Twilio question?
I took a small position in Twilio as I thought their June quarter report looked very good, but after closing at $33.58 after earnings, it has gone nowhere at all, while all the rest of my tech stocks are going up, and is now back at $29.25.
Does anyone have an idea what the Bear story on this company is, aside from the worry that other companies will take the process inhouse, the way Uber partially did, but no-one else has as far as I know?
Thanks
Saul
I took a small position in Twilio as I thought their June quarter report looked very good, but after closing at $33.58 after earnings, it has gone nowhere at all, while all the rest of my tech stocks are going up, and is now back at $29.25.
Does anyone have an idea what the Bear story on this company is, aside from the worry that other companies will take the process inhouse, the way Uber partially did, but no-one else has as far as I know?
Saul,
TWLO lost less Uber business than expected last quarter. They will lose a lot of Uber business in the back half of the year. I think in a few quarters that TWLO’s business from Uber will grow again (but from a lower base). I think it’s a mistake to focus Uber because ex-Uber TWLO is growing very fast and TWLO is adding customers at a rapid clip. Uber will be a smaller and smaller part of the pie with each quarter that passes.
Chris
Chris said: TWLO lost less Uber business than expected last quarter. They will lose a lot of Uber business in the back half of the year.
A little more detail on that, from the CC. I think the first part (in bold) is the key to what everyone’s worried about.
Embedded in our third quarter guidance is a full quarter of impact of these changes. This will translate into a larger sequential decline in revenue from Uber in Q3 than what occurred in the second quarter.
We currently forecast a more modest sequential decline in the fourth quarter. This revenue forecast is consistent with our prior expectations and guidance. We expect that Uber will remain a significant customer for us going forward as we partner with them to support their needs globally for both existing and new initiatives.
But they also said: Uber accounted for 9% of total revenue in the second quarter
NINE. Maybe I’m being too cavalier, but I don’t really give a $%#@ what happens to 9% of revenue. Not when they’re growing the other 91% at a 60%+ clip.
Bear
PS And to answer your original question, Saul, I do think it mainly this issue keeping people out. Obviously they’re not just concerned about the 9% of revenue, but are worried about what the deeper implications are for competition and Twilio’s margins, etc. I just think these concerns are overplayed and Twilio’s 65% base revenue growth is being drastically underplayed.
Thanks Bear and Chris for your answers. I also suggest to anyone interested in Twilio to read the deep dive I just linked to: http://discussion.fool.com/twilio-my-question-answered-32823960…
Saul
Saul,
Perhaps the problem is that 40% of the stock is short?
https://finance.yahoo.com/news/sorry-twilio-inc-twlo-stock-1…
Regards,
Jay
Sorry, I don’t know how to make the link a link. You will have to copy and paste for now.
Interesting discussion, I do have to ask the question though. If they are growing 91% of the company at a 60% rate, then even if the 9% disappeared in one quarter, the overall revenue would grow.
I.e. The next quarters revenue would be .91 x (.60/4) = .136 or 13.6% growth. So even with the 9% loss the revenue would be going up. And the next quarter all of the uber revenue is gone so growth should be 13% sequentially again.
I’ll have to look a little deeper…
Randy
No position yet…
Randy, try this:
They currently have $100 in revenue.
$91 of that is not from Uber.
It grows at 60%.
160% of $91.00 = $145.60 (so that $91.00 grows to $145.60)
The $9.00 in revenue from Uber goes to $0.
New revenue is $145.60, up from $100.00 a year ago
Rate of Growth, with zero from Uber, becomes 45.6% for one year,
And then if they are still growing at 60%, the growth rate becomes … 60%!
How’s that? Make sense?
Saul
Totally. That was my point. I thought Earlier posts were saying revenue was not growing sequentially due to Uber. Maybe I misread…
Randy
No position as of yet.