What happened
Shares of Twilio (TWLO +2.07%) fell 16.6% in November, according to data from S&P Global Market Intelligence, despite the cloud communications platform specialist posting strong third-quarter results and increasing its annual guidance. Nearly all of Twilio's drop last month, as a matter of fact, came in the days surrounding the release of its quarterly report.
But those results certainly weren't bad. Revenue soared 41% year over year to $100.5 million, crushing Wall Street's expectations for sales of $92 million. On the bottom line, that translated to an adjusted net loss per share of $0.08, which was in line with consensus estimates. Keep in mind that Twilio consciously forsakes profitability in favor of investing to drive top-line growth in these early stages of its long-term story.
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So what
Twilio's underlying business trends were equally encouraging. Active customer accounts grew nearly 35% to 46,489, and the company struck its first-ever enterprise license agreement for its higher-level software products -- a nearly eight-figure, three-year deal with a large unnamed tech customer.
Looking forward, Twilio also raised its full-year guidance to call for revenue in the range of $386.5 million to $388.5 million (up from $371 million to $375 million previously), and an adjusted net loss per share of $0.23 to $0.22 (compared to a per-share loss of $0.24 to $0.22 previously).
Now what
As fellow Fool Rick Munarriz pointed out shortly after the report, this was also the first time since Twilio's IPO a year and a half ago that its earnings didn't exceed expectations. So perhaps investors had simply grown accustomed to its habit of underpromising and overdelivering.
There's also the matter of Twilio's decelerating growth. The midpoint of next quarter's revenue guidance represents year-over-year growth of "just" 26.3%. Though to be fair, management reminded investors that Q4 will go up against difficult year-over-year comparisons given its loss of revenue from its relationship with Uber, which comprised around 17% of sales in last year's fourth quarter.
In the end, though, this deceleration was expected, and there was truly little not to like about Twilio's latest report. So, as the dust settles, I suspect the recent pullback will prove to be a compelling buying opportunity for long-term investors.
