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Twilio Reports Surprise Q3 Profit; Shares Plunge

Twilio (TWLO) reported a surprise profit in the third quarter of 2021. Additionally, revenues beat analysts’ expectations.

Shares of the cloud communications platform slumped in the extended trading session on Wednesday, following the company’s disappointing Q4 earnings guidance.

The company reported adjusted earnings of $0.01 per share against the Street’s loss estimate of $0.14 per share. Twilio had posted adjusted earnings of $0.04 per share in the same quarter last year.

Total revenue generated in the quarter amounted to $740.2 million, topping expectations of $680.5 million. Markedly, revenues jumped 65% from the prior-year quarter.

On a year-over-year basis, the Twilio segment contributed $52.3 million to total revenues, while Zipwhip revenues added $23.6 million.

As of September 30, 2021, Twilio had over 250,000 active customer accounts, compared to 208,000 as of September 30, 2020.

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CEO of Twilio, Jeff Lawson, commented, “We are extremely excited about the next generation of our customer engagement platform, and our newest pillar, Twilio Engage, which will allow companies of all sizes and in any industry to build and optimize hyper-personalized marketing campaigns on every channel for customer acquisition, conversion and retention.”

Guidance

The company projects Q4 revenue to fall between $760 million and $770 million, higher than the consensus estimate of $744.7 million. However, its non-GAAP loss guidance range of $0.26-$0.23 per share compared unfavorably with analysts’ estimated loss of $0.07 per share.

Other Development

The company revealed that the COO of Twilio, George Hu, has resigned and Khozema Shipchandler, who has served as the company’s CFO since November 1, 2018, will take over COO duties.

Wall Street’s Take

Following the upbeat Q3 results, JMP Securities analyst Patrick Walravens maintained a Buy rating on the stock, with a price target of $510 (81% upside potential).

Walravens believes “Twilio warrants a premium valuation due to its strong competitive position, attractive financial profile, and impressive leadership team.”

Consensus among analysts is a Strong Buy based on 15 Buys versus two Holds. The average Twilio price target of $437.67 implies 55.8% upside potential from current levels.

Hedge Fund Holdings

TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Twilio is currently Very Positive, as the cumulative change in holdings across all 16 hedge funds that were active in the last quarter was an increase of 2.4 million shares.

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