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Twilio Stock Has a Lot to Prove on Wednesday

It's time for Twilio Inc. (NYSE: TWLO) to step up with its latest financial results. The leading provider of in-app communications solutions posts its third-quarter results after Wednesday's market close, and it should be another period of healthy growth.

Twilio's summertime guidance was calling for $91 million to $93 million in revenue for the third quarter, up 27% to 30% from the $71.5 million it rang up a year earlier. Base revenue -- a steadier measuring stick that accounts for the lion's share of Twilio's top-line results -- is expected to clock in 35% to 37% higher. Twilio is targeting an adjusted net loss per share of $0.07 to $0.08. 

Image source: Twilio Inc.

Communication breakdown

Twilio had seen its year-over-year revenue growth decelerate with every passing quarter since going public last year, until showing an uptick in its top-line growth during the its second quarter. It was a fluke, as the more relevant base revenue saw its growth rate decelerate during the financial period. Twilio's guidance suggests that growth will continue to decelerate, at least through the latter half of this year.

Investors have had their ups and downs with Twilio this year. The stock has taken hits when some of its larger accounts including Uber and Lyft kick the tires of rival offerings for their in-app texting and voice calling needs. The shares also came under fire when a new AWS two-way text messaging feature was seen as a threat to Twilio, until some analysts clarified that the platform is at least partly powered by Twilio.

The shares have also displayed fierce volatility during earnings season. Twilio shot 10% higher the day after announcing its second-quarter results, but that followed a brutal 26% plunge the day after posting its first-quarter financials. 

The big surprise here is that there's been surprising balance in the wild price swings. The stock is trading marginally higher than it was when the year began. It's not like last year where the stock quadrupled in its first three months of trading, only to give back more than half of those gains. However, after double-digit percentage moves in back-to-back quarters, it's safe to say that the stock won't be flat for 2017 by the end of the week. 

Investors will be weighing Twilio against its own early August guidance, but naturally how it adjusts its full-year outlook now that there's just one financial period left will be even more important. Shareholders will also want to keep an eye on its customer count, where it was at 43,431 -- up 41% over the past year -- as of the end of June. Any color that Twilio can provide on where Uber, Lyft, and AWS stand with its platform will also help guide the market's reaction. Twilio stock may have gone nowhere in 2017, but those riding it know that it's been anything but tranquil this year. 

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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool recommends Twilio. The Motley Fool has a disclosure policy.