Down significantly AH. Saul does it again. Seems to make timely buy and sell decisions. Looks like his decision to reduce his position was a good one. Saul has serious spider sense…
Cobra
6 Likes
NER dropped quite a bit and their continued big GAAP losses caught my attention immediately.
The NER did drop from 145% to 132%, but that’s still a pretty impressive number. Looking forward to the conference call
5 Likes
last year, TWLO + SEND did about $800m.
Their guide for full year 2019 is still under $1.2b.
Therefore, actual growth, y/y, is potentially under 50% y/y, unless they beat next Q enough to finish above $1.2b. Currently they are forecasting $1.117b:
https://seekingalpha.com/pr/17680956-twilio-announces-third-…
TWLO had a good run, but with a lower GM than many other SaaS/cloud stocks, the argument that they can just end mktg dollars anytime they want and be profitable doesn’t hold as much water, and therefore they should have a lower P/S than something like AYX.
Dreamer
7 Likes
The NER did drop from 145% to 132%, but that’s still a pretty impressive number. Looking forward to the conference call
NER is for the past 12 months (4 quarters) compared to the previous 12 months. In Q3 2018 there was that monster beat quarter due to one time events. That quarter has not dropped off the past 12 months and is now in the prior 12 months. I think that will explain a large part of that drop.
Chris
8 Likes
Down significantly AH. Saul does it again. Seems to make timely buy and sell decisions. Looks like his decision to reduce his position was a good one. Saul has serious spider sense…
Down 12.79% at this time. (Yawn). We don’t used crushed on this board till it hits down 25%.
Andy
14 Likes
Looks like the reason for the AH drop is because the forward guidance (base revenue 300-302MM) comes in well below analyst expectation of 320MM. Even with lowballing, that seems to be quite a miss.
Also wonder what the margin comes in for Q3.
bashuzi
1 Like
Added over 10,000 new customers in the quarter compared to adding 7,000 last quarter. But despite beating top guide of total revenue, base revenue came in under top of guide. Guided for $278M at top, and reported came in at $275.5M, a $2.5M miss.
7 Likes
Added over 10,000 new customers in the quarter compared to adding 7,000 last quarter. But despite beating top guide of total revenue, base revenue came in under top of guide. Guided for $278M at top, and reported came in at $275.5M, a $2.5M miss.
There was a billing error resulting in a one time credit of $5M to customers.
Chris
4 Likes
In my August summary I wrote:
I was really a bit disappointed having been taken in by all the exaggerated hype about how Flex and Sendgrid were going to explode their revenue. I guess I was expecting a lot more than we got. So when I wanted money to add to my Trade Desk position, I reduced my position in Twilio a bit.
In my Sept summary I wrote the following:
To raise the cash, I… cut my very large Twilio position in half… The reasons I chose… Twilio was because its relatively low margin, and because it acquired a large, much slower growing company. Comparing the combined revenue to last year’s revenue makes it look like it’s growing at 90%, but it grew organically at 56% and Sendgrid was growing at 20%-ish, so that in three quarters when you are comparing apples to apples it will look as if revenue growth dropped from 90% this year to 40% next year.
I reduced my position from 18.10% of my portfolio in June, for instance, to 7.45% at today’s close, reduced by roughly 60%. My mistake was in thinking that I had a lot more time (at least an additional quarter), until the bad news hit. I sold every share in IRA’s but I was trying to wait to sell in taxable accounts until early 2020 so I wouldn’t have to pay the taxes on my very large per share gains until Apr of 2021. It turned out to have been a big mistake and I should know better. Live and learn.
Best,
Saul
A link to the Knowledgebase for this board is in the Announcements panel that is on the right side of every page on this board.
For some additions to the Knowledgebase, bringing it up to date, I’d advise reading several other posts linked to on the panel, especially “How I Pick a Company to Invest In,” and “Why My Investing Criteria Have Changed,” and “Why It Really is Different.”
28 Likes
There was a billing error resulting in a one time credit of $5M to customers.
Just heard that on the call, too. So a $5M hit. But they also reduced FY base revenue guidance at top by $13M! Previous guidance was $1.068B now $1.055B.
Call is not going well in my opinion. CFO is flustered about all this. Doesn’t sound like the TWLO I know.
Darth
1 Like
Saul,
Are you saying you made a big mistake because the stock dropped or because you don’t think the company is doing well? The reason I ask this is we have known for a long time that guidance was going to drop into the 40-50% range for q4 since that is the first quarter to compare sendgrid+twlo to itself.
For what it’s worth, MDB is going to have the same issue. Next quarter they will drop to 65% +/-5% growth range and then probably guide around 47% +/- a few %. I think there is a reasonable chance they drop to sub 50% growth after next quarter.
Both companies supposedly have huge TAMs, both are spending lots of money, both have solid SBC, both are coming up on apples to apples comparisons. Honestly, I was surprised TWLO guided so high.
I wasn’t able to listen to the twlo call and only briefly looked at their PR.
best,
e
16 Likes
Call is not going well in my opinion. CFO is flustered about all this. Doesn’t sound like the TWLO I know.
