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Valued at a market cap of $10.6 billion, Twilio (NYSE: TWLO) offers an enterprise-facing customer engagement platform that drives real-time personalized experiences for brands. It enables companies to use data and communications from sales to marketing, growth, and customer service at every step of the customer journey.
Twilio stock has doubled investor returns since its IPO or initial public offering in 2016. However, TWLO stock is also down 87% from all-time highs, allowing you to buy the dip. Let’s see if you should buy Twilio shares following its Q2 results.
Twilio reported revenue of $1.04 billion in Q2
In Q2 of 2023, Twilio reported revenue of $1.04 billion, an increase of 10% year over year. While communications sales were $913 million, data & applications revenue grew 12% to $124.6 million. It also reported adjusted net income of $0.54 per share, compared to the year-ago loss of $0.11 per share.
Analysts forecast Twilio to report revenue of $986 million and earnings of $0.30 per share in the June quarter. Due to its earnings and revenue beat, TWLO stock trades 6% higher in early-market trading today.
Twilio ended Q2 with 304,000 active customer accounts, up from 275,000 accounts in the year-ago period. Its dollar-based net expansion rate stood at 103%, which suggests existing customers increased spending by 3% on the Twilio platform in the last 12 months.
Twilio is still unprofitable
Twilio reported an adjusted operating income of $120 million, a quarterly record for the company. During the earnings call, Twilio’s CEO Jeff Lawson stated, “We begin the second half of the year energized by the progress we've made to date communications, confident that we've laid the foundations to reaccelerate growth in our data and applications business over time and optimistic about AI's potential to be an excellent for Twilio's vision.”
Twilio emphasized it has made significant strides toward GAAP (generally accepted accounting principles) profitability due to its improving operating margin profile. For instance, the company reduced GAAP operating losses by 50% year over year in Q2, ending the quarter with $72 million in free cash flow.
It now expects to end 2023 with adjusted operating income between $350 million and $400 million.
Twilio continues gaining traction as its software product portfolio allows it to expand its customer base. The company claimed a long-standing communications customer that offers software services to healthcare providers signed another deal to deliver personalized customer experiences and increase trial-to-pay subscription rates to improve patient outcomes.
Twilio also won a deal with Follet, an ed-tech company, to leverage its entire set of segment products. Moreover, it signed an eight-figure deal with a Fortune 100 property and casualty insurance provider in Q3 last year, allowing it to scale to over 15,000 agents.
What next for TWLO stock price and investors?
Analysts tracking Twilio stock expect sales to rise 10% to $4.2 billion in 2023 and 10% to $4.66 billion in 2024. Its bottom line might improve to $1.86 per share in 2024 from a loss of $0.15 per share in 2022.
Priced at 2.2 times forward earnings and 32x forward earnings, TWLO stock is not too expensive.
Wall Street remains bullish on TWLO stock and expects shares to surge over 20% in the next 12 months.
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