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Twilio (NYSE:TWLO) Beats Q2 Sales Targets, Provides Optimistic Guidance For Next Quarter


Radek Strnad /
2021/07/29 4:17 pm EDT
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Cloud communications infrastructure company Twilio (NYSE:TWLO) reported Q2 FY2021 results topping analyst expectations, with revenue up 66.8% year on year to $668.9 million. Twilio made a GAAP loss of $227.8 million, down on its loss of $99.9 million, in the same quarter last year.

Is now the time to buy Twilio? Get early access to our full analysis of the earnings results here, it's free

Twilio (TWLO) Q2 FY2021 Highlights:

  • Revenue: $668.9 million vs analyst estimates of $599 million (11.6% beat)
  • EPS (non-GAAP): -$0.11 vs analyst estimates of -$0.13 (17.7% beat)
  • Revenue guidance for Q3 2021 is $675 million at the midpoint, above analyst estimates of $639.3 million
  • Net Revenue Retention Rate: 135%, in line with previous quarter
  • Customers: 240,000, up from 235,000 in previous quarter
  • Gross Margin (GAAP): 49.5%, down from 50.5% previous quarter

“Our strong momentum continued in the second quarter as our revenue growth accelerated at a run rate of more than $2.6 billion,” said Jeff Lawson, Twilio’s co-founder and CEO.

Founded in 2008 by Jeff Lawson, a former engineer at Amazon, Twilio is a software as a service platform that makes it really easy for software developers to use text messaging, voice calls and other forms of communication in their apps.

The rise of the consumer internet is what drives the demand for platforms like Twilio. Organizations are conducting more business online and need to be able to bi-directionaly communicate with their customers, and the COVID pandemic has only further accelerated this shift.

Sales Growth

As you can see below, Twilio's revenue growth has been incredible over the last year, growing from quarterly revenue of $400.8 million, to $668.9 million.

Twilio Total Revenue

This was another standout quarter with the revenue up a splendid 66.8% year on year. On top of that, revenue increased $78.9 million quarter on quarter, a very strong improvement on the $41.8 million increase in Q1 2021, and a sign of acceleration of growth, which is very nice to see indeed.

Analysts covering the company are expecting the revenues to grow 30.7% over the next twelve months, although we would expect them to review their estimates once they get to read these results.

There are others doing even better. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 400% since the IPO in December. You can find it on our platform for free.

Customer Growth

You can see below that Twilio reported 240,000 customers at the end of the quarter, an increase of 5,000 on last quarter. That is a bit slower customer growth than what we are used to seeing lately, suggesting that the customer acquisition momentum is slowing a little bit.

Twilio Customers

Key Takeaways from Twilio's Q2 Results

Sporting a market capitalisation of $67.4 billion, more than $5.92 billion in cash and with positive operating free cash flow over the last twelve months, we're confident that Twilio has the resources it needs to pursue a high growth business strategy.

We were impressed by how strongly Twilio outperformed analysts’ revenue expectations this quarter. And we were also excited to see the really strong revenue growth. On the other hand, it was unfortunate to see the slowdown in customer growth and gross margin deteriorated a little. Overall, we think this was still a strong quarter, that should leave shareholders feeling very positive. The company is down -2.97% on the results and currently trades at $381 per share.

Twilio may have had a good quarter, but investors should also consider its valuation and business qualities, when assessing the investment opportunity. Is now the right time to invest? Are there better opportunities? Get access to our full analysis here, it's free.

The author has no position in any of the stocks mentioned.