Braze, Inc. (BRZE): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at Braze, Inc.'s competitive moat after its fiscal year 2025, where revenue hit $593.4 million, up 25.78%. Honestly, mapping out the landscape reveals a complex picture: while deep platform integration helps lock in customers, the power held by those top 247 clients-who account for 62% of Annual Recurring Revenue (ARR)-is definitely a factor you need to watch. We see extreme rivalry from giants like Salesforce and Adobe, plus a rising tide of AI-native threats, making every strategic move critical. So, before you model the next quarter, let's break down exactly where the pressure is coming from across suppliers, customers, rivals, substitutes, and new entrants in this fast-moving customer engagement space.

Braze, Inc. (BRZE) - Porter's Five Forces: Bargaining power of suppliers

You're assessing the competitive landscape for Braze, Inc., and the suppliers are definitely a key area to watch. For a platform that processes massive amounts of customer data and sends billions of messages, the entities providing the foundational infrastructure and specialized human capital hold significant leverage.

Power is moderate-to-high due to dependence on major cloud infrastructure providers

The bargaining power of cloud infrastructure suppliers is inherently high because the market is dominated by a few hyperscalers. Global cloud spend is expected to surpass $723 billion in 2025, with infrastructure and platform services being the fastest-growing segments. This massive market is controlled by three main players whose combined market share accounted for 64% of global cloud spending in late 2024. To put their scale into perspective, AWS's total capital expenditure is projected to exceed $100 billion in 2025, while Microsoft plans to invest around $80 billion in data centers over the fiscal year.

For Braze, Inc., whose fiscal year 2025 subscription revenue hit $570.3 million, this dependence means that any significant price hike or change in service terms from a dominant provider directly impacts the cost of goods sold. Considering that 82% of data breaches involve cloud data, the reliance on these few, powerful suppliers for security and uptime is absolute.

Here's a quick look at the supplier scale:

High switching costs exist for core data and specialized messaging infrastructure

Switching the underlying infrastructure for a platform like Braze, Inc. is not a simple lift-and-shift operation. The core data-the very asset that powers customer engagement-is deeply embedded. Migrating petabytes of customer interaction history, journey orchestration logic, and proprietary data models represents a massive undertaking in terms of time, engineering resources, and operational risk. Honestly, the risk of data loss or extended downtime during a migration is a huge deterrent.

We can look at the cost of failure as a proxy for the cost of switching. The global average cost of a data breach in 2025 is a serious financial threat, and for organizations in the US, these costs are driven by complex regulations. If a migration fails or introduces a vulnerability, the financial exposure is immense. Furthermore, with 2,296 total customers relying on the platform as of January 31, 2025, the reputational damage from a protracted migration would be catastrophic.

• Data migration complexity is a major barrier.
• Downtime risk erodes customer trust quickly.
• Re-certifying compliance post-migration is lengthy.
• Existing integrations lock in the current stack.

Specialized software development talent is a high-leverage supplier in the AI space

The push toward agentic AI, evidenced by Braze, Inc.'s intent to acquire OfferFit for $325 million to boost its AI decisioning capabilities, means the demand for specialized AI/ML engineers is fierce. These engineers are high-leverage suppliers because their skills are scarce and directly translate into product differentiation and competitive edge. You see this reflected in the hourly rates for top-tier talent.

For a company needing to maintain and advance its platform, the cost of this specialized labor is a significant factor in operating expenses. Here's what you're looking at for development expertise in 2025:

The supplier power here comes from the scarcity of talent capable of building and securing the next generation of customer engagement tools. If onboarding specialized talent takes 14+ days, churn risk rises because product velocity slows down.

Here are some benchmark costs for the talent pool:

Braze, Inc. (BRZE) - Porter's Five Forces: Bargaining power of customers

High power for the 247 large customers, which contributed [Data not found for FY2025 ARR % contribution].

Customers face high switching costs once the platform is deeply integrated.

Dollar-based net retention was 111% for the TTM ended January 31, 2025, showing solid expansion but customers still have options.

