Twilio Inc TWLO's earnings report impressed investors with a revenue beat in the third quarter. The company's outlook didn't disappoint, as the fourth-quarter guidance came in ahead of expectations and management revised its full-year outlook higher.
The Analyst
Oppenheimer's Ittai Kidron.
The Rating
Kidron maintains an Outperform rating on Twilio's stock with an unchanged $38 price target. (See Kidron's track record here.)
The Thesis
Twilio's third quarter report was "solid" and guidance was "decent," Kidron said in a research report. The earnings report and guidance also confirms the company is seeing "robust traction" across its customer base and reaffirms the bullish case for owning the stock, the analyst said.
Other positive metrics from the quarter include: 1) base revenue growth excluding Uber remains "robust," 2) dollar-based net expansion of 137 percent remains unchanged from the past two quarters, 3) average base revenue/base customer excluding Uber rose 20.7 percent and WhatsApp revenue bounced back and 4) non-U.S. expansion surged 119.4 percent.
The negative aspects of the report include: 1) gross margin hit the lowest level since the fourth quarter of 2014, 2) Uber revenue "cratered" by 53.1 percent year-over-year, 3) the company highlighted high investment activities in research and developments, 4) sales and marketing dollars fell quarter-over-quarter and 5) voice and text continue to account for the "lion's share" of revenue.
Price Action
Shares of Twilio were down 3.59 percent to $26.83 at the time of publication.
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