Twilio Inc.’s second-quarter revenue jumped 41 percent year-over-year to $943.35 million, beating the consensus. The net loss of $(0.11) per share beat the estimate.
Morgan Stanley analyst Meta Marshall’s Overweight thesis on TWLO factored in the unique value proposition the company has in transforming and optimizing the customer relationship (making it a ‘durable high growth franchise’).
She saw the durability of this growth in Q2, with the company continuing to outgrow expectations. More notably, Meta would expect them to continue to be able to deliver on organic growth expectations for the whole year.
Meta believes the company will achieve breakeven next year. Her base case price target valuation on TWLO is $160.
RBC Capital analyst reiterated Outperform while knocking down the price target from $150 to $125. Twilio reported mixed 2Q results, with a continued deceleration, DBNE softness, and weak gross margins, he noted.
He also had additional questions about TWLO’s profitability, macro headwinds, and growth target.
Piper Sandler analyst Brent Bracelin saw TWLO entering a critical identity juncture in 2022 (similar to 2017) as the business model approaches a $4 billion+ revenue run-rate with a $2 billion+ gross profit run-rate.
Bracelin saw that sales and marketing remain elevated and on pace to eclipse $1 billion or roughly half of gross profit dollars. Comparably, Atlassian Corp. generated $2.4 billion+ in gross profit with an S&M budget of <$0.5 billion.
He lifted his revenue estimates (i.e., empty calories) but cut EPS and price target to $122 from $132 on eroding confidence in margin potential. The $4 billion+ in cash and investments gives TWLO a long leash, he added.
Mizuho analyst Siti Panigrahi reiterated a Buy and cut PT from $200 to $125. Twilio’s strong organic growth beat guidance while the gross margin disappointed, as reflected in AH’s share weakness.
The management reiterated guidance despite macro headwinds. Panigrahi was optimistic about Twilio’s continued dominance in CPaaS and ongoing transition to a customer engagement platform.
Still, he awaited the impact of price increases and software revenue growth on GM improvement. The price target cut reflected recent SaaS multiple compression.
