Why Twilio Inc (TWLO) Shares Jumped Today


Twilio Inc (NYSE:TWLO) investors have a smile on their faces Tuesday morning, after the cloud software maker reported strong second-quarter results, posting revenue and EPS of $95.8 million and $0.05, versus Street’s estimates of $86.2 million and $0.11, respectively. In addition, Twilio provided guidance well ahead of consensus and increased its full-year guidance.

Twilio shares reacted to the news, rising nearly 11% to $33.90 in Tuesday’s trading session.

CEO Jeff Lawson stated, “I’m extremely proud of what our team was able to deliver at our SIGNAL Conference in Q2. We announced 42 new products around SIGNAL – from speech recognition and our new machine learning-powered Understand product, to the launch of an entirely new layer of software – the Twilio Engagement Cloud […] Once again this quarter, we saw a large number of companies across a variety of industries place their trust in our platform.”

Canaccord analyst Richard Davis commented, “Tactically, we expect TWLO to trade in a broad range of about $30-40, with an upward bias over the next few months as investors conclude that 2018 estimates are a floor level with a bit of upside. This print and guide was a good first step, but we acknowledge that it was one in a row. Our independent work on the CPaaS sector suggests that there are no more than a handful of well-constructed, well-run firms in this space that will capture disproportionate share of the market. Investors might not realize that our analysis says that upwards of half of vendors’ growth is from completely new use cases, rather than the oftentimes more competitive and contentious “rip and replace” market populated with legacy systems. Think about the rise of mobile apps for everything from car services to retail and get ready for entirely new markets like public safety and citizens to government communications and you begin to grasp the enormity of this “everything gets connected” theme that we have been writing about for the past few years. Markets like this typically produce good growth, especially for the well-positioned firms. As such, we push back on the bearish narrative that pricing is, or soon will cascade down.” (To watch Davis’ track record, click here)

Overall, 2 research analysts have assigned a Hold rating and 8 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $38.25 which is 25% above where the stock closed yesterday.

Twilio engages in the provision of communications software, cloud-based platform and services. Its developer-first platform approach consists of programmable communications cloud, super network, and business model for innovators.