Braze (BRZE) Stock Trades Down, Here Is Why
What Happened:
Shares of customer engagement software provider Braze (NASDAQ:BRZE) fell 11.4% in the morning session after the company reported fourth-quarter results and provided revenue guidance for next year, suggesting a significant slowdown in demand. Customer growth also slowed during the quarter as the total customer count came in below expectations. An additional negative is that full-year operating loss guidance was worse than expectations. On the other hand, revenue and EPS exceeded expectations during the quarter. Overall, it was a mixed but weaker quarter for the company.
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What is the market telling us:
Braze's shares are very volatile and over the last year have had 12 moves greater than 5%. But moves this big are very rare even for Braze and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 10 months ago, when the stock gained 9.1% on the news that the company reported an impressive "beat and raise" quarter. First quarter results exceeded analysts' expectations for key top-line metrics, including revenue, subscription revenue, and calculated billings. Notably, calculated billings saw a nice beat of nearly 10%. The company also posted better-than-expected profits, with gross margin, operating income, and earnings per share all topping analysts' projections. Customer growth also accelerated.
Looking ahead, Braze provided strong guidance with revenue guidance for the next quarter exceeding Consensus. The full-year guidance was also raised and came in above expectations. Similarly, operating loss guidance for the next quarter and full year beat. On the other hand, there was a deterioration in revenue retention rate. Regardless, it was still a strong quarter with a clear outperformance of key metrics and a bullish guidance.
Braze is down 10.2% since the beginning of the year, and at $45.14 per share it is trading 24.4% below its 52-week high of $59.73 from February 2024. Investors who bought $1,000 worth of Braze's shares at the IPO in November 2021 would now be looking at an investment worth $484.21.
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