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Twilio (TWLO) to Report Q1 Earnings: What's in the Cards?

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Twilio Inc. (TWLO - Free Report) is slated to release first-quarter 2019 results on Apr 30.

Notably, the company boasts an encouraging record of earnings surprises in the trailing four reported quarters, the average beat being 110.72%.

Its fourth-quarter 2018 revenues soared 77% year over year to $204.3 million and also surpassed the Zacks Consensus Estimate of $182 million. Its core products, voice, messaging, e-mail and engagement platform strategy were key growth drivers.

For the first quarter of 2019, Twilio envisions revenues between $222 million and $225 million. Base revenues are anticipated within $212-$214 million. The Zacks Consensus Estimate for revenues is currently pegged at $223.4 million.

The company forecasts non-GAAP earnings per share of breakeven to a penny. The consensus mark for earnings is pegged at a penny.

Let us take a look at how things are shaping up for the company prior to the announcement.

Factors at Play

Twilio is benefiting from selective acquisitions and strategic investments in businesses and technologies. With the acquisition of SendGrid in February this year, Twilio aims to strengthen its omnichannel communications capabilities by enhancing its Programmable Communications Cloud software. The buyout is expected to contribute $27-$28 million to first-quarter revenues.

With new products gaining more traction, dollar based net expansion rate, which was 147% in the last reported quarter, should be a major first-quarter revenue driver.

Twilio is riding on solid demand for its Twilio Flex platform, which is lending a further impetus to the company’s Engagement Cloud strategy. This uptrend is expected to be a tailwind for the upcoming quarterly results.

However, Twilio expects some headwinds to the gross margin from product, country and customer mix; network service provider fees; and foreign exchange, among others.

Notably, in its last earnings call, it mentioned that a large international customer’s seasonal surge in spending combined with the U.S. midterm election-related spending environment had driven its base revenues in the quarter.

However, in the first quarter of 2019, spending from the international customer reportedly watered down and election-related spending timed out. This is expected to make it difficult for a sequential comparison of base revenues.

Twilio Inc. Price and EPS Surprise

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

What the Zacks Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Twilio has a Zacks Rank #3 and its Earnings ESP is +136.35%.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stock to Consider

Here are a couple of stocks which you may consider as our model shows that they have the right combination of elements to post an earnings beat in their upcoming release:

Fortinet, Inc. (FTNT - Free Report) has an Earnings ESP of +1.49% and is a Zacks #1 Ranked stock. You can see the complete list of today’s Zacks #1 Rank stocks here.

Acacia Communications, Inc. (ACIA - Free Report) has an Earnings ESP of +5.73% and a Zacks Rank #2.

Shopify, Inc. (SHOP - Free Report) has an Earnings ESP of +7.14% and a Zacks Rank #2.

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Acacia Communications, Inc. (ACIA) - free report >>