Twilio’s New Risk Factors Caution About Debt and Tax

This article was originally published on

California-based Twilio (TWLO) provides a cloud-based communications platform for customer engagement. It recently acquired Zipwhip, a toll-free messaging provider, to strengthen its messaging business.

Twilio has also launched a $50 million venture fund to invest in startups and developers who are building the future of customer engagement. The fund has already invested in a number of startups, including Hyro, Algolia, Calixa, and Terazo.

With this in mind, we used TipRanks to take a look at the latest financial performance and newly added risk factors for Twilio. (See Top Smart Score Stocks on TipRanks)

Q3 Financial Results

Twilio reported a 65% year-over-year increase in revenue to $740.2 million for Q3 2021, surpassing the consensus estimate of $680.5 million. It posted adjusted EPS of $0.01, beating the consensus estimate of a loss per share of $0.14. Twilio ended Q3 with $1.5 billion in cash. (See Twilio stock charts on TipRanks).

Risk Factors

According to the new TipRanks Risk Factors tool, Twilio’s main risk category is Finance and Corporate, representing 33% of the total 69 risks identified for the stock. Twilio recently updated its profile with five new risk factors.

The company tells investors that it ended Q3 with $1 billion in debt. It cautions that the debt could limit its ability to obtain additional financing for capital expenditures or acquisitions in the future. The company further warns that the debt could increase its vulnerability to adverse changes in economic conditions.

Twilio informs investors that its business may not generate sufficient cash to meet its debt service obligations. As a result, its credit rating may be downgraded if it misses a debt repayment. Furthermore, the company cautions that it might need to sell some of its assets to raise funds to service its debt.

Twilio cautions that changes in U.S. and global tax laws could increase its tax liability and adversely affect its cash flow and financial position. In addition to establishing international standards for taxing multinationals, the company mentions that some countries have enacted or proposed a digital services tax, which could apply to its business.

The Finance and Corporate risk factor’s sector average is 40%, compared to Twilio’s 33%. Twilio’s stock has gained about 19% year-to-date.

Analysts’ Take

RBC Capital analyst Rishi Jaluria recently reiterated a Buy rating on Twilio stock with a price target of $450. Jaluria’s price target suggests 63.75% upside potential.

Consensus among analysts is a Strong Buy based on 16 Buys and 2 Holds. The average Twilio price target of $426.25 implies 55.11% upside potential to current levels.

Related News:
Johnson Controls Hikes Quarterly Dividend by 26%
Twilio Launches $50 Million Twilio Ventures Fund; Street Says Buy
AstraZeneca’s Covid-19 Antibody Therapy Receives FDA Authorization

Stay Ahead of Everyone Else

Get The Latest Stock News Alerts