Cloud Stocks: Twilio Steps up Spending for 2020

Cloud Stocks: Twilio Steps Up Spending For 2020

By Sramana Mitra of 1 Million by 1 Million

Monday, February 10, 2020 10:26 AM EST

Twilio (NYSE: TWLO) is a leading player in the Communications PaaS segment that made it to our list of Top 20 Cloud Stocks for 2020. It recently reported a strong quarter that beat estimates but its profitability outlook was disappointing.

Twilio’s Financials

For the fourth quarter of the year, Twilio’s revenues grew 62% to $331.2 million, ahead of the market’s forecast of $315 million. GAAP loss from operations more than doubled to $93.8 million. Non-GAAP earnings was $0.04 per share, in line with analyst estimates.

For the full year 2019, revenue was up 75% to $1.13 billion with $177 million coming from SendGrid since its acquisition in February 2019. GAAP loss from operations more than doubled to $369.8 million. Non-GAAP earnings was $0.16 per share.

Among key metrics, its Q4 base revenues grew 65% over the year to $306.6 million and full year base revenue grew 79% to $1.06 billion. It added 6,908 customers in the quarter to end with 179,000 active customers. Its dollar-based net expansion rate was 132% in the fourth quarter and 136% for the full year.

Revenues from SendGrid grew 30% to $54 million in Q4. Its top 10 active customer accounts accounted for 14% of its total revenues, compared with 20% a year ago and 13% in the last quarter.

For the year 2020, Twilio plans to make significant investments that will affect its profitability. It forecast revenues of $1.475-$1.49 billion for a growth of 30% to 31%, which is a sharp decline from last year’s 75% growth. Non-GAAP operating loss is expected to be $50-$60 million and non-GAAP loss per share is expected to be $0.20 to $0.14.

For the first quarter, Twilio forecast revenue of $335-$338 million at a growth of 44% -45% and a loss of $22 to $25 million. Non-GAAP loss per share is expected to be $0.11 to $0.09.

While the revenue outlook was in line with analyst estimates of $326.7 million for Q1 and $1.46 billion for 2020, analysts were expecting slight profitability of $0.03 per share for the first quarter and $0.23 per share for fiscal 2020.