UPDATED 20:21 EST / FEBRUARY 05 2020

19043799692_29d0900c8d_k CLOUD

Twilio beats earnings forecasts but its stock falls on lower guidance

Cloud communications services provider Twilio Inc. surpassed the $1 billion annual revenue mark for the first time as it delivered its fourth-quarter and full-year financial results today, but the achievement was overshadowed by disappointing guidance.

The company easily beat Wall Street’s projections, posting a profit before certain costs such as stock compensation of 4 cents per share on revenue of $331.2 million, up 62% from a year ago. Analysts had forecast earnings of just a penny a share on lower revenue of $312.9 million.

For the full year, Twilio reported adjusted earnings of 16 cents per share on revenue of $1.13 billion, up 75% from a year ago.

“Twilio’s 62% year-over-year total revenue growth in the fourth quarter capped off a spectacular year in which we delivered more than $1.13 billion in revenue and welcomed SendGrid to the Twilio family, and added more than 1,400 new employees,” Jeff Lawson (pictured), Twilio’s co-founder and chief executive officer, said in a statement.

SendGrid Inc. was a provider of cloud email services that Twilio acquired in October last year for a company record $2 billion. Twilio has since fully integrated SendGrid’s technology to provide cloud email support that complements its existing communications software, including its popular voice-over-internet-protocol features.

Twilio also had good news on the customer acquisition front, saying it had more than 179,000 active customer accounts at the end of the year, compared to just 64,286 active customer accounts at the end of December 2018.

Constellation Research Inc. analyst Holger Mueller said that in the era of infinite computing, infinite communications are table stakes for enterprises, and that Twilio’s growth suggests it is receiving the bulk of those workloads, powering its customer’s next-generation applications.

“Growing past the $1 billion mark at over 70% is remarkable,” Mueller said. “But ultimately software companies that pass the $1 billion mark need to move to profitability, Twilio still doesn’t have that in the plans for its next full year. The question for investors is when will the management address profitability successfully, ensuring the long term viability of Twilio and its software assets?”

Concerns over Twilio’s profitability won’t be eased by what was disappointing guidance for the next quarter. Company officials said they’re projecting a first-quarter loss of 9 to 11 cents per share on revenue of $335 million to $338 million.

Wall Street had earlier forecast a first-quarter earnings profit of 4 cents per share on revenue of $327.5 million. Twilio’s stock fell almost 6% in after-hours trading.


Photo: JD Lasica/Fickr

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