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Twilio, Inc. Posted 54% Sales Growth in the Second Quarter

By Anders Bylund – Aug 7, 2018 at 8:40PM

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The company's cloud-based communications tools are finding plenty of new business, and established customers are also expanding their order volumes.

Cloud-based communications expert Twilio (TWLO 1.63%) reported second-quarter results Monday after the closing bell. The company crushed its own guidance targets and management raised their full-year ambitions accordingly. Here's a closer look at Twilio's results.

Twilio's second-quarter results: The raw numbers


Q2 2018

Q2 2017

Year-Over-Year Change

Total revenue

$147.8 million

$95.9 million


Net income

($24.0 million)

($7.1 million)


GAAP earnings per share (diluted)




Data source: Twilio.

What happened with Twilio this quarter?

  • The GAAP figures in the table above include a $21 million non-cash charge for stock-based compensation, nearly double the $12.4 million charge the same line item saw in the year-ago quarter. Backing out this effect along with the associated tax effects and an assortment of other GAAP costs, Twilio's adjusted earnings work out to $2.9 million, or $0.03 per diluted share. In the second quarter of 2017, the same adjustments landed at a net loss of $4.8 million, or $0.05 per share.
  • The company issues its guidance in terms of adjusted earnings rather than GAAP figures. Three months ago, management set the midpoint of their second-quarter revenue guidance at roughly $130 million while the adjusted bottom-line target for this period stood at a net loss of $0.06 per share. The actual results exceeded these projections by a wide margin.
  • Twilio boasted 57,350 active customer accounts by the end of the second quarter. That's a 6.2% increase from the previous quarter and a 32% year-over-year boost.
  • The net expansion rate, which measures how much more Twilio's active customers spent on its services in comparison to the same clients' year-ago orders, landed at 137%. The same metric stood at 132% in the first quarter and 131% in the second quarter of 2017.
  • Not counting former top client Uber, which started backing out of its Twilio relationship last year in order to build its own communication tools from the ground up, the net expansion rate would have been 145%. That's consistent with the Uber-less expansion rate of the first quarter and up from 137% in the year-ago period.
  • During the second quarter, Twilio signed a couple of important client deals. These included a large contract to help Bank of America build a voice-controlled application that helps the megabank's sales department find the information needed to close their own big contracts. Elsewhere, e-commerce specialist Shopify is using the still-in-beta Twilio Flex software to build a custom contact center platform, meeting all of Shopify's unique needs.
Two smiling office workers huddle around a tablet, a desktop computer, and a smartphone.

Digital communications tools, hard at work. Image source: Getty Images.

What management had to say

The Shopify deal was a good example of why Flex is important to Twilio's long-term future. It's all about giving customers what they need instead of asking them to find tools to fit their requirements -- which may or may not exist.

COO George Hu explained it this way in a conference call with financial analysts:

For the first time, companies can build exactly what they need to support the specific requirements of their customer engagement while taking advantage of global cloud scale at the same time. As a development-centric company that is growing quickly, Shopify needs both customization and scalability. They chose Twilio Flex because they wanted a contact center that will fit their business instead of fitting their business with a software.

Looking ahead

Twilio's management provided the following guidance targets for the next quarter and the full fiscal year. I'll be looking at the midpoints of each guidance range here.

  • In the third quarter, total revenue should land near $151 million and adjusted earnings are seen at approximately $0.03 per share. That would be up from a net loss of $0.08 per share and $100.5 million in revenue for the same period of 2017.
  • The full-year revenue target now stands at approximately $587.5 million, a 9% increase from the $541 million target that was given three months ago.
  • Twilio now expects to record adjusted full-year earnings in the neighborhood of $0.03 per share, up from the previously predicted net loss of $0.08 per share. In fiscal year 2017, the non-GAAP losses added up to $0.26 per share.

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

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