Oppenheimer has adjusted its price target on Braze Inc (NASDAQ: BRZE) shares to $51.00, decreased from the previous $60.00, while maintaining an Outperform rating.
The revision follows an investor event held on Monday, where Braze's management team offered detailed insights into the company's operations and future plans.
During the event, the management outlined several positive developments. Notably, they increased the higher end of their long-term gross margin target to 74%, representing a 200 basis points improvement.
Additionally, there was a significant customer growth, with about a 50% increase in customers using five or more channels since FY2021. The company also emphasized the adoption of a credits pricing model aimed at enhancing customer retention.
However, concerns were raised regarding the company's near-term outlook. The management's guidance for a 110% net revenue retention (NRR) rate for the fourth quarter of fiscal year 2025 suggests that this figure may not represent a minimum threshold, indicating potential volatility. Furthermore, a growth and profit framework for fiscal years 2026 to 2028 was introduced, which implies the possibility of growth rates falling below 15%.
In other recent news, Braze Inc. reported a robust 26% increase in its fiscal second quarter 2025 revenue, reaching $145.5 million. The company also added 61 new customers, taking the total to 2,163.
This growth was supported by the launch of the Braze data platform. Analyst firms DA Davidson, TD Cowen, and an unnamed firm have maintained their confidence in Braze. DA Davidson adjusted the price target from $65 to $55 while retaining a Buy rating, and TD Cowen reiterated a Buy rating with a consistent price target of $52.
Braze's management shared insights into customer trends and economic challenges during a recent investor day event. They also presented strategies for achieving the 'rule of 40' status within the next four years. The company's Dollar-Based Net Retention (DBNR) rate, a key metric for measuring customer spending over time, stood at approximately 110% at the end of the second fiscal quarter of 2024.
For the third quarter, revenue is projected to fall between $147.5 million and $148.5 million, with full fiscal year 2025 revenue expected to be between $582.5 million and $585.5 million. Braze ended the quarter with a non-GAAP operating income of $4.2 million, representing 3% of revenue, and $504 million in cash and cash equivalents.
InvestingPro Insights
As Braze Inc (NASDAQ:BRZE) navigates through its growth trajectory, real-time data from InvestingPro offers a snapshot of the company's financial health and market performance. With a market capitalization of approximately $3.56 billion, Braze currently does not have a positive P/E ratio, reflecting its lack of profitability over the last twelve months. However, analysts remain optimistic as evidenced by the revision of earnings upwards for the upcoming period by 11 analysts, indicating potential for future profitability.
InvestingPro Tips highlight that Braze holds more cash than debt on its balance sheet, suggesting financial stability, and its liquid assets exceed short-term obligations, providing operational flexibility. Despite recent performance where the stock has fared poorly over the last month and is trading near its 52-week low, analysts predict the company will turn profitable this year. These insights, coupled with a 31.12% revenue growth in the last twelve months as of Q1 2023, may offer investors a nuanced understanding of the company's potential.
For those interested in a deeper analysis, InvestingPro provides additional tips on Braze Inc, available at https://www.investing.com/pro/BRZE, which could further inform investment decisions.
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