Twilio released their Q1 2020 earnings report on May 6. The results stunned the market – they beat Q1 estimates and raised projections for Q2 by a wide margin. Growth was across the board – benefitting from COVID-19 specific use cases and their broad platform offering, as companies flock towards digitizing customer communications. The market reacted the next day by driving TWLO stock up over 39% to close at nearly $171. All analysts raised their price targets significantly. Commentary on the earnings call was very positive. Let’s take a deeper look at the results, customer wins, overall market trends and then draw some conclusions for the investment thesis going forward.

Investors are probably familiar with the latest trend among stock-picking sites and analysts to publish a list of technology stocks that will likely benefit from the COVID-19 situation. While obvious picks like ZM, WORK and TDOC are usually mentioned, I haven’t seen Twilio included. This is understandable, as the Twilio brand is usually suppressed in end-user applications that utilize its services. Yet, as the leading provider of programmable communications, many of these types of solutions for social distancing (video collaboration, messaging, chat, email, etc.) could be built on Twilio’s platform. Over the last couple of weeks, Twilio (TWLO) has announced several product extensions and ready-made templates that provide solutions for connecting and notifying people in a COVID-19 impacted environment. In this post, I’ll highlight some of the recent announcements from Twilio and implications for incremental use of their platform.