What Happened?
Shares of customer engagement software provider Braze (NASDAQ: BRZE) jumped 14.5% in the pre-market session after the company reported impressive fourth quarter 2024 (fiscal 2025) results with strong growth in customers, enabling it to beat analysts' revenue, EPS, and adjusted operating income estimates. But the shortfall in billings pointed to some softness in near-term sales. Also, a slowdown in net revenue retention, dropping from 117% to 111%, suggested customers were spending more cautiously than before.
Looking ahead, guidance was more encouraging, as Braze provided full-year EPS guidance topping Wall Street's estimates, while revenue was expected to be roughly in line. The company highlighted the progress in AI with its planned OfferFit acquisition to personalize customer journeys through reinforcement learning, a move that could deepen customer stickiness over time. However, this vision might take time to execute.
Overall, this was a decent quarter, with promising guidance.
After the initial pop the shares cooled down to $37.78, up 3% from previous close.
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What The Market Is Telling Us
Braze’s shares are quite volatile and have had 19 moves greater than 5% over the last year. But moves this big are rare even for Braze and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock dropped 20.6% on the news that the company reported weak second-quarter 2024 earnings. Its billings unfortunately missed, and its net revenue retention decreased. On the other hand, Braze's revenue, adjusted operating income, and EPS outperformed Wall Street's estimates. It was also good to see its full-year revenue and EPS guidance top expectations. Overall, this was a weaker quarter for the company.
Braze is down 12.9% since the beginning of the year, and at $37.78 per share, it is trading 20% below its 52-week high of $47.22 from January 2025. Investors who bought $1,000 worth of Braze’s shares at the IPO in November 2021 would now be looking at an investment worth $404.54.
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