Twilio (TWLO 108.17, -7.12, -6.18%)
is trading lower despite reporting strong fourth quarter results last night.
It was a difficult setup into earnings. The stock was up well over 300% over the last year, so expectations were sky high.
The company reported strong fourth quarter results, but there was a lack of clarity around the strength of guidance for the first quarter and fiscal 2019, which included the recent acquisition of SendGrid, but was not included in analyst estimates.
Quarterly revenue accelerated for the fourth consecutive quarter. Revenue grew 77% to $204 mln, surpassing estimates by more than 10%.
On the call, management attributed 10 percentage points of growth from a potentially one-time significant seasonal spending ramp from a large international customer that was added last year and positive impacts from the mid-term elections in the US. Management implied that the revenue beat would've been closer to 4% excluding those two benefits.
Twilio has beaten revenue expectations all eleven quarters since its IPO. The company has blown away revenue estimates nine consecutive quarters.
Guidance for the first quarter and fiscal 2019 was not directly comparable to consensus, but analysts didn't take much of an issue with the outlook.
Twilio guided for 45% organic growth for Twilio-only base revenue and 25% organic growth for SendGrid base revenue.
The company guided for modest operating profits as it continues to reinvest in the business to drive growth given its leadership position in the early stage of the Communications Platform as a service (CPaaS) market.
Eventually, investors will want to see some leverage in the business, but the tremendous growth profile continues to have investors salivating for now.
Management and analysts were upbeat regarding cross-selling synergies with SendGrid.
With a market value approaching $15 bln, the stock trades with a low teens revenue multiple. Investors see a long runway for growth for this leader in the CPaaS market.
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