The curse of the mixed guidance strikes again. Shares of Twilio (TWLO) took a hammering in Thursday’s trading after the CPaaS (communication-platforms-as-a-service) company’s Q4 outlook failed to impress. The soft guidance took the shine off a strong third-quarter in which the company posted beats on both the top-and bottom-line.
In 3Q21, Twilio generated revenue of $740.2 million, amounting to a 65.2% year-over-year increase and coming in ahead of the estimates by $56.1 million. Non-GAAP EPS of $0.01 beat the Street’s forecast by $0.15.
Looking ahead to Q4, Twilio’s guidance for revenue between $760 million and $770 million actually came in higher than the consensus estimate of $748 million. However, the company expects to post a wider loss than the analysts’ forecast; Twilio guided for non-GAAP EPS in the range of ($0.26) – ($0.23), worse off than the Street’s call for ($0.10).
Additionally, the company announced the departure of COO George Hu, effective immediately. As Mr. Hu helped steer the company to a revenue run rate revenue of ~$3 billion from only $300 million since joining shortly after 2016’s IPO, Colliers analyst Catharine Trebnick believes the company will lose a “critical asset.”
Nevertheless, Trebnick remains on board and highlights the company’s newly launched marketer assisting automation platform Engage as offering much promise.
“Despite the mixed guidance, we remain buyers of TWLO,” the analyst said. “We believe Engage drives an expanded market opportunity for the company, as it benefits B2C customers by providing a platform that is capable of unifying disparate communication silos/data analytics to set more effective marketing campaigns.”
Trebnick rates TWLO shares a Buy along with a $375 price target. At current levels, this target suggests ~29% upside for the year ahead. (To watch Trebnick’s track record, click here)
Needham’s Ryan Koontz offers a similar assessment, calling Hu’s departure a surprise which “raises concern.” The analyst also thinks investors might be worried about a slowdown in organic growth which dropped from the past 4 quarters’ range of 47-54% to 42% year-over-year.
That said, Koontz applauds the “strong results,” and like Trebnick, remains in the bull camp.
“Despite the pull-back in the stock,” the analyst said, “We view TWLO’s market leadership as durable given the company’s highly differentiated developer-led GTM (go-to-market).
The Needham analyst rates TWLO a Buy alongside a $400 price target. This figure implies 37% upside from current levels. (To watch Koontz’ track record, click here)
Twilio also retains the support of most Street analysts. Of the 18 reviews on record, 16 are to Buy while only 2 say Hold, all resulting in a Strong Buy consensus rating. Following Thursday’s decline, the $437.67 average price target implies shares will rise 46% over the coming months. (See Twilio stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
