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Can Growing Customer Base Aid Twilio's (TWLO) Q1 Earnings?

Zacks Equity Research

Twilio Inc. TWLO is expected to benefit from a solid product menu and an increasing customer base in the first quarter of 2019. Results for the quarter are slated to release on Apr 30.

Notably, the company is not only gaining from a robust expansion of its existing clientele but is also aided by the first-time deals with the new ones, courtesy of  Twilio’s firm focus on introducing products and the go-to-market sales strategy.

Click here to know how the company’s overall first-quarter performance is likely to be.

Expanding Customer Base —A Key Driver?

Twilio has been witnessing strong demand for its programmable voice and messaging products, which is driving top-line performance. Its consistent efforts toward developing innovative use case products are expected to boost its customer base in the first quarter.

The company is striving to gain more and more Enterprise customers. Its plan for enterprise customers with more compliance, administrative and security features – Enterprise Plan – which, we believe, should drive its first-quarter enterprise customer growth.

In the last reported quarter, 20% of total revenues was contributed by the top 10 active customer accounts compared to 18% in the third quarter of 2018. This uptrend is likely to continue into the first quarter 2019 as well.

Twilio is also expected to witness growth in customers for its new platform, Twilio Flex, which was launched in the fourth quarter 2018 and already attracted a few deals from key companies.

Twilio’s efforts toward expanding global footprint are commendable. The company has been continuously making investments to meet the requirements of a broader range of global developers and enterprises. Furthermore, it is making strategic alliances, as well as has employed more employees outside the U.S. office to enhance international operations. These efforts are likely to drive the company’s international business in the quarter under review.

Twilio Inc. Price and EPS Surprise

Twilio Inc. Price and EPS Surprise | Twilio Inc. Quote

Zacks Rank and Stocks to Consider

Twilio currently has a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader Computer and Technology sector are CACI International, Inc. CACI, Cadence Design Systems, Inc. CDNS and Verint Systems Inc. VRNT, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for CACI, Cadence and Verint is projected to be 10%, 11% and 12%, respectively.

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