Why Uber Is Driving Twilio Much Lower

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When Twilio Inc. (NYSE: TWLO) released its most recent quarterly results after the markets closed on Tuesday, the company said that it had a net loss of $0.04 per share and $87.4 million in revenue. Consensus estimates from Thomson Reuters had called for $0.06 per share and $83.6 million in revenue.

During this quarter, the company recorded 40,696 active customer accounts as of March 31, 2017, compared to 28,648 in the first quarter of last year.

The company highlighted in the report that it extended its long-standing relationship with Amazon Web Services by helping to power and further enhance the capabilities of Amazon Connect.

In terms of the outlook for the second quarter, the company expects to see a net loss of $0.10 to $0.11 per share and revenues in the range of $85.5 million to $87.5 million. The consensus estimates are a net loss of $0.08 per share and $87.81 million in revenue.

On the books, Twilio cash, cash equivalents and short-term marketable securities totaled $288.53 million at the end of the quarter, versus $305.67 million at the end of 2016.

Jeff Lawson, Twilio’s co-founder and CEO, commented:

We made continued progress across a number of our key initiatives in the first quarter, delivering further product innovation and adding new customers of all types at a rapid pace around the globe. While we are seeing some changes in the relationship with our largest customer, our momentum across the business continues to be strong, with a 42% year over year growth in Active Customer Accounts and a 62% year over year growth in Base Revenue during the quarter.

Although it might sound vague saying its “largest customer,” Lawson is actually talking about Uber. The ride-sharing service accounts for roughly 12% of Twilio’s revenue. Lawson is suggesting that Uber is taking over its messaging service and handling more of its software needs internally as opposed to going through Twilio, which ultimately hurt sales this quarter.

Shares of Twilio closed Tuesday down 1.3% at $33.94, with a consensus analyst price target of $39.45 and a 52-week trading range of $23.66 to $70.96. Following the release of the earnings report, the stock was down 31.7% at $23.17 in early trading indications Wednesday.