Cloud-based communications expert Twilio (NYSE:TWLO) posted first-quarter results on Tuesday, dropping the report just after the closing bell. The company accelerated its revenue growth, albeit at the cost of deeper bottom-line losses.

Let's take a closer look at Twilio's first-quarter report.

Twilio's first-quarter results: The raw numbers

Metric

Q1 2018

Q1 2017

Year-Over-Year Change

Total revenue

$129 million

$87.4 million

47%

Net income

($23.7 million)

($14.2 million)

N/A

GAAP earnings per share (diluted)

($0.25)

($0.16)

N/A

Data source: Twilio.

Three months ago, Twilio's management guided first-quarter revenue to roughly $116 million. The bottom-line target was set to an adjusted net loss of $0.07 per share. The actual net loss stopped at $0.04 per share on that adjusted basis, making for a clean sweep of official guidance targets.

What happened with Twilio this quarter?

  • The company had 54,000 active customer accounts by the end of March, up from 49,000 accounts three months earlier and 40,700 customers at the same point in 2017.
  • Facebook-owned messaging app WhatsApp was Twilio's largest customer in this period, accounting for the same 7% of total sales that it held in the previous report. The former king of the till, ridesharing veteran Uber, dropped from a 5% to 4% share of revenue. Rising customer counts are a less top-heavy client list point to a more diverse customer base overall.
  • Twilio collected $17 million in cash from operations, yielding free cash flows of $11.2 million or 8.7% of total sales. In the year-ago period, operating cash flows stopped at $2.4 million and Twilio's free cash flows were negative to the tune of $6.2 million.
Two smiling woman pumping their right fists looking at a laptop screen

Are they using Twilio Flex? Image source: Getty Images.

What management had to say

"Our first quarter results exhibited broad-based strength across multiple areas of our business, especially with continued expansion with existing customers," said Twilio CEO Jeff Lawson in a prepared statement. "Our continued devotion to innovation was highlighted by the launch of Twilio Flex -- the first fully programmable cloud contact center application platform."

Management sees Flex as a serious growth driver for the long term, as this development tool helps clients put Twilio's cloud communications platform to better use. With more programmers and applications on the street, rising sales and profits should follow naturally. If Flex also manages to give less sophisticated clients control over Twilio's more advanced functions, I smell an upselling strategy here. All told, Flex appears poised to help Twilio evolve both its raw revenue streams and the associated profit margins.

Looking ahead

For the second quarter, Twilio expects total revenue to land near $130 million, a 36% jump over the year-ago report. Adjusted net losses should stop at approximately $5.5 million or $0.06 per diluted share. That would be about half the bottom-line pain Twilio saw in the second quarter of 2017.

Management also boosted their full-year targets in the light of strong first-quarter results and generally positive business trends. Revenue guidance for the 2018 fiscal year now points at approximately $541 million, a 6% increase over the original target that was given in February. Twilio should now record a full-year adjusted net loss in the neighborhood of $0.08 per share, a 30% improvement over the originally expected loss of $0.12 per share.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook and Twilio. The Motley Fool has a disclosure policy.