TipRanks Smart Growth Portfolio #6: The Growth Loop
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Dear Investors,
Welcome to the 6th edition of the Smart Growth Portfolio and Newsletter.
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Note to Investors:
We’re officially in the middle of a global tariff war, and the ripple effects are hitting stock markets hard. Volatility has spiked, earnings visibility is almost non-existent, and valuation models are flying blind. It’s messy. Still, as we all know, markets always bounce back — it’s just a matter of when. Instead of getting lost in the noise, we’re zeroing in on what actually matters: strong fundamentals, resilient business models, and industries with staying power. When great companies trade at a discount to their peers or history, that’s our signal.
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Portfolio News and Updates
❖ Cathie Wood, the founder and CEO of ARK Invest and one of the most closely watched growth investors on Wall Street, continues to double down on her high-conviction holdings. As markets tumbled last week, ARKK and ARKW ETFs added 30,120 shares to their existing GitLab (GTLB) holdings. Following continued accumulation, ARK ETFs now hold about 1.3% of GTLB’s public float.
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This Week’s Top Growth Pick: Braze (BRZE)
Braze, Inc. is a customer engagement platform that enables companies to manage and automate messaging across mobile, web, email, and connected devices. Its software is used by marketing teams to coordinate personalized campaigns based on real-time user data and behavior. Designed to integrate with a wide range of data sources and customer systems, Braze supports complex, cross-channel strategies without requiring significant engineering resources. The platform plays a central role in helping consumer-facing businesses improve user retention and engagement. As digital channels multiply and customer expectations rise, Braze has positioned itself as a core infrastructure layer for data-driven marketing operations.
Source: Braze, Inc. Website
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From Flow to Flywheel
Braze was founded in 2011, but the past three years have marked its most significant phase of strategic acceleration. The company went public in late 2021, using the proceeds to deepen product development and expand its global go-to-market footprint. From 2022 onward, Braze invested heavily in real-time data infrastructure, doubling down on its core strength: helping brands move from batch messaging to live, contextual engagement. This shift aligned with broader industry trends toward personalization and first-party data, especially as privacy regulations tightened and third-party cookies fell out of favor.
Strategic partnerships became a core growth lever. Braze integrated more deeply with major cloud providers like AWS and Snowflake, allowing enterprise customers to activate customer data directly from their cloud environments. It also expanded collaborations with customer data platforms and commerce stacks, embedding itself within broader digital experience ecosystems. These integrations made Braze more sticky and accelerated adoption among large-scale enterprise users.
The company also made select acquisitions to drive international expansion and sharpen its AI capabilities. In 2023, Braze acquired North Star, its exclusive reseller in Australia and New Zealand, establishing a direct presence in the ANZ region and adding regional expertise. In early 2025, it announced the acquisition of OfferFit, an AI decisioning platform specializing in reinforcement learning for personalized marketing. The move brought advanced experimentation and automation tools into Braze’s ecosystem, further differentiating its product in a crowded market.
On the R&D front, Braze prioritized AI-driven orchestration and behavioral prediction tools, enabling marketers to better automate campaign flows and optimize user journeys. It also launched developer-focused tools to expand platform usage beyond traditional marketing teams. By 2025, these combined efforts had positioned Braze as a leading independent engagement platform, steadily gaining market share from legacy incumbents struggling to adapt to real-time, data-centric demands.
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Cloud Done Right
Braze operates at the center of the modern marketing stack, offering a vertically integrated SaaS platform purpose-built for real-time, cross-channel customer engagement. Its core advantage lies in unifying data activation, message orchestration, and campaign delivery within a single platform—eliminating the silos that have historically plagued legacy marketing clouds. Delivered via a cloud-native, usage-based model, Braze allows companies to scale engagement dynamically without complex licensing structures. The result is a flexible, developer-friendly product that fits seamlessly into modern data ecosystems, particularly those powered by cloud data warehouses like Snowflake and AWS.
Source: Braze, Inc. Website
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Unlike older incumbents such as Salesforce Marketing Cloud and Adobe, which are stitched together through acquisitions, Braze’s architecture is natively integrated and purpose-built for speed and automation. This allows for faster execution, lower latency, and easier deployment of AI- and event-driven campaigns. Its real-time data streaming engine is a core differentiator, enabling brands to respond to customer behavior as it happens, not hours or days later.
Geographically, BRZE generates the majority of its revenue from the United States, with no meaningful exposure to China – a critical advantage given rising trade tensions and regulatory risks. However, it does maintain a growing presence in EMEA and APAC, particularly in Australia, Japan, and Western Europe. While international growth remains a key pillar of its expansion strategy, the company has taken steps to localize data infrastructure and ensure compliance with regional privacy laws, which could mitigate – even if not fully eliminate – future trade-related disruptions.
