Why Braze Stock Plummeted This Week
Key Points
Braze posted better-than-expected fiscal Q2 results.
The company also issued strong guidance.
Tech stocks were under pressure this week, and some investors reacted negatively to elements of the company's report.
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Braze (NASDAQ: BRZE) stock got hit with big sell-offs after publishing its latest quarterly report and closed out this week's trading down 25.1%. Meanwhile, the S&P 500 ended the week down 2%, and the Nasdaq Composite was off 1.8%.
Tech stocks were under pressure this week as investors reacted to macroeconomic concerns, and the release of Braze's Q2 fiscal 2027 report didn't do anything to prop up its share price. On the other hand, the company's sales and earnings for the period beat Wall Street's forecasts -- and the company raised its forward guidance.
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Braze showed solid momentum in fiscal Q2
On Sept. 8, Braze published results for the second quarter of its 2027 fiscal year -- which ended July 31. The company posted non-GAAP (adjusted) earnings per share of $0.19 on sales of $227.2 million. Revenue was up 26% year over year and beat the average analyst target by roughly $6.9 million, and adjusted earnings per share were up roughly 19% and beat the average target by $0.03 per share.
Braze issued encouraging guidance, but it wasn't enough
For the full fiscal year, Braze now expects sales to be between $910 million and $913 million -- beating the average estimate for sales of $906.5 million. The company also said it expected adjusted earnings per share between $0.64 and $0.65 -- with the midpoint of that target range exceeding the average forecast for per-share earnings of $0.64.
Some investors may have been looking for stronger earnings guidance, but the forecast still represents a big step up over the profit of $0.38 per share recorded last year. On the other hand, Braze is relying fairly heavily on stock-based compensation to fund its operations -- and the market may be worried about what this means for the overall earnings picture. The company also guided for some adjusted operating income headwinds in the current quarter connected to the hosting of its Forge event, but that's typical for the quarter.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends Braze. The Motley Fool has a disclosure policy.
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