December 10, 2025 – Braze, Inc. (NASDAQ: BRZE), the customer‑engagement software provider, is back in focus after delivering strong fiscal third‑quarter 2026 results, lifting full‑year guidance and triggering a rush of bullish analyst calls. The stock last closed regular trading at $30.65, up about 2.1% on the day, leaving shares roughly 27% lower year to date and about 37% below their 52‑week high of $48.33. [1]
Following the earnings release, Braze briefly surged in after‑hours trading into the mid‑$30s. Benzinga highlighted an after‑hours gain of around 11% after the company beat revenue expectations and raised guidance, while StockStory described the move as the stock “soaring” on the print. [2] Even after that pop, Braze remains a deeply “re‑rated” growth name: it now trades on about 5.2× trailing sales and a forward P/E near 50, with consensus targets implying substantial upside from current levels. [3]
Q3 FY2026: 25.5% Revenue Growth and a Turn to Operating Profit
Braze’s fiscal third quarter (ended October 31, 2025) was strong on almost every top‑line and operating metric:
- Revenue: $190.8 million, up 25.5% year over year from $152.1 million.
- Subscription revenue: $181.6 million (the vast majority of the total), with professional services and other revenue at $9.2 million.
- Non‑GAAP EPS: $0.06, versus $0.02 a year earlier, broadly in line with Wall Street expectations. [4]
Customer and contract metrics continue to show healthy expansion. Total customers grew to 2,528, up from 2,211 a year ago, while large customers with ARR over $500,000 rose to 303 from 234, a 29% increase. Remaining performance obligations (RPO) reached $891.4 million, with $572.7 million classified as current (less than one year), giving reasonably good visibility into near‑term revenue. [5]
Profitability is still a work in progress, but the trend is moving in the right direction. Braze posted a GAAP operating loss of $37.5 million, largely driven by $37.6 million in stock‑based compensation, yet on a non‑GAAP basis it produced $5.1 million of operating income, flipping from a $2.2 million loss in the prior‑year quarter. [6] Management emphasized on the earnings call that this marks four straight quarters of non‑GAAP operating income and six straight quarters of non‑GAAP net income, underscoring a pivot toward disciplined growth. [7]
Free cash flow is also improving. Commentary around the call and follow‑up analysis highlight roughly $18 million of free cash flow for the quarter and more than $52 million of net cash provided by operations in the first nine months of the fiscal year, up sharply from about $20 million a year ago. [8]
Guidance Raised Above Wall Street Consensus
The most important part of the Q3 print for many investors was not the quarter itself, but what management said about the future.
For Q4 FY2026, Braze guided revenue to about $197.5–198.5 million, with the midpoint roughly 2–3% above prior Street estimates. [9] That implies mid‑20% year‑over‑year growth continuing into the January quarter and reflects management’s view that demand trends remain solid despite a choppy enterprise spending environment.
More significantly, Braze raised its full‑year FY2026 revenue guidance from $717–720 million (issued after Q2) to $730.5–731.5 million, now comfortably above the FactSet consensus of about $719 million prior to the report. [10] That updated range implies roughly 21% annual revenue growth, up from an earlier 19% outlook, and is based on the company’s improved pipeline visibility and stronger customer expansion. [11]
On the profitability side, management reiterated a medium‑term target of 8% non‑GAAP operating margins by FY2027, and DA Davidson notes that its refreshed price target is built on applying 5× FY2027 revenue to a model that assumes continued margin expansion. [12] The combination of higher guidance and a clearer path to margins is a key reason why analyst sentiment shifted sharply more bullish today.
AI Strategy: OfferFit Acquisition and Google Cloud Partnership
Braze is increasingly framing itself as an AI‑powered customer engagement platform rather than just another marketing tool, and recent moves back that up.
