Braze stock retains Buy rating as DA Davidson notes positive Non-GAAP operating performance

On Friday, DA Davidson maintained a Buy rating on shares of Braze Inc (NASDAQ:BRZE), with a steady price target of $65.00. The firm's stance comes after Braze reported a quarter that exceeded expectations, with the company achieving its first-ever quarter of positive Non-GAAP operating income, surpassing its own guidance. The results highlighted strong underlying growth trends, despite a challenging macroeconomic environment.

Braze's recent financial outcomes show a significant top-line beat, which reflects robust upselling activities and sustained new business trends. According to the firm, these factors contribute to the company's resilience and potential to outperform its second half of the fiscal year 2025 (F2H25) guidance, which suggests an anticipated 19% year-over-year revenue growth.

The company is poised for a potential boost with an investor day scheduled for September 26th, which is anticipated to act as a near-term catalyst for the stock. The event is expected to provide investors with deeper insights into the company's strategies and performance outlook.

DA Davidson's reiteration of the Buy rating and price target is based on a revenue multiple of 8.7 times the forecasted fiscal year 2026 revenues. This valuation reflects confidence in the company's growth trajectory and market positioning.

The endorsement from DA Davidson underscores the company's solid financial performance and the expectation of continued growth, as Braze navigates the current economic landscape. The upcoming investor day may further influence investor sentiment and provide additional context for the company's future direction.

In other recent news, Braze, Inc. reported better-than-expected results for the second quarter. The company posted adjusted earnings per share of $0.09, surpassing the analyst consensus of a $0.03 loss. Revenue also saw a growth of 26.4% year-over-year to $145.5 million, beating expectations of $141.3 million.

Braze also provided forecasts for the third quarter, anticipating adjusted earnings between breakeven and a $0.01 loss per share. This stands in comparison to analyst estimates of a $0.02 loss. The company's revenue guidance of $147.5-148.5 million was roughly in line with the $148 million consensus.

The customer engagement platform provider witnessed a surge in total customers to 2,163, up from 1,958 in the prior year period. These recent developments also show the company's non-GAAP operating income of $4.2 million for Q2, compared to a loss of $7.6 million in the same quarter last year. Finally, Braze reported having $504.5 million in cash and marketable securities as of the recent quarter end.

InvestingPro Insights

As Braze Inc (NASDAQ:BRZE) garners attention with its robust financial performance and DA Davidson's optimistic outlook, insights from InvestingPro provide additional context for investors. Braze's significant revenue growth of 33.12% over the last twelve months, as noted in the InvestingPro Data, underscores the company's strong growth trends that exceed expectations. This aligns with the top-line beat and resilience highlighted by DA Davidson.

InvestingPro Tips reveal that Braze holds more cash than debt on its balance sheet and that its liquid assets exceed short-term obligations, indicating a solid financial position to weather economic uncertainties. However, analysts do not expect the company to be profitable this year, and it has not been profitable over the last twelve months. These factors could be crucial for investors considering the company's longer-term profitability amidst its current growth phase.

With Braze trading at a high revenue valuation multiple and a high Price / Book multiple, the company's market valuation reflects investor confidence, which is further supported by strong returns over the last month and three months. For investors seeking more comprehensive analysis, InvestingPro offers additional tips on Braze, which can be accessed through the platform.

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