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Twilio shares drop on weak guidance despite strong earnings
Shares in cloud communications services provider Twilio Inc. dropped in after-hours trading today on weaker-than-expected guidance despite the company smashing analysts’ predictions in the second quarter.
For the quarter ended June 30, Twilio reported revenue of $400.8 million, up 46% over the same quarter in 2019. Net loss for the quarter came in at $102.6 million, while profit before items such as stock compensation hit $9.5 million, or nine cents a share, compared with $1.5 million a year ago. Analysts had been expecting a loss of nine cents per share on revenue of $368.3 million.
Twilio’s revenue growth was driven by an increase in customers, passing 200,000 in the quarter, up 24% year-over-year.
While not specifically mentioning COVID-19, Twilio Chief Executive Officer Jeff Lawson said in a statement that “organizations in nearly every industry are turning to Twilio as they identify new ways to communicate with their customers and stakeholders.” Lawson added that “we are just scratching the surface of this huge opportunity and we believe the solutions being built today using our customer engagement platform will be the standard for digital engagement in the future.”
Despite achieving a double beat on earnings and revenue estimates, it was Twilio’s guidance that investors focused on.
For the third quarter, Twilio is estimating revenue of $401 million to $406 million, or year-over-year growth of 36% to 38%. Adjusted loss is predicted to be $10 million to $15 million, or five to nine cents a share. Analysts had been predicting a loss of six cents a share on revenue of $379 million.
Twilio did not say why it expected lower figures in the third quarter, but it could be a case of the company being conservative with its predictions. Twilio has a track record of beating both its own estimates and those of analysts as it did in the first quarter of 2020 and the fourth quarter of 2019.
Twilio stock fell as much as 5.5% in after-hours trading following the earnings release before settling down about 4%. The drop could be described as a blip given that Twilio’s stock price has more than tripled this year.
Photo: Web Summit/Flickr
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