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Communication Platform as a Service (CPaaS) player Twilio (NYSE: TWLO) recently announced its third quarter results that outpaced market expectations. The improved outlook and the strong performance helped take the stock 10% higher in the after-hours trading session.

Twilio’s Financials

Twilio’s third quarter revenues grew 10% to $1.134 billion, ahead of the market’s forecast of $1.09 billion. On an adjusted basis, it reported an EPS of $1.02, which was significantly better than the analyst estimates of $0.87.

Communications revenue grew 10% to $1.06 billion. Segment revenue, formerly Data & Applications, was flat at $73.4 million.

Among key metrics, Twilio ended the quarter with more than 320,000 Active Customer Accounts, compared to 306,000 a year ago. Dollar-Based Net Expansion Rate of 105% was better than previous year’s 101%.

Twilio expects to end the third quarter with revenues of $1.15-$1.16 billion and earnings of $0.95-$1.00 per share. The market was looking for revenues of $1.15 billion and an EPS of $0.86. For the full year, analysts expect revenues of $4.37 billion and earnings of $3.41 per share.

Twilio’s AI Growth Focus

Twilio remains focused on embedding AI and ML capabilities throughout its platform to provide a differentiated offering to its customers. It expects these initiatives to help deliver a stronger return on investment for its customers while it automates capabilities, boosts productivity, and drives personalization at scale. By integrating communications and customer data, Twilio can help brands deliver deeper customer engagement. It recently reported that it is powering over 8 trillion emails and billions of messages annually to help customers drive engagement.

It recently announced an integration with OpenAI’s new real-time API, that will make it easier for Twilio’s customers and developers to build conversational virtual agents. Customers will have access to OpenAI’s multilingual and multimodal GPT 4.0 model to create solutions and build virtual agents for IVRs.

Twilio is also looking at improving the quality of its message deliverability. It recently released a deliverability score on its console that comes with personalized actionable instructions from its AI agent. The capability helps customers take immediate action to fix messaging deliverability errors. By providing analytics around the issue, it is also simplifying the messaging experience for developers, leading to better engagement. Recently, it also announced the public beta launch of Rich Communication Services (RCS) Business Messaging via its Programmable Messaging and Verify APIs.

The service is targeted at customers looking to deliver a more custom personalized experience. Its RCS offering will automatically upgrade SMS messages to RCS on capable devices at no additional cost to include the incorporation of business logos, tagline, business name, trusted sender verification by Google, and read receipts. RCS messaging allows businesses to create interactive experiences with call-to-action buttons, thus adding the capability for end users to take immediate actions within the message itself.

Twilio’s stock is trading at $96.59 with a market cap of $14.7 billion. The stock had climbed to a 52-week high of $101 soon after result announcement. It has recovered from the 52-week low of $52.51 that it had fallen to in June this year.

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