Brands can consolidate vendors, increasing their leverage during renewal negotiations.

Customers with Annual Recurring Revenue (ARR) of $500,000 or more showed the following metrics:

• Number of customers: 247
• Dollar-based net retention for the TTM ended January 31, 2025: 114%
• Dollar-based net retention for the TTM ended January 31, 2024: 120%

For all customers, the dollar-based net retention rate for the trailing 12 months ended January 31, 2025, was 111%, down from 117% for the trailing 12 months ended January 31, 2024.

The total customer count reached 2,296 as of January 31, 2025.

Braze, Inc. (BRZE) - Porter's Five Forces: Competitive rivalry

You're looking at a market where the established players aren't just sitting still; they are entrenched giants. The competitive rivalry for Braze, Inc. is definitely intense, stemming from established behemoths like Salesforce Marketing Cloud and Adobe Experience Cloud. These platforms have massive installed bases and broad suites that make switching costly for customers. Still, Braze, Inc. is making headway, evidenced by its financial performance.

For the fiscal year ended January 31, 2025, Braze, Inc. grew revenue to $593.4 million, marking a 25.78% increase year-over-year. That execution shows you they are winning deals. However, the competitive pressure is accelerating, especially with AI-driven platforms such as Klaviyo and MoEngage entering the fray. This shift means the battleground is moving from feature parity to superior intelligence in customer interactions.

The market is fragmenting, which makes maintaining share defintely harder. You see this pressure when you compare Braze, Inc.'s recent growth to the broader industry. Here's the quick math:

That gap suggests that while Braze, Inc. is growing, the overall market, or perhaps its direct competitors, are expanding at a much faster clip. This dynamic puts pressure on Braze, Inc. to continuously differentiate its offering, particularly in areas where it claims success, like displacing the larger marketing clouds.

The rivalry isn't just about size; it's about product focus and customer value capture. You can see where Braze, Inc. is winning and retaining high-value customers, but the need to keep winning is constant:

• Braze, Inc. reported total revenue of $654.62 million for the trailing twelve months ending July 31, 2025.
• Subscription revenue for the fiscal year ended January 31, 2025, was $570.3 million.
• Dollar-based net retention for customers with Annual Recurring Revenue (ARR) of $500,000 or more was 119% for the trailing 12 months ended April 30, 2024.
• For the fiscal second quarter of 2026, revenue reached $180 million, up 24% year-over-year.
• Annual Recurring Revenue (ARR) surpassed $700 million as of the second quarter of fiscal 2026.

Honestly, the fact that Braze, Inc. is still posting growth rates in the mid-twenties while fighting Salesforce and Adobe, and simultaneously integrating new AI capabilities like the planned OfferFit acquisition, speaks to a strong product-market fit, even if the overall market growth rate is higher. If onboarding takes 14+ days, churn risk rises against these well-resourced competitors.

Braze, Inc. (BRZE) - Porter's Five Forces: Threat of substitutes

The threat of substitutes for Braze, Inc. (BRZE) is substantial, stemming from solutions that can fulfill the core need-customer engagement-through different means. You have to look beyond direct competitors to see the full picture of substitution risk, especially as technology evolves this fast.

High threat from large enterprises developing custom, in-house customer engagement solutions

For the largest enterprises, building a system internally is always an option, even if it's expensive and slow to start. While Braze, Inc. has successfully captured high-value clients-reporting 262 customers with at least $500,000 in Annual Recurring Revenue (ARR) as of April 30, 2025-each of these represents a potential build-or-buy decision. These in-house builds bypass the recurring subscription cost of Braze, Inc., though they absorb significant internal engineering and maintenance overhead. The fact that Braze, Inc.'s Non-GAAP gross margin stood at 69.3% in Q1 FY2026 suggests a high value capture on the service provided, which an internal team might try to replicate at a lower marginal cost once the initial build is complete. It's a classic trade-off: speed and feature parity versus control and capital expenditure.

