Twilio Inc Tops Estimates and Reports Strong First-Quarter Results

Twilio Inc Tops Estimates and Reports Strong First-Quarter Results
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Twilio Inc Stock Up 62% in 2019 on Strong Financials

Twilio Inc (NYSE:TWLO) had a strong 2018, with Twilio stock finishing the year up 270%. TWLO stock has been equally as impressive in 2019, up 62% year-to-date.

On April 30, the San Francisco-based tech company reported strong first-quarter results that topped Wall Street estimates and provided strong guidance for the second quarter. The company also raised its full-year guidance.

I’ve been watching Twilio Inc, and I believe there is room for significant stock gains in the second half of 2019.

Twilio Inc Overview

Twilio is a cloud communications platform company that allows software developers to build real-time communications (voice, text, chat, video) within software applications. This allows its more than two million clients to reinvent how companies interact with their customers. (Source: “About,” Twilio Inc, last accessed May 1, 2019.)

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The company’s programmable communications cloud software allows developers to embed voice, messaging, video, and authentication capabilities into their applications through its application programming interfaces.

Twilio’s “Super Network” is its software layer that allows its clients’ software to communicate with connected devices globally.

Twilio isn’t afraid to drop serious money on accretive acquisitions. Over the last five years, the company has made five major acquisitions. Most recently, in October 2018, the Twilio spent $2.0 billion to buy SendGrid, a Denver-based company that helps send mass e-mails. (Source: “Twilio to Acquire SendGrid, the Leading Email API Platform,” Twilio Inc, October 15, 2018.)

Twilio Inc Stock

Twilio Stock Information
Market Cap $16.2 billion
Beta 1.33
52-Week Change 213.8%
52-Week High $142.20
52-Week Low $41.43
Shares Outstanding 110.2 million
Float 101.4 million
50-Day Moving Average $128.42
200-Day Moving Average $103.15

(Source: “Twilio Inc. (TWLO),” Yahoo! Finance, last accessed May 2, 2019.)

Twilio stock has been bullish since the start of 2018, seriously outpacing the broader market.

Over the last 16 months, Twilio’s share price has soared 488%, and over the last 52 weeks, it has risen by more than 220%. In 2019, TWLO stock has advanced more than 62%. The company entered the year trading at $87.45, and on May 1, it hit a new 52-week high of $142.20.

Chart courtesy of StockCharts.com

First-Quarter Revenue Up 81%, Non-GAAP Profit of $0.05

On April 30, Twilio reported its financial results for the first quarter ended March 31, 2019.

First-quarter revenue came in at $233.1 million, an 81% increase from the first quarter of 2018 and a 14% increase sequentially. That revenue included sales from SendGrid (the acquisition was completed on February 1, 2019). (Source: “Twilio Reports First Quarter 2019 Results,” Twilio Inc, April 30, 2019.)

Twilio reported a net loss of $0.31 per share, compared to a net loss of $0.25 in the same prior-year period.

Non-generally accepted accounting principles (non-GAAP) income from operations in the first quarter was $3.4 million, compared to a Q1 2018 non-GAAP loss from operations of $4.7 million.

Non-GAAP net income per share was $0.05, compared to a non-GAAP net loss of $0.04 per share in the year-ago period.

Analysts were expecting Twilio to report first-quarter revenue of $22.8 million and non-GAAP earnings of $0.01 per share.

Twilio CEO Jeff Lawson said that a growing number of clients from around the world were behind the strong financial numbers and that the company’s acquisition of SendGrid should provide it with additional opportunities.

While that may be true, the company’s platform updates also helped spur the strong earnings growth.

At the end of the first quarter of 2019, Twilio had 154,797 active customer accounts, a 186% increase from the 53,985 accounts it had on March 31, 2018. Active customer accounts in the 2019 first quarter included the new accounts from SendGrid.

For the second quarter of 2019, Twilio expects to report revenue in the range of $262.0 to $265.0 million. At the midpoint, that would represent a 78% increase from the $147.8 million that the company reported in Q2 2018.

Twilio is also projecting second-quarter non-GAAP earnings of $0.02 to $0.03 per share. In the Q2 2018, Twilio reported non-GAAP earnings of $0.03 per share.

For now, Wall Street is looking for Twilio to report second-quarter revenue of $251.0 million and non-GAAP second-quarter earnings of $0.03 per share.

Analyst Take

Twilio Inc’s strong first-quarter results beat its revenue and profit targets. This was something that investors needed to see, especially after the company provided disappointing full-year 2019 guidance in February.

That month, Twilio projected full-year revenue between $1.06 and $1.07 billion, and non-GAAP net income between $0.08 and $0.11 per share. On April 30, the company increased its full-year revenue guidance to between $1.10 and $1.11 billion and increased its non-GAAP net income guidance to between $0.11 and $0.13 per share.

While Twilio stock is actually down on the heels of well-deserved investor profit-taking, that situation will likely be short-lived, with TWLO stock resuming its nascent rise to new levels.