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Twillio (TWLO) Q3 Earnings Surpass Estimates, Guidance Up

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Twilio Inc. (TWLO - Free Report) reported third-quarter non-GAAP earnings of 7 cents per share, which beat the Zacks Consensus Estimate of 2 cents. The company had reported loss of 8 cents in the year-ago quarter.

The company’s third-quarter revenues surged 68% year over year to $169 million and surpassed the Zacks Consensus Estimate of $151 million.

Buoyed by a stellar quarterly performance, Twilio provided encouraging view for the fourth quarter and raised its full-year revenue guidance.

Quarter Details

The company’s base revenues also increased 68% year over year to $154.3 million. Excluding Uber, base revenues grew 70%.

Twilio’s top 10 active customer accounts contributed 18% of total revenues, up from 17% in the year-ago and previous quarters. The company’s top two customers, WhatsApp and Uber, contributed 6% and 4% of total revenues, respectively.

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, a number of Twilio Flex deals signed in the third quarter gave further impetus to the company’s Engagement Cloud strategy. The company added workforce optimization or WFO to Flex through the acquisition of Ytica in the quarter.

The company’s acquisitions of Ytica and another company, which was acquired to support its programmable wireless efforts, had a material impact on the top and the bottom line. The company expects it to remain accretive in the fourth quarter as well.

The company registered a 32% surge in active customer accounts, bringing the total count to 61,153 as of Sep 30, 2018. During the third quarter alone, Twilio added more than 3,803 active customer accounts.

Moreover, customers of are currently driving more than 1% of the company’s overall revenues.  Management noted that is growing faster than the company’s overall business.

The company’s international mix of revenues in the quarter was 26%. Twilio has increased its network reach significantly across Europe, Asia and Latin America.

Twilio Inc. Price, Consensus and EPS Surprise

Twilio Inc. Price, Consensus and EPS Surprise | Twilio Inc. Quote

Operating Results

Non-GAAP gross profit climbed approximately 74% year over year to $93.5 million. Gross margin expanded 200 basis points (bps) to 55%.

The company reported non-GAAP operating income of $4.3 million against non-GAAP operating loss of $7.7 million in the year-ago quarter.

The company reported non-GAAP operating margin of 3% against the year-ago quarter’s figure of a negative 8%.

Balance Sheet

The company exited the reported quarter with cash and cash equivalents, and short-term marketable securities of $745.4 million, compared with $795 million reported at the end of the previous quarter.

In addition to this, during the quarter, the company generated cash flow of $12.8 million from operational activities.


For the full year, Twilio now expects revenues between $629 million and $631 million, up from the previous range of $585.5 million and $589.5 million.

Similarly, base revenues are now estimated in the range of $581–$582 million, higher than the previous forecast of $546.5–$548.5 million.

The company now projects non-GAAP earnings per share in the range of 10-11 cents against the earlier projection of 2-4 cents per share.

For the fourth quarter, Twilio estimates revenues to be between $183 million and $185 million. Base revenues are anticipated in the range of $174-$175 million. Non-GAAP earnings are projected in the range of 3-4 cents per share.

Zacks Rank and Stocks to Consider

Twilio currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader technology sector are Intel Corp. (INTC - Free Report) , Twitter, Inc. (TWTR - Free Report) and CACI International (CACI - Free Report) , each 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 Intel, Twitter and CACI International is projected to be 8.4%, 22.1% and 10%, respectively.

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