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With the help of artificial intelligence (AI), the customer relationship management (CRM) industry has evolved to help businesses manage interactions with customers and potential customers. The CRM industry is rapidly expanding due to rising demand for data-driven customer engagement and AI-powered automation. Businesses are shifting to cloud-based CRM systems, and mobile CRM usage is increasing.
Valued at $3.4 billion, Braze (BRZE) is a growing tech company that specializes in customer engagement platforms that enable businesses to deliver personalized and targeted messaging to their users. Braze’s AI-powered platform helps businesses to engage with their customers via a variety of channels, including mobile apps, websites, email, SMS, and push notifications. The company reported strong financial results for the fourth quarter of its fiscal 2025, with solid revenue growth, increased customer engagement, and a strategic acquisition that emphasizes the company’s AI-driven future.
However, Braze stock has fallen 26% year-to-date, led by overall market volatility. Nonetheless, Wall Street expects the stock to rally around 73% over the next 12 months. Let’s find out if this is a good time to buy Braze stock now.
Customer Growth and Market Expansion Led to a Strong End to Fiscal 2025
Braze’s platform help businesses build meaningful relationships with their customers using data-driven strategies. This has resulted in robust growth over the last few quarters. In the fourth quarter of its fiscal 2025, total revenue of $160.4 million rose 22.5% from the prior year quarter. This growth was fueled primarily by new customer acquisitions, upsells, and renewals. Subscription revenue increased by 22.2% while professional services and other revenue rose 27.4% this quarter.
Braze continued to grow its customer base, adding 85 net new customers in Q4 to a total of 2,296, representing a 12% year-over-year increase. Large customers, defined as those who generate more than $500,000 in annual recurring revenue (ARR), increased by 22% to 247. Management highlighted that these large clients now account for 62% of Braze’s total ARR, up from 60% a year ago.
Notably, its remaining performance obligation, which refers to contractual revenue that has yet to be recognized, totaled $793.1 million in the quarter. The dollar-based net retention rate stood at 111% for the trailing 12 months, indicating strong customer loyalty and increased spending.
Braze, like many other growth-stage tech companies, struggled to become profitable. However, its most recent quarter marks Braze’s third consecutive period of adjusted net income profitability, with over $12.3 million in net income and over $15.2 million in free cash flow. For the full fiscal year, the company demonstrated strong operating leverage, generating $18.3 million in adjusted net income and $19.6 million in free cash flow.
In a strategic move to enhance its AI capabilities, Braze announced the acquisition of OfferFit for $325 million. OfferFit specializes in AI-driven marketing optimization, and this acquisition is expected to help Braze provide more personalized and optimized customer engagement experiences. Braze intends to integrate OfferFit’s AI capabilities throughout its platform, thereby improving its ability to provide real-time personalization and data-driven engagement solutions. However, management stated that the acquisition is expected to have a modest diluting effect on adjusted operating income margins in fiscal 2026.
Looking ahead to the first quarter of fiscal 2026, management expects a profit of $0.04 to $0.05 per share on 17% revenue growth, which is consistent with analyst expectations. Analysts expect Braze’s revenue to rise 16.4% to $584.4 million in fiscal 2026, with earnings rising 99% to $0.34 per share. Furthermore, analysts predict that earnings will increase by 71.6% in fiscal 2027, driven by a 16.9% increase in revenue. Braze, trading at four times forward 2026 sales, is a reasonable CRM stock to buy right now.
What Does Wall Street Say About BRZE Stock?
Overall, Wall Street rates Braze stock a “Strong Buy.” Of the 20 analysts covering Braze stock, 17 rate it a “Strong Buy,” while two recommend a “Moderate Buy,” and one recommends a “Hold.”
Its mean target price is $52.63, which implies an upside potential of 73% from current levels. Plus, its high target price of $75 suggests that the stock could rise as high as 150% over the next 12 months.
The global market for customer engagement solutions is expected to grow to $32.2 billion by 2027. Overall, Braze’s strong financial results, expanding customer base, and strategic initiatives position the company for future success in the customer engagement market. However, Braze competes in a highly competitive market, with legacy marketing platforms such as Salesforce (CRM) and newer customer engagement solutions. Thus, Braze remains a high-risk, high-reward play.
