Is a Beat Likely for Twilio (TWLO) This Earnings Season?
Twilio Inc. TWLO is likely to beat expectations when it reports second-quarter 2023 results on Aug 8.
For the second quarter, the company anticipates revenues between $980 million and $990 million. The Zacks Consensus Estimate for fiscal second-quarter revenues stands at $984.5 billion, indicating a year-over-year increase of 4.4%.
Twilio anticipates non-GAAP earnings between 27 cents and 31 cents per share. The consensus mark for earnings is pegged at 29 cents per share, suggesting a strong improvement from the year-ago quarter’s loss of 11 cents per share.
Twilio’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 138.8%.
Twilio Inc. Price and EPS Surprise
Twilio Inc. price-eps-surprise | Twilio Inc. Quote
Factors at Play
Twilio’s second-quarter results are likely to reflect gains from continued digital transformation initiatives as organizations are continuing to reconfigure their setup for a hybrid operational environment. The strong uptake of Segment, the growing adoption of Twilio Flex and an increasing clientele base are likely to have favored the second-quarter performance.
In the last reported quarter, Twilio added around 10,000 new clients, taking the total active customer count to 300,000 as of Mar 31, 2023. In the second quarter, the company’s increasing scope among leading enterprises is likely to have acted as a key tailwind. Our estimates suggest that TWLO is expected to have ended the second quarter with 307,700 customers, indicating a year-over-year improvement of 11.9%.
Solutions like Twilio Conversations, SendGrid Ads and SendGrid’s Email Validation application programming interface are likely to have contributed to the second-quarter performance. The company’s efforts to fortify its global footprint are likely to get reflected in the to-be-reported quarter's results.
Our estimates suggest that the company’s International revenues are likely to have increased 3.4% year over year to $338.2 million in the second quarter. Meanwhile, revenues from the United States are expected to have grown 5% year over year to $647.3 million.
However, softening IT spending, as customers are pushing or postponing their large IT investment plans amid the ongoing uncertain macroeconomic environment and geopolitical issues, is likely to have weighed on the to-be-reported quarter’s top line. Moreover, TWLO witnessed a decline in the average selling price and a contraction in conversion rates in the first quarter due to macroeconomic headwinds. The trend is likely to have continued in the second quarter as well, which is anticipated to have negatively impacted its top line.
However, Twilio’s bottom line is likely to have benefited from its cost-saving initiatives, which include headcount reduction and the closure of several offices. The company ended the first quarter with 6,766 employees, down 17.5% from the year-ago quarter’s 8,199 staff. Our estimates suggest that Twilio is likely to have ended the second quarter with 6,688 employees.
Earnings Whispers
Our proven model predicts an earnings beat for Twilio this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate (31 cents per share) and the Zacks Consensus Estimate (29 cents per share), is +6.90%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: TWLO carries a Zacks Rank #2.
Other Stocks With the Favorable Combination
Per our model, NVIDIA NVDA, Workday WDAY and PagSeguro Digital PAGS also have the right combination of elements to post an earnings beat in their upcoming releases.
NVIDIA is slated to report second-quarter fiscal 2024 results on Aug 23. The company sports a Zacks Rank #1 and has an Earnings ESP of +5.56% at present. NVDA’s earnings beat the Zacks Consensus Estimate twice in the trailing four quarters while missing the same on two occasions, the average surprise being 0.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for second-quarter earnings is pegged at $2.06 per share, suggesting a whopping increase of 303.9% from the year-ago quarter’s earnings of 51 cents. NVIDIA’s quarterly revenues are estimated to increase 64.4% year over year to $11.02 billion.
Workday sports a Zacks Rank #1 and has an Earnings ESP of +2.36%. The company is scheduled to report second-quarter fiscal 2024 results on Aug 24. Its earnings beat the Zacks Consensus Estimate in the preceding four quarters, with the average surprise being 13.1%.
The Zacks Consensus Estimate for Workday’s second-quarter earnings stands at $1.24 per share, 49.4% higher than the year-ago quarter. It is estimated to report revenues of $1.77 billion, which suggests an increase of approximately 15.5% from the year-ago quarter.
PagSeguro sports a Zacks Rank #1 and has an Earnings ESP of +2.97%. The company is anticipated to report second-quarter 2023 results on Aug 24. Its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 36.7%.
The Zacks Consensus Estimate for PAGS’ second-quarter earnings is pegged at 25 cents per share, indicating a year-over-year decline of 46.8%. The consensus mark for revenues stands at $689.4 million, suggesting a year-over-year decrease of 13.2%.
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