Core Viewpoint - Braze's stock is experiencing a decline following analysts' reductions in price targets, yet the company is recognized for its growth potential in the AI sector [1][2]. Group 1: Analyst Actions - Stifel analyst Parker Lane has lowered Braze's price target from $45 to $40 while maintaining a buy rating, citing the company's overlooked competitive advantages [1]. - Last week, Piper Sandler also reduced its price target for Braze from $50 to $30, keeping an overweight rating on the stock [2]. Group 2: Financial Performance - In Q3 2025, Braze reported a 25% year-over-year increase in revenue, with free cash flow of $17.8 million, a significant improvement from negative free cash flow of $14.2 million in the same period last year [3]. Group 3: Valuation Metrics - Braze shares are currently trading at 2.7 times sales, which is below the five-year average price-to-sales ratio of 6.2, indicating that the stock is undervalued [4].

Core Insights - Piper Sandler lowered its price target on Braze, Inc. (NASDAQ:BRZE) to $30 from $50 while maintaining an Overweight rating, reflecting a cautious stance on software multiples amid investor pessimism [1] - Braze reported Q3 fiscal 2026 revenue of $191 million, showing a 25.5% year-over-year growth and a 6% sequential increase, with 106 net new customers added during the quarter, marking the strongest customer growth in three years [3] - Founded in 2011, Braze is a cloud-based customer engagement platform that enables brands to manage personalized marketing campaigns across various channels, indicating a strong position in the customer engagement and data-driven marketing landscape despite cautious valuation sentiment [4] Company Performance - Braze's revenue growth of 25.5% year-over-year and 6% sequential increase highlights sustained demand for its customer engagement tools [3] - The addition of 106 net new customers in Q3 fiscal 2026 and a total of 317 over the past year indicates robust customer acquisition trends [3] Market Position - Despite a cautious outlook on software valuations, Braze's consistent revenue growth and improving customer acquisition suggest it remains well-positioned within the customer engagement sector [4]

Core Viewpoint - Braze Inc (NASDAQ:BRZE) is recognized as one of the 13 best revenue growth stocks to consider for investment, despite recent price target reductions by analysts [1]. Analyst Ratings and Price Targets - Piper Sandler has reduced the price target for Braze from $50 to $30 while maintaining an Overweight rating [1]. - Goldman Sachs has also lowered its price target for Braze from $55 to $45, but continues to hold a Buy rating on the stock [3]. - Needham analyst Scott Berg has maintained a Buy rating with a price target of $50, highlighting operational improvements and positive demand signals [3]. Market Sentiment and Sector Analysis - Piper Sandler's research note indicates a general pessimism in the software sector, suggesting that "seat-compression and vibe coding narratives could set a ceiling on multiples" [3]. - The hyperscaler, consumption, and vertical sub-sectors are expected to perform better compared to the broader software market [3]. Company Overview - Braze, Inc. operates a customer relationship management platform specifically designed for mobile applications, integrating messaging, audience segmentation, analytics, and user support into a single solution [3]. - The company's strategic execution is noted as a strong fit for the increasing focus on automation and agentic commerce among firms [3].

