Tag: TWLO (Page 1 of 2)

Checking in on Twilio (TWLO)

August 18, 2022 / poffringa

I like to keep tabs on stocks that I have owned previously, in the event that their execution catches back up with the potential I had identified previously. When I invest in a company, it is because I see an opportunity in which a strong product strategy could drive durable revenue growth and operating leverage over the long term. However, that thesis may not always play out as expected, or may take longer to align with execution. Companies can also experience different product adoption curves, cycling through rapid and slowing growth, as each product category achieves market fit.

Twilio (TWLO) is one such stock that I rotated in and out of, first entering in mid-2018 and exiting in 2021. During that time period, I watched the stock ascend from about $60 to an all-time-high of $443 in February 2021. Since its 2021 highs, the stock has descended back into the $80’s, putting it well below the price range going back to 2019 (pre-Covid). It’s Price/Sales ratio is now below 5, an all-time low over the prior 5 years. This ratio was above 10 for most of 2018-2019, reaching as high as 20 in mid-2019 and even peaked at 37 in 2021.

Twilio (TWLO) Q2 2021 Update

September 12, 2021 / poffringa

Twilio released their Q2 2021 earnings report on July 29th. The results were mixed. Twilio outperformed significantly on the top-line, but gross margin and operating margin were lower than investors had hoped. TWLO stock dropped 5% the day after earnings and has sunk almost 13% from the pre-earnings price to date. Looking forward to Q3, Twilio’s total and organic growth should accelerate slightly, but additional headcount and acquisition absorption will keep operating margins under pressure.

At a high level, Twilio is continuing their rapid expansion trajectory, marked by organic growth over 50% and significant uptick in international activity. These are being driven by the broad enterprise migration of offline customer experiences into new digital channels. This digital transformation often takes the form of building custom applications, for which Twilio’s programmable communications APIs provide key building blocks. I expect these secular tailwinds to continue and provide ongoing demand to drive Twilio’s future expansion.

Twilio (TWLO) Q1 2021 Update

June 9, 2021 / poffringa

Twilio released Q1 2021 earnings results on May 5th. They continue to demonstrate strong revenue growth at scale, with both Q1 actuals and Q2 estimates coming in well ahead of expectations. The continued delayed progress on gross margin improvement is causing some consternation for investors. Twilio has plans for this, but they are taking time to ramp. Additionally, rapid headcount growth is putting pressure on operating margins for the next quarter, but I expect this to be transitory as Twilio absorbs and optimizes staff from recent acquisitions.

Overall, Twilio is continuing their consistent expansion trajectory. The key to appreciating Twilio’s potential is to consider the enormous TAM that they occupy, their leadership position within it and the multiple product expansion vectors still available. Platform growth is coming both from organic product development and strategic acquisitions. Segment in particular adds a whole new dimension of insight to Twilio’s communications capabilities, allowing the combined company to close the loop on customer preferences and optimize marketing performance in a way that CPaaS competitors cannot match. Twilio is quickly evolving beyond just providing communications plumbing to enabling data-informed applications that drive enriched customer engagement for enterprises.

Twilio (TWLO) Q3 Recap

November 8, 2020 / poffringa

Twilio announced Q3 earnings on October 26th. The results were strong, beating estimates for both revenue and earnings by a large margin. Similarly, the company raised Q4 revenue estimates by about 6% of annualized growth at the midpoint. In spite of this, TWLO stock dropped 5% the following day. As investors will recall, Twilio conducted their Investor Day on October 1st. During that event, leadership announced that they would exceed their Q3 revenue estimates, as well as provided several other bullish long term performance expectations. Those updates drove the stock up about 13%. Twilio also conducted their annual user conference, Signal, in late September, which included several new product releases and large customer use cases. Finally, Twilio acquired leading Customer Data Platform (CDP) provider Segment in October.

Obviously, the past several months were packed with exciting updates to the Twilio story. In this blog post, I review Twilio’s Q3 earnings, Investor Day and the Segment acquisition. I also dig into product enhancements announced at Signal and revisit the competitive landscape. For a refresher of my prior coverage of Twilio, interested investors can read past quarterly updates and my original investment thesis.

Twilio (TWLO) Q2 Recap

August 23, 2020 / poffringa

Twilio announced Q2 earnings on August 4th. The results were strong, beating estimates for both revenue and earnings by a large margin. Similarly, they raised Q3 revenue estimates by almost 10% of annualized growth at the top end. In spite of this, TWLO stock dropped a modest 2% the following day, as the stock had run up prior to earnings and market participants were likely expecting a bigger beat. On the earnings call, Twilio management highlighted several customers wins and momentum in telehealth. Subsequent to earnings, Twilio conducted a capital raise for another $1.25B, fueling speculation of an acquisition. In this blog post, I review Twilio’s Q2 earnings and other business updates that occurred during the quarter. I also dig into product enhancements and revisit the competitive landscape. For a refresher of my prior coverage of Twilio, interested investors can read past quarterly updates and my original investment thesis.

Independent Software Providers and the Cloud Vendors

July 26, 2020 / poffringa

Early in the evolution of cloud computing infrastructure, the cloud providers were rapidly expanding their offerings. For a while, it seemed they would leave no room for independent providers in a land grab to address every segment of software infrastructure. As the landscape has matured and enterprises increasingly implement a multi-cloud strategy, it has become clear that independent providers can not only co-exist, but thrive, in this environment. Examples are Datadog for observability, Twilio for communications, MongoDB for databases and Fastly for CDN.

This blog post examines the history of cloud service providers and the evolution of their offerings. As cloud vendors have defined broad categories of software services, they have left openings for nimble, focused independent software vendors to leverage the same cloud infrastructure to deliver substantially better product offerings in some segments. From this, we can draw observations about why they are succeeding and what they need to continue doing. Investors occasionally raise competitive concerns for independent software providers that cloud vendors will choose at some point to crush them. I posit that threat has passed in many categories. This post seeks to help investors understand what has changed and how to reason about the risks going forward for their favorite independent software company investments.

Twilio (TWLO) Q1 2020 Earnings Results Review

May 10, 2020 / poffringa

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.

Twilio Announces Communications Solutions for COVID-19

March 29, 2020 / poffringa

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.

Twilio (TWLO) Q4 2019 Earnings Results

February 7, 2020 / poffringa

Twilio released earnings results for Q4 2019 on February 5, 2020. These results were met with mixed response. The market clearly expected more, with TWLO stock closing down 7.3% on the following day. Yet, analysts reacted favorably with 6 out of 7 raising their price target and reiterating a buy rating. Let’s dive into the details.

Insights from Microsoft Earnings Call

January 30, 2020 / poffringa

Microsoft reported FY20 Q2 earnings after the market close on January 29th. I won’t dig into Microsoft’s performance overall, as it is covered thoroughly by other analysts. However, within the earnings release and subsequent analyst call, there were some implications for smaller, niche software companies that may be useful for investors to consider.

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