Twilio 'Failed To Impress' And Faces A 'Long Turnaround' — 4 Analysts On Q1 Print

Shares of Twilio Inc TWLO tanked in early trading on Wednesday, despite the company reporting first-quarter results and issued weak guidance.

The report came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

• Morgan Stanley analyst Meta Marshall reiterated an Overweight rating, while slashing the price target from $82 to $65.
• Needham analyst Ryan Koontz reaffirmed a Buy rating, while reducing the price target from $88 to $65.
• RBC Capital Markets analyst Rishi Jaluria maintained a Sector Perform rating, while reducing the price target from $75 to $55.
• JMP Securities analyst Patrick Walravens reiterated a Market Outperform rating and price target of $110.

Check out other analyst stock ratings.

Morgan Stanley

Twilio reported better-than-expected results for the first quarter, highlighting increasing “opex discipline.” Marshall said.

Macro is an overhang in the near term and "reacceleration from sales changes in the software business could come in Q4," she added. Expect investors to remain on the sidelines as it is difficult to parse how much of this meaningful deceleration over the past couple of years is "macro vs. self-inflicted sales organization moves.”

Needham

Twilio’s first-quarter results “failed to impress,” Koontz said.

“Management noted that its mature Communications segment has further weakened on the consumer macro and acknowledged deeper setbacks in its emerging Data & Applications business due to high sales turnover,” the analyst wrote. He reduced full-year estimates on “what appears to be a long turn-around.”

RBC Capital Markets

“Twilio's results were lackluster,” with the first-quarter revenue beat being “thin” and the guidance for the second quarter being “only 4-5% growth,” Jaluria said. The company “remains one of the more macro-sensitive names in our coverage,” he added.

“That said, while likely overshadowed by the top-line lull, Twilio did deliver solid upside on profitability, with operating margins expanding to double-digits in the quarter,” the analyst further wrote.

JMP Securities

“Citing a challenging macro, difficult comps, and a consumption model, Twilio offered mixed guidance,” Walravens wrote in a note.

“We like how Twilio has divided its business into two business units, Communications, which is focused on profit first and then growth, and Data & Applications, which is focused on growth and market expansion,” the analyst said. “Twilio continues to have the dominant, developer-focused communication platform and should see consumption come back when the macro improves."

TWLO Price Action: Shares of Twilio had declined by 15.89% to $47.10 at the time of publishing Wednesday.