The Sell-Side Digs Into Twilio Earnings

Twilio Inc TWLO reported in-line second-quarter EPS and revenue above analyst expectations. The company also issued third-quarter guidance above consensus estimates and said it reached a $1 billion annual revenue run rate in the second quarter for the first time.

Twilio is up 56% year to date and 141% in the past year, and traders are certainly entertaining the possibility of cashing in on some of those gains.

Several Wall Street analysts have weighed in on whether investors should cut and run on Twilio or stay aboard for more upside. Here’s a sampling of what they’ve had to say.

High Expectations

Morgan Stanley analyst Meta Marshall said the $1 billion run rate news is a big milestone for Twilio.

“While growth remains exceptionally strong,up 86% Y/Y in Q2,55%+ organically, this is largely built into expectations, with TWLO's 15x EV/20e Rev multiple giving credit for 15 years of 25%+ annual growth,” Marshall wrote in a note.

Bank of America analyst Nikolay Beliov said Twilio’s impressive revenue would have been about $1.5 billion higher if not for a delay in the implementation of a Verizon Communications Inc. VZ A2P fee.

“Comps get tougher in 2H19, but Flex (call center), IoT, and international provide growth vectors that are not fully reflected in FY19E estimates,” Beliov wrote.

Rare Growth Numbers

Baird analyst William Power said the Twilio growth story still has a long runway.

“Overall, we remain positive on the core growth opportunity, highlighted by core Twilio base revenue growth of 56% and a dollar-based expansion rate of 140%,” Power wrote.

KeyBanc analyst Brent Bracelin said Twilio is one of only a handful of cloud stocks delivering 50% organic revenue growth.

“While skeptics could focus on decelerating base growth and NRR metrics, we remain bullish on the compelling multi-year growth opportunity ahead and see few other cloud models operating at $1B+ scale that are still growing 50%-plus,” Bracelin wrote.