Monkey might be listening through his banana phone and hearing a different call:
-Organic growth is 47% off a larger base, which is still terrific (terrific is subjective, sure, but have we been so spoiled by some of our SaaS companies that even a kick-ass result like this is interpreted as anything less than great?
- 5M hit, which they call self-inflicted and self-identified and almost entirely in control, but nonetheless they lowered guidance just to be safe. Translation: things are fine and they’re guiding conservatively––this is smart! If problem is indeed solved, numbers will be better than expected.
-Business-wise, it was a very strong quarter and the total market of the business remains huge as companies continue to need Twilio’s tools. The whole day-one mentality still seems appropriate. We’re invested for the long-term, right, and there’s still a huge TAM runway, no? Or are we now closer aligned with momentum trading?
-lots of tough comps which were expected (one time political dynamic; one-time costumer) plus one-time billings issue. - CEO sounds forthright, not dissembling, proud of his team, proud of the business, acknowledged the billing error, contained it and said it’s not that big of a deal for much longer
- Q1 comp with sendgrid also complex
-Huge market opportunity and we have a differentiated solution
-Gross Margins only scuffled a bit due to billing issue but exactly where assumed they would be
Monkey’s question is this: how much higher will the price be three-five years from now? Answer: lots higher.
How much higher will the price be in the next six months? Dunno. Opportunity cost investing in other companies seems like the highest risk–as long as we’re sure about the others, which we aren’t.
So is the short-term worth weighing more heavily than the long-term? Isn’t that a bit of momentum trading?
Ought we not compare to Shopify for theory’s sake? Shop numbers seemed to be trending the wrong way, but stock kept rising because the big business picture was more than intact. Is this not the case with Twilio? Temporary comps/tech glitch/acquisition in the context of a huge business opportunity and a company that still is still only 14B in size.
So maybe this is a mix of current valuation and cost-opportunity question versus looks like long-term the company is doing great and just holding is the slow and steady and proven approach.
Thoughts?
Monkey (long TWLO)
80 Likes
Yes Monkey I heard the same call, and AHs must have heard it as well, back up over 100 right now.
Mike
1 Like
Monkey’s question is this: how much higher will the price be three-five years from now? Answer: lots higher.
An absolute statement…Bear says those are no good.
If WDAY grew rev rapidly but stock did nothing for 4 year stretch, maybe there is room for doubt?
Dreamer
1 Like
I too concur with Monkey’s take on the call.
Worth noting that they said that Flex wouldn’t have a meaningful impact on their numbers until 2021/22, but they’re happy with the way things are headed. They mentioned that it hadn’t “crossed the chasm”, which of course, is expected, as it’s still very new.
Also, Sendgrid growth was I think 31%.
Alex
7 Likes
The reason I ask this is we have known for a long time that guidance was going to drop into the 40-50% range for q4 since that is the first quarter to compare sendgrid+twlo to itself.
Ethan, they acquired Sendgrid on Feb 1st. They didn’t have SendGrid at any time in the 4th quarter.
Saul
3 Likes
ugggh. Saul you are absolutely correct. I’m a quarter off. Worse than i thought!
2 Likes
Jeff Lawson said the following in the Conference Call
Our third quarter results were strong with total revenue growing 75%, tremendous growth at this scale, that reinforces our view that we are still in the early days of this market opportunity.
That’s VERY misleading and disingenuous, as part of the growth is combining two companies compared to one. It’s not a 75% growth rate, and Jeff knows very well that they aren’t growing at 75%. When pinned down by analyst questions they acknowledged that Twilio grew organically at 47% and Sendgrid by even less (30% I think I remember).
An “Adjusted” or Actual growth rate, calculated as Total Revenue compared to last year’s Twilio revenue + Sendgrid revenue, would probably give them an adjusted actual growth rate of about 42% or 43%, so crowing about “revenue growing 75%, tremendous growth at this scale” is outrageously misleading !!! It’s embarrassing!
Just my opinion. I trimmed another 15% off my current position at $100.50 in the premarket.
Saul
29 Likes
I have now sold ALL my Twilio – one of my largest positions until yesterday’s earnings call.
Yep. They really had an awful quarter. As Saul points out:
When pinned down by analyst questions they acknowledged that Twilio grew organically at 47% and Sendgrid by even less (30% I think I remember).
And it’s not going to get better going forward…probably will slow just due to their size and scale. So we’re looking at about 40% growth, maybe lower. That’s obviously not awful, but what is? The valuation. They are still at a PS of 14…I could see that dropping to 10 or even less if they can’t grow over 40%. The stock price could eventually be buoyed by actual EPS, but currently their PE is over 600 and even at 20% of revenue (which is a LONG way off) it would be a PE of 70. This is not a bargain, or a buying opportunity. This is a selling opportunity. I’m thankful I got out with it only being down about 10% today.
If Twilio can make steps toward profitability, shares you own today might do ok in the long run, but this is no longer a world beater. To operate as they are, 40% growth is not enough.
Bear
14 Likes