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Twilio (TWLO) Q4 Earnings and Revenues Surpass Estimates

Twilio Inc. TWLO reported better-than-expected fourth-quarter 2023 results. The programmable communication tool provider reported non-GAAP earnings of 86 cents per share, which surpassed the Zacks Consensus Estimate of 57 cents and came above management’s guidance range of 53-57 cents. The bottom line also witnessed robust improvement from the year-ago quarter’s earnings of 22 cents.

Revenue Details

The cloud-based communications platform-as-a-service provider registered revenues of $1.08 billion. The figure improved 5% year over year and beat the consensus mark of $1.04 billion.

The company benefited from the steady growth in the usage of its products and experienced seasonal sales boost during the holiday season. However, the top line was affected by the challenges from customers in the crypto industry.

Twilio Inc. Price, Consensus and EPS Surprise

Twilio Inc. Price, Consensus and EPS Surprise
Twilio Inc. Price, Consensus and EPS Surprise

Twilio Inc. price-consensus-eps-surprise-chart | Twilio Inc. Quote

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In the fourth quarter, TWLO also restructured its business segments by shifting Flex and Marketing Campaigns to the Communications segment, which was earlier reported in the Data and Applications segment, thereby shifting $54 million of revenues to Communications. The company has renamed its Data and Applications business unit to the Twilio Segment, which includes both the Segment and Engage products.

The company’s dollar-based net expansion rate was 102% in the reported quarter, up from 101% in the previous quarter and down from 110% in the year-ago quarter.

Active customer accounts decreased to 305,000 as of Dec 31, 2023, from 306,000 at the end of the third quarter of 2023. The figure was 290,000 as of Dec 31, 2022.

Operating Results

Non-GAAP gross profit climbed 9% year over year to $564 million. The non-GAAP gross margin expanded 180 basis points to 52.4% year over year and declined 110 basis points sequentially.

Non-GAAP operating income was $172.6 million against the year-ago quarter’s non-GAAP operating loss of $32.9 million. The non-GAAP operating margin was 16% for the reported quarter.

General & administrative (G&A) expenses on a non-GAAP basis decreased 29.1% to $62.1 million. G&A expenses accounted for 6% of quarterly revenues, down from 9% in the year-ago quarter. Research & development (R&D) expenditures on a non-GAAP basis declined 15.9% year over year to $149.2 million. R&D expenses contributed 14% of fourth-quarter revenues, down from 17% in the year-ago quarter.

Non-GAAP sales & marketing costs declined 18.3% to $179.7 million. The same represented 17% of fourth-quarter revenues, lower than 21% in the year-ago quarter.

Balance Sheet

The company exited the December quarter with cash and cash equivalents and short-term marketable securities of $4.01 billion, up from $3.86 billion at the third-quarter 2023 end. As of Dec 31, 2023, TWLO’s long-term debt was $988.6 million.

During fiscal 2023, Twilio generated an operating cash flow of $414.8 million and repurchased stocks worth $656 million. Moreover, the company revealed that it had bought back $730 million worth of its common stock till Feb 14 under the ongoing $1 billion share repurchase program authorized in February 2023. The program will expire in December 2024.

Q1 Guidance

For the current quarter ending Mar 31, 2024, TWLO anticipates revenues between $1.025 billion and $1.035 billion, indicating a year-over-year increase of 2-3% on a reported basis and 5-6% on an organic basis. Twilio forecasts non-GAAP earnings in the range of 56-60 cents per share.

Zacks Rank and Other Stocks to Consider

Currently, Twilio carries a Zacks Rank #2 (Buy). Shares of TWLO have gained 9.4% in the past year.

Some other top-ranked stocks from the broader technology sector are BlackLine BL, Dell Technologies DELL and Arista Networks ANET, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for BlackLine’s first-quarter 2024 earnings has remained unchanged at 47 cents per share in the past 90 days. Shares of BL have lost 20.9% in the past year.

The Zacks Consensus Estimate for Dell's fourth-quarter 2024 earnings per share has been revised northward by a penny to $1.73 in the past 30 days. Shares of DELL have surged 101% in the past year.

The Zacks Consensus Estimate for Arista’s first-quarter 2024 earnings has been revised by 3 cents northward to $1.70 per share. Shares of ANET have rallied 87.7% in the past year.

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