Company Performance - Shares of Braze Inc have lost close to 40% year to date [1] - Shares of Braze declined by 0.30% to $30.78 at the time of publication on Tuesday [2] Analyst Coverage and Rating - Stifel analyst Parker Lane initiated coverage of Braze with a Buy rating and price target of $37 [1] - Braze is well-positioned to capture market share in the customer engagement software segment [1] Market Trends and Opportunities - Consumer expectations are shifting to more personalized brand experiences [1] - Increase in digitally native consumers and gen AI-powered marketing are favoring customer engagement providers [1] - Braze is viewed as a tightly integrated and extensive customer engagement platform compared to larger marketing platforms and point-solution martech vendors [2] Company Strategy and Market Position - Braze has built a leading-edge multi-channel marketing platform that is difficult to replicate [2] - The company has incorporated strategic changes this year that should materially lower customer friction [2] - Braze remains in its early days of capturing its addressable market [2]

Core Insights - Bert Hochfeld has a strong background in economics and business, with degrees from the University of Pennsylvania and Harvard, and has extensive experience in the tech industry [1] - He founded Hochfeld Independent Research Group in 2001, providing research services to major institutions and hedge funds, and managed the Hepplewhite Fund, which was recognized as the best performing small-cap fund for five years ending in 2011 [1] - Hochfeld has published over 500 articles on Seeking Alpha, focusing on information technology companies, and is highly regarded for his investment insights, ranking in the top 0.1% of Tip Ranks analysts for technology stock selections [1] Company Background - Hochfeld has worked for notable companies such as IBM, Memorex/Telex, Raytheon Data Systems, and BMC Software, contributing to his expertise in the tech sector [1] - The Hepplewhite Fund, under Hochfeld's management, specialized in technology investments and achieved significant recognition in the hedge fund industry [1] Legal Issues - In 2012, Hochfeld was convicted of misappropriating funds from the hedge fund he operated, which raises concerns about his past conduct in the investment space [1]

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Core Viewpoint - Braze, Inc. (BRZE) has experienced a significant downtrend, with a 27.8% decline in stock price over the past four weeks, but it is now in oversold territory, suggesting a potential turnaround due to improved earnings expectations from analysts [1]. Group 1: Technical Indicators - The Relative Strength Index (RSI) is a key technical indicator used to identify oversold stocks, with a reading below 30 typically indicating oversold conditions [2]. - BRZE's current RSI reading is 29.18, suggesting that the heavy selling pressure may be exhausting, indicating a possible price rebound [5]. Group 2: Fundamental Analysis - Analysts have shown strong consensus in raising earnings estimates for BRZE, with a 15.2% increase in the consensus EPS estimate over the last 30 days, which often correlates with price appreciation [6]. - BRZE holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a near-term turnaround [7].

Group 1 - The stock price of Braze, Inc. (BRZE) has experienced a bearish trend, losing 9.9% over the past week, but a hammer chart pattern suggests a potential trend reversal as buying interest may be increasing [1] - The hammer chart pattern indicates a possible bottoming out of the stock price, with reduced selling pressure, which could signal a shift in control from bears to bulls [2] - Recent upward revisions in earnings estimates, with a 15.2% increase in the consensus EPS estimate over the last 30 days, indicate strong bullish sentiment among analysts regarding BRZE's future earnings [3] Group 2 - Braze, Inc. holds a Zacks Rank of 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks, which historically correlates with outperformance in the market [3] - The Zacks Rank serves as a reliable timing indicator for investors, suggesting that the company's prospects are improving and reinforcing the likelihood of a trend reversal [3]

