Braze, Inc. (BRZE) is gearing up to unveil its second-quarter fiscal 2025 earnings on September 5th, after the market closes. While the company is anticipated to report revenue growth, the likelihood of an earnings beat remains unclear.
Analysts project a loss of 3 cents per share for the quarter, representing a 25% decrease from the same period last year. Revenue is expected to reach $141.1 million, indicating a 22.6% year-over-year increase. However, it’s worth noting that there have been no recent changes or revisions to these estimates.
Braze has a history of exceeding earnings expectations. In the past four quarters, the company has surpassed the Zacks Consensus Estimate by an average of 50.7%. However, our proven model doesn’t strongly indicate an earnings beat this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) typically increases the odds of an earnings beat. However, BRZE currently has an Earnings ESP of 0.00% and a Zacks Rank #3, which doesn’t suggest a strong likelihood of an earnings surprise.
Despite the uncertainty surrounding earnings, Braze’s subscription business is expected to be a key driver of revenue growth in the second quarter. The consensus estimate for subscription revenues is $136 million, representing a 23.6% year-over-year increase. Professional services and other revenues are projected to remain flat at $5 million.
Over the past three months, BRZE shares have climbed 21%, though they are still down 15.7% year-to-date. The stock has emerged from a correction phase and began an upward trend around mid-year. This performance is somewhat in line with competitors like Salesforce (CRM), which is down 3.8%, and HubSpot (HUBS), which has declined 14% year-to-date. The broader industry has seen a 21.3% rise during this period.
Braze is focused on expanding its customer base across various sectors, including retail, media, entertainment, gaming, health, lifestyle, and financial services. The company aims to leverage its sales and marketing efforts to capitalize on industries undergoing digital transformation, particularly those with growing direct-to-consumer models. Additionally, Braze is enhancing its platform’s usage by existing clients by introducing new channels and increasing messaging volume. As customers become more digitally advanced, they are investing in additional data management capabilities.
Given Braze’s recent stock performance and the mixed indicators leading up to its fiscal second-quarter earnings report, a hold strategy is recommended. While the stock has shown resilience and its year-over-year revenue growth suggests potential upside, the uncertainty surrounding an earnings beat this quarter and the stock’s volatility make it prudent to hold off on new purchases until after the earnings release. Investors should closely monitor the upcoming report and broader market trends to better assess the stock’s future trajectory.
