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Why Is Twilio (TWLO) Down 20.6% Since Last Earnings Report?
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A month has gone by since the last earnings report for Twilio (TWLO - Free Report) . Shares have lost about 20.6% 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 Q4 Earnings and Revenues Beat Estimates
Twilio delivered better-than-anticipated fourth-quarter 2020 results. The company posted non-GAAP earnings of 4 cents per share for the quarter, while the Zacks Consensus Estimate was pegged at a loss of 8 cents. The non-GAAP bottom-line figure is flat, year on year.
Twilio’s quarterly revenues surged 65% year over year to $548.1 million and also surpassed the Zacks Consensus Estimate of $454.6 million on increase in clientele and the Segment buyout. The growing adoption of Twilio Flex is also a tailwind.
Twilio is benefiting from the accelerated digital-transformation projects across many industries owing to the remote-working wave amid the COVID-19 pandemic. Organizations are reconfiguring their set-ups for a work-from-home operational environment and making nearly 100% e-commerce a reality.
Quarterly Details
Twilio’s top 10 active customer accounts contributed to 13% of its total revenues, down from the 14% seen in the previous quarter as well as the year-ago quarter. WhatsApp represented approximately 5% of revenues during the fourth quarter compared with the year-ago quarter’s 6%.
The company’s dollar-based net expansion rate was 139% in the reported quarter, up from the prior-year period’s 125%.
Twilio’s active customer accounts increased to more than 221,000 as of Dec 31, 2020 from more than 179,000 as of Dec 31, 2019. In the fourth quarter, Twilio added more than 13,000 active customers.
Operating Results
Non-GAAP gross profit climbed 62.1% year over year to $306.6 million. However, gross margin contracted 100 basis points (bps) to 56% mainly due to a 150-basis point negative impact from Application to Person or A2P fees.
Twilio registered fourth-quarter non-GAAP operating income of $12.8 million, marking a strong improvement from the operating loss of $3 million posted in the year-ago quarter. Non-GAAP operating margin improved to positive 2% from negative 1% in the year-ago quarter.
Balance Sheet
The company exited the October-December quarter with cash and cash equivalents plus short-term marketable securities of $3.04 billion, down sequentially from $3.3 billion.
During 2020, the company generated $32.7 million of cash from operational activities.
Outlook
Twilio issued a dismal bottom-line outlook for first-quarter fiscal 2021.The company forecasts non-GAAP loss per share between 9 cents and 12 cents.
We believe the company’s drab bottom-line outlook reflects elevated spending on its expansion plans. Twilio has entered into new product and geography markets to continue its high growth momentum.
For the current quarter, the company anticipates revenues between $526 million and $436 million. It estimates non-GAAP loss from operations in the range of $15 million to $20 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -25.36% due to these changes.
VGM Scores
Currently, Twilio has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the fifth 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. It's no surprise Twilio has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Why Is Twilio (TWLO) Down 20.6% Since Last Earnings Report?
A month has gone by since the last earnings report for Twilio (TWLO - Free Report) . Shares have lost about 20.6% 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 Q4 Earnings and Revenues Beat Estimates
Twilio delivered better-than-anticipated fourth-quarter 2020 results. The company posted non-GAAP earnings of 4 cents per share for the quarter, while the Zacks Consensus Estimate was pegged at a loss of 8 cents. The non-GAAP bottom-line figure is flat, year on year.
Twilio’s quarterly revenues surged 65% year over year to $548.1 million and also surpassed the Zacks Consensus Estimate of $454.6 million on increase in clientele and the Segment buyout. The growing adoption of Twilio Flex is also a tailwind.
Twilio is benefiting from the accelerated digital-transformation projects across many industries owing to the remote-working wave amid the COVID-19 pandemic. Organizations are reconfiguring their set-ups for a work-from-home operational environment and making nearly 100% e-commerce a reality.
Quarterly Details
Twilio’s top 10 active customer accounts contributed to 13% of its total revenues, down from the 14% seen in the previous quarter as well as the year-ago quarter. WhatsApp represented approximately 5% of revenues during the fourth quarter compared with the year-ago quarter’s 6%.
The company’s dollar-based net expansion rate was 139% in the reported quarter, up from the prior-year period’s 125%.
Twilio’s active customer accounts increased to more than 221,000 as of Dec 31, 2020 from more than 179,000 as of Dec 31, 2019. In the fourth quarter, Twilio added more than 13,000 active customers.
Operating Results
Non-GAAP gross profit climbed 62.1% year over year to $306.6 million. However, gross margin contracted 100 basis points (bps) to 56% mainly due to a 150-basis point negative impact from Application to Person or A2P fees.
Twilio registered fourth-quarter non-GAAP operating income of $12.8 million, marking a strong improvement from the operating loss of $3 million posted in the year-ago quarter. Non-GAAP operating margin improved to positive 2% from negative 1% in the year-ago quarter.
Balance Sheet
The company exited the October-December quarter with cash and cash equivalents plus short-term marketable securities of $3.04 billion, down sequentially from $3.3 billion.
During 2020, the company generated $32.7 million of cash from operational activities.
Outlook
Twilio issued a dismal bottom-line outlook for first-quarter fiscal 2021.The company forecasts non-GAAP loss per share between 9 cents and 12 cents.
We believe the company’s drab bottom-line outlook reflects elevated spending on its expansion plans. Twilio has entered into new product and geography markets to continue its high growth momentum.
For the current quarter, the company anticipates revenues between $526 million and $436 million. It estimates non-GAAP loss from operations in the range of $15 million to $20 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -25.36% due to these changes.
VGM Scores
Currently, Twilio has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the fifth 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. It's no surprise Twilio has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.