Solel Partners LP increased its stake in Braze (NASDAQ:BRZE) by 526,300 shares in the fourth quarter, an estimated $15.59 million trade based on quarterly average pricing, according to a February 17, 2026, SEC filing. What happened According to an SEC filing dated February 17, 2026, Solel Partners LP purchased an additional 526,300 shares of Braze in the fourth quarter. The estimated transaction value was $15.59 million, calculated using the average closing price during the quarter. The fund ended the pe ...

Core Insights - Battery Management Corp. increased its holding in Braze (NASDAQ:BRZE) by 839,864 shares, valued at approximately $24.88 million based on average pricing during the fourth quarter [2][4] - The value of Battery Management Corp.'s BRZE position rose by $42.99 million at quarter-end, reflecting both trading activity and stock price changes [2] - As of February 17, 2026, Braze shares were priced at $16.93, down 60% year over year, significantly underperforming the S&P 500's 13% gain in the same period [8] Company Overview - Braze, Inc. specializes in customer engagement software, enabling brands to deliver personalized messaging across channels [6] - The company reported a revenue of $693.41 million and a net income of -$116.68 million for the trailing twelve months [4] - Braze achieved a year-over-year revenue growth of 25.5%, reaching $190.8 million in its fiscal third quarter, with subscription revenue of $181.6 million [11] Financial Metrics - As of February 17, 2026, Braze's market capitalization stood at $1.73 billion [4] - The company's dollar-based net retention stabilized at 108%, with 303 accounts generating at least $500,000 in annual recurring revenue, up from 234 a year ago [11] - GAAP operating losses persist, with stock-based compensation amounting to $37.6 million for the quarter [12] Investment Implications - The BRZE position now constitutes 17.98% of Battery Management Corp.'s 13F AUM, indicating a significant concentration in this mid-cap software name [8] - The increase in position reflects a preference for platforms with expanding free cash flow and improving operating leverage [13] - Long-term investors should focus on retention, large customer growth, and sustained cash generation, as these factors may influence future valuations [13]

Group 1 - Braze, Inc. (NASDAQ:BRZE) is recognized as one of the 14 best cloud computing stocks to buy currently [1] - Stifel has reduced its price target for Braze's stock from $45 to $40 while maintaining a "Buy" rating, citing negative sentiment due to recent AI announcements [2] - Piper Sandler has also lowered its price target for Braze from $50 to $30, keeping an "Overweight" rating, indicating expected pessimism in the software sector [3] Group 2 - Braze operates a customer engagement platform, with its Braze Cloud Data Ingestion (CDI) enabling brands to utilize customer data effectively [4] - Despite the potential of Braze as an investment, there are concerns that other AI stocks may offer greater upside with less downside risk [4]

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]