Group 1: Market Outlook - 2025 is expected to be a favorable year for stocks, particularly for smaller companies like Braze, LightPath Technologies, and Guidewire, driven by anticipated interest rate reductions and a shift in AI focus from infrastructure to application [1] - The expansion of AI-driven services is projected to surpass the AI infrastructure boom, creating significant investment opportunities [1] Group 2: LightPath Technologies (LPTH) - LightPath Technologies is positioned to benefit from AI's impact on the IoT, producing optical sensors and devices essential for generating actionable data [2] - Revenue growth for LightPath is forecasted to accelerate to nearly 20% in 2025, following sluggish growth in 2024 [3] - Analysts have a bullish outlook on LPTH, with a consensus price target suggesting a potential upside of 150% [4] Group 3: Braze (BRZE) - Braze operates a customer engagement platform, with growth rates in the high 20% range expected to be sustained into 2025 [7] - The company has achieved a 114% net retention rate, indicating existing clients are generating 15% more revenue compared to the previous year [8] - Analysts maintain a Moderate Buy rating for Braze, with price targets implying a potential upside of 40% to over 70% [9] Group 4: Guidewire Software (GWRE) - Guidewire Software provides platforms for the insurance industry, utilizing AI to enhance operational efficiency [11] - Revenue growth for Guidewire is anticipated to accelerate, with margins expected to widen in 2025 [11] - Analysts have noted a 75% increase in the consensus target for GWRE over the past 12 months, indicating strong market support [12]

Core Viewpoint - Braze, Inc. (BRZE) has experienced a significant downtrend, with a 17.3% decline in stock price over the past four weeks, but it is now in oversold territory, suggesting a potential turnaround due to improved earnings expectations from analysts [1]. Group 1: Stock Performance - The stock has declined 17.3% over the past four weeks, indicating strong selling pressure [1]. - The Relative Strength Index (RSI) for BRZE is currently at 29.27, suggesting that the heavy selling may be exhausting itself, which could lead to a price rebound [3]. Group 2: Analyst Sentiment - There is strong consensus among sell-side analysts regarding an increase in earnings estimates for BRZE, with a 12.9% rise in the consensus EPS estimate over the last 30 days [4]. - BRZE holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a favorable outlook for the stock [4].

Core Viewpoint - Braze, Inc. (NASDAQ:BRZE) is expected to maintain a strong growth trajectory despite recent share price declines, which are deemed unjustified given the company's operational performance and market demand [2][6][8] Financial Performance - In 2Q25, Braze reported total revenue of $145.5 million, with $140 million from subscription and $5.5 million from services, reflecting a 26.4% year-over-year growth, and subscription revenue grew by 28% year-over-year [3] - The adjusted gross margin improved by 90 basis points to 70.9% in 2Q25, attributed to cost optimization and personnel efficiencies [3] - For the first time, Braze achieved an adjusted EBIT margin of 3%, leading to an adjusted EPS of $0.12 [3] Growth Metrics - Billings growth was reported at 15.9% year-over-year, a decline from previous quarters, primarily due to a decrease in net-new business and the impact of an acquisition in the prior year [4][5] - On a two-year stack basis, billings growth remains robust at 50.1%, indicating sustained demand [5] - The number of customers generating over $500k in annual recurring revenue (ARR) grew by 28% year-over-year, highlighting strong demand in the enterprise segment [5] Strategic Initiatives - Braze launched a free trial program for new customers, aimed at lowering adoption barriers and enhancing customer engagement with the platform [5][8] - The company continues to focus on sophisticated marketing campaigns, leveraging its decade-long experience in customer engagement [5] Valuation Perspective - The recent decline in Braze's share price is viewed as unjustified, with expectations that growth metrics will rebound, potentially leading to a re-rating of the company's valuation multiples back to pre-results levels [6]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 reached $145.5 million, representing a 26% year-over-year increase [6][20] - Non-GAAP gross margin improved to 70.9%, up 90 basis points from the previous year [6][22] - Non-GAAP operating income was $4.2 million, compared to a loss of $7.6 million in the prior year [24] - Non-GAAP net income attributable to Braze shareholders was $9.1 million, or $0.09 per share, compared to a loss of $3.9 million, or a loss of $0.04 per share in the prior year [24] Business Line Data and Key Metrics Changes - Customer count increased to 2,163, up 10% year-over-year [20] - Large customers (spending at least $500,000 annually) grew to 222, a 28% year-over-year increase [11][20] - Dollar-based net retention was 114%, with large customers at 117% [21] Market Data and Key Metrics Changes - Revenue outside the U.S. contributed 5% to total revenue, down from 43% in the prior year [21] - Total remaining performance obligation was $690 million, up 32% year-over-year [21] Company Strategy and Development Direction - The company is focusing on the legacy vendor replacement cycle and point solution consolidation trends to drive growth [7][9] - Investments are being made in product innovation, AI initiatives, and expanding the customer community [12][16] - The Braze data platform was introduced to enhance data capabilities and streamline customer engagement [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic challenges while focusing on long-term goals [12] - The company anticipates continued growth driven by customer engagement strategies and AI advancements [9][12] - Management highlighted the importance of maintaining operational efficiency and profitability [19][24] Other Important Information - The company celebrated its 13-year anniversary and launched the Braze data platform [13] - A free trial program and a "Braze for Startups" initiative were announced to attract new customers [16][17] - The annual customer conference, Forge, is scheduled for September 23-25, where further product innovations will be revealed [18] Q&A Session Summary Question: Customer interest in RCS with Apple supporting it - Management is excited about RCS and is preparing full support, noting its advantages over SMS [30] Question: Member retention outlook for the year - Management indicated that member retention is not yet stabilizing and is impacted by historical performance [34] Question: AI's role in legacy Marketing Cloud replacement - AI is a critical part of the deal cycle, with varying attitudes from companies regarding vendor consolidation [36] Question: Impact of macro environment on business metrics - Management noted that the macro environment has influenced metrics like dollar-based net retention and deferred revenue [40][41] Question: Company-specific initiatives for growth - Management believes that initiatives like free trials and product-led growth will help reaccelerate business over the next 12-18 months [44][49] Question: Role of the Braze data platform - The Braze data platform aims to enhance customer engagement outcomes and integrate with existing customer data ecosystems [55][57]

