UPDATED 19:43 EDT / FEBRUARY 12 2019

CLOUD

Twilio trips up on poor profit outlook

Cloud communications services company Twilio Inc. saw its stock take a tumble on disappointing guidance for the year ahead, despite beating estimates today for its latest latest quarter.

Indeed, Twilio saw its fourth-quarter sales jump 77 percent from a year ago, to $204.3 million, as it posted earnings before certain costs such as stock compensation of 4 cents per share.

Analysts were expecting a profit of 4 cents per share on revenue of just $185 million.

But the strong quarter, which saw Twilio swing from a loss in the same quarter one year ago to a slight profit today, was tempered by poor profit outlook that missed estimates by some distance.

The company, which sells cloud-based communications services in the form of application programming interfaces to help enterprises embed voice, text messaging and video into their software apps, said its 2019 earnings will fall between 8 and 11 cents per share. Analysts had pegged Twilio’s 2019 earnings at 16 cents per share.

The revenue outlook for 2019 was somewhat better, with Twilio saying it expects to pull in $1.07 billion sales. Analysts had forecast $984 million in revenue.

Shareholders were still upset, however, as Twilio’s stock fell by more than 5.5 percent in after-hours trading.

The earnings and revenue forecast notably includes expected sales from SendGrid Inc., a cloud email services provider, that Twilio acquired for about $2 billion in October.

Twilio’s forecast for the first quarter was better, at least. For the three month period ending in March, it said it’s expecting earnings of a penny per share on revenue of $222 million to $225 million.

Despite the stock drop, Twilio Chief Executive Officer Jeff Lawson (pictured) said the quarter was strong overall, with the company being particularly successful on the customer acquisition front. He said the company now boasts 64,286 active customer accounts, up from 61,153 at the end of its third quarter.

“Our engagement platform strategy is working well,” Lawson said in a statement. “It’s changing the types of conversations we’re having with customers and producing early success with products like Flex. And we’ve proven our ability to augment our developer led go to market model with a significant sales motion driving deeper, more strategic relationships with our existing customers and successfully acquiring new customers.”

Twilio has comfortably established itself as a leader in the cloud communications market, but it does face some competition on that front. Amsterdam-based MessageBird B.V. for example, is a rival that has just said it’s partnering with a company called SparkPost Corp. that provides email delivery and analytics services. The two companies appear to be trying to replicate what Twilio is doing with SendGrid, adding cloud email support to its existing communications software.

“Twilio is on the way with its communications platform-as-a-service approach and the results are in and they are good,” said Holger Mueller, principal analyst and vice president at Constellation Research Inc. “The combination with SendGrid will give the vendor extra growth. Now it needs to manage expectations, but in the meantime it offers an attractive platform to power next generation applications.”

Photo: JDLasica/Flickr

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