Twillio (TWLO) Q4 Earnings Meet Estimates, Revenues Beat

Twilio Inc. (NYSE:TWLO) reported fourth-quarter 2018 non-GAAP earnings of 4 cents per share, which matched the Zacks Consensus Estimate. Meanwhile, the company incurred a loss of 3 cents in the year-ago quarter.

The company’s fourth-quarter revenues soared 77% year over year to $204.3 million and also surpassed the Zacks Consensus Estimate of $182 million. Its core products, voice, messaging, e-mail and its engagement platform strategy were key growth drivers.

Quarterly Details

The company’s base revenues also jumped 77% year over year to $186.2 million. Significant increase in seasonal spending from a large international customer added earlier in 2018 and the impact of midterm elections in the United States drove base revenues. Excluding Uber, base revenues grew 79%.

Twilio’s top 10 active customer accounts contributed to 20% of total revenues, up from 17% in the year-earlier period and 18% in the earlier reported quarter.

The company benefited not only from a robust expansion of its existing customer base but also owing to first-time deals with the new ones, which resulted from the company’s firm focus on introducing products and its go-to-market sales strategy. Its go-to-market investments are helping it further penetrate the traditional enterprise.

Moreover, a few Twilio Flex deals signed in the fourth quarter are key catalysts. Gaining adoption of new products is driving the company’s dollar-based net expansion rate, which stood at 147% in the reported quarter.

The company registered a 31.3% surge in active customer accounts, thus bringing the total count to 64,286 as of Dec 31, 2018. Alone in the fourth quarter, Twilio added more than 3,133 active customer accounts.

Operating Results

Non-GAAP gross profit climbed approximately 79% year over year to $110.3 million. Gross margin expanded 100 basis points (bps) to 54%.

The company reported non-GAAP operating income of $2.4 million against non-GAAP operating loss of $3.9 million in the prior-year quarter.

Twilio Inc. Price, Consensus and EPS Surprise

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

Balance Sheet

The company exited the quarter under review with cash and cash equivalents plus short-term marketable securities of $748.3 million compared with $745.4 million sequentially.

Additionally, during the quarter under consideration, the company generated cash flow of $7.98 million from operational activities.

Outlook

For the full year, Twilio expects revenues between $1.065 billion and $1.077 billion. Base revenues are estimated in the range of $1.028-$1.036 billion.

The company projects non-GAAP earnings per share in the band of 8-11 cents.

For the first quarter of 2019, Twilio envisions revenues between $222 million and $225 million. Base revenues are anticipated within $212-$214 million. The company forecasts non-GAAP earnings per share of breakeven to a penny.

SendGrid acquisition is expected to rake in roughly $27-$28 million as part of first-quarter revenues and contribute nearly $168-$170 million to full-year revenues.

Zacks Rank and Other Stocks to Consider

Twilio currently sports a Zacks Rank #1 (Strong Buy). A few other top-ranked stocks in the broader technology sector are Fortinet, Inc. (NASDAQ:FTNT) , MeetMe, Inc. (NASDAQ:MEET) and Verint Systems Inc. (NASDAQ:VRNT) , each sporting a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Fortinet, MeetME and Verint is projected at 16.8%, 20% and 10%, respectively.

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