TWLO: 2 analysts up PT to $38

Investment Analysis Clubs Saul’s Investing Discussions
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http://www.barrons.com/articles/twilio-a-good-first-step-but…

Here’s some interesting commentary from one of the analysts:

"Tactically, we expect TWLO to trade in a broad range of about $30-40, with an upward bias over the next few months as investors conclude that 2018 estimates are a floor level with a bit of upside… Our independent work on the CPaaS sector suggests that there are no more than a handful of well-constructed, well-run firms in this space that will capture disproportionate share of the market. Investors might not realize that our analysis says that upwards of half of vendors’ growth is from completely new use cases, rather than the oftentimes more competitive and contentious “rip and replace” market populated with legacy systems. Think about the rise of mobile apps for everything from car services to retail and get ready for entirely new markets like public safety and citizens to government communications and you begin to grasp the enormity of this “everything gets connected” theme that we have been writing about for the past few years.
Markets like this typically produce good growth, especially for the well-positioned firms. As such, we push back on the bearish narrative that pricing is, or soon will cascade down – at least until the leaders penetrate the comparatively easy part of a TAM that we have estimated in past reports to be at least several billion dollars.

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Do you know what the Uber status is? I was under the mistaken impression that Uber was developing their own system to replace TWLO, but from the conference call, they expect Uber to remain a significant customer.

I did want to spend a moment discussing Uber’s impact to our guidance. The situation has played out largely as we expected it as we outlined on the last call. We did lose some of the lower value book messaging used cases and readjusted pricing in other areas based on their rapidly growing volumes. Most of these changes are implemented in the latter part of Q2 and are therefore partially reflected in this quarter’s results.

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.