Twilio Surprises With Strong Q2 Earnings, Shares Jump 6.7% After Hours
Twilio Inc. (TWLO) shares soared 6.7% in after-hours trading on Thursday after the cloud communications company delivered better-than-expected second-quarter 2024 results. The beat came despite a challenging economic environment, signifying continued momentum in the digital communications space.
Key Takeaways:
- Strong Earnings Beat: Twilio exceeded analyst expectations with non-GAAP earnings of 87 cents per share, marking a significant improvement from the previous year’s 54 cents.
- Revenue Growth: Revenue clocked in at $1.08 billion, surpassing analyst forecasts and demonstrating a 4% increase year-over-year on a reported basis and a 7% organic growth.
- Positive Outlook: Twilio updated its full-year 2024 guidance anticipating 6-7% organic revenue growth, indicating continued confidence in the company’s future.
- Share Buyback: Twilio repurchased $1.27 billion worth of stock during the first half of 2024, signaling commitment to shareholder value.
Twilio’s Strong Q2 Performance: A Deep Dive
Twilio’s second-quarter earnings report offered a glimmer of optimism in a volatile market. The company’s core business, centered around providing a platform for programmable communications, continues to thrive despite economic headwinds. Let’s delve into the key aspects of their performance:
Earnings and Revenue Exceed Expectations
Twilio exceeded expectations on both the top and bottom lines. Non-GAAP earnings per share of 87 cents outpaced the Zacks Consensus Estimate of 71 cents and management’s guidance range of 64-68 cents. The company attributed this strong performance to increased revenues, lower expenses, and a reduction in outstanding shares.
Revenue, at $1.08 billion, also surpassed analysts’ forecasts and management’s guidance. This figure shows a 4% increase on a reported basis and a 7% organic growth compared to the previous year. The company highlighted that the unsetting of the software component of the Zipwhip business negatively impacted the second-quarter’s organic revenue growth, creating a 100-basis point (bps) headwind.
Communication and Segment Revenue Growth
Within the revenue breakdown, the Communications division generated $1.01 billion in revenue, a 4% year-over-year increase on a reported basis and 7% organically. The Segment division experienced a 3% year-over-year increase, reaching $75.2 million in revenue.
Twilio’s dollar-based net expansion rate remained at 102% for the quarter, flat with the previous quarter but slightly down from the 103% in the prior year. Notably, the expansion rates for the Communications and Segment divisions were 102% and 93%, respectively.
Strong Operating Performance
Twilio’s operating performance was equally impressive during the second quarter. Non-GAAP gross profit increased by 6.5% year-over-year to $555.8 million, while non-GAAP gross margin expanded by 110 bps to 53.3%.
Non-GAAP operating income saw a notable jump of 45.9% compared to the previous year, reaching $175.3 million. The non-GAAP operating margin for the quarter expanded by 460 bps to 16.2%.
Financial Health and Share Repurchase
At the end of June, Twilio held $3.12 billion in cash and cash equivalents and short-term marketable securities, a slight decrease from the previous quarter’s $3.83 billion. Its long-term debt totaled $989.8 million.
The company continued its commitment to shareholder value by repurchasing $1.27 billion worth of stock during the first half of 2024, demonstrating its confidence in the future. They also announced plans to complete the remaining $800 million of authorized repurchases by December 2024.
Looking Ahead: Guidance for the Future
Twilio’s guidance for the rest of 2024 reflects a cautiously optimistic outlook. The company predicts organic revenue growth of 6-7% for the full year, a slight adjustment from the earlier forecast of 5-10%.
For the third quarter ending September 30, 2024, Twilio projects revenue between $1.085 billion and $1.095 billion, representing a 5-6% year-over-year increase on a reported and organic basis. The Zacks Consensus Estimate for third-quarter revenue stands at $1.09 billion.
Twilio’s non-GAAP income from operations is expected to be in the range of $160 – $170 million for the third quarter, with non-GAAP earnings projected to be between 81 and 86 cents per share. The consensus estimate for third-quarter earnings currently sits at 73 cents per share.
Twilio’s Performance: A Sign of Resilience
Despite a challenging macroeconomic environment, Twilio’s second-quarter earnings report highlights the company’s resilience and continued growth potential. Its robust financial performance, share repurchase program, and positive future outlook suggest that Twilio remains well-positioned to navigate ongoing economic uncertainties while maintaining its leadership in the rapidly evolving digital communications space.
The company’s focus on innovation and expansion in key markets like customer engagement and enterprise communications will likely drive further growth in the coming quarters.
Note: This article is for informational purposes only and is not intended to be construed as investment advice. Please consult with a qualified professional before making any financial decisions.