Industry Overview - Cloud computing is a crucial and rapidly growing sector of the digital economy, projected to grow from $752 billion in 2024 to over $2.3 trillion by 2030, with a compound annual growth rate exceeding 20% [2] - The rise of generative AI is driving demand for cloud capacity, as training large AI models requires significant computing power and data storage, making cloud adoption essential for businesses [3] Investment Perspective - Cloud companies benefit from attractive business models, often operating on subscription or SaaS models that provide recurring, high-margin revenue streams [4] - High switching costs create competitive advantages, as enterprises are often locked into specific cloud ecosystems, making it costly to switch providers [4] - The long-term fundamentals of the cloud sector remain strong, supported by trends in AI, digital transformation, and recurring revenue, despite fluctuations in valuations and market sentiment [4] Stock Selection Methodology - A list of 13 high-growth cloud stocks was compiled based on revenue growth exceeding 35% over the past five years, ranked by revenue growth [7] - Hedge fund sentiment was included for each stock, sourced from Insider Monkey's database as of Q3 2025, indicating interest from institutional investors [7][8] Company Highlights Braze, Inc. (NASDAQ:BRZE) - Reported Q3 fiscal 2026 revenue of $191 million, reflecting a 25.5% year-over-year growth and a 6% sequential increase, with 106 net new customers added in the quarter [11][12] - Despite a cautious valuation sentiment in the software sector, Braze's consistent revenue growth and improving customer acquisition trends position it well in the customer engagement landscape [12] Datadog, Inc. (NASDAQ:DDOG) - Achieved a 3-year revenue growth of 37.67% and reported record new logo annualized bookings, more than doubling year over year, indicating strong demand for its observability platform [13][14] - Datadog's expanding product suite and strong cross-sell capabilities position it favorably to capture a larger share of customer spending, even amid macroeconomic pressures [15][16]

Group 1 - Piper Sandler downgraded ratings for three enterprise software stocks: Adobe, Freshworks, and Vertex, from "Overweight" to "Neutral" and significantly reduced their target prices to $330, $12, and $20 respectively [1] - The rationale for the bearish outlook includes concerns that AI-driven efficiency will suppress or reduce employee growth, negatively impacting software companies that charge per seat [1] - The report anticipates that 2026 will mark the fifth consecutive year of slowing growth in the software industry, leading to valuation downgrades for companies on their coverage list [1] Group 2 - Target prices were also lowered for several other companies including Amplitude, Asana, BlackLine, Braze, Figma, HubSpot, Salesforce, Oracle, Klaviyo, monday.com, ServiceTitan, and ZoomInfo [2] - Despite the overall pessimism in the software sector, Piper Sandler remains optimistic about Microsoft and ServiceTitan, naming them as top picks for 2026 [2] - The analysis suggests that Microsoft is potentially the best pure play in the current AI application space, with positive sentiment emerging from CIO surveys regarding Azure and Copilot activities [2]

Summary of Braze Conference Call Company Overview - **Company**: Braze - **Industry**: Customer engagement and marketing software - **Core Offering**: Braze provides a platform for brands to engage with customers through various digital messaging channels, leveraging first-party and zero-party data to enhance customer relationships and ROI [3][4] Key Points Discussed Industry Trends - **Complex Customer Journeys**: The customer journey is becoming increasingly complex, necessitating brands to utilize high-quality first-party data for direct engagement with consumers [9] - **Agentic Commerce**: Braze operates in a space where agentic commerce is gaining traction, emphasizing the need for direct-to-consumer engagement [10][11] - **Market Position**: Approximately 80% of Braze's business is not e-commerce, indicating a diversified customer base [10] Product Innovations - **AI Integration**: Braze has incorporated AI into its platform since its inception, allowing for hyper-personalization and real-time engagement with customers [13][14] - **Decision Studio**: The acquisition of OfferFit, now rebranded as Decision Studio, offers a reinforcement learning engine that optimizes customer engagement for measurable business outcomes [21][23] - **Agent Console**: A new feature in private beta that allows customers to build agents for campaign management and customer engagement, enhancing personalization and relevance [26][28] Customer Engagement and Metrics - **Customer Growth**: Recent Q3 metrics indicate strong customer growth, attributed to a focus on execution and the competitive landscape [17] - **Flex Credits**: The introduction of a flex credits pricing strategy has lowered barriers for customers to experiment with new channels, leading to increased engagement and retention [34][35] - **Message Volume**: Braze processed 100 billion messages during Cyber Week, showcasing its capability to handle large-scale data processing [41][42] Competitive Landscape - **Market Positioning**: Braze differentiates itself from legacy marketing clouds through its integrated, stream processing architecture, allowing for real-time, cross-channel engagement [58][59] - **Customer Retention**: The flexibility of the new pricing model has reduced downsell pressure during contract renewals, enhancing customer satisfaction [36][39] Leadership Changes - **New CRO**: Ed McDonnell has been appointed as the new Chief Revenue Officer, bringing extensive experience from competitors to enhance Braze's strategies in verticalization and internationalization [47][48] Financial Outlook - **Net Revenue Retention**: The company has stabilized its dollar-based net retention, indicating a healthier demand environment [51] - **Future Growth**: The growth strategy is expected to be balanced between upsell and net new customer acquisition, with a focus on maintaining a 50/50 ratio [55] Additional Insights - **Customer Feedback**: Customers are increasingly interested in procuring budgets for new functionalities, indicating a shift towards valuing advanced features [29][30] - **Market Adaptation**: Braze's ability to adapt to market changes and customer needs is reflected in its evolving product offerings and pricing strategies [49][50]

