Braze, Inc. (BRZE): A Bull Case Theory

We came across a bullish thesis on Braze, Inc. (BRZE) on Substack by Elliot. In this article, we will summarize the bulls’ thesis on BRZE. Braze, Inc. (BRZE)'s share was trading at $31.71 as of May 5^th. BRZE’s forward P/E was 96.15 according to Yahoo Finance.

Braze (BRZE) has emerged as a category-defining leader in customer engagement technology, offering a real-time, cross-channel messaging platform used by modern consumer brands to orchestrate personalized outreach across mobile push, email, SMS, in-app messages, and web. Originally launched in 2011 as Appboy, Braze rebranded in 2017 as it expanded beyond mobile-first capabilities to support broad customer journey orchestration. The company’s core differentiator lies in its real-time streaming data architecture, which updates user profiles as events occur, enabling instant responsiveness across marketing channels. This foundational advantage, paired with deeply embedded software development kits (SDKs) and integration into customers’ workflows, creates significant switching costs and positions Braze as core infrastructure for marketing operations. Tools like Canvas Flow, Liquid templating, and Connected Content empower marketers to build intelligent customer journeys with high levels of customization, while Braze Currents allows real-time export of engagement data to external systems for analytics. Braze goes beyond marketing into product-led capabilities like feature flags, and its Sage AI suite, coupled with the planned acquisition of OfferFit, signals its intent to lead in AI-driven engagement optimization.

Technologically, Braze holds a formidable moat. Legacy competitors like Salesforce Marketing Cloud and Adobe Campaign rely on slower batch-processing systems and fragmented databases, while Braze’s unified, vertically integrated platform supports millisecond-level triggers and low-latency messaging. This gives it a clear advantage in scalability and user experience. In 2024, the platform supported more than 7.2 billion monthly active users and processed trillions of messages with 99.9% uptime. These capabilities are nearly impossible to replicate without years of sustained R&D and infrastructure build-out, particularly as Braze continues to leverage distribution partnerships like AWS Marketplace. While newer competitors like Iterable offer similar functionality, Braze consistently wins on the strength of its SDKs, real-time capabilities, and developer-friendly environment. Internationally, low-cost providers like MoEngage and CleverTap compete on price, but lack the maturity and scale needed to serve multinational enterprises, where Braze thrives. Twilio’s failed attempt to build a rival product (Twilio Engage) underscores the difficulty of entering this market, affirming Braze’s architectural edge.

Strategically, Braze has adopted a focused go-to-market approach, avoiding very small businesses and prioritizing mid-market and enterprise clients through a direct sales model. It has grown to 2,296 customers globally, including leading brands across QSR, retail, media, and finance. Its "land-and-expand" strategy is showing clear results: while only 11% of customers generate more than $500K in ARR, they account for 58% of total ARR, and that cohort grew by 22% year-over-year, reflecting deepening customer adoption and strong unit economics. Geographically, Braze is aggressively expanding in EMEA and APAC, targeting enterprise accounts and driving platform standardization across global customer bases. Its increased investment in product-led growth, such as self-service trials and low-friction onboarding through marketplaces, could further broaden reach into lighter-touch segments without diluting margins.

Financially, Braze is entering a new phase of disciplined growth. It ended FY’25 with $593 million in revenue, up 26% YoY, and subscription revenue accounted for roughly 96% of the total—providing visibility and margin consistency. Gross margins stand at 70%, a solid figure given the platform’s real-time messaging load, and importantly, Braze achieved non-GAAP operating breakeven for the year. This milestone highlights emerging operating leverage as the business scales. The company is still investing significantly in R&D and AI innovation, but is doing so within a framework of growing financial discipline. As with many SaaS companies, Braze remains somewhat sensitive to macroeconomic headwinds. Marketing budgets are often scrutinized during downturns, and while Braze is mission-critical for customer engagement, enterprises may look to reduce message volume or delay expansions. Nevertheless, Braze’s role in customer retention and LTV expansion makes it harder to displace than most discretionary tools.

The risk/reward profile for Braze is increasingly attractive. On one hand, it faces near-term pressures from macro volatility and the risk of growing commoditization in multichannel messaging. On the other, it possesses clear structural advantages—an entrenched platform, real-time infrastructure, and a fast-growing high-value customer base. The company’s investments in AI, combined with strong international growth and rising large-account penetration, suggest durable long-term potential. As Braze continues to differentiate itself with automation, data streaming, and infrastructure quality, it stands out as not just a SaaS platform, but a vital operating system for how modern consumer brands engage their users at scale.

Braze, Inc. (BRZE) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge fund portfolios held BRZE at the end of the fourth quarter which was 28 in the previous quarter. While we acknowledge the risk and potential of BRZE as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BRZE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.