OfferFit acquisition
Braze’s latest 10‑Q filing reveals that it closed the acquisition of OfferFit, Inc., an AI‑driven decisioning company, for total consideration of about $303.2 million. Roughly $195.3 million of that was paid in cash and $107.6 million in stock, adding around $66.6 million of intangible assets and $238.5 million of goodwill tied explicitly to Braze’s AI initiatives. [13]
The filing notes that for the first nine months of FY2026 Braze generated $533 million in revenue (up from $433 million a year earlier) but still reported a net loss of about $99.7 million, even as operating cash flow turned strongly positive. [14] In other words, Braze is using its improving cash profile to lean harder into AI, betting that personalized, machine‑driven decisioning will be a long‑term differentiator.
BrazeAI Decisioning Studio on Google Cloud Marketplace
On December 2, 2025, Braze announced that BrazeAI Decisioning Studio is now available through Google Cloud Marketplace, making it easier for joint customers to deploy its AI decisioning engine directly inside their Google Cloud environments. [15]
The partnership is designed to let marketers run autonomous, individualized decisioning against first‑party data stored in Google Cloud – essentially helping brands decide what to say to each customer, when to say it, and on which channel, with less manual rules‑writing. Management highlighted this as an important channel for distribution, simplifying procurement for large enterprises already standardized on Google’s infrastructure. [16]
AI in the core platform
Beyond those deals, Braze has steadily expanded its AI toolkit over 2025 with features like BrazeAI Operator, Agent Console and other generative‑AI enhancements, and now touts itself as a leader in AI‑driven omni‑channel engagement. [17] Earnings commentary emphasized strong demand for these tools, including record customer additions and increased usage among large accounts. [18]
What the Latest Numbers Say About Growth and Retention
Under the hood, Braze’s growth story is still very much alive, but with some nuance.
- Over the last five years, Braze has grown revenue at roughly a high‑30s compound annual rate, according to StockStory’s long‑term look at the business. [19]
- Year to date, revenue is up from $433 million to $533 million, reflecting continued double‑digit expansion even as IT budgets remain selective. [20]
- For Q3 alone, organic revenue growth was about 22%, a slight acceleration that led management to lift its full‑year growth outlook. [21]
Customer retention is solid but no longer accelerating. Dollar‑based net retention for all customers over the trailing 12 months was 108%, down from 113% a year earlier, and 110% for large customers, down from 116%. [22] That still means existing customers are, on average, spending more with Braze each year, but the pace of expansion has cooled from its post‑pandemic highs – a common theme across many SaaS names.
Gross margins also ticked down modestly, with GAAP gross margin at 67.2% and non‑GAAP gross margin at 69.1%, versus 69.8% and 70.5% respectively in the prior‑year quarter. Management and third‑party analysis attribute the decline mainly to higher messaging volumes (which carry pass‑through costs) and hosting expenses. [23]
Wall Street on December 10: A Cluster of Upgrades and Higher Targets
Today’s biggest story around BRZE is the convergence of bullish analyst calls following the Q3 release.
A widely cited note from DA Davidson raised its price target from $40 to $42 and reiterated a Buy rating. The firm highlighted Braze’s better‑than‑expected revenue, improved non‑GAAP margins, stronger‑than‑anticipated organic growth, and the company’s commitment to 8% non‑GAAP operating margins in FY2027, arguing that the stock’s current valuation – roughly 5× projected FY2027 revenue – leaves room for upside. [24]
DA Davidson also summarized the broader Street reaction:
- Mizuho: raised its price target to $50 and maintained an Outperform rating, citing robust Q3 results and upbeat guidance. [25]
- Needham: reiterated a Buy rating with a $50 target and labeled Braze a “top pick”, pointing to its strongest quarter in three years and accelerating AI‑driven demand. [26]
- Stifel: lifted its target to $45 (from $37) while maintaining a Buy, highlighting solid execution and product momentum. [27]
- TD Cowen: increased its target to $43, emphasizing the combination of durable growth and improving profitability. [28]
- Wells Fargo: boosted its target from $40 to $45 and kept an Overweight rating, flagging accelerating growth and Braze’s positioning in AI‑powered marketing software. [29]
- Cantor Fitzgerald: maintained an Overweight rating with a $38 target, calling out Braze’s AI enhancements and its Decisioning Studio launch on Google Cloud as strategic positives. [30]
- Citizens: reiterated a Market Outperform rating and a street‑high $68 price target, arguing that Braze has a strong competitive moat in customer engagement and is well‑placed to benefit from generative‑AI adoption. [31]
Across the analyst universe, GuruFocus data from October already showed an average one‑year price target of around $44.8 from 18 analysts, with a range of $38–68. [32] Finviz’s aggregated figures now point to a consensus target near $46.3 and a “Strong Buy”‑style average rating of 1.10 on the usual 1–5 scale. [33]
Put simply: after today’s notes, Wall Street overwhelmingly views Braze as a growth story with meaningful upside from current levels, contingent on the company hitting its growth and margin targets.
