Twilio Inc. (TWLO - Free Report) reported second-quarter non-GAAP earnings of 3 cents per share against the Zacks Consensus Estimate of a loss of 6 cents per share. The company had reported loss of 5 cents in the year-ago quarter.
The company’s second-quarter revenues surged 54% year over year to $147.8 million and surpassed the Zacks Consensus Estimate of $130 million.
Let’s discuss the second-quarter results in detail.
The company’s base revenues also increased 54% year over year to $135 million. Excluding Uber, base revenues showed consistent growth of 61%.
The company benefited not only from robust expansion within existing customers but also first- time deals with new ones, which resulted from the company’s continued focus on introducing products as well as its go-to-market sales strategy.
Management pointed out solid growth in the company’s core voice and messaging products to be a key driver. Moreover, positive response to Twilio Flex has given further impetus to the company’s Engagement Cloud strategy.
The company registered a 32% surge in active customer accounts, bringing the total count to 57,350 as of Jun 30, 2018. During the second quarter alone, Twilio added more than 3,365 active customer accounts.
Non-GAAP gross profit climbed approximately 48% year over year to $81 million. However, gross margin contracted 200 basis points (bps) to 55% as elevated cost of goods sold more than offset the benefit of higher revenues.
The company reported non-GAAP operating income of $2.2 million, compared with non-GAAP operating loss of $4.7 million in the year-ago quarter.
The company reported non-GAAP operating margin of 1% compared with year-ago quarter’s figure of a negative 5%.
The company exited the reported quarter with cash and cash equivalents, and short-term marketable securities of $795 million, up from $308 million reported at the end of the previous quarter.
In addition to this, during the quarter, the company generated cash flow of $19.2 million from operational activities.
Buoyed by a stellar quarterly performance, Twilio provided encouraging outlook for the third quarter and raised its full-year revenue guidance.
For the full year, Twilio now expects revenues between $585.5 million and $589.5 million, up from the previous range of $538 million and $544 million.
Similarly, base revenues are now estimated in the range of $546.5–$548.5 million, higher than the previous forecast of $507–$510 million.
The company now projects non-GAAP earnings per share in the range of 2-4 cents against the earlier projection of a loss of 7-10 cents per share.
For the third quarter, Twilio estimates revenues to be between $150 million and $152 million. Base revenues are anticipated in the range of $142-$143 million. Non-GAAP earnings are projected in the range of 2-3 cents per share.
Zacks Rank & Key Picks
Twilio currently has a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader technology sector are Zillow Group (ZG - Free Report) , Science Applications (SAIC - Free Report) and Verint Systems (VRNT - Free Report) , 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 for Zillow, Science Applications and Verint is projected to be 15.4%, 5% and 10%, respectively.
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