Twilio May Still Be Overvalued, But Expect Company To Grow Substantially In The Years To Come

Q4 Review

Reviewing the fourth-quarter results, Argus noted the company reported 60 percent year-over-year and 15 percent quarter-over-quarter revenue growth. The firm also pointed out the 44 percent year-over-year growth in its active customer accounts and the 155 percent increase in the dollar-based net expansion, which is defined as the active existing users embracing new products and services.

Contradicting Street expectations for a loss of $0.05 per share, the firm noted that the company reported break-even results on a non-GAAP basis.

Twilio's cloud-based platform enables clients to embed messaging, voice, video and authentication capabilities directly into their software applications.

Losses To Resume

Argus believes the company could post losses for at least several more quarters and for 2017 despite the surprise break-even results in the fourth quarter of 2016. Concluding Argus said, its Hold rating seems appropriate, premising the rating on the stock's high valuations, the stock's net run-up from its IPO and the prospects for continued losses in the near term.

In pre-market trading, shares of Twilio were down 4.15 percent at $31.44 and at last check mid-morning, shares were down 3.11 percent at $31.79.