth trajectory.
Recent developments include a 16% year-over-year increase in billings and a 32% year-over-year rise in Remaining Performance Obligations (RPO). However, these figures fell short of previous estimates. The company's Net Revenue Retention (NRR) rate dipped to 114%, a trend observed among application software companies.
For the third quarter, Braze's revenue guidance aligns with market expectations, projecting a 19% year-over-year increase. The company also anticipates an Earnings Before Interest and Taxes (EBIT) margin of negative 3%, with an improvement to the full-year EBIT margin guidance, adjusting from negative 4% to negative 1%.
InvestingPro Insights
As Barclays maintains an optimistic view on Braze Inc (NASDAQ:BRZE), real-time data from InvestingPro provides a detailed financial perspective. Braze's market capitalization stands at $4.39 billion, underscoring its significant presence in the sector. Despite the company's growth prospects, analysts are not expecting Braze to be profitable this year, as reflected in a negative P/E ratio of -28.78, which further adjusts to -34.61 for the last twelve months as of Q1 2025. This aligns with the company's recent performance, where it has not been profitable over the past year.
On the positive side, Braze holds more cash than debt, indicating a strong balance sheet, and its liquid assets exceed its short-term obligations, suggesting financial stability in the near term. The company's revenue growth remains robust, with a 33.12% increase over the last twelve months as of Q1 2025, which could be a driving factor behind the analyst's positive outlook. Two InvestingPro Tips to consider are that Braze is trading at a high revenue valuation multiple and at a high Price/Book multiple of 10.28, which may indicate expectations of future growth.
For those interested in a deeper analysis, InvestingPro offers additional tips on Braze Inc, which can be found at https://www.investing.com/pro/BRZE. These insights could be valuable for investors looking to understand the company's financial health and growth trajectory in greater detail.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.