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Should You Buy, Sell or Hold Braze Ahead of Q2 Earnings Report?

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Braze, Inc. (BRZE - Free Report) will report its second-quarter fiscal 2025 results on Sep. 5, after the bell.

The Zacks Consensus Estimate for the bottom line in the to-be-reported stands at a loss of 3 cents, indicating a 25% contraction from the year-ago reported quarter. The consensus estimate for revenues stands at $141.1 million, indicating 22.6% year-over-year growth. There has been no change in analyst estimates or revisions lately.

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The company has an impressive surprise history. The bottom line surpassed the Zacks Consensus Estimate in all the trailing four quarters, with a surprise of 50.7%, on average.

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Lesser Chance of Q2 Earnings Beat

Our proven model doesn’t conclusively predict an earnings beat for BRZE this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

BRZE has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Subscription Should be BRZE’s Driver in Q2

We expect a significant year-over-year improvement in the company’s top line in the to-be-reported quarter, driven by new customers, upsells and renewals. The consensus estimate for subscription revenues is pegged at $136 million, indicating 23.6% year-over-year growth. The consensus mark for professional services and other revenues is pegged at $5 million, flat with the year-ago actual figure.

BRZE Stock Out of Correction Phase

Over the past three months, BRZE shares have risen 21%, although they are down 15.7% year to date. The stock has emerged from a correction phase and began an upward trend around mid-year. This performance aligns with competitors like Salesforce (CRM - Free Report) , which is down 3.8%, and HubSpot (HUBS - Free Report) , which has declined 14% year to date. The broader industry has seen a 21.3% rise during this period.

Year-to-Date Price Performance

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Investment Considerations for BRZE

BRZE aims to broaden its customer base across sectors like retail, media, entertainment, gaming, health, lifestyle and financial services. By leveraging sales and marketing efforts, BRZE plans to tap into industries undergoing digital transformation, especially where direct-to-consumer models are gaining momentum, such as consumables. The company enhances its platform’s usage by existing clients by introducing new channels and increasing messaging volume. As customers grow more digitally advanced, they invest in additional data management capabilities. BRZE is focused on developing AI tools for better customer data analysis and is committed to expanding partnerships that enhance its offerings.

Wait for the Right Time to Buy

Given BRZE's recent stock performance and the mixed indicators ahead of its fiscal second-quarter earnings report, a hold strategy is advisable. The stock has shown resilience, recovering from its correction phase, and its year-over-year growth in revenues suggests potential upside. However, with the uncertainty around an earnings beat this quarter and the stock's volatility, it may be wise to hold off on new purchases until post-earnings clarity is achieved. Investors should monitor the upcoming report and broader market trends to better assess the stock's future trajectory.


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