Application infrastructure firm Twilio Inc. beat expectations on revenue as it delivered its fourth-quarter financial results today and followed with a strong outlook for the next three months, sending its stock sky-high in extended trading.

The company reported a loss before certain costs such as stock compensation of $27.2 million, or 20 cents per share, on revenue of $842.7 million in the quarter, up 54% from a year ago.

Wall Street had expected Twilio to report a 20-cent loss on sales of just $773 million, so it was a positive result overall.

The report sent Twilio’s stock up more than 19% in the extended trading session.

Twilio co-founder and Chief Executive Jeff Lawson (pictured) said the fourth quarter helped to cap off an “amazing year” for the company, which delivered $2.8 billion in revenue in fiscal 2021, up 61% from a year ago.

“The combination of our leading cloud communications platform with Twilio Segment’s customer data platform gives Twilio an unparalleled view into the customer journey, and I’ve never been more excited about the future of the company than I am today,” the CEO added.

Twilio sells tools for application developers that help them embed capabilities such as voice, text messages and video into their apps. The company’s software also makes it easier for cloud-based apps to communicate with one another. Those capabilities propelled Twilio to strong growth in the months after the COVID-19 pandemic emerged, with the company reporting rising revenues over a string of quarters from early 2000.

The company’s run came to an end in late October, however, when a decline in customer retention and cautious guidance resulted in a sharp selloff of its stock. This time, though, Twilio offered a more upbeat forecast for the coming quarter. It expects revenue in a range of $855 million to $865 million, well ahead of Wall Street’s forecast of $824.8 million.

The forecast appears to have been enough to offset the fact that Twilio’s dollar-based net expansion rate declined from 139% one year ago, and 132% in the previous quarter, to 126% now. The net expansion rate is a key number for investors as it shows how much the company’s existing user base is spending on its products and services from one year to the next.

On the other hand, Twilio did at least have positive news on the customer acquisition front. It said it ended the quarter with 256,000 active customer accounts, up from 221,000 a year ago.

Holger Mueller of Constellation Research Inc. told SiliconANGLE that Twilio is showing “amazing growth” thanks to its key role in enabling communications and collaboration for next-generation applications. However, he said he was concerned by Twilio’s rising expenses, which almost doubled over the last year, much faster than its 60%-plus revenue growth.

“The cost of revenue is a problem,” Mueller said. “Twilio uses partner cloud infrastructure and those costs are constant at approximately 50% of its revenue, so the only lever is reducing operating expenses, but they grew by almost $900 million last year. It looks like Twilio can’t grow itself out of generating losses. How it addresses this will be the key question for the upcoming financial year.”

Photo: Web Summit/Flickr