Twilio


TWLO

delivered better-than-anticipated first-quarter 2021 results. The company posted non-GAAP earnings of 5 cents per share for the quarter, while the Zacks Consensus Estimate was pegged at a loss of 10 cents. However, the non-GAAP bottom-line figure is a penny lower than the year-ago quarter’s earnings.

Twilio’s quarterly revenues surged 62% year over year to $590 million and also surpassed the Zacks Consensus Estimate of $533.4 million on increase in clientele and the Segment buyout. Segment contributed $44.6 million to the company’s total revenues. The growing adoption of Twilio Flex is also a tailwind.

Twilio is benefiting from the accelerated digital-transformation projects across many industries owing to the remote-working wave amid the COVID-19 pandemic. Organizations are reconfiguring their set-ups for a work-from-home operational environment and making nearly 100% e-commerce a reality.

Quarterly Details

Twilio’s top 10 active customer accounts contributed to 12% of its total revenues, down from the 13% seen in the previous quarter and 15% in the year-ago quarter. The company’s dollar-based net expansion rate was 133% in the reported quarter, down from the 139% registered in the previous quarter and 143% in the year-ago quarter.

Twilio’s active customer accounts increased to more than 235,000 as of Mar 31, 2021, from 221,000 at the end of fourth-quarter 2020 and 190,000 at the end of first-quarter 2020. In the first quarter, Twilio added more than 14,000 active customers.

Operating Results

Non-GAAP gross profit climbed 57.6% year over year to $306.6 million. However, gross margin contracted 200 basis points (bps) to 55%.

Twilio registered first-quarter non-GAAP operating income of $17.3 million, marking a strong improvement from the operating income of $6.1 million posted in the year-ago quarter. Non-GAAP operating margin advanced 100 bps to 3% from the year-earlier quarter’s 2%.

Balance Sheet

The company exited the January-March quarter with cash and cash equivalents plus short-term marketable securities of $5.71 billion, up sequentially from $3.04 billion.

During the quarter, the company generated $4.5 million of cash from operational activities.

Outlook

Twilio issued a bleak bottom-line outlook for second-quarter fiscal 2021. The company forecasts non-GAAP loss per share between 13 cents and 16 cents. The Zacks Consensus Estimate for the same is pegged at a loss per share of 5 cents.

We believe the company’s drab bottom-line outlook reflects elevated spending on its expansion plans. Twilio has entered into new product and geography markets to sustain its high growth momentum.

For the current quarter, the company anticipates revenues between $591 million and $601 million. The Zacks Consensus Estimate is pegged at $571.8 million. It estimates non-GAAP loss from operations in the range of $22 million to $27 million.

Zacks Rank and Stocks to Consider

Twilio currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include

Lam Research Corporation


LRCX

,

ASML Holding N.V.


ASML

and

NVIDIA


NVDA

. While Lam Research and ASML Holding sport a Zacks Rank #1, NVIDIA carries a Zacks Rank #2 (Buy), at present. You can see


the complete list of today’s Zacks #1 Rank stocks here


.

The long-term earnings growth rate for Lam Research, ASML Holding, and NVIDIA is currently pegged at 32.8%, 29.8% and 15.1%, respectively.

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