Twilio's (TWLO) Q3 Earnings and Revenues Beat Estimates
Twilio TWLO delivered better-than-anticipated third-quarter 2021 results. The company reported non-GAAP earnings of a penny, beating the Zacks Consensus Estimate of a loss of 15 cents per share. However, the bottom line declined 75% from the year-ago quarter’s earnings of 4 cents per share.
The cloud-based communications platform-as-a-service provider reported revenues of $740.2 million, which improved 65% year over year and surpassed the consensus mark of $680.2 million. Twilio Segment contributed $52.3 million to total revenues. The company’s newly acquired Zipwhip business contributed $23.6 million to total revenues.
Twilio has been benefiting from the constant expansion of its international business and the continuous acceleration of digital transformation projects across several industries. The top line was primarily driven by enhancement of customer experiences across various product portfolios like Segment and Flex, which are its fastest-growing SaaS products at present.
During the third quarter, Twilio launched Twilio Live, a cloud-based audio and video live streaming platform, and Twilio Messaging X, a next-generation messaging platform. Recently, the company introduced the first of its kind growth automation platform in the digital era — Twilio Engage — which will enable it to delve deeper into digital marketing.
Twilio Inc. Price, Consensus and EPS Surprise
Twilio Inc. price-consensus-eps-surprise-chart | Twilio Inc. Quote
Quarterly Details
Twilio’s dollar-based net expansion rate was 131% in the reported quarter, down from the 135% in the previous quarter and 137% in the year-ago quarter.
The company’s active customer accounts increased to more than 250,000 as of Sep 30, 2021, from 240,000 at the end of second-quarter 2021 and 208,000 at the end of second-quarter 2020. Twilio Segment customer accounts were also included in the active customer accounts.
Geography wise, 33% of revenues stemmed from outside of the United States, up from 27% in the previous-year quarter.
Operating Results
Non-GAAP gross profit climbed 62.8% year over year to $399.9 million. However, non-GAAP gross margin contracted 100 basis points (bps) to 54%.
Twilio reported third-quarter non-GAAP operating income of $8.2 million, higher than the year-ago quarter’s operating income of $7.3 million. Non-GAAP operating margin contracted 100 bps to 1% from the year-earlier quarter’s 2%.
General & administrative expenses on a non-GAAP basis increased 61.1% to $74.3 million and accounted for 10% of the quarterly revenues.
Research & development expenses on a non-GAAP basis surged 53.3% year over year to $134.2 million and represented 18% of the quarterly revenues.
Non-GAAP sales & marketing expenses surged 75% to $183.2 million and made up 25% of the third-quarter revenues.
Balance Sheet
The company exited the July-September quarter with cash and cash equivalents plus short-term marketable securities of $5.39 billion, down from $5.93 billion at the end of the second quarter.
In the first nine months of 2021, the company used $19.9 million of cash from operational activities.
Guidance
Twilio forecast non-GAAP loss per share between 23 cents and 26 cents for the fourth quarter of 2021. The Zacks Consensus Estimate for the same is pegged at a loss per share of 9 cents.
For the current quarter ending Dec 31, 2021, the company anticipates revenues between $760 million and $770 million, estimating year-over-year growth of 39-40%. The Zacks Consensus Estimate is pegged at $737.4 million. It estimates non-GAAP loss from operations in the range of $40 million to $45 million.
The company noted that its fourth-quarter outlook includes revenue contribution from both its Segment and the newly acquired ZipWhip.
Zacks Rank & Key Picks
Twilio currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader computer and technology sector are Salesforce CRM, HP Inc. HPQ and Infineon Technologies IFNNY, all sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rates for Salesforce, HP and Infineon are currently pegged at 16.8%, 12.7% and 33.0%, respectively.
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