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Twilio (NYSE:TWLO) Beats Q4 Estimates, Stock Jumps 26.7% On Strong Guidance


Kayode Omotosho /
2022/02/09 4:25 pm EST
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Cloud communications infrastructure company Twilio (NYSE:TWLO) announced better-than-expected results in the Q4 FY2021 quarter, with revenue up 53.7% year on year to $842.7 million. On top of that, guidance for next quarter's revenue was surprisingly good, being $860 million at the midpoint, 6.98% above what analysts were expecting. Twilio made a GAAP loss of $291.3 million, down on its loss of $179.3 million, in the same quarter last year.

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

Twilio (TWLO) Q4 FY2021 Highlights:

  • Revenue: $842.7 million vs analyst estimates of $769.4 million (9.53% beat)
  • EPS (non-GAAP): -$0.20 vs analyst estimates of -$0.22 (7.57% beat)
  • Revenue guidance for Q1 2022 is $860 million at the midpoint, above analyst estimates of $803.8 million
  • Free cash flow was negative $58.7 million, compared to negative free cash flow of $81.6 million in previous quarter
  • Net Revenue Retention Rate: 126%, down from 131% previous quarter
  • Customers: 256,000, up from 250,000 in previous quarter
  • Gross Margin (GAAP): 47%, down from 51.4% same quarter last year

“Our fourth quarter capped off an amazing year of results as we delivered more than $2.8 billion in revenue for the year, growing 61% year-over-year,” said Jeff Lawson, Twilio’s Co-Founder and CEO.

Founded in 2008 by Jeff Lawson, a former engineer at Amazon, Twilio (NYSE:TWLO) 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 first shift towards voice communication over the internet (VOIP), rather than traditional phone networks, happened when the enterprises started replacing business phones with the cheaper VOIP technology. Today, the rise of the consumer internet has increased the need for two way audio and video functionality in applications, driving demand for software tools and platforms that enable this utility.

Sales Growth

As you can see below, Twilio's revenue growth has been incredible over the last year, growing from quarterly revenue of $548 million, to $842.7 million.

Twilio Total Revenue

This was another standout quarter with the revenue up a splendid 53.7% year on year. On top of that, revenue increased $102.5 million quarter on quarter, a very strong improvement on the $71.2 million increase in Q3 2021, and a sign of acceleration of growth, which is very nice to see indeed.

Guidance for the next quarter indicates Twilio is expecting revenue to grow 45.7% year on year to $860 million, slowing down from the 61.6% year-over-year increase in revenue the company had recorded in the same quarter last year.

There are others doing even better than Twilio. 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 150% since the IPO last December. You can find it on our platform for free.

Customer Growth

You can see below that Twilio reported 256,000 customers at the end of the quarter, an increase of 6,000 on last quarter. That is a little 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 Q4 Results

Since it has still been burning cash over the last twelve months it is worth keeping an eye on Twilio’s balance sheet, but we note that with a market capitalization of $35.3 billion and more than $5.35 billion in cash, the company has the capacity to continue to prioritise growth over profitability.

We were impressed by the very optimistic revenue guidance Twilio provided for the next quarter. And we were also excited to see the really strong revenue growth. On the other hand there was a slight slowdown in customer growth. Zooming out, we think this was still a strong quarter, showing the company is staying on target. The company is up 26.7% on the results and currently trades at $256.16 per share.

Should you invest in Twilio right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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