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Why Is Twilio (TWLO) Up 22.8% Since Last Earnings Report?
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It has been about a month since the last earnings report for Twilio (TWLO - Free Report) . Shares have added about 22.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Twilio due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Twilio Beats on Q3 Earnings and Revenues
Twilio reported better-than-expected results for the third quarter of 2023. The programmable communication tool provider reported non-GAAP earnings of 58 cents per share, which surpassed the Zacks Consensus Estimate of 35 cents. The figure also beat the company’s guided range of 33-37 cents per share. The bottom line also witnessed a robust improvement from the year-ago quarter’s reported loss of 27 cents per share. The year-over-year rise in non-GAAP earnings was primarily due to higher revenues and cost savings through headcount reductions.
Revenue Details
The cloud-based communications platform-as-a-service provider registered revenues of $1.03 billion. The figure improved 5% year over year and outpaced the consensus mark of $985 million.
TWLO has been benefiting from 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 experience across various product portfolios like Segment, Flex and Engage. These are the company’s fastest-growing software-as-a-service products at present.
Twilio’s dollar-based net expansion rate was 101% in the reported quarter, down from 103% in the previous quarter and 122% in the year-ago period. The Zacks Consensus Estimate for the same was pegged at 95%.
Active customer accounts increased to 306,000 as of Sep 30, 2023, from 304,000 at the end of the second quarter of 2023. The figure totaled 280,000 as of Sep 30, 2022. The consensus mark for the same was pinned at 308,107 for the reported quarter.
Operating Results
Non-GAAP gross profit climbed 11% year over year to $553 million. The non-GAAP gross margin expanded 200 basis points to 53%.
Non-GAAP operating income totaled $136.4 million against the year-ago quarter’s non-GAAP operating loss of $35.1 million. The non-GAAP operating margin was 13% for the reported quarter.
General & administrative (G&A) expenses on a non-GAAP basis decreased 16.1% to $79.6 million. G&A expenses accounted for 8% of quarterly revenues, down from 10% in the year-ago quarter. Research & development (R&D) expenditures on a non-GAAP basis declined 24.2% year over year to $145.5 million. R&D expenses made up 14% of third-quarter revenues, down from 20% in the year-ago quarter.
Non-GAAP sales & marketing costs declined 22.8% to $191 million. The same represented 18% of third-quarter revenues, way lower than 25% in the year-ago quarter.
Balance Sheet
The company exited the September quarter with cash and cash equivalents and short-term marketable securities of $3.86 billion, up from $3.68 billion at the end of second-quarter 2023. As of Sep 30, 2023, TWLO’s long-term debt amounted to $988.6 million.
During the first nine months of 2023, Twilio generated an operating cash flow of $192.2 million and repurchased stocks worth $548.9 million. Moreover, the company revealed that it had bought back $620 million worth of its common stock till Nov 7, under the ongoing $1-billion share repurchase program authorized in February 2023. The program will expire in December 2024.
Q4 Guidance
For the current quarter ending Dec 31, 2023, TWLO anticipates revenues between $1.03 billion and $1.04 billion, indicating a year-over-year increase of 1-2% on a reported basis and 4-5% organically. Twilio expects non-GAAP earnings in the range of 53-57 cents per share for the same time frame. Our model estimates non-GAAP income from operations in the $115-$125 million range.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 30.84% due to these changes.
VGM Scores
Currently, Twilio has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Twilio has a Zacks Rank #3 (Hold). We expect an in-line 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 19.6%. The company reported its results for the quarter ended September 2023 more than a month ago.
Aspen Technology reported revenues of $249.31 million in the last reported quarter, representing a year-over-year change of -0.6%. EPS of $1.16 for the same period compares with $2.20 a year ago.
Aspen Technology is expected to post earnings of $1.49 per share for the current quarter, representing a year-over-year change of +325.7%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Aspen Technology. Also, the stock has a VGM Score of D.
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Why Is Twilio (TWLO) Up 22.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Twilio (TWLO - Free Report) . Shares have added about 22.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Twilio due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Twilio Beats on Q3 Earnings and Revenues
Twilio reported better-than-expected results for the third quarter of 2023. The programmable communication tool provider reported non-GAAP earnings of 58 cents per share, which surpassed the Zacks Consensus Estimate of 35 cents. The figure also beat the company’s guided range of 33-37 cents per share. The bottom line also witnessed a robust improvement from the year-ago quarter’s reported loss of 27 cents per share. The year-over-year rise in non-GAAP earnings was primarily due to higher revenues and cost savings through headcount reductions.
Revenue Details
The cloud-based communications platform-as-a-service provider registered revenues of $1.03 billion. The figure improved 5% year over year and outpaced the consensus mark of $985 million.
TWLO has been benefiting from 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 experience across various product portfolios like Segment, Flex and Engage. These are the company’s fastest-growing software-as-a-service products at present.
Twilio’s dollar-based net expansion rate was 101% in the reported quarter, down from 103% in the previous quarter and 122% in the year-ago period. The Zacks Consensus Estimate for the same was pegged at 95%.
Active customer accounts increased to 306,000 as of Sep 30, 2023, from 304,000 at the end of the second quarter of 2023. The figure totaled 280,000 as of Sep 30, 2022. The consensus mark for the same was pinned at 308,107 for the reported quarter.
Operating Results
Non-GAAP gross profit climbed 11% year over year to $553 million. The non-GAAP gross margin expanded 200 basis points to 53%.
Non-GAAP operating income totaled $136.4 million against the year-ago quarter’s non-GAAP operating loss of $35.1 million. The non-GAAP operating margin was 13% for the reported quarter.
General & administrative (G&A) expenses on a non-GAAP basis decreased 16.1% to $79.6 million. G&A expenses accounted for 8% of quarterly revenues, down from 10% in the year-ago quarter. Research & development (R&D) expenditures on a non-GAAP basis declined 24.2% year over year to $145.5 million. R&D expenses made up 14% of third-quarter revenues, down from 20% in the year-ago quarter.
Non-GAAP sales & marketing costs declined 22.8% to $191 million. The same represented 18% of third-quarter revenues, way lower than 25% in the year-ago quarter.
Balance Sheet
The company exited the September quarter with cash and cash equivalents and short-term marketable securities of $3.86 billion, up from $3.68 billion at the end of second-quarter 2023. As of Sep 30, 2023, TWLO’s long-term debt amounted to $988.6 million.
During the first nine months of 2023, Twilio generated an operating cash flow of $192.2 million and repurchased stocks worth $548.9 million. Moreover, the company revealed that it had bought back $620 million worth of its common stock till Nov 7, under the ongoing $1-billion share repurchase program authorized in February 2023. The program will expire in December 2024.
Q4 Guidance
For the current quarter ending Dec 31, 2023, TWLO anticipates revenues between $1.03 billion and $1.04 billion, indicating a year-over-year increase of 1-2% on a reported basis and 4-5% organically. Twilio expects non-GAAP earnings in the range of 53-57 cents per share for the same time frame. Our model estimates non-GAAP income from operations in the $115-$125 million range.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 30.84% due to these changes.
VGM Scores
Currently, Twilio has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Twilio has a Zacks Rank #3 (Hold). We expect an in-line 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 19.6%. The company reported its results for the quarter ended September 2023 more than a month ago.
Aspen Technology reported revenues of $249.31 million in the last reported quarter, representing a year-over-year change of -0.6%. EPS of $1.16 for the same period compares with $2.20 a year ago.
Aspen Technology is expected to post earnings of $1.49 per share for the current quarter, representing a year-over-year change of +325.7%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Aspen Technology. Also, the stock has a VGM Score of D.