Twilio (TWLO) Q3 Results Has Bulls Riled Up Despite Flat Stock Action, One Analyst Sees Revenues Heading to $5B by 2024
Shares of Twilio (NYSE: TWLO) are flat in pre-open after the company announced better-than-expected revenue and earnings figures for the third quarter.
Twilio posted a loss of $116.9 million, or $0.79 a share. In the same period last year, Twillio recorded a loss of $87.7 million, or $0.79 cents a share. On an adjusted basis, the company posted an adjusted profit of $0.04 per share, which beat the consensus of a $0.03 per share loss.
Revenue soared 52% to $447.9 million from $295.1 million a year ago. The Street expected revenue of $409.8 million.
“Great digital engagement is becoming more critical to differentiate the customer experience, and companies across industries and around the world are choosing Twilio's customer engagement platform to build these solutions,” said Jeff Lawson, Twilio’s co-founder and CEO.
“Our performance in the third quarter is further evidence that Twilio's platform provides three things that every company needs today — digital communications, software agility, and cloud scale.”
Going forward, Twilio said they will no longer break out WhatsApp, which contributed approximately 6% of the firm’s revenue in the quarter, as a percentage of revenue.
"We continue to have a great relationship with WhatsApp," CFO Khozema Shipchandler said. "However, as our business has scaled, coupled with the strong revenue diversification we discussed at our Investor Day, disclosing the contribution from a single customer is less meaningful."
BofA Securities' Nikolay Beliov, who rates TWLO as ‘Buy’, believes the company is heading towards generating over $5 billion in revenues in 2024.
“30%+ revenue growth in each of the next four years implies $5bn+ in revenues in 2024E," the analyst commented. "We believe this target is realistic and achievable based on: 1) $5bn+ in 2024E revenues implies just 5% market share in about a $100bn market; 2) TWLO’s business is diversified across all verticals and customer sizes; 3) verticals with nascent DX strategies such as healthcare, represent long-term levers; 4) Twilio is in less than 20% of the Global 2000; 5) from a product perspective, the business will be increasingly diversified going forward with voice at just 17% of revenues; 6) the messaging business is reaccelerating to 59% y/y vs 49% last year; 7) application services at 12% of revenues vs 9% in 2017 are growing faster than the core with video up about 600%, messaging software 208%, and engagement cloud 94%; 8) customers are spending more with Twilio: seven $10mn customers vs two in 2017, 15 $5mn vs three, 142 $1mn vs 48,” Beliov wrote in today’s note.
Beliov raised the price objective to $370.00 per share from prior $335.00.
Elsewhere, Morgan Stanley’s Meta Marshall also maintained the “Overweight” rating on TWLO and maintained the price target of $340.00.
“Coming out of TWLO's Analyst Day, we remained further encouraged on our OW thesis, which remains centered around the company's pole position within the growing digital customer engagement market. This positions the company to provide one of the most attractive growth opportunities in our coverage, especially given the company's track record of continuing to innovate on its platform.
“With management noting challenged industries in travel/ridesharing/hospitality beginning to see green shoots in recovery alongside a growing tailwind of other digital transformation initiatives, we believe catalysts remain in place to drive the stock towards our base case in the near term,” Marshall said in today’s note.