Digital Transformation And Cloud Expansion Will Revolutionize Global Engagement

Key Takeaways

• Accelerated enterprise adoption, platform innovation, and strong partner ecosystem could substantially drive recurring revenue, retention, and competitive moat against legacy vendors.
  
• Enhanced pricing flexibility, global expansion, and AI-driven solutions position Braze for faster growth, increased customer loyalty, and improved operational efficiency internationally.
  
• Growing regulatory pressures, customer concentration, and intensifying competition threaten Braze's data-driven growth, product differentiation, and profitability, while demanding higher innovation and compliance investments.

Catalysts

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

• While analyst consensus expects OfferFit to be a differentiator and modest revenue growth driver, the rapid cross-sell potential into Braze's large enterprise base-with a third of OfferFit's customers already shared-could lead to a much greater, faster increase in average deal size and recurring revenue than anticipated, particularly as AI-driven uplift proves its ROI in high-value verticals with willingness to pay for outsized performance.
  
• Analysts broadly agree that legacy vendor replacement and consolidation will benefit Braze's revenue, but the scale and pace may be underestimated; as legacy competitors visibly stagnate, Braze's aggressive platform innovation and highly engaged partner ecosystem may drive an accelerated enterprise adoption curve, translating into both faster top-line acceleration and substantial operating leverage.
  
• The launch of more flexible, usage-based pricing (including substantial data point limit relaxation and credit-based entitlements) directly addresses previous friction in the sales cycle, which could sharply increase platform usage, revenue expansion, and materially improve customer retention and long-term net dollar retention rates.
  
• Braze's rapidly expanding global data center footprint and vertical-specific go-to-market efforts position the company to capture significant share as privacy regulations and data residency requirements become de facto commercial standards, potentially unlocking faster international revenue growth and improved gross margins through regional scale efficiencies.
  
• The growing integration and certification among systems integrators and agency partners is creating a robust network effect, with Braze increasingly becoming the preferred platform for executing complex, omnichannel, first-party data strategies-a dynamic that could create a durable moat, further lift large enterprise retention, and drive higher-margin subscription and services revenue over time.

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 20.4% 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 -16.8% to the average US Software industry of 13.5% in 3 years.
• If Braze's profit margin were to converge on the industry average, you could expect earnings to reach $146.1 million (and earnings per share of $1.22) by about August 2028, up from $-103.9 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 61.4x on those 2028 earnings, up from -28.0x today. This future PE is greater than the current PE for the US Software industry at 37.6x.
• Analysts expect the number of shares outstanding to grow by 2.81% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.51%, as per the Simply Wall St company report.

Braze Future Earnings Per Share Growth

Risks

• Heightened privacy regulations and evolving data residency laws, especially in international markets, threaten Braze's ability to collect and leverage first-party data, which could limit the effectiveness of its AI and personalization tools and negatively impact revenue growth.
  
• Increasing customer concentration, with 62 percent of total ARR coming from large enterprise customers, creates a vulnerability where the loss of a few key clients or reductions in their spend could materially impact Braze's future revenue and visibility.
  
• The risk of insufficient innovation or inability to keep pace with larger, better-capitalized competitors in AI, machine learning, and engagement channels may erode Braze's product differentiation, leading to pressure on gross margins and customer retention rates.
  
• Industry commoditization and platform integration by giants such as Salesforce and Adobe increase the likelihood that customers will consolidate spending into broader all-in-one suites, displacing specialized platforms like Braze and compressing both revenue growth and net margins.
  
• Shifting consumer attitudes toward privacy, personalization, and digital engagement channels-alongside changing regulations around data-may reduce the relevance of Braze's product suite, thus requiring costly and ongoing R&D investment and potentially impacting both operating margins and long-term earnings.

Valuation

• The assumed bullish price target for Braze is $58.48, which represents two standard deviations above the consensus price target of $45.0. 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 $146.1 million, and it would be trading on a PE ratio of 61.4x, assuming you use a discount rate of 8.5%.
• Given the current share price of $26.19, the bullish analyst price target of $58.48 is 55.2% 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.