Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Market Commentary

Is Braze (BRZE) making money from Customer Engagement?

Braze Inc. (NASDAQ: BRZE) is a company built on customer engagement. To explain, Braze (BRZE) builds customer engagement solutions and apps.

Braze offers solutions for data streaming and sharing, push notifications, cross channel messaging, data security, data ingestion, reporting and analytics, data segmentation, journey orchestration and testing, and personalization. Specific Braze solutions include Mobile & Web Push Apps, In-App & Browser Messages, Content Cards, email, and SMS messaging.

Braze claims its platform is purpose built for customer engagement. Users connect with the platform through  application programming interfaces (APIs). For example, Braze offers APIs for customer engagement and enterprise grade security.

One Trillion Messages a Year

Braze claims its platform sends one trillion messages a year, and serves three billion users a month. In addition, 64% of Braze’s customers use over three digital channels. They claim Braze sent 2.3 billion push notifications on Black Friday 2021 and 2.1 billion push push notifications on Cyber Monday 2021.

An example of Braze’s solutions is Braze Canvas, a customer journey management tool. They claim Braze Canvas is a single comprehensive interface for all customer engagement tasks.

Braze claims its customers include HBO, The Guardian, PayPal, Intuit, Pomelo, Domino’s Pizza, Etsy, Delivery Hero, Mercari, The GAP, and Delivery Hero. The Braze Platform operates on Amazon Web Services (AWS), the Google Cloud, and Snowflake clouds. They claim Braze integrates with over 50 other technology platforms including Facebook, Foursquare, and Twillio.

Hence, Braze is good barometer for the profitability of digital marketing and apps. We can tell how much money apps can make by examining Braze’s finances.

How Much Money is Braze Making?

Braze (BRZE) is losing money from its digital marketing platform. For instance, Braze reported a quarterly operating loss of -$10.45 million on 31 October 2021.

However, Braze reported a quarterly gross profit of $44.79 million on Halloween Day 2021. Additionally, Braze reported quarterly revenues of $63.97 million on 31 October 2021. Thus, I think Braze shows it is hard to make money in digital marketing.

Additionally, Braze is burning cash. For instance, it reported a quarterly operating cash flow of -$28.22 million and a quarterly ending cash flow of $110,000 on 31 October 2021. Braze also borrowed some money to operate it reported a quarterly financing cash flow of $1.36 million on 31 March 2021.

How Much Cash does Braze (BRZE) generate?

Conversely, Braze Inc. (BRZE) reported a net debt of -$76.88 million on 31 October 2021. Strangely, that figure mirrors the $76.88 million in cash and short-term investments on 31 October 2021.

Braze offers a little value. It had $184.09 million in total assets on 31 October 2021. Hence, I think Mr. Market overpriced Braze at $67.92 on 11 January 2022. I see nothing in Braze’s financial numbers that justifies that stock price.

Braze’s shares have lost value since its 17 November 2021 initial public offering (IPO). To explain, Braze premiered at $93.39 on 17 November 2021.

Is App Marketing a Waste of money?

I advise all investors to stay away from Braze (BRZE) because Mr. Market grossly overvalues its shares. Moreover, I think Braze’s sorry financial numbers show that app marketing and email marketing are not lucrative businesses.

Instead, Braze seems to confirm popular suspicions that app marketing and email marketing are wastes of money. Hence, I have to advise executives and entrepreneurs to limit spending on app marketing because it seems to be a waste of money.