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Twilio (TWLO - Free Report) reported better-than-expected results in the third quarter of 2022. The company reported a non-GAAP loss of 27 cents per share for the third quarter, while the Zacks Consensus Estimate was pegged at a loss of 39 cents per share.
However, the bottom line compared unfavorably with the earnings of a penny reported in the year-ago quarter. Increased investments in research & development and sales & marketing initiatives to drive future growth continued to weigh on the bottom line, which more than offset the benefits of higher revenues.
Revenue Details
The cloud-based communications platform-as-a-service provider reported revenues of $983 million, which improved by 33% year over year and surpassed the consensus mark of $969.2 million. The company’s newly acquired Zipwhip business contributed $35 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 122% in the reported quarter, down from 123% in the previous quarter and 131% in the year-ago quarter.
The company’s active customer accounts increased to 280,000 as of Sep 30, 2022 from 250,000 at the end of the first quarter of 2022 and 275,000 as of Jun 30, 2021.
Operating Results
The non-GAAP gross profit climbed 25% year over year to $499 million. However, the non-GAAP gross margin contracted by 300 basis points to 51%.
Twilio reported a third-quarter non-GAAP operating loss of $35.1 million, while it reported an operating income of $8.2 million in the year-ago quarter.
General & administrative expenses on a non-GAAP basis increased 27.7% to $94.1 million and accounted for 10% of the quarterly revenues.
Research & development expenses on a non-GAAP basis surged 43.2% year over year to $192 million and made up 20% of the quarterly revenues.
Non-GAAP sales & marketing expenses surged 35% to $247.3 million and represented 25% of third-quarter revenues.
Balance Sheet
The company exited the July-September quarter with cash and cash equivalents and short-term marketable securities of $4.21 billion, down from $4.39 billion at the end of the second quarter of 2022. As of Sep 30, 2022, TWLO’s long-term debt was $987 million.
Fourth-Quarter Guidance
Twilio forecast a non-GAAP loss between 6 cents and 11 cents per share for the fourth quarter of 2022. The Zacks Consensus Estimate for the same is pegged at a loss of 11 cents per share.
For the current quarter ending Dec 31, 2022, the company anticipates revenues between $995 million and $1.005 billion, suggesting year-over-year growth of 18% to 19%. Management estimates the non-GAAP loss from operations in the range of $5-$15 million.
Zacks Rank & Other Stocks to Consider
Twilio currently carries a Zacks Rank #2 (Buy). Shares of TWLO have fallen 75.2% year to date (YTD).
The Zacks Consensus Estimate for Zscaler's first-quarter fiscal 2023 earnings has been revised 7 cents north to 26 cents per share over the past 60 days. For fiscal 2023, earnings estimates have moved 15 cents north to $1.18 per share in the past 60 days.
ZS’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 28.6%. Shares of the company have declined 58.6% YTD.
The Zacks Consensus Estimate for Celestica’s fourth-quarter 2022 earnings has increased by 9 cents to 53 cents per share over the past 30 days. For 2022, earnings estimates have moved 9.4% up to $1.86 per share in the past 30 days.
CLS' earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 11.8%. Shares of the company have decreased 6% YTD.
The Zacks Consensus Estimate for Coupa's third-quarter fiscal 2023 earnings has been revised 4 cents northward to 10 cents per share over the past 60 days. For fiscal 2023, earnings estimates have moved upward by 19 cents to 44 cents per share in the past 60 days.
Coupa's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 478.1%. Shares of COUP have slumped 69.6% YTD.
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Twilio (TWLO) Posts Narrower-Than-Expected Q3 Loss, Solid Sales
Twilio (TWLO - Free Report) reported better-than-expected results in the third quarter of 2022. The company reported a non-GAAP loss of 27 cents per share for the third quarter, while the Zacks Consensus Estimate was pegged at a loss of 39 cents per share.
However, the bottom line compared unfavorably with the earnings of a penny reported in the year-ago quarter. Increased investments in research & development and sales & marketing initiatives to drive future growth continued to weigh on the bottom line, which more than offset the benefits of higher revenues.
Revenue Details
The cloud-based communications platform-as-a-service provider reported revenues of $983 million, which improved by 33% year over year and surpassed the consensus mark of $969.2 million. The company’s newly acquired Zipwhip business contributed $35 million to total revenues.
Twilio Inc. Price, Consensus and EPS Surprise
Twilio Inc. price-consensus-eps-surprise-chart | Twilio Inc. Quote
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 122% in the reported quarter, down from 123% in the previous quarter and 131% in the year-ago quarter.
The company’s active customer accounts increased to 280,000 as of Sep 30, 2022 from 250,000 at the end of the first quarter of 2022 and 275,000 as of Jun 30, 2021.
Operating Results
The non-GAAP gross profit climbed 25% year over year to $499 million. However, the non-GAAP gross margin contracted by 300 basis points to 51%.
Twilio reported a third-quarter non-GAAP operating loss of $35.1 million, while it reported an operating income of $8.2 million in the year-ago quarter.
General & administrative expenses on a non-GAAP basis increased 27.7% to $94.1 million and accounted for 10% of the quarterly revenues.
Research & development expenses on a non-GAAP basis surged 43.2% year over year to $192 million and made up 20% of the quarterly revenues.
Non-GAAP sales & marketing expenses surged 35% to $247.3 million and represented 25% of third-quarter revenues.
Balance Sheet
The company exited the July-September quarter with cash and cash equivalents and short-term marketable securities of $4.21 billion, down from $4.39 billion at the end of the second quarter of 2022. As of Sep 30, 2022, TWLO’s long-term debt was $987 million.
Fourth-Quarter Guidance
Twilio forecast a non-GAAP loss between 6 cents and 11 cents per share for the fourth quarter of 2022. The Zacks Consensus Estimate for the same is pegged at a loss of 11 cents per share.
For the current quarter ending Dec 31, 2022, the company anticipates revenues between $995 million and $1.005 billion, suggesting year-over-year growth of 18% to 19%. Management estimates the non-GAAP loss from operations in the range of $5-$15 million.
Zacks Rank & Other Stocks to Consider
Twilio currently carries a Zacks Rank #2 (Buy). Shares of TWLO have fallen 75.2% year to date (YTD).
Some other top-ranked stocks from the broader Computer and Technology sector are Zscaler (ZS - Free Report) , Celestica (CLS - Free Report) and Coupa Software . Zscaler and Celestica each sport a Zacks Rank #1 (Strong Buy) at present, while Coupa carries a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Zscaler's first-quarter fiscal 2023 earnings has been revised 7 cents north to 26 cents per share over the past 60 days. For fiscal 2023, earnings estimates have moved 15 cents north to $1.18 per share in the past 60 days.
ZS’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 28.6%. Shares of the company have declined 58.6% YTD.
The Zacks Consensus Estimate for Celestica’s fourth-quarter 2022 earnings has increased by 9 cents to 53 cents per share over the past 30 days. For 2022, earnings estimates have moved 9.4% up to $1.86 per share in the past 30 days.
CLS' earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 11.8%. Shares of the company have decreased 6% YTD.
The Zacks Consensus Estimate for Coupa's third-quarter fiscal 2023 earnings has been revised 4 cents northward to 10 cents per share over the past 60 days. For fiscal 2023, earnings estimates have moved upward by 19 cents to 44 cents per share in the past 60 days.
Coupa's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 478.1%. Shares of COUP have slumped 69.6% YTD.