On Monday, BTIG adjusted its outlook on Braze Inc (NASDAQ:BRZE) shares, reducing the price target to $68 from $75, while sustaining a Buy rating. The firm cited the company's fourth-quarter results which surpassed revenue expectations by $6 million, despite challenging macroeconomic conditions and increased spending scrutiny in the enterprise sector.
Braze's performance was highlighted by its success in securing new business with larger clients and enhancing its position as a leading product in the market. Notably, customers with an annual recurring revenue (ARR) exceeding $500,000 rose by 29% year-over-year, accounting for approximately 60% of the total ARR, up from 57% the previous year.
This segment demonstrated nearly 40% ARR growth and achieved a 120% net dollar retention rate, compared to the overall rate of 117%. This growth among Braze's largest customers, who are also utilizing the product most extensively, underscores the strategic value of the platform.
Management's confidence is reflected in plans to resume hiring for go-to-market roles, indicating an optimistic outlook for demand for Braze's offerings. The company's fiscal year 2025 guidance was largely in line with analyst expectations prior to the report, but now seems conservative given the robust fourth-quarter top-line results and management's comments on improving macroeconomic conditions.
BTIG's continued research supports the view that Braze is becoming an integral component for businesses seeking to enhance the return on investment for sales and marketing budgets. This perspective is bolstered by a 40% year-over-year growth in the company's remaining performance obligations (RPO) during the fourth quarter.
InvestingPro Insights
As Braze Inc (NASDAQ:BRZE) continues to navigate the enterprise software market, recent data from InvestingPro provides additional context for investors considering the stock. With a market capitalization of $4.44 billion, Braze holds more cash than debt on its balance sheet, suggesting a solid financial position. Despite a challenging macroeconomic environment, Braze's revenue growth remains robust, with a 32.74% increase in the last twelve months as of Q4 2024, indicating a strong demand for its customer engagement platform.
From an investment standpoint, two InvestingPro Tips that stand out are the company's Relative Strength Index (RSI), which suggests the stock is currently in oversold territory, and the fact that liquid assets exceed short-term obligations, providing financial flexibility. Additionally, while analysts have revised their earnings expectations downward and do not anticipate profitability this year, the company's strategic value and growth in larger client segments may offer long-term benefits.
For those considering an investment in Braze, or seeking a more in-depth analysis, InvestingPro offers a wealth of information. With the use of coupon code PRONEWS24, new subscribers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are over 10 additional InvestingPro Tips available for Braze Inc, which can be accessed at: https://www.investing.com/pro/BRZE
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