Point solutions (like specialized email or SMS vendors) offer cheaper, less integrated alternatives

You see this pressure from specialized vendors constantly. These point solutions often undercut Braze, Inc. on price or offer deeper functionality in one specific channel, making them attractive for teams that aren't ready for a full cross-channel orchestration platform. For instance, some competitors are noted as being more cost-effective. Braze, Inc. is clearly positioned as an enterprise-grade, scalable solution, evidenced by its Q2 Fiscal Year 2026 revenue reaching $180.1 million and its focus on large customers. However, this premium positioning means that businesses with smaller budgets or less complex needs might opt for cheaper, channel-specific tools. The risk here is that these point solutions can be stitched together, slowly eroding the need for a unified platform like Braze, Inc. until the integration cost outweighs the benefit.

Here's a quick look at the scale of Braze, Inc.'s current business, which helps frame the cost of its premium offering:

Use of general-purpose Large Language Models (LLMs) from companies like OpenAI for automated messaging is a new, growing substitute

This is the newer, more dynamic threat. General-purpose LLMs are rapidly integrating into workflows, which could automate parts of the messaging creation and personalization that Braze, Inc. charges a premium for. As of 2025, 67% of organizations globally use generative AI products powered by LLMs. Furthermore, the number of LLM-powered apps is projected to hit 750 million globally by 2025, and global spending on generative AI technologies is expected to hit $644 billion in 2025.

While Braze management, as of October 2025, felt these providers lacked functional depth, the sheer scale of investment suggests this gap will close. If an LLM provider can offer automated, personalized messaging at a fraction of the cost, the value proposition of Braze, Inc.'s specialized platform comes under pressure. You need to watch for any shift where these models move from content generation to full orchestration.

• LLM adoption: 67% of organizations use generative AI products in 2025.
• Projected LLM-powered apps by 2025: 750 million.
• 2025 GenAI spending: $644 billion globally.
• LLMs automate an estimated 50% of digital work by 2025.

If onboarding takes 14+ days, churn risk rises, and a faster, AI-native alternative could look very appealing.

Finance: draft 13-week cash view by Friday.

Braze, Inc. (BRZE) - Porter's Five Forces: Threat of new entrants

You're looking at the competitive landscape for Braze, Inc. as of late 2025, and the threat from new players is definitely something to watch. The barrier to entry for a niche player is lower now, thanks to rapid AI advancements.

The market itself is large enough to attract new entrants. The global Customer Engagement Software Market was valued at USD 18.82 billion in 2025, up from USD 17.01 billion in 2024, and is projected to reach USD 38.52 billion by 2032. This growth attracts specialized competition.

Here are some indicators of the new, AI-native threat:

• New competitors, like one focused on agentic AI, claim execution ten times faster than legacy platforms.
• 33% of marketers still rely on multiple point solutions to achieve their cross-channel vision.
• Braze, Inc. itself is investing heavily, agreeing to acquire OfferFit for $325 million in cash and stock to bolster its AI capabilities.

Still, building a platform that matches the scale and comprehensiveness of Braze, Inc. requires substantial resources. Look at the numbers Braze, Inc. is managing; that's the moat they've built, but it's also the target for well-funded challengers.

The threat is amplified because established tech giants can enter this space by leveraging existing infrastructure and massive customer bases. They don't need to build the data foundation from scratch; they just need to bolt on the engagement layer.

Consider the scale of the potential entrants:

• Microsoft reported fiscal year 2025 revenue of $252 billion.
• Microsoft's Azure cloud revenue reached $138 billion in fiscal year 2025.
• Microsoft Copilot is active across 65% of Fortune 500 companies.
• Microsoft 365 commercial users surpassed 400 million in early 2025.
• Alphabet (Google) and Amazon are also noted as spending heavily on AI technology deployment.

If a giant like Microsoft decides to aggressively bundle a full Customer Engagement Platform (CEP) capability, leveraging its existing cloud scale and Copilot integration, the competitive pressure on Braze, Inc. would shift immediately. The threat is less about if they can build it, and more about when they decide to prioritize it over their existing ecosystem integrations.