Twilio (TWLO) Q1 Earnings And Revenues Surpass Estimates

Twilio Inc. (NYSE:TWLO) reported first-quarter 2019 non-GAAP earnings of 5 cents per share, which topped the Zacks Consensus Estimate of a penny and also reversed the company’s loss of 4 cents in the year-ago quarter.

The company’s first-quarter revenues soared 81% year over year to $233.1 million and also surpassed the Zacks Consensus Estimate of $224 million. Its core products, voice, messaging and e-mail were key growth drivers. Moreover, results were driven by the acquisition of Sendgrid, completed in February.

Quarterly Details

The company’s base revenues also jumped 88% year over year to $220.9 million. Organic growth for Twilio's base revenues was more than 60% year over year while the same for Twilio SendGrid during the sub-period (Since Feb 1) was 30% year over year.

Twilio’s top 10 active customer accounts contributed to 14% of its total revenues, down from 18% in the year-ago period and 20% in the earlier reported quarter.

Moreover, multiple Twilio Flex deals signed in the first quarter are key catalysts. Gaining adoption of new products is driving the company’s dollar-based net expansion rate, which stood at 146% in the reported quarter.

The company’s active customer accounts increased to 154,797 as of Mar 31, 2019 from 53,985 on Mar 31, 2018. Alone in the first quarter, Twilio added more than 90,511 active customer accounts. Twilio SendGrid contributed more than 84,000 to the count.

Operating Results

Non-GAAP gross profit climbed approximately 92% year over year to $136.9 million. Gross margin expanded 300 basis points (bps) to 58%. Higher margin revenues from Twilio SendGrid are a tailwind.

The company reported non-GAAP operating income of $3.4 million against non-GAAP operating loss of $4.7 million in the prior-year quarter.

Twilio Inc. Price, Consensus and EPS Surprise

Twilio Inc. Price, Consensus and EPS Surprise | Twilio Inc. Quote

Balance Sheet

The company exited the quarter under review with cash and cash equivalents plus short-term marketable securities of $918.9 million compared with $748.3million sequentially.

Additionally, during the quarter under consideration, the company used $9.11 million of cash from operational activities compared with $7.98 million of cash generated in the previous reported quarter.

Outlook

For the full year, Twilio expects revenues in the range of $1.102-$1.111 billion, up from the $1.065-$1.077 billion band expected earlier. Base revenues are estimated within $1.062-$1.068 billion, up from the previous prediction of $1.028-$1.036 billion.

The company projects non-GAAP earnings per share in the band of 11-13 cents, up from 8-11 cents envisioned earlier.

For the second quarter of 2019, Twilio anticipates revenues between $262 million and $265 million. Base revenues are estimated within $252-$254 million. The company forecasts non-GAAP earnings per share to be 2-3 cents.

Zacks Rank and Stocks to Consider

Twilio currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader Computer and Technology sector are MeetMe, Inc. (NASDAQ:MEET) , ACI Worldwide, Inc. (NASDAQ:ACIW) and Avid Technology, Inc. (NASDAQ:AVID) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for MeetMe, ACI Worldwide and Avid is projected at 20%, 12% and 10%, respectively.

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