TSP Weekly Tech Stock Update—June 8, 2024
This Week: Apple shares rally into WWDC, CrowdStrike to join S&P 500, Smartsheet's upside surprise, Broadcom earnings preview, Braze reports solid FQ1 results, GTLB ups guidance, ESTC rallies & more.
Hello from Rob…
—Shares of Braze (BRZE, $36.65—TSP Watch List) on Friday initially ran up to a high of $41.55 after the company delivered better-than-expected FQ1 (April) results and raised its FY’25 (Jan.) revenue outlook, but then reversed to close the session down 0.35%. Braze stock, off 31% YTD, this week hit a new 52-week low of $35.47.
The provider of a customer engagement platform for B2C use cases reported that FQ1 total revenue rose 33% to $135.5 million, above the consensus estimate of $131.6 million. Subscription revenue of $130.1 million was up 34%, accelerating from growth of 33% in the previous quarter. Operating margin rose 830 basis points year over year.
Total RPO advanced 38% to $657 million, while current RPO of $420 million gained 29%. RPO strength was driven by contract renewals, upsells and new customer sign-ups.
Braze ended the quarter with a total customer count of 2,102, up 13% year over year. The number of customers with annual recurring revenue (ARR) of $500k or more rose 29% to 212. These large customers accounted for 60% of total ARR. Dollar-based net retention was 117% for all customers and 119% for customers with $500k+ ARR.
For Q2 (July), Braze sees total revenue of $140.5 million to $141.5 million (growth of 23% at the midpoint), above the consensus of $139.7 million.
For FY’25, the revised revenue outlook of $577 million to $581 million (growth of 23% at the midpoint) was raised from the prior forecast of $570 million to $575 million. The consensus was $573.9 million.
Following FQ1 earnings, Canaccord raised its Braze price target to $53 from $50, saying the company was able to report upside despite the ongoing challenging selling environment, with marketing budgets under pressure. The firm notes that Braze continues to perform well in the enterprise thanks to solution consolidation, product innovation and customer use case/geographic diversification.
*Inside This Issue: Zscaler Stock Shows Signs of Life
—Paid subscribers will receive the June 2024 PDF of Tech-Stock Prospector (TSP #268) via email on Tuesday, June 11.
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