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What Should We Expect From Twilio Inc.'s (NYSE:TWLO) Earnings In The Years Ahead?

Simply Wall St

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Twilio Inc.'s (NYSE:TWLO) released its most recent earnings update in December 2018, which revealed company earnings became less negative compared to the previous year's level as a result of recent tailwinds Below is a brief commentary on my key takeaways on how market analysts perceive Twilio's earnings growth trajectory over the next few years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

See our latest analysis for Twilio

Market analysts' consensus outlook for next year seems pessimistic, with earnings becoming even more negative, generating -US$158.1m in 2020. However, earnings are expected to move into an upward direction, generating -US$172.8m in 2021, and -US$215.1m in 2022.

NYSE:TWLO Past and Future Earnings, April 4th 2019

While it’s informative knowing the growth rate year by year relative to today’s figure, it may be more beneficial to evaluate the rate at which the company is growing on average every year. The pro of this method is that we can get a bigger picture of the direction of Twilio's earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. To calculate this rate, I've inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is -16%. This means that, we can presume Twilio will chip away at a rate of -16% every year for the next few years.

Next Steps:

For Twilio, I've compiled three essential factors you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is TWLO worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether TWLO is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of TWLO? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.