Why Braze Stock Jumped Today
Key Points
Braze's artificial intelligence (AI)-powered marketing solutions are in high demand.
Management boosted its full-year earnings targets.
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Shares of Braze (NASDAQ: BRZE) popped 18% on Wednesday after the brand engagement platform announced strong third-quarter sales growth and issued a bullish profit forecast.
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AI is accelerating Braze's expansion
BrazeAI, the company's suite of artificial intelligence (AI)-powered tools, helps businesses deploy AI models and agents across a wide range of customer touchpoints.
"The new BrazeAI is a force multiplier for both marketers and consumers, delivering smarter, more adaptive, and increasingly autonomous capabilities," CEO Bill Magnuson said in the company's earnings release.
Braze's third-quarter revenue grew 25.5% year over year to $190.8 million, fueled by new customer wins and higher sales to existing clients.
Braze's total customer count increased 14% to 2,528. Large customers with annual recurring revenue (ARR) of $500,000 or more surged 29% to 303.
The company's dollar-based net retention rate for the trailing 12 months checked in at a solid 108%, though that was down from 113% in the prior-year period.
These customer and revenue gains, combined with Braze's efficiency initiatives, helped its adjusted operating income improve to $5.1 million, compared to a loss of $2.2 million in the year-ago quarter.
Better still, Braze generated positive free cash flow of $17.8 million, compared to negative $14.2 million in the year-earlier period.
Braze boosted its business outlook
These strong results prompted management to lift its full-year sales and profit guidance. Braze now expects revenue of $730.5 million to $731.5 million and adjusted operating income of $26 million to $27 million, up from a prior forecast of $717 million to $720 million and $24.5 million to $25.5 million.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Braze. The Motley Fool has a disclosure policy.
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