On Friday, Braze Inc (NASDAQ:BRZE) retained its Buy rating and $70.00 price target from Needham stock. The company achieved its first Non-GAAP operating profit this quarter and reported securing its second and third eight-figure contracts. These developments indicate potential for further expansion within Braze's top 100 customers.
The company's second-quarter results showed promising signs, including notable contract wins. However, sales metrics such as committed remaining performance obligations (cRPO) growth, net revenue retention (NRR), and net customer additions were slightly below expectations, pointing to a consistent yet constrained selling environment.
The cRPO growth experienced a sequential drop of approximately 500 basis points, which was more than anticipated, especially when considering the impact of the North Star acquisition.
Despite the lower-than-expected growth in cRPO, the company's net customer additions remained consistent with recent quarters. Braze's fiscal year 2025 revenue guidance has seen a slight increase, suggesting a positive outlook. However, the guidance on profitability indicates that Non-GAAP operating profitability is expected to remain steady, which could provide a stable foundation for the company's stock value.
The analyst's commentary highlighted the importance of the company's first-ever Non-GAAP operating profit and its success in securing significant contracts as key indicators of its growth trajectory. The expectation is that the company's expansion within its customer base has considerable room to progress.
In summary, while Braze Inc's sales metrics have shown some softness, the upward adjustment in FY25 revenue guidance and the achievement of Non-GAAP operating profitability are seen as positive signs for the company's financial health and stock stability moving forward.
InvestingPro Insights
As Braze Inc (NASDAQ:BRZE) navigates through its growth trajectory, real-time data from InvestingPro provides additional context to its financial health and stock performance. The company holds a market capitalization of approximately $4.48 billion, indicating a significant presence in the market. Despite not being profitable over the last twelve months, Braze has shown strong returns recently, with an 18.66% increase over the past month and a 19.98% increase over the last three months, reflecting investor confidence in its growth potential.
One of the notable InvestingPro Tips for Braze is that the company holds more cash than debt on its balance sheet, which is a positive sign for financial stability and potential future investments. Additionally, Braze's liquid assets exceed its short-term obligations, providing it with a cushion to manage its operations and invest in growth opportunities.
Investors should note that while analysts do not expect Braze to be profitable this year, the company's revenue has grown by 33.12% over the last twelve months as of Q1 2023, showcasing its ability to increase sales. However, the company is trading at a high revenue valuation multiple and a high Price/Book multiple of 10.28, which may raise questions about its valuation. For those interested in a deeper analysis, InvestingPro offers additional tips on BRZE, which can be found at the InvestingPro platform.
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