We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Twilio (TWLO) Q4 Loss Narrower than Expected; Guides Well
Read MoreHide Full Article
Twilio Inc. (TWLO - Free Report) ended 2016 on a strong note as evident from the better-than-expected results for the fourth quarter. The company’s top and bottom line not only fared better than the Zacks Consensus Estimate but also recorded a solid year-over-year improvement.
Although the company reported adjusted loss (including one-time expenses and income but excluding stock based compensation) of 10 cents per share, it was narrower than the Zacks Consensus Estimate of a loss of 12 cents. Furthermore, on a non-GAAP basis, the company achieved breakeven, which not only compared favorably with the year-ago quarter’s loss of 7 cents but also its own guided range of a loss of 5 cents to 6 cents.
The year-over-year improvement in the bottom line was mainly driven by strong top-line growth, which was partially offset by increased operating expenses as well as higher share count.
The company’s fourth quarter revenues surged 59.6% year over year to $82 million and surpassed the Zacks Consensus Estimate of $73.9 million. Also, it came ahead of the previously guided range of $72.5 million to $74.5 million.
The robust top-line performance was mainly driven by seasonal contribution from elections in the United States and Brazil as well as strong year-over-year growth in active customer account. During the quarter, the company registered a 44% rise in active customer account, adding over 2,000 new active customer accounts, bringing the total count to 36,606 as of Dec 31, 2016.
Adjusted gross profit increased 66.2% year over year to $48.2 million while margin improved 240 basis points (bps) to 58.8%. Per Twilio “a favorable mix of usage in higher-margin geographies internationally, ongoing efficiency gains, and some end-of-year refunds and accrual reversals” positively impacted gross margin.
Adjusted operating expenses were up 53% year over year to $56.7 million. However, as a percentage of revenues, it declined 300 bps to 69.1%.
Further, the company’s operating loss increased 5.4% year over year to $8.5 million. However, as a percentage of revenues it declined to -10.4% from -15.7% reported in the year-ago quarter. Improved margin was the result of increased gross margin and lower operating expenses as a percentage of revenues.
The company exited 2016 with cash and cash equivalents of $305.7 million, up from $252.2 million in the previous quarter end. Moreover, during the year, the company generating operating cash flow of $10.1 million.
Guidance
The company provided outlook for the first quarter and full year 2017. For the first quarter, Twilio expects revenues to come between $82 million and $84 million (mid-point $83 million). This is significantly higher than the Zacks Consensus Estimate of $79.23 million. Base revenue is anticipated to be in a range of $78 million to $79 million. Non-GAAP operating loss is projected to come in a range of 6 cents to 7 cents per share.
For 2017, Twilio expects revenues to come between $364 million and $372 million (mid-point $368 million). This is significantly higher than the Zacks Consensus Estimate of $350.28 million. Base revenue is anticipated to be in a range of $351 million to $355 million. Non-GAAP operating loss is projected to come in a range of 15 cents to 19 cents per share.
Our Take
San Francisco, CA-based Twilio offers cloud-based software that helps developers make and receive phone calls, text messages and video chats. The company’s fourth quarter results were better than expected. The company also registered year-over-year improvement on both counts. Furthermore, it provided an optimistic guidance for the first quarter and full year 2017.
The company boasts a strong clientele that includes the likes of Netflix (NFLX - Free Report) , salesforce.com (CRM - Free Report) and Twitter among others. Furthermore, the long-standing relationship with Amazon (AMZN - Free Report) is particularly noticeable. Twilio uses Amazon Web Service (AWS) to host its platform. Moreover, Amazon had invested during Twilio’s Series E round funding in 2015.
The partnership with Amazon will provide the company exposure to the e-commerce giant’s massive customer base. Per the recently extended partnership, Twilio will now provide voice notifications in addition to SMS messages through the Amazon Simple Notification Service (SNS).
Despite a healthy customer base and strong relationship with Amazon, we believe registering growth in 2017 will be hard. Intensifying competition in the communications market and growing prevalence of in-app push notifications are major concerns. Moreover, customer concentration (more than 10% revenues come from WhatsApp) is a headwind.
Notably, the stock has outperformed the Zacks categorized Internet Software industry in the YTD period. Twilio has gained 9.2% in the said period compared with the industry’s return of just 3.5%.
Just Released – Driverless Cars: Your Roadmap to Mega-Profits Today
In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report predicting the 7 stocks that will soar highest in the coming month.