Core Viewpoint - Braze Inc. (BRZE) is expected to continue growing revenue at a rate of 20% due to solid execution and operational performance [1] Company Analysis - The company has demonstrated strong revenue growth potential, with a consistent execution strategy that supports its growth forecast [1] - The investment approach taken by the author includes fundamental, technical, and momentum investing, indicating a comprehensive analysis of the company's performance [1] Industry Context - The article reflects a broader trend in the investment community where individual investors are increasingly focusing on managing their own capital and utilizing various investment strategies [1]

Core Insights - The stock market in 2025 has experienced significant volatility, resulting in distinct winners and losers, with large-cap growth stocks being the primary contributors to this year's gains [1] - Small- and mid-cap companies have not performed as well, lagging behind their larger counterparts [1] Group 1 - Large-cap growth stocks have been the major source of gains in 2025 [1] - Small- and mid-cap companies have been left behind in the market performance [1] - The volatility of the stock market has created clear distinctions between successful and underperforming sectors [1] Group 2 - Gary Alexander has extensive experience in technology sectors, both on Wall Street and in Silicon Valley, influencing his insights into current industry trends [1] - He has been a contributor to Seeking Alpha since 2017 and has been featured in various web publications [1] - His articles are also syndicated to popular trading apps like Robinhood, indicating a broad reach and influence [1]

Core Insights - Braze, Inc. (NASDAQ:BRZE) is recognized as a potential high-growth stock, with analysts predicting significant returns by 2026 [1] - The company has shown strong performance in Q3, with notable growth in revenue and improvements in key financial metrics [2][3] Financial Performance - For Q3, Braze reported earnings per share of $0.06, which was $0.01 below market expectations [3] - Revenue for the quarter reached $190 million, representing a year-over-year increase of over 25% and exceeding estimates by $6.7 million [3] Analyst Coverage - BTIG initiated coverage of Braze with a Buy rating and a price target of $45, highlighting growth reacceleration and margin expansion as key factors [2] - The firm noted improvements in the dollar-based net retention rate and increased sales productivity [2]

Company Overview - Braze Inc. specializes in customer engagement technology, aiding businesses in building strong customer relationships through personalized messaging and data-driven insights [1] Price Targets and Market Performance - BTIG set a price target of $45 for BRZE, indicating a potential upside of approximately 32.59% from its then-current price of $33.94 [2][6] - The average price target for BRZE is $46.63, with estimates ranging from $38.00 to $68.00, suggesting a potential increase of 8.8% to 94.7% from the current price level [3][6] - The stock has shown a recent performance gain of 23.8% over the past four weeks, closing at $34.93, reflecting a 2.48% increase [2][4] Market Capitalization and Trading Volume - BRZE's market capitalization is approximately $3.6 billion, with a trading volume of 2,096,293 shares on NASDAQ [5][6] - Over the past year, the stock has reached a high of $48.33 and a low of $23.91, indicating significant price volatility [5]