Twilio (NYSE:TWLO) has had a roller coaster year so far. The stock had climbed to record highs this summer. But since then, the stock has been falling as the company fails to keep with the market’s expectations on financial performance. The recently announced fourth quarter outlook was no better, and the stock fell more than 10% post the announcement.
For the third quarter of the year, Twilio’s revenues grew 75% over the year to $295.1 million, ahead of the market’s forecast of $287 million. While revenues delivered a strong growth, Twilio reported that errors in its billing process had resulted in it issuing one-time credits of $5 million to customers this quarter. Twilio ended the quarter with non-GAAP earnings of $0.03 per share, ahead of the Street’s forecast earnings of $0.02 per share but worse than previous year’s $0.07 per share.
Among key metrics, its organic base revenues grew 47% over the year to $227 million. Revenues from SendGrid grew 31% to $49 million. Twilio’s top 10 active customer accounts accounted for 13% of its total revenues, compared with 18% a year-ago and 13% in the last quarter. Its dollar-based net expansion rate fell from 145% last year to 132% in the reported quarter. It added over 10,220 customers in the quarter to end with over 172,090 active customers.
While the company outpaced market expectations for the reported quarter, its outlook was very disappointing. For the current quarter, Twilio forecast revenues of $311-$314 million with an EPS of $0.01-$0.02. The Street was looking for revenues of $321.2 million with an EPS of $0.07 for the quarter. Twilio expects to end the year with revenues of $1.114-$1.117 billion, falling short of the Street’s outlook of revenues of $1.2 billion.
Twilio’s API Upgrades
Twilio is targeting growth through product upgrades. During the recent quarter, it announced several new platform upgrades. It introduced Twilio Conversations, an API that allows developers to build conversational experiences across multiple messaging channels. Conversations API integrates various messaging channels by allowing developers to leverage one unified API to scale group conversations across SMS, MMS, Chat, and WhatsApp. The API allows customers to connect directly to the field service agents using messaging capabilities and helps deliver secure, compliant conversations for financial services.
Twilio also announced the beta release of SendGrid Ads, a new advertising capability within its Marketing Campaigns platform that will allow marketers to create multi-channel engagements. Marketers will now be able to extend their existing email campaigns to other channels by building targeted display and social ad campaigns within the same platform. They can invite potential clients to sign up for emails from within a lead ad on other channels and can also target them on an existing email contact list.
It introduced Twilio Media Streams, an API that helps improve customer support by allowing businesses to access, analyze, and act on the voice calls in real time. Instead of waiting for analytics that happen on recordings after the calls, Twilio users can now leverage AI capabilities to detect the tone and nature of the call to understand the sentiment of the caller and address the issues accordingly.
Twilio’s stock is trading at $96.23 with a market capitalization of $13 billion. It had climbed to a 52-week high of $151 in July this year. The stock has been climbing from the 52-week low of $73.15 in December last year.
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