Photo Credit: Gerd Altmann from Pixabay

Communication Platform as a Service (CPaaS) player Twilio (NYSE: TWLO) recently announced its second quarter results that outpaced market expectations. The impressive outlook for the coming quarters sent the stock soaring 7% in the after-hours trading session.

Twilio’s Financials

Twilio’s second quarter revenues grew 4% to $1.08 billion, ahead of the market’s forecast of $1.06 billion. It ended the quarter with a loss of $0.19 per share. On an adjusted basis, it reported an EPS of $0.87 per share which was significantly better than the analyst estimate of $0.71 per share.

Communications revenue grew 4% to $1.01 billion. Segment revenue, formerly Data & Applications, grew 3% to $75.2 million.

Among key metrics, it ended June with more than 316,000 Active Customer Accounts, compared to 304,000 a year ago. Dollar-Based Net Expansion Rate of 102% was lower than previous year’s 103%.

Twilio expects to end the third quarter with revenues of $1.09-$1.11 billion and earnings of $0.81-$0.86 per share. The market was looking for revenues of $1.09 billion and an EPS of $0.73 for the quarter. For the full year, analysts expect revenues of $4.35 billion and earnings of $3.12 per share.

Twilio’s Growth Focus

During the quarter, Twilio remained focused on initiatives to deliver improved growth rates over time. In the near term, it expects growth to be fueled by its expanded network of partners and ISVs. Last quarter, it recorded an eight-figure renewal contract with a leading customer experience provider who will continue to embed Twilio Voice within their customer service software solution.

Additionally, it also signed a new partnership with Omnisend, an omnichannel marketing platform that focuses on the SMB retail market. The partnership will allow Twilio to expand its footprint into new geographies. It is also simplifying the onboarding experience for customers to drive customer engagement. Last quarter, it released a new console experience that helps make recommendations, guiding customers to the right products based on their desired use cases and outcomes.

Twilio’s AI Innovations

In the medium term, Twilio is focusing on product innovation to deliver growth by providing the ability for smarter, more personalized interactions for brands. Its products with AI capabilities such as Verify and Voice Intelligence, and platform innovations that embed AI and machine learning, such as traffic optimization engine and engagement suite are helping drive greater deliverability and better customer engagement. Initial market reports suggest that these products are seeing quick adoption because they are simple to use and are helping customers save costs and effort.

Last quarter, Twilio also released a personalized virtual agent into private beta. The agent natively embeds Segment into Communications. The personalized virtual agent allows its customers to receive a truly personalized interactive voice response. The menu of options for each caller has been customized based on their recent interactions with the company, purchase history, and other related incidents. The product integrates Voice, virtual agent with Google Dialogflow agent, studio, and unified profiles into a simple product. Twilio believes that globally, IVR will continue to evolve with the adoption of AI, and its recent product is an example of one such advancement.

Last month, it released two new capabilities for Segment – Linked Audiences and Segment Data Graph. The new features will integrate data from lakes, clouds, and warehouses with Twilio Segment’s real-time data to allow businesses to transform diverse data points into comprehensive profiles. This level of interoperability will improve the users’ ability to understand and engage with customers and help make the data more actionable.

Twilio’s stock is trading at $61.88 with a market cap of $9.9 billion. The stock had climbed to a 52-week high of $78.16 in December last year, and has grown from the year low of $49.86 that it had fallen to in November last year.

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