Twilio Shares Soar After a Planned Profit Streak Starts Early

Twilio Shares Soar After a Planned Profit Streak Starts Early

Twilio Inc. surged after notching its second-ever profitable quarter and releasing a rosy projection, a signal that growing corporate spending on customer communication tools has boosted its fortunes.

Profit excluding some costs in the current quarter may be 2 to 3 cents a share on sales of $150 million to $152 million, the San Francisco-based cloud software company said in a statement Monday. Analysts had projected a loss of less than 1 cent a share. The software maker also reported adjusted profit of 3 cents a share on revenue of $147.8 million for the second quarter. Shares jumped about 16 percent in early trading Tuesday.

Chief Executive Officer Jeff Lawson has sought to increase Twilio’s sales and profits by courting ever-larger corporate clients. For the past year, the company has expanded the sales team and bolstered its product portfolio to take advantage of businesses seeking better ways of engaging with their customers. Boosting sales from existing clients has also been a key part of the company’s strategy. The efforts at Twilio, which remains focused on selling to developer teams, seem to have paid off.

“There’s a once-in-a-generation communication renaissance going on right now and Twilio is right in the middle of it,” Lawson said in an interview. “We’ve just been scaling up our sales team to meet the size of the opportunity.”

Shares climbed to $73.79 in early trading after closing at $63.27 Monday. The stock has skyrocketed 168 percent since the start of the year.

Twilio’s customers include a broad cross-section of the corporate world, including Uber Technologies Inc., Airbnb Inc., Coca-Cola Co., EBay Inc. and Twitter Inc. Twilio sells these companies plug-in tools that allow them to send automated text messages to consumers and communicate through applications. If sales from customers from a year ago were normalized at $100, those same customers would now be spending $137, Lawson said. That’s because Twilio has a pay-as-you-go model, in which companies are charged for what they use. As businesses communicate more with customers through digital channels, their demand for Twilio’s software has risen.

The company had earlier signaled to investors that the third quarter would be profitable, before certain items. Twilio also reported a narrow adjusted profit in the fourth quarter of 2016. Under generally accepted accounting principles, the company is projected to report net losses through 2019.

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Author: HEDGE

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