Twilio Announces Q4 and Full Year Results

[FoolishJeff]

-Twilio up 12.5% after hours on strong revenue beat and improved guidance-

-Fourth Quarter Revenue of $548.1 million, up 65% Year-Over-Year
-Fourth Quarter Revenue Dollar-Based Net Expansion Rate of 139%
-Full Year Revenue of $1.76 billion, up 55% Year-Over-Year
-Full Year Revenue Dollar-Based Net Expansion Rate of 137%

“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."

Fourth Quarter 2020 Financial Highlights

Revenue of $548.1 million for the fourth quarter of 2020, up 65% year-over-year, including $23 million from Twilio Segment starting on November 2, 2020 (the date of acquisition). Political traffic also contributed $22.7 million to revenue.
GAAP loss from operations of $185.3 million for the fourth quarter of 2020, compared with GAAP loss from operations of $93.8 million for the fourth quarter of 2019.
Non-GAAP income from operations of $12.8 million for the fourth quarter of 2020 compared with non-GAAP loss from operations of $3.0 million for the fourth quarter of 2019.
GAAP net loss per share attributable to common stockholders, basic and diluted, of $1.13 based on 158.4 million weighted average shares outstanding in the fourth quarter of 2020, compared with GAAP net loss per share attributable to common stockholders, basic and diluted, of $0.66 based on 137.7 million weighted average shares outstanding in the fourth quarter of 2019.
Non-GAAP net income per share attributable to common stockholders, diluted, of $0.04 based on 173.1 million non-GAAP weighted average shares outstanding in the fourth quarter of 2020, compared with non-GAAP net income per share attributable to common stockholders, diluted, of $0.04 based on 147.3 million weighted average shares outstanding in the fourth quarter of 2019.
Full Year 2020 Financial Highlights

Revenue of $1.76 billion for the full year 2020, up 55% year-over-year, including $23 million from Twilio Segment starting on November 2, 2020 (the date of acquisition).
GAAP loss from operations of $492.9 million for the full year 2020, compared with GAAP loss from operations of $369.8 million for the full year 2019.
Non-GAAP income from operations of $35.7 million for the full year 2020 compared with non-GAAP loss from operations of $1.8 million for the full year 2019.
GAAP net loss per share attributable to common stockholders, basic and diluted, of $3.35 based on 146.7 million weighted average shares outstanding in full year 2020, compared with GAAP net loss per share attributable to common stockholders, basic and diluted, of $2.36 based on 130.1 million weighted average shares outstanding in the full year 2019.
Non-GAAP net income per share attributable to common stockholders, diluted, of $0.23 based on 157.6 million non-GAAP weighted average shares outstanding in the full year 2020, compared with non-GAAP net income per share attributable to common stockholders, diluted, of $0.16 based on 143.0 million weighted average shares outstanding in the full year 2019.
Key Metrics and Recent Business Highlights

More than 221,000 Active Customer Accounts as of December 31, 2020, compared to 179,000 Active Customer Accounts as of December 31, 2019. Active Customer Accounts as of December 31, 2020 include the contribution from Twilio Segment customer accounts.
Dollar-Based Net Expansion Rate was 139% for the fourth quarter of 2020, compared to 125% for the fourth quarter of 2019. Twilio Segment results do not impact the calculation of this metric in either period.
4,629 employees as of December 31, 2020.
Completed the acquisition of Segment, the market-leading customer data platform, accelerating Twilio’s journey to build the world’s leading customer engagement platform.
Welcomed Jeremiah Brazeau as Chief Technology Officer.
Welcomed former Governor of Massachusetts Deval Patrick to the Board of Directors.
Released Twilio’s first Impact Report, highlighting efforts in social impact and environmental, social and corporate governance areas.
Chief Legal Officer Transition

The Company also announced that Karyn Smith, who has served as Twilio’s Chief Legal Officer since September 2014, has informed the Company of her decision to leave. To ensure an orderly transition and continuity of operations, Smith will continue to serve as Chief Legal Officer until her successor is found and has moved into the role.

Outlook

Twilio is initiating guidance for the first quarter ending March 31, 2021. This guidance includes the revenue contribution from Twilio Segment.

Q1 FY21

Guidance

Revenue (millions)

$526 - $536

Y/Y Growth

44% - 47%

Non-GAAP loss from operations (millions)

($20) - ($15)

Non-GAAP loss per share

($0.12) - ($0.09)

Non-GAAP basic shares outstanding (millions)

166

[JAFbrblev]

This is by all means a blowout quarter. I had exited Twilio about a year ago when they were playing with their Revenue numbers post merger (comparing merged revenue to unmerged revenue). I didn’t like it.

