Twilio Projects 47% Revenue Growth to $536 Million in Q1 2021

During the fourth quarter of 2020, Communications-Platform-as-a-Service (CPaaS) leader Twilio outperformed expectations amid rising demand for communication software.

According to the research data analyzed and published by ComprarAcciones.com, the company grew its active customer base by 13,000 compared to 8,000 in the prior quarter. The increase pushed its total to 221,000 up from 179,000 in Q4 2019. In addition to the surge in users, political activity also contributed to the robust performance, adding $23 million to the revenue.

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Twilio’s dollar-based net expansion rate in Q4 2020 was 139% compared to 137% in Q3 2020 and 125% in Q4 2019.

Twilio expects its remarkable performance to extend through the first quarter of 2021. Based on its guidance, it projects a 47% increase in revenue during the period to $536 million. That would be considerably higher than the Refinitiv forecast of $492.1 million.

Based on its estimates, the company’s total addressable market (TAM) was worth $62 billion in 2020. It increased to $79 billion following the acquisition of Segment and is set to grow to $87 billion by 2023.

Following the release of the results, Twilio shares surged by 10%. As of March 11, 2021, one share was trading at $377 according to Marketwatch. Over the trailing 12-month period, the share price has surged by 367.87%.

Twilio Revenue Surged by 55% in 2020 to $1.76 Billion, 10 Times the 2015 Total

However, since the start of 2021, Twilio’s stock price has shed 5.29%. It incurred most of its losses in the past one month, sinking by 19.75%. The drop coincided with massive losses in tech stocks as well as an overall market decline. Current market sell-offs have been particularly harsh to a number of growth stocks that soared in 2020.

Twilio’s stock performed exceptionally well during the pandemic, soaring by 244% in 2020. Considering the services it provides, the performance was not surprising. Over 10 million developers use its library of software.

The platform offers developer tools that make it possible to integrate voice and video calls as well as text messaging to their sites and apps. It also offers cloud-based software for contact centers, facilitating customer-agent interactions.

Its customers include Lyft, Uber Technologies, DoorDash, Postmates and Grubhub. As a first mover, Twilio has an obvious advantage over competitors such as MessageBird, Nexmo and Bandwidth. Not surprisingly, therefore, its revenue in fiscal 2017 shot up by 44%, by 68% in 2018 and by 75% in 2019.

During the first nine months of 2020, it posted a 51% year-over-year (YoY) revenue increase to $1.21 billion. By the end of the period, it had 208,000 active customers, up by 21% from the previous year. At the end of the year 2020, its active user base was up by 23% YoY.

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Full-year revenue for 2020 surged 55% to $1.76 billion. It is worth noting that the 2020 revenue total is more than 10 times the $167 million posted in 2015. Non-GAAP net income for the year rose by 13% to $6.5 million, translating to $0.04 per share.

Twilio Net Loss Widened to $491 Million in Fiscal 2020

Despite Twilio’s seemingly robust revenue growth though, the company remains unprofitable. Between January and September 2020, its net loss rose from $217 million to $312 million. For the full year, its net loss widened to $491 million compared to $307 million in 2019.

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The biggest contributor to the loss was stock-based compensation (SBC) expenses. These totaled $238 million during Q1 to Q3 2020, marking a 21% YoY increase. In fiscal 2020, SBC expenses and related payroll taxes surged by 47% YoY to reach $389.3 million. That translated to 22% of the company’s top line.

In its November acquisition of Segment, Twilio funded the $3.2 billion purchase with stock instead of cash. And in a bid to capitalize on its soaring stock price in February 2021, it announced a secondary offering of $1.54 billion. For perspective, the shares were up by over 400% at the time compared to the January 2020 price.

As a result of its heavy dependence on secondary offerings and stock bonuses, its outstanding shares rose significantly in 2020. At the end of the year, they stood at 146.7 million compared to 86.1 million in 2016.

Over the past three years, its huge stock bonuses have pushed the number of outstanding shares by more than 70%. Due to the rising share count, Twilio’s valuations are highly unlikely to cool off despite its consistent double-digit annual revenue growth.