Twilio (TWLO) Gains on Surprise Q4 Profit, Revenue Beat; Cowen Says 'Best Days are Yet to Come'

February 18, 2021 7:23 AM EST
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Price: $385.24 -1.19%

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Shares of Twilio (NYSE: TWLO) are up about 10% in pre-open Thursday after the company reported it made a profit in the fourth quarter.

Twillio said it earned $0.04 per share in Q4 while the Street consensus was a loss of $0.08 per share. Surprising results came after the company generated as much as $548.1 million in revenues, easily topping the $454.8 million expected from the market analysts.

Revenue soared 65% to further accelerate the company’s growth trend (+52% in the prior quarter). Higher revenue comes from a growing number of active accounts, up from 208,000 to 221,000.

“Twilio's 65% year-over-year total revenue growth in the fourth quarter continued the strength and momentum we saw throughout an outstanding year of results in which we delivered $1.76 billion in revenue,” said Jeff Lawson, Twilio’s Co-Founder and CEO.

“These results reinforced that we are addressing a generational opportunity, and with our acquisition of Segment and strong traction with Flex, we are building the leading customer engagement platform to improve every interaction that businesses have with their customers."

CEO Lawson said that the pandemic has accelerated the digital shift while he doesn’t expect these new trends to go away anytime soon.

“The pandemic accelerated change overnight. Health care had to accelerate the adoption of telemedicine and e-commerce companies accelerated their e-commerce plans. Companies that hired more developers and upped their digital game during the pandemic are not going back,” he said during a call with analysts.

As for the first-quarter guidance, Twilio expects to record an adjusted loss of $0.12 per share to $0.09 per share on sales ranging between $526 million and $536 million in revenue in the first quarter. On the other hand, surveyed analysts expected an adjusted loss of $0.02 per share on sales of $492.1 million.

Cowen analyst Derrick Wood was evidently impressed by Twilio’s performance in Q4 but adds the best is yet to come. He raised the price target to $540.00 per share from the old $440.00 and maintained his “top pick” call for TWLO.

“The pandemic has unleashed a whole set of new opps for TWLO, incl. in healthcare, e- commerce, education, fin serv & more, and we see TWLO just scratching the surface. All of this evidenced by TWLO's remarkable 139% DBNE & strong new customer generation, and we see substantial upside momentum continuing. We think the acq of Segment super-charges TWLO's capabilities & is bound to make it a more strategic platform, w/ initial traction off to a great start. We believe TWLO is building the foundation to become a much larger platform in the IT stack w/ a unique position to transform B2C omni-channel customer engagements,” the analyst wrote in a research note sent to clients.

Miziho’s Siti Panigrahi also hiked the price objective to $475.00 per share (up from $400.00).

“We continue to believe the company is a significant beneficiary of digitization post-COVID-19, and the result further validates our belief it has hit an inflection point. Longer-term, we view Twilio as a durable growth story in software, benefiting from several secular tailwinds, including proliferation of the API economy, modern customer experience, adoption of multichannel communication and cloud contact centers, and a work- from-anywhere model. With a differentiated technology, a growing breadth of products, a large TAM, and robust growth, TWLO remains an attractive growth story in our view,” Panigrahi said in today’s note.

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