I’ve been watching Twilio since then. Their business has no competition and is more and more prevalent. Their growth obviously accelerating. Their guidance raised, they’ve been beating the pants off quarter after quarter.

I swallowed my pride and invested some of my children’s Coverdell into Twilio following their report. I see green pasture and opportunities.

This is the highest market cap company I own clocking in tomorrow at around $70B by the opening bell.

That said, it’s growing revenues faster and guiding stronger than FSLY, who is valued much higher, and who’s position I sold to raise the capitol for this allocation.

To the future,

Just a Fool

[Diablito]

I agree, it was a great quarter. The comparables are still skewed a bit though, since they added some Segment revenue in the quarter. But I don’t mind that they are acquiring companies. I think both the SendGrid and Segment acquisitions are great fits for the company and show that Twilio has a clear vision to capture a very large market. Also, the way the deals were structured indicates that the acquired companies believe in that vision. I always liked Jeff Lawson a lot and I always thought that management didn’t try to mislead investors with revenue growth (I still believe that to be true; actually in this quarter’s earnings presentation they added a slide disclosing the adjusted revenue growth; they even disclosed and excluded political fees because of the election!!). I also liked the CC and thought that management sounded extremely upbeat. This is a nice tidbit: “In fact, in 2020, the number of transactions with Global 2000 customers was up 76% over the last year and the number of seven-figure yields overall was up 93% from 2019.” (I think there was an error in the transcript and they meant “deals” not “yields”) I especially like this success in large customers as I remember that Twilio struggled a bit in the beginning with larger customers as their nature was to get viral from the developer-level up.

[gmcnatt]

Worth pointing out that excluding the Segment acquisition and one-time “political traffic” YOY revenue growth was 52%, which is more in-line with next quarter’s guidance of 47% at the high-end

All in all, Q4 capped off a phenomenal year for the company especially given their now nearly $2 billion dollar revenue run rate

[RedeemStream]

After reviewing these Q4 numbers, I decided to take a 4% portfolio position with TWLO and I may decide to add more in the coming weeks. This quarter is exceptional and the guidance they gave (which you have to assume is somewhat sandbagged) means that they will most likely be a 50% grower minimum over the coming year, as well as having cash on hand ($1.2B offering) to further add to their market strength.

I feel like these posts really lack impact unless you state what you sold to start these positions, and, in my case, I decided to sell out of Docusign and move that allocation over to TWLO.

Let’s do some number comparisons…

Revenue Growth
- DOCU: 53% YoY (39% to 45% to 53%)
- TWLO: 65%* YoY (46% to 52% to 52%*)
*Segment acquisition & political traffic not included but a little disingenuous not to include

Adjusted Gross Margin (Non-Gaap)
- DOCU: 79%
- TWLO: 56%

Adjusted Operating Income
- DOCU: 188% YoY
- TWLO: 232% YoY

Net Expansion Rate
- DOCU: 122%
- TWLO: 137%
*I didn't verify if this is an apple-to-apple comparison, I will follow up with another message if these are calculated differently.

Non-GAAP Net Income per diluted share
- DOCU: $0.22
- TWLO: $0.23

Top of Revenue Guidance
- DOCU: 45.1% YoY
- TWLO: 47% YoY

In a vacuum, both of these companies have favorable numbers and I believe they both are going to be great companies going forward. At the end of the day, I have more faith in Twilio’s key products continuing to maintain growth and adding acquisitions that keep their high growth moving forward. I have less faith in Docusign’s CLM platform moving the needle enough to maintain their growth moving forward. I must admit I have an inherent bias as my spouse works for a competitor to Twilio, and I see the amount of runway that these sort of companies have. I believe the use cases are more abundant with API/Data compared to esignature. I hope both of these companies and their stockholders the best moving forward, but I believe Twilio has more runway even though it has a bigger market cap currently.

-Redeemed
Long TWLO 4.1%

[dawsdaws]

@Redeemed: I was contemplating the same action with the blowout quarter reported but the thing that stopped me was the Q1 outlook that guided -3% sequential QoQ growth. I realize there was $22.7M “politcal traffic” revenue that will not be seen in Q1. But never before have we seen any seasonality to this business that I’m aware of. For Q1 2020, the sequential growth was 10% and in Q1 2019 the sequential growth was 14%.

Is this just a case of sandbagging? Or do they really expect revenue growth to effectively stop in Q1?

Daws (long DOCU, contemplating TWLO)

[nilvest]

But never before have we seen any seasonality to this business that I’m aware of.

TWLO has high seasonality historically… if you go back to 22018 and 2016, they had large benefit from political spending…
in 2020, they earned a lot more business from seasonal consumer economy - i.e. retailers and restaurants for curb side pick up etc. which should at-least sustain seasonal pattern, even though they have broaden their base a lot.