Customer Engagement Firm Braze Jumps After $520 Million IPO

(Bloomberg) -- Customer engagement software maker Braze Inc. rose 44% in its trading debut after an initial public offering that priced above the marketed range to raise $520 million.

The company’s shares, which sold for $65 in the IPO, closed at $93.39 in New York trading Wednesday, giving Braze a market value of $8.4 billion. Accounting for employee stock options and restricted stock units, the company has a fully diluted value of more than $9.6 billion.

The company and some of its investors on Tuesday sold 8 million shares that had been marketed for $55 to $60.

Braze was valued at $850 million after an $80 million funding round in 2018, according to data provider PitchBook.

The New York-based company’s biggest investors are Battery Ventures and Iconiq Capital, according to the filing. Affiliates of Inter West Partners and Bullpen Capital had planned to sell a combined total of 1.3 million shares in the IPO, according to Braze’s filings with the U.S. Securities and Exchange Commission.

Grubhub, DraftKings

Braze had a net loss of $26 million on revenue of $104 million for the six months ended July 31, compared with a loss of $12 million on revenue of $68 million a year earlier, according to its filings. The company’s diverse array of customers includes brands such as Grubhub, IBM and DraftKings, according to its website.

Braze co-founder and Chief Executive Officer William “Bill” Magnuson said in an interview that he was pleased by the investor reception, saying that the company priced above range because “the roadshow went well.” There was room in the market for Braze because “companies that came before us were not using an advanced enough technical approach,” he said.

Magnuson said in a letter to investors that the coronavirus pandemic has accelerated digital transformation, including the importance of mobile technology for connecting customers to brands. He said he was “confident that the transformative impact from 2020 will echo into the future.”

‘Gut-Driven’

Neeraj Agrawal, general partner at Battery Ventures, said Braze’s success is a further indication that “marketing has gone from being very gut-driven to very data-driven.”

Going public doesn’t make sense for every company at scale in this environment, though, because there are enough tech offerings to allow investors to be selective, he said.

“The reality is the IPO market is a tale of two cities right now,” Agrawal said. “Other companies are having a hard time getting deals done.”

The offering was led by Goldman Sachs Group Inc., JPMorgan Chase & Co. and Barclays Plc. The company’s shares are trading on the Nasdaq Global Select Market under the symbol BRZE.

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