Why Braze Stock Is Sinking Today
Key Points
Braze beat Wall Street's sales target for the first quarter, and earnings per share were in line with the average forecast.
The company also raised its full-year sales outlook, but the business is seeing some declines for margins.
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Braze (NASDAQ: BRZE) stock is losing ground in Thursday's trading following the company's recent quarterly report. The marketing software specialist's share price was down 4.2% as of 3:45 p.m. ET despite the S&P 500 being up 0.6% at the same point in the daily session and the Nasdaq Composite being up 0.9%. On the other hand, the stock had been off as much as 9.4% earlier in the session.
Braze published its first-quarter results after the market closed yesterday and actually posted sales that beat Wall Street's forecast. The company also raised its full-year sales outlook, but that hasn't been enough to prevent a pullback for the stock.
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Braze posted solid momentum in Q1
With its Q1 report, Braze delivered non-GAAP (adjusted) earnings of $0.10 on sales of $211 million. Earnings per share were in line with the average Wall Street analyst estimate, and sales for the period topped the average forecast by $5.8 million. Revenue increased roughly 30% year over year in the period, but the company's adjusted gross margin fell to 67.4% from 69.3% in the prior-year period.
What's next for Braze?
With its Q1 report, Braze raised its full-year sales target to between $895 million and $899 million -- with the midpoint of that guidance suggesting annual sales growth of roughly 22%. The company had previously guided for sales to come in between $884 million and $889 million for the year.
On the other hand, the company said that it expected adjusted earnings per share for the year to come in between $0.61 and $0.65. While that forecast was in line with management's previous guidance, the company is targeting the same profit range even though its sales target has increased. With signs that margins are softening, some investors are opting to move out of the stock today.
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Keith Noonan 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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