Since the artificial intelligence (AI) revolution began, investors have been drawn to technology stocks. One such company is Braze (BRZE), a top customer engagement platform.
Founded in 2011, Braze is a cloud-based software company that has established itself as a major player in the customer relationship management (CRM) space. The company uses data-driven communication to help brands connect with their customers on a deeper level.
With the rise of digital marketing, Braze's AI-enabled platform provides businesses with real-time insights and the ability to interact with customers through multiple channels, including mobile, email, and the web.
Wall Street is very optimistic about Braze stock, with JPMorgan analyst Pinjalim Bora recently reiterating his "strong buy" rating. Bora believes Braze's short-term prospects may appear bleak due to macroeconomic challenges; nonetheless, the company's ability to "ingest and combine data in an easy but powerful way" makes the analyst optimistic about the long-term prospects for BRZE.
Valued at $3.33 billion, Braze stock has dipped 37.8% year-to-date, compared to the S&P 500 Index's ($SPX) surge of 20.4%. Let's find out if this dip could be a buying opportunity on BRZE.
A Promising Software Company
Braze has gained traction as a growth stock, with strong revenue expansion. According to the company, total revenue increased 26.4% year-over-year to $145.5 million in the second quarter of fiscal 2025, driven by new customers, upsells, and renewals. Furthermore, subscription revenue increased 27.6% in the quarter, indicating that its customer engagement tools are resonating with brands across multiple industries.
The total number of customers increased by 10.5% to 2,163 from the same period last year. Furthermore, the remaining performance obligation (or RPO), which measures the contractual revenue that will be recognized in the future, totaled $689.6 million.
As of July 31, the company had about 6.7 billion active monthly users. Braze reported an adjusted net profit for the first time during the quarter, at $0.09 per share, compared to an adjusted net loss of $0.04 a year ago.
Braze launched the Braze Data Platform in Q2, which unifies data capabilities and the partner ecosystem while also adding new features to help brands easily integrate and activate data for relevant, memorable customer experiences.
The company is concentrating on expanding its presence in a variety of sectors and countries. During the second quarter, it signed new business agreements with Asiana Airlines, Papa John's Pizza (PZZA), Strawberry Hotels, and Loan Depot, among others. The company's business also expanded globally, with customers including a European hotel chain, a European advertising marketplace, a German neo bank, and many more. This diverse client base across industries and countries strengthens Braze's revenue streams and reduces its reliance on a single sector.
In fiscal 2025, Braze’s revenue is expected to increase by 23.8% to $584.5 million, with Wall Street projecting a profit of $ 0.07 per share. In fiscal 2026, earnings are anticipated to increase to $0.28 per share, on revenue growth of 19.5%. Trading at five times forward 2025 sales, Braze seems like a reasonable growth stock to buy now.
What Does Wall Street Say About Braze?
Recently, Goldman Sachs analyst Gabriela Borges reiterated a "buy" rating for Braze stock, with a price target of $65. Borges said the new product innovation updates revealed at the company's annual flagship customer conference, Forge, were impressive. These new initiatives demonstrate how Braze's platform is intended to drive increased automation over the next few years.
According to MarketsandMarkets, the global customer engagement solutions market is expected to grow at a 10.8% CAGR to $32.2 billion by 2027, creating significant opportunities for companies such as Braze.
Overall, Wall Street rates Braze stock a “strong buy.” Of the 18 analysts covering Braze stock, 16 rate it a “strong buy,” while two recommend a “moderate buy.” Its mean target price is $59.82, which implies an upside potential of 80.6% from current levels. Plus, its Street-high target price of $75 suggests that the stock could rise as high as 126.6% over the next 12 months.