Image: Bigstock
Twilio (TWLO) Q4 Loss Narrower than Expected; Guides Well
Twilio Inc. (TWLO - Free Report) ended 2016 on a strong note as evident from the better-than-expected results for the fourth quarter. The company’s top and bottom line not only fared better than the Zacks Consensus Estimate but also recorded a solid year-over-year improvement.
Although the company reported adjusted loss (including one-time expenses and income but excluding stock based compensation) of 10 cents per share, it was narrower than the Zacks Consensus Estimate of a loss of 12 cents. Furthermore, on a non-GAAP basis, the company achieved breakeven, which not only compared favorably with the year-ago quarter’s loss of 7 cents but also its own guided range of a loss of 5 cents to 6 cents.
The year-over-year improvement in the bottom line was mainly driven by strong top-line growth, which was partially offset by increased operating expenses as well as higher share count.
Twilio Inc. Price, Consensus and EPS Surprise
Twilio Inc. Price, Consensus and EPS Surprise | Twilio Inc. Quote
Quarter in Detail
The company’s fourth quarter revenues surged 59.6% year over year to $82 million and surpassed the Zacks Consensus Estimate of $73.9 million. Also, it came ahead of the previously guided range of $72.5 million to $74.5 million.
The robust top-line performance was mainly driven by seasonal contribution from elections in the United States and Brazil as well as strong year-over-year growth in active customer account. During the quarter, the company registered a 44% rise in active customer account, adding over 2,000 new active customer accounts, bringing the total count to 36,606 as of Dec 31, 2016.
Adjusted gross profit increased 66.2% year over year to $48.2 million while margin improved 240 basis points (bps) to 58.8%. Per Twilio “a favorable mix of usage in higher-margin geographies internationally, ongoing efficiency gains, and some end-of-year refunds and accrual reversals” positively impacted gross margin.
Adjusted operating expenses were up 53% year over year to $56.7 million. However, as a percentage of revenues, it declined 300 bps to 69.1%.
Further, the company’s operating loss increased 5.4% year over year to $8.5 million. However, as a percentage of revenues it declined to -10.4% from -15.7% reported in the year-ago quarter. Improved margin was the result of increased gross margin and lower operating expenses as a percentage of revenues.
The company exited 2016 with cash and cash equivalents of $305.7 million, up from $252.2 million in the previous quarter end. Moreover, during the year, the company generating operating cash flow of $10.1 million.
Guidance
The company provided outlook for the first quarter and full year 2017. For the first quarter, Twilio expects revenues to come between $82 million and $84 million (mid-point $83 million). This is significantly higher than the Zacks Consensus Estimate of $79.23 million. Base revenue is anticipated to be in a range of $78 million to $79 million. Non-GAAP operating loss is projected to come in a range of 6 cents to 7 cents per share.
For 2017, Twilio expects revenues to come between $364 million and $372 million (mid-point $368 million). This is significantly higher than the Zacks Consensus Estimate of $350.28 million. Base revenue is anticipated to be in a range of $351 million to $355 million. Non-GAAP operating loss is projected to come in a range of 15 cents to 19 cents per share.
Our Take
San Francisco, CA-based Twilio offers cloud-based software that helps developers make and receive phone calls, text messages and video chats. The company’s fourth quarter results were better than expected. The company also registered year-over-year improvement on both counts. Furthermore, it provided an optimistic guidance for the first quarter and full year 2017.
The company boasts a strong clientele that includes the likes of Netflix (NFLX - Free Report) , salesforce.com (CRM - Free Report) and Twitter among others. Furthermore, the long-standing relationship with Amazon (AMZN - Free Report) is particularly noticeable. Twilio uses Amazon Web Service (AWS) to host its platform. Moreover, Amazon had invested during Twilio’s Series E round funding in 2015.
The partnership with Amazon will provide the company exposure to the e-commerce giant’s massive customer base. Per the recently extended partnership, Twilio will now provide voice notifications in addition to SMS messages through the Amazon Simple Notification Service (SNS).
Despite a healthy customer base and strong relationship with Amazon, we believe registering growth in 2017 will be hard. Intensifying competition in the communications market and growing prevalence of in-app push notifications are major concerns. Moreover, customer concentration (more than 10% revenues come from WhatsApp) is a headwind.
Currently, Twilio carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, the stock has outperformed the Zacks categorized Internet Software industry in the YTD period. Twilio has gained 9.2% in the said period compared with the industry’s return of just 3.5%.
Just Released – Driverless Cars: Your Roadmap to Mega-Profits Today
In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>