Twilio Delivers More Blockbuster Earnings, Rises 3%


Aug. 1 2019, Published 3:56 p.m. ET

Cloud communications company Twilio (TWLO) announced its second-quarter earnings results on July 31 after the closing bell. The company continued to beat estimates and grow its business at a scorching pace. Twilio generated revenue of $275.0 million in the quarter, a remarkable rise of 86.1% YoY (year-over-year). The company blew past Wall Street’s expectation of $264 million.

The company’s revenue growth keeps accelerating. It’s now accelerated YoY in every quarter for over two years. This growth has been the biggest driver of its stock, which rose 3.2% in the first couple hours of trading today. The stock has risen an astonishing 480% in the last 18 months.

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Twilio reported a non-GAAP profit

The company also posted its fifth-straight net profit on a non-GAAP (generally accepted accounting principles) basis. The company made $4.8 million in net income, a rise of 69.8% YoY.

On an adjusted basis, Twilio reported EPS of $0.03, beating analysts’ estimate of $0.02. The company has now exceeded Wall Street’s EPS expectations three times in the last four quarters.

Twilio continues to see stellar growth in its client base

The communications software maker continues to see robust growth in its number of active user accounts. At the end of the second quarter of 2019, Twilio had 161,869 active customer accounts—a stellar 182% rise from the 57,350 accounts it had in the same quarter last year.

The company’s acquisition of SendGrid helped propel not only its revenue but also its number of active customer accounts. The second quarter was its first full quarter following the acquisition.

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Meanwhile, the company said that its top ten active customer accounts had contributed 13% of its total revenue in the second quarter, a slight decline from 14% in the first quarter and 17% in the second quarter of 2018. The decline was a sign of Twilio’s reducing its dependence on its main clients and increasing its client base.

Twilio continues to garner more revenue from clients

Twilio’s dollar-based net expansion rate is a metric that measures revenue growth from its active customer accounts but excludes the effects of active customer account growth. The metric is a gauge of the company’s bargaining power with its customers.

The company’s dollar-based net expansion rate was 140%, meaning that its revenue from its active customer accounts rose 40% in the second quarter compared to the same quarter last year. That number was slightly lower than 146% in the first quarter.

Twilio provided third-quarter EPS guidance of $0.02 on revenue of $289 million. This guidance was better than Wall Street’s expectation of EPS of $0.01 on revenue of $285.6 million.

The company is well on its way toward reaching revenue of $1 billion for the year. Its tremendous growth acceleration, however, has caused its stock to appear very expensive. It’s currently trading at over 12.8x its 2020 expected revenue.


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