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Twilio Inc. (TWLO) Down 10.1% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Twilio Inc. (TWLO - Free Report) . Shares have lost about 10.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Twilio Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Twillio Reports Q4 Results
Twilio reported fourth-quarter 2019 non-GAAP earnings of 4 cents per share, which topped the Zacks Consensus Estimate of a penny and was in line with the year-ago figure.
Meanwhile, the company’s fourth-quarter revenues soared 62% year over year to $331.2 million and also surpassed the Zacks Consensus Estimate of $315 million, driven by increase in clientele and the Sendgrid buyout. Growing adoption of Twilio Flex is also a tailwind.
Quarterly Details
The company’s base revenues jumped 65% year over year to $306.6 million.
Organic base revenues of $253 million soared 36% year over year. SendGrid revenues of $54 million grew 30% year over year.
Twilio’s top 10 active customer accounts contributed to 14% of its total revenues, down from 20% in the year-ago period but up from 13% sequentially. WhatsApp represented approximately 6% of revenues in the quarter.
The company’s dollar-based net expansion rate was 124% in the reported quarter, down from 147% in the prior-year period.
The company’s active customer accounts increased to 179,000 as of Dec 31, 2019 from 64,286 on Dec 31, 2018. In the fourth quarter, Twilio added 6,908 active customer accounts.
During the quarter, PayPal, which has more than 300 million customers, selected Twilio as its SMS delivery platform. The company also entered into new deals as well as expanded relations with many other customers.
Operating Results
Non-GAAP gross profit skyrocketed approximately 71.5% year over year to $189.1 million. Further, gross margin expanded 300 basis points (bps) to 57%. However, it was down sequentially due to some increased international usage, customer, product and country mix, carrier fees, FX and others.
Non-GAAP research and development as a percentage of revenues expanded 500 bps to 23%.
The company reported non-GAAP operating loss of $3.01 million against operating income of $2.37 million in the prior-year quarter.
Balance Sheet
The company exited the reported quarter with cash and cash equivalents plus short-term marketable securities of $1.85 billion, down from $1.88 billion sequentially.
As of Dec 31, 2019, the company generated $14.05 million of cash from operational activities.
Outlook
Twilio is looking forward to expand its enterprise and international reach and continue to build out partner ecosystem. As a result, the company is stepping up investments in its systems and infrastructure, go-to-market team and Flex, as well as in R&D, which is likely to remain an overhang on profitability in the near term.
Although the Verizon A2P program went live, the company’s guidance does not include any revenue benefit or margin impact from A2P fees.
For 2020, Twilio expects revenues in the range of $1.475-$1.479 billion, indicating growth of 30-31% driven by strength in core products and constant development of newer products like email and Flex.
The company projects non-GAAP loss per share in the band of 20-14 cents.
For 2020, the company expects gross margins to continue to be in the mid-to-high 50s.
For the first quarter of 2020, Twilio anticipates revenues between $335 million and $338 million.
Moreover, the company forecasts non-GAAP loss per share to be 11-9 cents.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -50.6% due to these changes.
VGM Scores
Currently, Twilio Inc. has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Twilio Inc. has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Twilio Inc. (TWLO) Down 10.1% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Twilio Inc. (TWLO - Free Report) . Shares have lost about 10.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Twilio Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Twillio Reports Q4 Results
Twilio reported fourth-quarter 2019 non-GAAP earnings of 4 cents per share, which topped the Zacks Consensus Estimate of a penny and was in line with the year-ago figure.
Meanwhile, the company’s fourth-quarter revenues soared 62% year over year to $331.2 million and also surpassed the Zacks Consensus Estimate of $315 million, driven by increase in clientele and the Sendgrid buyout. Growing adoption of Twilio Flex is also a tailwind.
Quarterly Details
The company’s base revenues jumped 65% year over year to $306.6 million.
Organic base revenues of $253 million soared 36% year over year. SendGrid revenues of $54 million grew 30% year over year.
Twilio’s top 10 active customer accounts contributed to 14% of its total revenues, down from 20% in the year-ago period but up from 13% sequentially. WhatsApp represented approximately 6% of revenues in the quarter.
The company’s dollar-based net expansion rate was 124% in the reported quarter, down from 147% in the prior-year period.
The company’s active customer accounts increased to 179,000 as of Dec 31, 2019 from 64,286 on Dec 31, 2018. In the fourth quarter, Twilio added 6,908 active customer accounts.
During the quarter, PayPal, which has more than 300 million customers, selected Twilio as its SMS delivery platform. The company also entered into new deals as well as expanded relations with many other customers.
Operating Results
Non-GAAP gross profit skyrocketed approximately 71.5% year over year to $189.1 million. Further, gross margin expanded 300 basis points (bps) to 57%. However, it was down sequentially due to some increased international usage, customer, product and country mix, carrier fees, FX and others.
Non-GAAP research and development as a percentage of revenues expanded 500 bps to 23%.
The company reported non-GAAP operating loss of $3.01 million against operating income of $2.37 million in the prior-year quarter.
Balance Sheet
The company exited the reported quarter with cash and cash equivalents plus short-term marketable securities of $1.85 billion, down from $1.88 billion sequentially.
As of Dec 31, 2019, the company generated $14.05 million of cash from operational activities.
Outlook
Twilio is looking forward to expand its enterprise and international reach and continue to build out partner ecosystem. As a result, the company is stepping up investments in its systems and infrastructure, go-to-market team and Flex, as well as in R&D, which is likely to remain an overhang on profitability in the near term.
Although the Verizon A2P program went live, the company’s guidance does not include any revenue benefit or margin impact from A2P fees.
For 2020, Twilio expects revenues in the range of $1.475-$1.479 billion, indicating growth of 30-31% driven by strength in core products and constant development of newer products like email and Flex.
The company projects non-GAAP loss per share in the band of 20-14 cents.
For 2020, the company expects gross margins to continue to be in the mid-to-high 50s.
For the first quarter of 2020, Twilio anticipates revenues between $335 million and $338 million.
Moreover, the company forecasts non-GAAP loss per share to be 11-9 cents.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -50.6% due to these changes.
VGM Scores
Currently, Twilio Inc. has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Twilio Inc. has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.