Braze’s total addressable market spans a $16-20 billion opportunity in customer engagement and marketing automation, growing at double-digit rates as digital communication becomes core to business strategy. With a platform that’s both horizontal and scalable, Braze is well-positioned to capture wallet share from legacy vendors and serve as the system of record for brands looking to build persistent, data-rich customer relationships in real time.
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From Burn to Earn
Braze has demonstrated robust financial performance, with revenue growing at a 35.6% CAGR over the past three years – underscoring its expanding footprint in the customer engagement space. In fiscal 2025, which ended January 31, the company posted another strong year, with total revenue rising 25.8% year over year to $593.4 million, fueled by a steady combination of new customer wins, renewals, and upsells.
The business remains overwhelmingly recurring, with 96% of FY2025 revenue derived from subscription services – highlighting the strength and predictability of Braze’s usage-based SaaS model. Subscription revenue grew 24.4% year-over-year, reaching $570.3 million, while non-recurring revenue from professional services rose 26.4% to $23.1 million.
Braze’s non-GAAP gross margin continued to expand with scale, reaching 69.9% in Q4 FY2025, up from 67.9% the prior year. The margin improvement reflects better optimization of cloud infrastructure costs and a favorable customer mix. At the same time, the company showed increasing operating leverage across sales and R&D, maintaining high product velocity while enforcing greater cost discipline.
Profitability has tracked a clear upward trend. Non-GAAP EPS increased at a double-digit pace year-over-year in every quarter since March 2023, with the last three quarters posting triple-digit gains. Fiscal Q2 2025 marked an inflection point as Braze turned profitable on a non-GAAP basis. By FQ4, the company had delivered three consecutive quarters of positive non-GAAP net income.
Retention remains strong. Dollar-based net retention stood at 111% over the trailing 12 months, and was 114% among customers with annual recurring revenue over $500,000, pointing to solid enterprise adoption and account expansion.
Source: Braze, Inc. Investor Presentation, March 2025
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Braze ended the year with $793.1 million in remaining performance obligations (RPO), of which $505.2 million (64%) is expected to be recognized within 12 months, offering high near-term visibility. The remainder spans multi-year contracts typical of enterprise software deployments.
FY2025 also marked operational breakeven, with non-GAAP operating income at zero, up from a $39.9 million loss in FY2024. Operating cash flow reached $36.7 million, nearly five times the prior year, while free cash flow turned positive at $19.6 million, compared to negative FCF a year earlier.
Following a strong finish to FY2025, Braze issued conservative guidance for FY2026. While FQ1 revenue is expected to remain flat amid macro uncertainty, full-year guidance implies 14-16% revenue growth, reflecting both external caution and internal confidence.
With a strong balance sheet and rising cash flow, Braze remains well-positioned to invest in product and market expansion without near-term capital needs, reinforcing its role as a core infrastructure layer for data-driven customer engagement.
Source: Braze, Inc. Investor Presentation, March 2025
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Back to Breakout Levels
Like many stocks in the technology universe, BRZE had been climbing steadily until tariff-driven macro uncertainty shook investors’ risk appetite in late January. The stock has since fallen more than 30% from its recent peak, erasing the prior rally and returning to levels last seen in October.
But this pullback has also reset Braze’s valuation. Its trailing twelve-month (TTM) price-to-sales ratio now stands at 5.3, the lowest since its IPO in November 2021. Both its TTM P/S and forward P/S of 4.7x place Braze mid-range among SaaS peers, while still outperforming many of them in revenue growth over the past 12 months and three years. The same holds for its TTM and forward EV/Sales multiples, which are now moderate relative to the sector, even as Braze maintains a stronger top-line trajectory.
This setup creates a compelling foundation for a potential breakout once tariff-related volatility eases and market focus returns to fundamentals. That optimism is echoed in analyst sentiment, as Braze is rated a “Strong Buy,” with top Wall Street price targets implying more than 79% upside over the next 12 months. With a proven SaaS model, high customer retention, and consistent growth execution, Braze appears well-positioned to outperform when markets reward real fundamentals again.
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To Sum It All Up
Braze is a high-growth SaaS platform powering real-time, data-driven customer engagement across digital channels. Purpose-built for speed, scale, and personalization, it enables brands to unify messaging, automation, and behavioral insights without engineering friction. Braze has steadily gained market share from legacy marketing clouds by investing in native architecture, AI-driven orchestration, and global integration. Strategic acquisitions and cloud partnerships have deepened its reach, while strong retention and operating leverage signal a shift toward sustained profitability. Despite consistent execution and a critical role in modern marketing stacks, the stock trades well below historical valuation levels, offering long-term upside as fundamentals regain investor focus.
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Smart Growth Portfolio
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Click here for more stock analysis from TipRanks Macro & Markets research analyst Yulia Vaiman
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Disclaimer
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