Twilio Inc.

TWLO Details

Twilio Inc. (NYSE: TWLO) is a cloud-based communication platform-as-a-service provider that provides communication APIs, and prebuilt solution apps focused on boosting client interaction. Twilio's platform, through these APIs, enables software developers to incorporate messaging, audio, and video capability into new or current business applications.

Latest News:

• Executive Leading Update: Elena Donio will become Twilio's President of Revenue, gaining responsibility for all go-to-market tasks, beginning May 4, 2022, and has resigned from her seat on Twilio's Board of Directors.
• Strategic Partnership with Syniverse: On May 16, 2022, Syniverse and Twilio announced the strategic relationship. Twilio has invested USD 750 million in Syniverse in exchange for common shares, and the two businesses have expanded their strategic and commercial association to Unlock the Power of Communications Technology.
• Expansion for Acceleration: Twilio and Carahsoft announced on May 12, 2022, to expand their partnership to accelerate the public sector need for digital engagement solutions.
• New Appointment: Twilio announced on May 16, 2022, the appointment of Joyce Kim as Chief Marketing Officer, who would drive worldwide marketing and execute the company's mission of becoming the leader in the burgeoning customer interaction category.

Q1 FY22 Results:

• Solid Jump in revenue: During the quarter under consideration, the company’s reported revenue stood at USD 875.4 million for the first quarter of 2022, up 48% year-over-year, including USD 32.2 million from Zipwhip. Further, Organic revenue grew 35% year-over-year.
• Reported Increase in Operational Loss: TWLO’s loss from operations was USD 217.8 million in Q1 FY22, compared to USD 197.3 million in Q1 FY21.

 As of March 31, 2022, there were 268,000 active customer accounts, up from 235,000 as of March 31, 2021.

• Bottom Line Performance: During the quarter GAAP net loss per share attributable to common stockholders, basic and diluted, of USD 1.23 based on 180.9 million weighted average shares outstanding in the first quarter of 2022, compared with GAAP net loss per share attributable to common stockholders, basic and diluted, of USD 1.24 based on 167.2 million weighted average shares outstanding in the first quarter of 2021.

Key Risks:

• Product Development Risk: The company depends on consumers expanding their use of its products. A loss of customers or a lack in their development of products might negatively impact the company's results of operations and financial position.
• Regulation Risk: TWLO's goods are subject to telecommunications-related rules, and future legislative or regulatory measures might harm the company.

Q2 FY22 Guidance:

(Source: Company Filings) 

Valuation Methodology: EV/ Sales Multiple-based Relative Valuation

(Source: Analysis by Kalkine Group)

Stock Recommendation:

TWLO’s stock price has fallen 62.93% in the past six months and is leaning towards the lower of its 52-week range of USD 412.68 to USD 87.67. We have valued the stock using the EV/Sales Multiple based relative valuation methodology and arrived at a target price of USD 127.01.

Considering the robust top-line performance, healthy balance sheet, positive guidance, solid customer base, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the current market price of USD 105.60 as of May 31, 2022, at 07:01 AM PDT.

1 Year Technical Price Chart (as of May 31, 2022, at 07:01 AM PDT). Source: REFINITIV, Analysis by Kalkine Group

Technical Summary Analysis

Technical Indicators Defined: - 

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.