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Twilio (TWLO) Down 6.4% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Twilio (TWLO - Free Report) . Shares have lost about 6.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Twilio due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Twilio delivered better-than-anticipated first-quarter 2022 results. The company reported break-even earnings for the first quarter, while the Zacks Consensus Estimate was pegged at a loss of 23 cents per share.
However, the bottom line compared unfavorably with the year-ago quarter’s non-GAAP earnings of 5 cents per share. The dismal bottom line can be attributed to increased investments in research & development and sales & marketing initiatives to drive future growth, which more than offset the benefits of higher revenues.
Revenue Details
The cloud-based communications platform-as-a-service provider reported revenues of $875.4 million, which improved by 48% year over year and surpassed the consensus mark of $861.6 million. The company’s newly acquired Zipwhip business contributed $32.2 million to total revenues.
Twilio has been benefiting from the constant expansion of its international business and the continuous acceleration of digital transformation projects across several industries. The top line was primarily driven by the enhancement of customer experiences across various product portfolios like Segment and Flex, which are its fastest-growing software-as-a-service products at present.
Twilio’s dollar-based net expansion rate was 127% in the reported quarter, up from 126% in the previous quarter but down from 133% in the year-ago quarter.
The company’s active customer accounts increased to 268,000 as of Mar 31, 2022 from 256,000 at the end of the fourth quarter of 2020 and 235,000 as of Mar 31, 2021.
Operating Results
Non-GAAP gross profit climbed 40.6% year over year to $460 million. However, the non-GAAP gross margin contracted by 200 basis points (bps) to 53%.
Twilio reported first-quarter non-GAAP operating income of $5 million, lower than the year-ago quarter’s operating income of $17.3 million. The non-GAAP operating margin contracted by 200 bps to 1% from the year-earlier quarter’s 3%.
General & administrative expenses on a non-GAAP basis increased 40.7% to $84.5 million and accounted for 10% of the quarterly revenues.
Research & development expenses on a non-GAAP basis surged 44% year over year to $154.6 million and made up 18% of the quarterly revenues.
Non-GAAP sales & marketing expenses surged 51.2% to $216.1 million and represented 25% of the first-quarter revenues.
Balance Sheet
The company exited the January-March quarter with cash and cash equivalents and short-term marketable securities of $5.22 billion, down from $5.36 billion at the end of the fourth quarter of 2021. As of Mar 31, 2022, TWLO’s long-term debt was $986.2 million.
Guidance
Twilio forecast non-GAAP loss per share between 20 cents and 23 cents for the second quarter of 2022. For the current quarter ending Jun 30, 2022, the company anticipates revenues between $912 million and $922 million, suggesting year-over-year growth of 36% to 38%. Management estimates the non-GAAP loss from operations in the range of $35 million- $40 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Twilio has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Twilio has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Twilio is part of the Zacks Internet - Software industry. Over the past month, Aspen Technology (AZPN - Free Report) , a stock from the same industry, has gained 21.5%. The company reported its results for the quarter ended March 2022 more than a month ago.
Aspen Technology reported revenues of $187.75 million in the last reported quarter, representing a year-over-year change of +15.4%. EPS of $1.38 for the same period compares with $1.05 a year ago.
Aspen Technology is expected to post earnings of $2.18 per share for the current quarter, representing a year-over-year change of +42.5%. Over the last 30 days, the Zacks Consensus Estimate has changed +5%.
Aspen Technology has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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Twilio (TWLO) Down 6.4% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Twilio (TWLO - Free Report) . Shares have lost about 6.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Twilio due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Twilio Reports Break-Even Q1 Earnings & Strong Sales
Twilio delivered better-than-anticipated first-quarter 2022 results. The company reported break-even earnings for the first quarter, while the Zacks Consensus Estimate was pegged at a loss of 23 cents per share.
However, the bottom line compared unfavorably with the year-ago quarter’s non-GAAP earnings of 5 cents per share. The dismal bottom line can be attributed to increased investments in research & development and sales & marketing initiatives to drive future growth, which more than offset the benefits of higher revenues.
Revenue Details
The cloud-based communications platform-as-a-service provider reported revenues of $875.4 million, which improved by 48% year over year and surpassed the consensus mark of $861.6 million. The company’s newly acquired Zipwhip business contributed $32.2 million to total revenues.
Twilio has been benefiting from the constant expansion of its international business and the continuous acceleration of digital transformation projects across several industries. The top line was primarily driven by the enhancement of customer experiences across various product portfolios like Segment and Flex, which are its fastest-growing software-as-a-service products at present.
Twilio’s dollar-based net expansion rate was 127% in the reported quarter, up from 126% in the previous quarter but down from 133% in the year-ago quarter.
The company’s active customer accounts increased to 268,000 as of Mar 31, 2022 from 256,000 at the end of the fourth quarter of 2020 and 235,000 as of Mar 31, 2021.
Operating Results
Non-GAAP gross profit climbed 40.6% year over year to $460 million. However, the non-GAAP gross margin contracted by 200 basis points (bps) to 53%.
Twilio reported first-quarter non-GAAP operating income of $5 million, lower than the year-ago quarter’s operating income of $17.3 million. The non-GAAP operating margin contracted by 200 bps to 1% from the year-earlier quarter’s 3%.
General & administrative expenses on a non-GAAP basis increased 40.7% to $84.5 million and accounted for 10% of the quarterly revenues.
Research & development expenses on a non-GAAP basis surged 44% year over year to $154.6 million and made up 18% of the quarterly revenues.
Non-GAAP sales & marketing expenses surged 51.2% to $216.1 million and represented 25% of the first-quarter revenues.
Balance Sheet
The company exited the January-March quarter with cash and cash equivalents and short-term marketable securities of $5.22 billion, down from $5.36 billion at the end of the fourth quarter of 2021. As of Mar 31, 2022, TWLO’s long-term debt was $986.2 million.
Guidance
Twilio forecast non-GAAP loss per share between 20 cents and 23 cents for the second quarter of 2022. For the current quarter ending Jun 30, 2022, the company anticipates revenues between $912 million and $922 million, suggesting year-over-year growth of 36% to 38%. Management estimates the non-GAAP loss from operations in the range of $35 million- $40 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Twilio has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Twilio has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Twilio is part of the Zacks Internet - Software industry. Over the past month, Aspen Technology (AZPN - Free Report) , a stock from the same industry, has gained 21.5%. The company reported its results for the quarter ended March 2022 more than a month ago.
Aspen Technology reported revenues of $187.75 million in the last reported quarter, representing a year-over-year change of +15.4%. EPS of $1.38 for the same period compares with $1.05 a year ago.
Aspen Technology is expected to post earnings of $2.18 per share for the current quarter, representing a year-over-year change of +42.5%. Over the last 30 days, the Zacks Consensus Estimate has changed +5%.
Aspen Technology has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.