Core Viewpoint - Braze, Inc. reported strong financial results for Q2 2025, with a revenue increase of 26% year-over-year, reaching $145.5 million, and achieving non-GAAP operating income profitability for the first time, indicating effective business execution and growth potential in customer engagement solutions [9][39]. Financial Performance - Revenue for Q2 2025 was $145.5 million, up 26% year-over-year [9][31]. - Non-GAAP gross margin improved to 70.9%, a rise of 90 basis points compared to the previous year [9][35]. - Non-GAAP operating income was $4.2 million, representing 3% of revenue, compared to a loss of $7.6 million in the prior year [39]. - Non-GAAP net income attributable to Braze shareholders was $9.1 million, or $0.09 per share, compared to a loss of $3.9 million in the prior year [39]. Customer Growth and Engagement - Customer count reached 2,163, an increase of 61 during the quarter and 205 year-over-year [11][32]. - The number of large customers (spending at least $500,000 annually) grew to 222, up 28% year-over-year, contributing 61% to total ARR [15][32]. - Dollar-based net retention was 114%, with large customers at 117% [33]. Product and Market Strategy - Braze is focusing on the legacy vendor replacement cycle and point solution consolidation trends, which are expected to drive market share gains as brands seek modern customer engagement solutions [10][12]. - The company launched the Braze data platform to enhance data capabilities and streamline customer engagement processes [18][80]. - New initiatives such as "Braze for Startups" and a free trial program aim to expand the customer base and improve engagement [24][25]. Guidance and Future Outlook - For Q3 2025, Braze expects revenue between $147.5 million and $148.5 million, representing approximately 19% year-over-year growth at the midpoint [41]. - Full fiscal year 2025 revenue is projected to be between $582.5 million and $585.5 million, indicating a year-over-year growth rate of approximately 24% at the midpoint [44]. - The company anticipates continued investment in product innovation and customer engagement strategies to solidify its market position [12][70].