I'm learning so much from this board and am grateful to everyone who shares their knowledge. When analyzing data I try to distill the abundance of info down to help me understand better. YOY refers to the most recent Qtr vs LY. In discussions of our stocks, Twilio's EV/S of 17 seems a veritable value. Revenues will exceed $1 billion this year. Growing 80% on this base flies in the face of the "law of large numbers." Dollar based net retention of 146% is outstanding. ``` Revenue % Q1 Q4 Q3 Q2 Q1 YOY Sequential $NRR MktCap TY Rev EV/S TWLO 81.0 77.3 68.0 54.1 47.8 33.2 3.7 146% 19,000,000,000 1,100,000,000 17.3 MDB 78.3 70.8 56.6 61.5 48.9 29.4 7.5 120% 9,200,000,000 380,800,000 24.2 ZS 61.0 65.0 58.8 53.7 49.1 11.9 -4.0 118% 9,700,000,000 300,000,000 32.3 AYX 51.0 56.8 58.6 54.4 47.8 3.2 -5.8 134% 6,500,000,000 360,700,000 18.0 OKTA 49.8 49.8 57.8 57.0 59.8 -10.0 0.0 119% 14,800,000,000 547,800,000 27.0 TTD 41.0 56.4 49.6 54.3 60.6 -19.6 -15.4 10,800,000,000 649,500,000 16.6 ZM 0.0 27,000,000,000 300,000,000 90.0 ``` YTD TTD +111% OKTA +102% ZS +98% MDB +98% AYX +75% TWLO +57% Zoom is +54% in a couple months. Being up 57% YTD is great but compared with these others, Twilio's strength seems almost under appreciated. I'm always curious what the market knows that I'm missing. Thanks JT
Twilio TWLO thoughts:
they bought some of this growth, so 80% is a bit misleading, imo. Core growth is/was still strong at close to 60% last Q, I believe.
One knock on them is lower gross margins than most of stocks discussed here, so under the theory that somewhere down the line they can leverage their business model and crank out profits is less rosy than, say, Zscaler (ZS) who are growing purely organically with much higher gross margins.
They should do about $1.2b in revenues this year. That is over almost exactly $800m last year (the amounts that TWLO and legacy SEND did in 2018 combined). So solid 50% growth on a big number. But not profitable for the most part, and lower gross margins.
I think the algos will get wind of these 80% inflated numbers in the next couple of ERs, and then I would be concerned that the bottom falls out once the y/y compares start to include TWLO+SEND vs just TWLO revenue. At that point, the algos/market could easily, and ignorantly, go “look at the huge drop in growth…sell!!”.
I reduced my TWLO quite a bit, as when I look at the past 12 months, the stocks that grew the most were all about $2b-7b when they started their growth off their low-point (pretty much Dec 24th for all of them). Only TEAM and VEEV seem to have had 100% gains off a $10b mkt cap or higher in the past 12 months. I don’t follow SQ and SHOP that much, but I guess SQ probably did that type of growth in 2018 from a starting point of over $10b mkt cap. SHOP may be close, too, although they hit a lull for a bit. SQ has been pretty dead for a while now.
I am starting to focus on what stocks can more easily justify growing 2-3x from current stock prices, and narrowing my focus a bit on any stocks under $7b or so.
At the start of 2018, we would have seen AYX, MDB, ZS, TTD, PAYC, OKTA, TWLO, and others between $2b-7b, and at P/S ratios much lower than 25-30 that are handed out like candy today.
Thanks to the Dec 2018 crash, we got another run at all of those stocks at a discount off their highs, and they proceeded to gain those losses right back and then tack on more gains.
Currently, at $2b-7b, I really see only AYX, ESTC, PLAN, and SMAR as being in that hyper-growth wheelhouse, while PD is probably just too rich to add into that group as they are already at a 30+ P/S. PLAN is technically sub-50% growth, but has been trending upwards in mid/high-40’s.
Could TWLO become a $30b, 45b, and then 60b mkt cap? I guess. Especially if they keep doing stock offerings and buying companies with their stock, but I am just not sure the CAGR of stock appreciation in the next 18 months can come close to matching the stock appreciation of the previous 18 months.
If the market allows them to keep their multiple at this high level for the next 2 years, then barring too much stock dilution, stock appreciation can at least come close to their organic growth rate, which would be a great CAGR. I just don’t see how to expect them to keep returning 60% or more in stock appreciation moving forward, unless organic growth truly re-accelerates, which is harder and harder to do the bigger a company’s revenue base gets.
I like VEEV and used to own. Their revenue growth is consistent 25.2%, 24.9%, 26.96%.
Sold in March at a nice profit, looking for a higher growth company. Although after reporting on May 29th, the stock is up 22%.
In comparison Zescaler reported May 30th in what I thought was a great report and they’re up 7% since then. So my opinions don’t always translate.
Any thoughts on whether they might be planning to buy BAND or TEUM? BAND owns their VOIP network so I’m thinking it could be a nice bump to margins with the customers they already have, let alone benefits of taking out a competitor.
There are two things TWLO has going for it, aside from their already impressive growth rates at the scale they are. The first is synergy between TWLO and the SendGrid acquisition gives room for growth with SendGrid. The second is the release of Flex, which is directed at the current shift of call centers from on-premise to the cloud, that is just beginning. The TAM here alone is big, and if management’s talk about customer excitement after the release end of last year is any indication, it could become a contributing growth driver going forward.
I don’t know which stocks will go up the most in the next few months or year or whatever so I don’t really trade based on planning for that. I do still have TWLO and will be reactive rather than proactive in regards to planning for slowing growth. I do have AYX, interested in PLAN but not really familiar with it, not interested in SMAR, want to see something take off at ESTC rather than continued decelerating growth as they enter crowded markets. Hoping to see something out of their newly released Enterprise Search and will be checking in on a quarterly basis: https://www.elastic.co/blog/elastic-enterprise-search-beta1-…
JT, You aren’t comparing apples to apples with your forward EV/S. You are taking the companies’ full-year guidance but the companies have different fiscal years. Below I list their fiscal year and how many quarters left. I bolded the ones I follow that are on a different fiscal year.
TWLO -Fiscal year ends December 2019, reports q4 in Feb 2020. Forward revenue has 3 more quarters in it.
MDB - Same as TWLO, 3 quarters of guidance
ZS - Fiscal year ends July 2019. Forward revenue only has 1 quarter of guidance
AYX - Same as TWLO, 3 quarters of guidance
OKTA - is a year in the future, but the fiscal year ends in december, so has 3 more quarters in it.
TTD - same as TWLO, 3 quarters of guidance.
ZM - same as TWLO, 3 quarters of guidance.
ESTC - FY ends april, 4 quarters of guidance.
Yes, you’re correct. For each company I used the same screen on the Schwab site that shows 2019 estimated revenues. Not sure of another way to come up with forward looking numbers. The companies seem to low ball their estimates anyway.
I just us trailing PS ratios because that’s fact rather then prediction and all you’re doing is getting a gauge as to what it’s trading at and compare to other companies. Trailing p/s is easy to find.