Twilio, Braze: The Top 2 CEP Platforms to Own in 2025

Industry Overview - The Customer Engagement Platform (CEP) industry is valued at approximately $25 billion globally at the end of 2024 and is expected to grow at a low-teen CAGR for the next five years, potentially doubling at the low-end range [3] - Growth drivers include increased digitization by consumers and businesses, accelerating adoption of AI automation, and penetration of services [3] Company Insights: Twilio - Twilio's stock price forecast for the next 12 months is$134.26, indicating a 16.30% upside based on 25 analyst ratings, with a high forecast of $185.00 and a low forecast of$50.00 [4] - Following the FQ4 2024 earnings release, Twilio's share price plunged due to slowing growth and tepid guidance, although this does not reflect the company's operational quality improvements [4][5] - Internal metrics such as client count and net retention rate suggest accelerating business and improving leverage, with growth expected to sustain a high-single-digit pace in 2025 [5] - Twilio maintains a robust free cash flow margin, allowing for aggressive share repurchases while keeping a strong balance sheet, despite a one-time impairment noted at the end of FQ3 2024 [6] - The company has a low leverage ratio of about 0.1X equity and has reduced its share count by 15%, with an additional $2 billion in buybacks authorized, equating to roughly 11.5$53.74, indicating a 45.04% upside based on 20 analyst ratings, with a high forecast of $75.00 and a low forecast of$39.00 [9] - Despite slowing growth into the low 20% range, Braze's margins are widening, and the company is shifting towards profitability, with earnings expected to more than double in 2025 [9] - The stock trades at over 350X its 2025 forecasts, indicating significant earnings growth expectations, and is considered a potential takeover target, with Twilio and Salesforce.com as possible buyers [10]