Accelerating growth is a good look on most companies, and that's where Twilio (TWLO -0.69%) finds itself after posting fresh financials shortly after Monday's market close. The in-app communications specialist saw its revenue climb 49% to $95.9 million in the second quarter, fueled by a 55% surge in base revenue. Twilio was targeting top-line results of $85.5 million to $87.5 million for the period just three months ago.
The 49% gain is noteworthy, and not just because Twilio was being woefully conservative in its guidance. Year-over-year revenue growth had decelerated for seven consecutive quarters -- going from 87% in the second quarter of 2015 all the way down to 47% during Twilio's problematic first quarter last time out -- before snapping the streak on Monday afternoon. Bears will rightfully point out that base revenue growth has continued to decelerate, but bulls will have no problem taking the overall victory.
Twilio's bottom-line results also exceeded its earlier guidance. Twilio's adjusted loss for the quarter clocked in at $0.05 a share, half of the red ink that the fast-growing app enhancer was forecasting back in May. Twilio went on to bump its outlook higher for all of 2017, making it a classic "beat and raise" performance that also happens to be a good look on growth stocks.
Image source: Twilio.
Climbing the wall of worry
Twilio's stock initially moved higher after its second-quarter results went out, a welcome change from the 26% drop that shareholders experienced the day after it disappointed investors with its first-quarter showing.
There's no denying the popularity of Twilio's growing number of applications. It closed out the second quarter with 43,431 customers, 41% more than it had a year earlier. The biggest concern out of May's report was that Uber -- its largest customer, accounting for 10% of its revenue last year -- was testing rival offerings in some markets. There's still some uncertainty on that front, but Twilio's healthy growth suggests that it has diversified its revenue stream to the point where it's not going to be held back by weakness at just one or two accounts.
Twilio is initiating guidance for the current quarter, eyeing $91 million to $93 million in revenue with an adjusted deficit per share of $0.07 and $0.08. Its outlook for the entire year is also improving. Three months ago Twilio was forecasting a deficit of as much as $0.30 a share on $356 million to $362 million in revenue. Now it's eyeing a loss of $0.22 to $0.24 a share on $371 million to $375 million in revenue.
The market was already warming up to Twilio in the days leading up to Monday's report. Twilio shares have been volatile, but they have ultimately doubled since going public at $15 last year. Revenue won't always accelerate the way it did during the second quarter. Twilio's guidance for the third quarter suggests just 30% top-line year-over-year growth on the high end and its first sequential decline. Investors better hope that Twilio is being conservative again.
