The Takeaway
• Marketers ditch Salesforce for Braze’s newer tech
• Klaviyo is less likely acquisition target because of its close Shopify ties
• Surveys suggest marketing spending could pick back up in 2025
This isn’t the year to be in marketing software. Companies’ marketing spending as a percentage of sales is at a five-year low, according to data from Gartner. That has hurt big software companies like Salesforce and Adobe, which get a chunk of revenue from selling marketing tools.
It’s also hurt smaller marketing software firms such as Braze, whose shares have fallen roughly 30% so far this year. But investors are missing an opportunity. Braze is picking up business, including from Salesforce and Adobe, thanks to its more sophisticated tools to customize marketing texts and emails, according to industry executives.
If either of those two big companies wants to regain an edge in marketing, they might decide to buy Braze, analysts, investors and marketing tech consultants say. After all, marketing spending is likely to pick up eventually. If that happens, shares in Braze, a publicly traded New York–based firm that sells tools to help companies create and manage email and text-message marketing campaigns, should get more expensive.
At $3.3 billion in enterprise value, inclusive of its net cash, Braze would be an affordable purchase. With its stock near its lows for the year, it is trading at just over five times its expected forward sales, according to data from S&P Global. That’s lower than Salesforce’s and Adobe’s multiples of eight and nine times, respectively.
Braze also has the benefit of making money—it generated more than $18 million in free cash flow in the first half of 2024, and its top line is growing well above 20% annually.
What should make Salesforce or Adobe interested in Braze, which was founded in 2011, are its products for marketers, which are more up to date than those the two bigger companies offer. Both Salesforce and Adobe rely largely on older technologies from companies they acquired in the 2010s, such as ExactTarget, which Salesforce bought in 2013, or Marketo, which Adobe acquired in 2018.
That’s been driving some customers away from Salesforce’s and Adobe’s marketing tools altogether, said Bobby Tichy, chief solutions officer at Stitch, a firm that helps marketing teams at large enterprises use Braze’s software.
Tichy said that Stitch was originally founded, in part, by marketers who used Salesforce who wanted to switch over to primarily supporting Braze, following droves of their own customers who were ditching Salesforce for that platform. According to Tichy, several of the companies that Stitch serves were finding Salesforce and Adobe “incredibly hard to use” and often found those providers lacked certain features Braze offered, especially in text message and push notification marketing.
Market research firm Gartner pointed out in a report last month that although Salesforce is a leader in marketing software today, some of its clients “complain about the company’s ability to deliver value relative to cost.”
Neither Salesforce nor Adobe reports results from email and SMS marketing tools in particular. But Salesforce’s much bigger marketing and commerce segment and Adobe’s digital experience segment have been growing in the low teens or single digits for several quarters.
Braze-ing Ahead
Braze isn’t the only software firm that could help bigger companies update their marketing offerings. Others include privately held firms such as Iterable and Bloomreach, as well as Klaviyo, which went public last year. Klaviyo is growing faster than Braze—analysts polled by Koyfin expect it to expand its top line 25% in 2025, compared to 18% for Braze.
But the universe of companies interested in buying Klaviyo could be limited because it relies for most of its business on merchants who use Shopify’s software platform to run their online stores, thanks to a partnership between the two companies, investors say. As a result, Klaviyo’s customers tend to be smaller firms.
Salesforce and Adobe primarily sell software to larger enterprises, however. For either of them, Braze would be a better fit. It has a foothold with midsize and large companies in various industries, such as Intuit, DoorDash and PayPal, all of which Braze says use its software.
Meanwhile, KeyBanc Capital Markets analyst Jackson Ader says he is optimistic the marketing business is about to pick up. Customer surveys he has conducted recently have suggested that small and medium-size businesses, which make up most of Braze’s customer base, are mulling the idea of ramping up their software spending next year.
That means Salesforce, Adobe and other software firms flush with cash will probably start circling Braze before its valuation climbs. Investors may be smart to do the same with its shares.
