Cloud communications specialist Twilio (NYSE:TWLO) reported earnings after the closing bell on Tuesday, Feb. 12. The report covered the fourth quarter and full year of the company's fiscal 2018. Here's a closer look at Twilio's fourth quarter.

Twilio's fourth-quarter results: The raw numbers

Metric

Q4 2018

Q4 2017

Year-Over-Year Change

Revenue

$204.3 million

$115.2 million

77%

Net income (loss)

($47.2 million)

($18.9 million)

N/A

GAAP earnings (loss) per diluted share

($0.47)

($0.20)

N/A

Data source: Twilio.

What happened with Twilio this quarter?

  • Three months ago, Twilio's management guided fourth-quarter sales to roughly $184 million, while adjusted earnings were expected to land near $0.04 per diluted share. The revenue target turned out to be conservative, and Twilio exactly matched its adjusted earnings guidance.
  • The company added 3,100 active customers in the fourth quarter, for a total of 64,300 accounts. The client roll grew 31% larger year over year.
  • Twilio's top-line sales continue to rise more than twice as quickly as its customer additions, showing that the company is able to extract significantly higher sales per customer over time. To this point, the dollar-based net expansion rate -- which measures how much more the average returning client is paying for its new contract -- stood at a record 147% in the fourth quarter.
  • The unadjusted bottom line included a $32 million noncash charge for stock-based compensation. Twilio's share prices have surged 370% higher over the last 52 weeks, pushing this line item 135% higher along the way.
  • Former top client Uber moving its cloud communications development in-house used to be a significant data point for Twilio and its investors, weighing heavy on both the top and bottom lines. In this report, revenue growth excluding Uber worked out to 79%, and the Uber-less net expansion rate stopped at 148%. In other words, the lack of a big Uber contract isn't hurting Twilio's year-over-year comparisons a whole lot these days. This will be the last time Twilio bothers to report these Uber-adjusted figures.
Twilio's corporate logo, red on white.

Image source: Twilio.

What management had to say

As usual, operating costs rose faster than the top-line sales -- partly due to the share-based compensation issue. In Twilio's fourth-quarter earnings call, CEO Jeff Lawson added some color on this fast-growing metric:

Our developer-first go to market is an efficient way to reach this broad range of companies. And with our platform business model, we see opportunities to power a tremendous range of applications for our customers across almost every customer touch point. And as a platform, we get a front-row seat to learn the major business problems that customers are looking to solve.
This view drives our product road map, resulting in products like [programming tool] Flex. That's why we plan to continue to invest across the company to support elevated growth over an extended period of time rather than taking profits in the short term.

Check out all ourĀ earnings call transcripts.

Looking ahead

In the first quarter of 2019, Twilio's management expects top-line sales to grow 74%, landing at approximately $224 million. Adjusted earnings should come in near the break-even point, up from a $0.04 loss per share in the year-ago period.

For the full year, revenues are seen rising roughly 65% to $1.07 billion. Adjusted earnings should stop in the neighborhood of $0.10 per diluted share, slightly below the $0.11 per share that was reported for fiscal year 2018.