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Twilio, Inc. Is Putting the Uber Fiasco to Rest

By Anders Bylund - Feb 14, 2018 at 1:21PM

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The digital-communications expert is moving past the loss of big Uber business with the help of a more diverse client roster.

Digital-communications specialist Twilio (TWLO -3.73%) reported fourth-quarter results on Tuesday night. The company crushed its own guidance targets thanks to a diversifying customer list, and the Uber panic is becoming a thing of the past now.

Twilio's fourth-quarter results: The raw numbers

Metric

Q4 2017

Q4 2016

Year-Over-Year Change

Total revenue

$115.2 million

$82.0 million

40%

Net income

($18.9 million)

($12.6 million)

N/A

GAAP earnings per share

($0.20)

($0.15)

N/A

Data source: Twilio.

What happened with Twilio this quarter?

Three months ago, Twilio's management sketched out fourth-quarter revenue guidance at roughly $103.5 million. On the bottom line, the company was supposed to deliver an adjusted net loss of $0.06 per share. Twilio left these targets far behind with top-line sales north of $115 million and an adjusted net loss of $0.03 per share.

The company also produced $3.2 million of free cash flow in the fourth quarter, up from a $6 million cash burn in the year-ago period. This was the first positive free cash flow reading since the first quarter of 2016.

Twilio achieved these results while continuing a separation from one of its largest customers. Excluding the impact from lower Uber orders, Twilio's base revenue rose 62% year over year. At this point, Uber accounts for 5% of Twilio's quarterly sales. Messaging app WhatsApp, owned by Facebook (META -0.51%) since 2014, is Twilio's largest client with a 7% share of the top line.

Young man with tablet and smartphone excited over something he sees on the tablet screen.

Image source: Getty Images.

What management had to say

"I'm very proud of the team for our fourth quarter performance, but my excitement lies in the foundations we've laid for the next ten years of Twilio," said Twilio CEO Jeff Lawson in a prepared statement. "We are poised for a stellar year ahead, built on our relentless focus on customer success, quality, and software-fueled innovation."

Looking ahead

For the first quarter of 2018, Twilio expects to pull in $116 million of top-line revenue at the midpoint of its guidance range but still report an adjusted net loss of approximately $0.07 per share. For the full year, management is aiming for total revenue near $510 million and a non-GAAP net loss of $0.12 per share.

Longtime CFO Lee Kirkpatrick also announced his intention to step back later this year, but will stay on board until his successor has been found and brought up to speed.

Moreover, a new drag-and-drop app editor known as Twilio Studio recently moved into beta testing. As this tool matures, Twilio hopes to make its products and services more accessible to app developers.

And the Uber situation has done most of its damage by now. The customer has become a small enough part of Twilio's overall business that its ups and downs from this point won't make a material difference. Still, Twilio should continue to report sales growth with and without the Uber effect for the next few quarters, helping analysts and investors analyze the business while this debacle fades into the background.

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