AI And Cross-Channel Trends Will Drive Consent-Based Engagement

Key Takeaways

• Braze's unique AI-native platform and regulatory tailwinds position it to lead market share gains, customer growth, and revenue acceleration as marketing evolves.
  
• Expansion into new markets, flexible pricing, and product stickiness are set to boost customer retention, improve margins, and drive sustained operational efficiency.
  
• Data privacy regulations, shifting consumer preferences, rising costs, customer vulnerability, and increasing competition all threaten Braze's growth, retention, and pricing power.

Catalysts

Operates a customer engagement platform that provides interactions between consumers and brands worldwide.

• While analyst consensus expects OfferFit to incrementally enhance Braze's AI capabilities and expand deal sizes, the pace and depth of integration demonstrated post-acquisition suggests Braze could rapidly become the undisputed leader in AI-driven autonomous customer engagement, catapulting both revenue growth and average contract values to levels well above current estimates.
  
• Analysts broadly agree that legacy vendor displacement will drive market share gains, but Braze's architectural advantage-purpose-built for mobile, cross-channel, and AI-native deployments-gives it a unique window to dominate vendor consolidation cycles, directly accelerating net dollar retention, expanding customer count, and materially improving operating leverage.
  
• The ongoing shift to first-party data, fueled by regulatory changes and the crumbling utility of third-party cookies, positions Braze as the clear beneficiary for global enterprise marketing budgets, enabling durable multi-year revenue growth as brands prioritize compliant customer engagement and loyalty at scale.
  
• The flexible credits model and global expansion of premium messaging channels, coupled with Braze's rapid adoption in emerging international markets and new verticals, unlocks a long runway for ARR acceleration and margin improvement as broader usage drives both platform stickiness and operational efficiency.
  
• The convergence of small, agile marketing teams with Braze's composable AI and automation is set to transform marketing organizations, turbocharging marketer productivity, lowering client churn, and creating significant long-term net margin expansion that market participants have yet to fully price in.

Braze Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Braze compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Braze's revenue will grow by 19.6% annually over the next 3 years.
• Even the bullish analysts are not forecasting that Braze will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Braze's profit margin will increase from -16.6% to the average US Software industry of 12.7% in 3 years.
• If Braze's profit margin were to converge on the industry average, you could expect earnings to reach $141.8 million (and earnings per share of $1.04) by about September 2028, up from $-108.8 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 72.7x on those 2028 earnings, up from -32.0x today. This future PE is greater than the current PE for the US Software industry at 36.2x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.46%, as per the Simply Wall St company report.

Braze Future Earnings Per Share Growth

Risks

• Tightening data privacy regulations and increasing consumer scrutiny, such as GDPR and CCPA, could restrict Braze's ability to collect, process, and monetize user data, potentially reducing product capabilities and limiting future revenue growth.
  
• Growing consumer aversion to targeted advertising and personalized notifications poses a long-term risk that can diminish end-user engagement with Braze-powered communications, weighing on customer retention, net retention rates, and ultimately recurring revenues.
  
• Elevated cloud infrastructure costs and rising sustainability concerns may prompt enterprise customers to scrutinize or consolidate their SaaS spend, exposing Braze to downward pressure on subscription revenues and renewal rates over time.
  
• Braze's reliance on high-growth, venture-backed customers creates vulnerability in the event of sustained high interest rates or recessionary conditions, which may lead to increased churn, destabilizing top-line revenue and introducing volatility to future earnings.
  
• Intensifying competition and industry consolidation can inhibit Braze's ability to differentiate from larger marketing clouds or emerging open-source platforms, potentially elongating sales cycles and exerting downward pricing pressure that risks limiting revenue expansion and net margin improvement.

Valuation

• The assumed bullish price target for Braze is $59.36, which represents two standard deviations above the consensus price target of $45.11. This valuation is based on what can be assumed as the expectations of Braze's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $68.0, and the most bearish reporting a price target of just $38.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $1.1 billion, earnings will come to $141.8 million, and it would be trading on a PE ratio of 72.7x, assuming you use a discount rate of 8.5%.
  
• Given the current share price of $31.31, the bullish analyst price target of $59.36 is 47.3% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.