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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