Not Everyone is Euphoric: The Bear Case and 2025 Drawdown
Despite today’s optimism, 2025 has been painful for long‑time Braze shareholders. German‑language coverage from outlets like Aktienwelt360 has described Braze as being down over 40% at one point this year even while delivering more than 24% revenue growth, framing the stock as a classic high‑growth name caught in valuation compression. [34]
Zacks notes that, even before this week’s rally, Braze shares had fallen about 28% year to date, compared with roughly 16% gains for the S&P 500, and currently assigns the stock a Zacks Rank #3 (Hold) despite acknowledging the latest revenue beat. [35]
From a fundamentals perspective, several risk factors remain:
- Braze continues to post GAAP net losses, with about $99.7 million in red ink over the first nine months of FY2026, heavily influenced by more than $100 million in stock‑based compensation year to date. [36]
- Dollar‑based net retention, while still above 100%, is trending lower, suggesting that expansion within existing accounts is not immune to tighter marketing budgets and competitive pressure. [37]
- The OfferFit acquisition materially increases Braze’s exposure to AI execution risk: the deal adds substantial goodwill and intangibles that must be justified through customer adoption and cross‑sell over time. [38]
Valuation remains elevated relative to many slower‑growing software peers. Finviz data show Braze trading at roughly 5.2× trailing sales, a price‑to‑book near 5.7, and a forward P/E just under 50, while the stock still carries a beta around 1.1 and a short interest a bit above 6% of float. [39] Bulls argue that the growth and AI story justifies this; bears counter that any stumble on growth, margins or AI integration could lead to further multiple compression.
How Braze Fits in the Customer Engagement Landscape
Analysts continue to position Braze as a best‑in‑class customer engagement platform sitting between pure‑play marketing clouds and broader CRMs. The company competes with products from Adobe, Salesforce, Oracle and others, but its focus on real‑time, cross‑channel messaging at high scale gives it a differentiated niche. [40]
Industry recognition has supported that narrative. Earlier in 2025, Braze was again named a Leader in Gartner’s Magic Quadrant for Multichannel Marketing Hubs, reinforcing the view that it belongs in the top tier of engagement platforms. [41] Combined with the Google Cloud partnership and ongoing BrazeAI roll‑out, the company is trying to cement itself as the default “orchestrator” for customer messaging across apps, web, email, push and in‑product experiences.
Key Takeaways for BRZE Investors
Putting all of today’s news and analysis together:
- Execution is strong: Q3 delivered 25.5% revenue growth, improved non‑GAAP margins, positive free cash flow and record net new customers, while full‑year guidance was raised above consensus. [42]
- AI is central to the thesis: The OfferFit acquisition and BrazeAI Decisioning Studio on Google Cloud Marketplace show Braze investing heavily in AI to drive personalization and decisioning – but they also introduce integration and ROI risk. [43]
- Wall Street is broadly bullish: A cluster of firms (Mizuho, Needham, Stifel, TD Cowen, Wells Fargo, Cantor, Citizens, DA Davidson) raised targets or reiterated bullish ratings today, with consensus one‑year targets in the mid‑$40s and a high estimate of $68. [44]
- But the stock is not “cheap”: Even after a rough year, Braze still trades at premium software multiples, with GAAP losses, decelerating net retention and heavy stock‑based compensation weighing on the bear case. [45]
References
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