What happened
Shares of customer engagement software platform Braze (BRZE 2.02%) soared on Friday after the company reported strong financial results for its latest quarter and raised its guidance. As of 10 a.m. ET, Braze stock is up about 13%, but it was up as much as 26% earlier in the trading session.
So what
Expectations from Wall Street were low prior to Braze's financial report. Just Wednesday, Canaccord analyst David Hynes said he didn't expect "any major surprises" from Braze, according to The Fly. However, the company pleasantly surprised investors with revenue of $101.8 million in its fiscal first quarter of 2024, which was up 31% year over year. For perspective, management had guided for revenue of $99.5 million at most.
NASDAQ: BRZE
Key Data Points
Judging by the number of analysts who raised their price targets for Braze today in light of Q1 results, including Hynes himself, I'd say the market was very surprised after all. And outperforming expectations can lead to big jumps in stock price, as we're seeing today with Braze.
Also noteworthy in Q1 was Braze's improvements to profitability. The company reported a quarterly adjusted operating loss of $16 million, whereas management had expected to lose at least $19 million. Moreover, it generated positive free cash flow of $21.7 million compared with free cash flow of $15.7 million in the prior-year period.
Now what
Braze co-founder and CEO Bill Magnuson said, "We are off to a great start to fiscal 2024," and management is consequently raising its guidance. Previously it expected to generate full-year revenue of $433 million to $438 million. Now it expects revenue of $442.5 million to $446.5 million -- a substantial raise considering it beat Q1 expectations by only $2.3 million.
Investors should be aware that Braze is losing money and expects to lose over $50 million in fiscal 2024 on an adjusted basis. That said, the company is growing, and it's well capitalized with cash, cash equivalents, restricted cash, and marketable securities of $507.4 million.
Those resources can sustain Braze for quite some time as it pursues its growth opportunity.
