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Twilio Jumps 25% in After-Hours Trading on 57% Surprise Sales Leap - TipRanks Financial Blog


Twilio Jumps 25% in After-Hours Trading on 57% Surprise Sales Leap

Twilio (TWLO) surprised investors with higher-than-expected revenue pushing shares up as much as 25% in after-hours trading as stay-at-home orders to contain the coronavirus pandemic lifted demand for cloud technology solutions.

Total revenue jumped 57% to $364.9 million in the first quarter compared with the same period last year, beating analysts’ expectations by $36.59 million. Looking ahead, Twilio sees the growing sales trend continue as it forecasts a revenue range of $365 million to $370 million for the second quarter, reflecting an increase of 33% to 35% year-on-year. Analysts’ consensus was for $323.4 million.

“We delivered strong first quarter revenue growth of 57% year-over-year, as customers across industries turned to Twilio’s customer engagement platform to accelerate their digital transformation efforts,” said Jeff Lawson, Twilio’s co-founder and CEO. “Our platform provides three things the world needs right now: digital engagement, software agility and cloud scale.”

Diluted earnings per share in the first quarter rose to $0.06 from $0.05 year-on-year, beating market estimates by $0.17.

Active customer accounts advanced 23% in the first three months of the year to 190,000 compared with the year-earlier period. The company had 3,060 employees as of March 31, 2020.

In reaction to the earnings, five-star analyst Ryan Koontz at Rosenblatt Securities raised his price target on the stock to $150 from $80, while maintaining his Hold rating.

“In contrast to our expectation that TWLO would suffer from a COVID-19 driven consumer spending slow down, the company saw a surge in revenue (organic +48 % y/y) across the board as customers looked increasingly to TWLO to maintain customer engagement through digital channels,” Koontz said in a note to investors.

Koontz added that the company’s management confirmed that it was on track to increase FY20 spending in sales and marketing, IT infrastructure, and lower cost R&D expansion in an effort to improve its competitive position.

“Impressive revenue strength through 1H20 amidst COVID-19 impacts increases our confidence in management’s ability to navigate to scale in a competitive and newly uncertain macro environment,” Koontz said. “We maintain our high confidence in management’s aggressive investment approach to drive revenue growth.”

Overall, Wall Street analysts have a Moderate Buy consensus rating on Twilio’s stock based on 9 Buys and 6 Holds. The $125.83 average price target indicates a mere 2.8% upside potential in the next 12 months. (See Twilio stock analysis on TipRanks).

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Sharon Wrobel
Sharon Wrobel is a journalist and writer with two decades of experience covering financial news in the U.S., Europe and the Middle East. Her work has appeared in global publications including The Financial Times, Bloomberg and The Jerusalem Post.

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