What to Watch for in Twilio’s Earnings Report

November 3, 2016 by Chris Lange

Twilio Inc. (NYSE: TWLO) is set to report its third-quarter earnings results after the markets close on Thursday. This company was one of the unicorns that came public this summer and it absolutely stunned investors at the time. However, as the markets have receded from their summer highs Twilio has been steadily losing as well. Are these the earnings to stop this slide?

The consensus estimates from Thomson Reuters call for a net loss of $0.08 per share and $66.77 million in revenue.

As we have said before, this was one of the best IPOs we have seen in some time. Shares had risen as high as almost $71 after the IPO but were at $15 per share in June. After huge gains, it is not unusual to see shareholders and insiders wanting to take some cash home.

Essentially, the firm announced a secondary offering in mid-October, after the stock had already begun to slide, looking to capitalize on its success.

It is also impossible to ignore that valuations are quite high. Twilio is not yet profitable, and its $2.8 billion market cap is reflected at the current price level.

JMP Securities has a Market Perform rating for Twilio shares. The firm detailed its position in a recent report:

In our opinion, Twilio is a remarkable business that, much like Amazon Web Services (AWS) (AMZN, MO, $775 PT, Josey), plays a critical role for software developers by allowing them to easily and securely build communications services such as voice, messaging, video, and authentication into their software applications and then scale those services elastically and globally.

Since the end of the post-IPO quiet period, a few other analysts weighed in on Twilio:

  • Argus has a Hold rating.
  • JMP Securities has a Market Perform rating.
  • Canaccord Genuity has a Hold rating with a $40 price target.
  • William Blair has an Outperform rating.
  • Pacific Crest has a Sector Weight rating.
  • JPMorgan has a Neutral rating with a $43 price target.
  • Goldman Sachs has a Neutral rating with a $33 price target.

Shares of Twilio were trading down nearly 2% at $33.52 on Thursday, with a consensus analyst price target of $39.50 and a post-IPO trading range of $23.66 to $70.96.

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