Twilio Announces First Quarter Results

Investment Analysis Clubs Saul’s Investing Discussions
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Twilio down ~5% after hours despite posting a strong beat for the Quarter.

Twilio’s second-quarter forecast predicted adjusted losses beyond analysts’ expectations. For Q2, Twilio forecasted adjusted losses of 13-16 cents a share on sales of $591-$601 million. Analysts on average were expecting adjusted losses of 4 cents a share on sales of $579 million in the second quarter, according to FactSet.

CFO Shipchandler explained in the Prepared Remarks:

“With regards to our operating loss guidance for the second quarter, as we have
previously discussed, some of the investments we planned on making last year did not
materialize as we had originally forecast due to COVID. Those investments are largely
centered on enterprise sales, Flex and new growth products, plus core systems and
infrastructure. As of the end of Q1, we have largely caught up on the hiring related to
these investments, which will generate losses in the short term while allowing us to
grow at elevated levels, and sets us up well to scale in the long term.”

First Quarter 2021 Financial Highlights

-Revenue of $590.0 million for the first quarter of 2021, up 62% year-over-year, including $44.6 million from Twilio Segment.

-GAAP loss from operations of $197.3 million for the first quarter of 2021, compared with GAAP loss from operations of $92.7 million for the first quarter of 2020.

-Non-GAAP income from operations of $17.3 million for the first quarter of 2021 compared with non-GAAP income from operations of $6.1 million for the first quarter of 2020.

-First Quarter Revenue Dollar-Based Net Expansion Rate of 133%

Outlook

-Revenue Growth of 47%-50% on $591-$601 million in Revenue
-Guidance includes the revenue contribution from Twilio Segment

Non-GAAP loss from operations of ($27) million to ($22) million
• Non-GAAP loss per share of ($0.16) - ($0.13)

Press Release:

https://investors.twilio.com/news/news-details/2021/Twilio-A…

Earnings Presentation:

https://s21.q4cdn.com/963721274/files/doc_financials/2021/q1…

Prepared Remarks:

https://s21.q4cdn.com/963721274/files/doc_financials/2021/q1…

Earnings Webcast:

https://event.on24.com/eventRegistration/EventLobbyServlet?t…

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Twilio had another extremely strong quarter.

Revenue came in at $590 million, up 62% YoY, and beat the consensus estimate by $57M (!)

They raised guidance for next quarter to $596 million, which is $23M more than consensus.

I think the guidance is conservative, and they are on track to generate $2.5 billion in sales next 12 months (NTM).

At today’s market cap of $57B, they are trading at 22x NTM revenues, which is reasonable for a company compounding revenues at 50%+ annually. They have a Net Dollar Based Expansion Rate of 133%.

I work in this industry, and I believe one of the fastest growing assets inside Twilio has got to be their Segment.io division, which they acquired last November. Segment is actually a customer data platform, and its customers include IBM, Intuit and Atlassian. Segment adds a completely new product category to Twilio’s lineup, and expands their TAM by additional billions. Very smart acquisition on their part.

I see no reason to sell any of my TWLO shares, which I’ve been holding since 1Q 2018 (up 700% since then).

Cheers,
Ron

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I know there is sensitivity on this board to Twilio reporting revenue growth but omitting to mention organic revenue growth. They mentioned how much Segment.io contributed to revenue. By my calculation, organic revenue growth was slightly under 50%. Which ain’t bad.

Fool on!
Thanks and best wishes,
TMFDatabaseBob (long: TWLO)
Advanced Research Fool (formerly known as Maintenance Coverage Fool)
See what a “Coverage Fool” does here: http://www.fool.com/community/community-team.aspx
See my holdings here: http://my.fool.com/profile/TMFDatabasebob/info.aspx
Peace on Earth

Please note: I am not a member of any newsletter team. My opinions are my own and do not necessarily reflect those of the TMF advisers. I am not an investment professional, merely an investor.

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Figured you could use a laugh after this Twilio sell-off. Here’s a excerpt from Marketwatch summarizing Twilio’s quarter (Article Here: https://www.msn.com/en-us/money/topstocks/twilio-earnings-ar…:slight_smile:

The pandemic-fueled growth has apparently made it difficult for Twilio to forecast its own performance. In the four quarters of the 2020 year, Twilio outperformed the top end of its sales guidance by 8%, 8.4%, 9.4% and 20.4%, respectively. In all four quarters, it guided for adjusted losses and posted adjusted earnings

Clueless…

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I know there is sensitivity on this board to Twilio reporting revenue growth but omitting to mention organic revenue growth. They mentioned how much Segment.io contributed to revenue. By my calculation, organic revenue growth was slightly under 50%.

I got a similar number at 49.5%. Management followed up in the prepared remarks by specifically stating 49% organic. They also stated they will break out the new pass through A2P carrier fees in future quarters.

As someone who exited TWLO during that “vague” stage, I view them as being much more transparent this time around. I liked both the quarter and the comments. It sounds like the Segment acquisition could really pay off.

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I am cross posting from TWLO board.

SA:More Air Is Coming Out Of This Balloon

SA article on TWLO
https://seekingalpha.com/article/4425014-twilio-air-is-comin…

Key takeaways
The best strategy for Twilio remains a watch-and-wait approach. Twilio is a nose-bleedingly expensive software stock that is in the midst of a much-needed correction.

Twilio’s valuation suggests it could fall still further. At current share prices near $335, Twilio trades at a market cap of $57.49 billion. Meanwhile, for the current fiscal year, Wall Street analysts are expecting $2.43 billion in revenue (+38% y/y), and for FY22, consensus is landing at $3.20 billion, or +32% y/y growth.

This puts Twilio’s valuation multiples at:

21.8x EV/FY21 revenue
16.5x EV/FY22 revenue

These EV/Revenue multiples look very reasonable to me for a company whose revenues are growing 60+%. Even assuming a reasonable falloff to 50% revenue growth, these multiples are really not a concern to me.

Twilio’s net expansion rate fell to 133% in the quarter, down from 139% in the prior quarter and 135% on an organic basis in the year-ago Q1. This is, in fact, the lowest net expansion rate in six quarters.

Gosh this is still near the pre-Covid 135% DBNER

Another metric that disappointed was Twilio’s margin profile. Pro forma gross margins fell two points in the quarter to 55%, down from 57% in the year-ago Q1:

Margins are something to really watch closely, but I cannot get concerned with a 2 point drop from last year.

So as much as I argue with the key arguments in this article, the author has guessed the price drop correctly. Today we are at $307 after what I would call a very good Q1 report. We have fallen from $398 a week ago. So what was the guidance? Well that was pretty normal as well. Guidance has always been conservative at TWLO. For example Q1 2021 guidance last quarter was for 44-47% revenue growth. And they hit 62%. Beating as usual.

TWLO Q2 2021 Guidance

  • Total Revenue $591-601 47-50% growth YOY
  • non GAAP loss ($27-22M)

So I am holding and still love TWLO even if Mr. Market does not. shhhhh That is the sound of me sliding away and sulking.

-zane

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