Yahoo Finance Twilio (NYSE:TWLO) Exceeds Q2 Expectations, Stock Soars
Cloud communications infrastructure company Twilio (NYSE:TWLO) announced better-than-expected results in Q2 CY2024, with revenue up 4.3% year on year to $1.08 billion. The company expects next quarter's revenue to be around $1.09 billion, in line with analysts' estimates. It made a non-GAAP profit of $0.87 per share, improving from its profit of $0.54 per share in the same quarter last year.
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Twilio (TWLO) Q2 CY2024 Highlights:
Revenue: $1.08 billion vs analyst estimates of $1.06 billion (2.4% beat)
Adjusted Operating Income: $175.3 million vs analyst estimates of $141.6 million (23.8% beat)
EPS (non-GAAP): $0.87 vs analyst estimates of $0.70 (24.2% beat)
Revenue Guidance for Q3 CY2024 is $1.09 billion at the midpoint, roughly in line with what analysts were expecting
Gross Margin (GAAP): 51.3%, up from 48.7% in the same quarter last year
Free Cash Flow of $197.6 million, up 11.4% from the previous quarter
Net Revenue Retention Rate: 102%, in line with the previous quarter
Customers: 316,000, up from 313,000 in the previous quarter
Billings: $1.08 billion at quarter end, up 3.7% year on year
Market Capitalization: $10.12 billion
“We are running the business with increased rigor and discipline, as evidenced by a record quarter of revenue and non-GAAP income from operations, as well as another quarter of strong cash generation,” said Khozema Shipchandler, CEO of Twilio.
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.
Communications Platform
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 decent over the last three years, growing from $668.9 million in Q2 2021 to $1.08 billion this quarter.
Twilio's quarterly revenue was only up 4.3% year on year, which might disappoint some shareholders. However, its revenue increased $35.45 million quarter on quarter, a strong improvement from the $28.9 million decrease in Q1 CY2024. This is a sign of acceleration of growth and very nice to see indeed.
Next quarter's guidance suggests that Twilio is expecting revenue to grow 5.4% year on year to $1.09 billion, in line with the 5.2% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 6.6% over the next 12 months before the earnings results announcement.
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Customer Growth
Twilio reported 316,000 customers at the end of the quarter, an increase of 3,000 from the previous quarter. That's a little slower customer growth than last quarter but in line with what we've observed in past quarters, suggesting that the company still has decent sales momentum.
Key Takeaways from Twilio's Q2 Results
It was good to see Twilio beat analysts' billings expectations this quarter. We were also glad its revenue and operating income outperformed Wall Street's estimates. Next quarter's revenue guidance was in line, which shows that the company is roughly on track. Overall, this was a solid quarter for Twilio. The stock traded up 6.1% to $59.75 immediately after reporting.
So should you invest in Twilio right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
