Twilio Complements, Not Compete With, Salesforce, Oracle, Adobe, Says COO

Cloud communication software maker Twilio Inc (TWLO) beat earnings estimates for the third-quarter — reported after market close Monday.

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Twilio's Q3 revenue grew 51.8% year-over-year to $447.97 million, handsomely beating consensus by $38 million. Adjusted earnings per share of 4 cents, beat consensus by 8 cents.

The company's Q3 adjusted gross margin contracted by 300 basis points YoY to 55%, missing a 55.9% consensus. Sales and marketing expense margin improved 300 basis points to 23% YoY from 26% last year.

Active customer accounts grew 21% YoY to 208,000 at the end of Q3, with the dollar-bases net retention rate improving to 137% compared to 132% last year.

Outlook: Twilio sees Q4 revenue in the range of $450 million to $155 million, higher than the consensus of $436.85 million; adjusted earnings per share loss to be in the range of 8 cents to 11 cents, wider-than-expected 1 cent loss.

Going forward, Twilio will only be providing quarterly guidance.

Key Highlights From Conference Call: Twilio has seen traffic from some of the heavily COVID-19-impacted industries return, but it is still below pre-pandemic levels, CFO Khozema Shipchandler said.

Commenting on the analyst question about whether Twilio sees the legacy customer relationship management companies like Salesforce.com (CRM), Oracle Corporation (ORCL), and Adobe Inc (ADBE), COO George Hu said, "many of our customers today are customers of these other companies. And we're very complementary. We don't often, like, see them in a sense we don't compete with them because we're coming out of the problem in a very different way."

Twilio is still in its infancy in the internet-of-things business, and it will take five to 10 years to mature and capture the market, CEO Jeff Lawson said.

Twilio is cautiously optimistic about their Q4 performance and expect 30% organic revenue growth for the next four years.

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