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Big Beat For Twilio: JMP's Patrick Walravens Touts Its Defining Characteristic

Twilio Inc (NYSE: TWLO) reported results for its first quarter as a public company for 2Q16, with the revenue and EPS meaningfully beating expectations. JMP’s Patrick Walravens maintained a Market Perform rating on the company.

The company reported robust 2Q16 results, with year-on-year revenue growth of 70 percent, well ahead of the consensus expectations of 53 percent.

The non-GAAP EPS came in at ($0.08), beating the consensus forecast of $(0.14).

Twilio raised its 3Q16 revenue growth and non-GAAP EPS guidance, with the former ahead of the consensus and the latter in line. The company also guided to 2016 revenue growth and non-GAAP EPS ahead of the consensus expectations.


Walravens mentioned that Twilio was the “leading cloud platform for communications, with over 1M developers on its platform, making it roughly five times bigger than two of its most direct competitors.”

The analyst expects the company to achieve non-GAAP operating income breakeven by 4Q17, while pointing out that Twilio is rapidly cutting down on cash burn, reporting free cash flow of a negative $5 million for 2Q16, well ahead of the estimate.

The company also generated a dollar-based net expansion rate of 164 percent for the quarter, “demonstrating its ability to use developers as a beachhead to expand rapidly within large accounts, the defining characteristic of this business-through-developer model,” Walravens said.

The non-GAAP EPS estimates for 2016, 2017 and 2018 have been raised.

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