Image source: Twilio.

What happened

Shares of Twilio (TWLO 2.64%), a provider of cloud communication services, jumped 32% in August, according to data provided by S&P Global Market Intelligence. The company posted strong growth and beat analyst estimates when it reported its second-quarter results, its first report as a public company, leading investors to bid up the stock. At the end of August, Twilio stock was up 257% from its IPO price.

So what

Twilio reported second-quarter revenue of $64.5 million, up 70% year over year and above the average analyst estimate of $58.2 million. Twilio claimed nearly 31,000 active customer accounts at the end of the quarter, up 45% year over year. The company's dollar-based net expansion rate, which measures a combination of growth in the number of active customers and growth in the amount each customer spends, was 164%, up from 149% during the same period last year.

Non-GAAP EPS came in at a loss of $0.08, an improvement from a loss of $0.11 during the prior-year period. On a GAAP basis, the company lost $0.45 per share, down from a loss of $0.52. GAAP operating expenses grew by 54% year over year, substantially slower than revenue.

Twilio CEO Jeff Lawson summed up the quarter:

We delivered strong results in our first quarter as a public company, as we saw continued growth across our product lines. Customers around the world use Twilio to build differentiated experiences for their end users by embedding communications into their software applications. The successful completion of our IPO in June will provide additional capital and brand visibility to drive our growth in the future as we look to fuel the future of communications.

Now what

Twilio expects its rapid growth to continue, guiding for $253 million to $257 million of revenue for the full year, representing 53% growth at the midpoint. Non-GAAP EPS is expected to be a loss of $0.28 to $0.30 for the full year.

Twilio is one of the few high-profile technology companies to go public this year, and with strong second-quarter results, investors can't get enough of the stock. With a market capitalization of around $4.6 billion, based on the company's expected diluted share count at the end of the third quarter, investors are paying a steep 18 times expected 2016 sales for the stock. Twilio will need to continue to report blockbuster results for the foreseeable future in order for investors to avoid getting burned.