Twilio Reports Upbeat Q4 Earnings, But Investors Pull Back: What 7 Wall Street Analysts Are Saying

Twilio Inc TWLO shares tanked in early trading on Thursday, even after the company reported upbeat results for its fourth quarter.

The results, which included Twilio not releasing a full-year outlook, saying it would provide the forecast in March, were announced amid an exciting earnings season.

Here are some key analyst takeaways from the release.

Needham On Twilio

Analyst Ryan Koontz maintained a Buy rating while reducing the price target from $80 to $71.

Twilio reported its fourth-quarter revenues and earnings ahead of the consensus estimates on strong Communications revenue, Koontz said in a note. He added, however, that the company’s first-quarter guidance was “mixed.”

“Management did not guide F24 pending a strategic decision on Segment which is sure to raise investor concerns,” the analyst wrote. “We see weak F23 results from Segment of $290MM revenue and ($72MM) OI loss likely to result in a lower valuation for its divestiture, likely to a PE buyer,” he further stated.

Baird On Twilio

Analyst William Power reiterated a Neutral rating while raising the price target from $65 to $70.
Twilio reported “solid” quarterly results, with revenues of $1.076 billion and adjusted operating income of $172.6 million significantly ahead of expectations, Power stated. “Restated communications revenue grew 5% YOY and 8% organically with Segment revenue up 4%,” he added.

“TWLO announced that it is undertaking an operational review of the Segment business to improve results and plans to provide an update in March,” the analyst further wrote.

JMP Securities On Twilio

Analyst Patrick Walravens reaffirmed a Market Outperform rating and price target of $110.

The company’s operational review of the Segment business is expected to conclude in early March, Walravens said.

Meanwhile, Twilio provided its first-quarter guidance, “which was mixed with EPS of $0.56 to $0.60 (consensus $0.54) and operating income of $120.0M-$130.0M (consensus $126.0M) on revenue of $1.025B-$1.035B (consensus $1.049B),” he added.

Check out other analyst stock ratings.

JPMorgan On Twilio

Analyst Mark Murphy maintained an Overweight rating and price target of $76.

“Twilio demonstrates similar execution to prior quarters, though with ongoing headwinds dragging near-term unadjusted revenue growth guidance amid a business model transition,” Murphy wrote in a note.

“While the macro environment remains complex and various factors, including crypto exposure, divestitures, and deprecation of certain products, weighs on near-term growth, we are more constructive on 2H trends and see the ongoing margin expansion in the model as an underappreciated development,” the analyst added.

Scotiabank On Twilio

Analyst Nick Altmann reiterated a Sector Outperform rating and price target of $100.

Although Twilio’s first-quarter guidance seems “a tad light,” it is better than what the stock reaction suggests, Altmann said. The “normalized” guidance for the quarter implies “9% organic growth (ex Crypto & degradation of two business lines) vs. 10% normalized growth in 4Q,” he stated.

While the Communications business generated 25% operating margins in the fourth quarter, management “believes Comms margins can continue to expand,” the analyst wrote. He added that growth stabilized and “DBNE expanded 100 bps in the qtr.”

RBC Capital Markets On Twilio

Analyst Rishi Jaluria reaffirmed an Underperform rating and price target of $50.

“On the positive side, TWLO delivered upside on margins, but leading indicators remain soft and new disclosures around Segment suggest business challenges,” Jaluria wrote in a note.

“Twilio provided new disclosures around Segment, recorded a ~$286M impairment related to the Segment acquisition, and will provide more details on the outcome of the review in March 2024,” he added.

William Blair On Twilio

Analyst Arjun Bhatia maintained an Outperform rating on the stock.

Twilio’s fourth-quarter results were “ahead of expectations on all fronts, with revenue beating by $30 million (3% beat) and operating margin of 16% coming in 440 basis points ahead of consensus,” Bhatia said in a note.

He added, however, that the company’s first-quarter guidance missed expectations by $22 million, or 2%. “This was largely driven by continued headwinds in the crypto end-market and Twilio’s decision to shut down its programmable video product under Zipwhip,” the analyst stated.

TWLO Price Action: Shares of Twilio had declined by 15.13% to $61.40 at the time of publication Thursday.

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