Bank Of America Thinks Twilio Can Reach $1B In Revenue By 2020

Shares of Twilio Inc. TWLO surged more than 30 percent after the company presented better-than-expected revenue, earnings and 2019 guidance.

The Analyst

Bank of America analyst Nikolay Beliov reiterated a Buy rating and increased the price target from $87 to $92.

The Thesis

The company’s results came in much higher than analysts’ expectations, according to Beliov. Some key highlights from the print included:

• The increase of base revenue to 68 percent, compared to 54 percent in Q2 and 46 percent in Q1.
• Gross margins of 55 percent, which are up from 53 percent in 2017.
• International revenues accounting for 26 percent of total revenues, and demonstrating a higher growth rate than that in the U.S.

Overall, Beliov considers a $1 billion revenue milestone by 2020.

“Our thesis is re-enforced by 3Q results: 1) strong underlying business; 2) top 10 customer headwind becoming a tailwind as % of revenues from the top 10 customers declines from a peak of 32% in FY15 to 20% in FY17 to 15% in FY18E, becoming small enough that base revenues are re-accelerating, which was the case in Q1, Q2, and Q3; 3) set up for sustained beat/raise; and 4) clear path to $1bn in revs by FY20E," the note said.

Price Action

Twilio shares were up 34.4 percent to $95.49 at time of publication Wednesday.

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