What happened
Shares of cloud computing company Twilio (TWLO -1.49%) increased 16% during the first half of 2021, according to data from S&P Global Market Intelligence. It was a wild ride getting there, though. In fact, Twilio stock surged as much as 30% higher the first two months of 2021 before selling off hard along with other high-flying tech stocks in the spring. Twilio started to rally in May, though it's still off some 17% from all-time highs as of this writing.
So what
Despite the volatility in stock price, Twilio itself is doing just fine. The company notched year-over-year sales growth of 62% in the first quarter of 2021 to $590 million, or 49% when backing out the results from its acquisition of data management and analytics firm Segment. Management also forecast 47% year-over-year growth in the second quarter.
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While Twilio doesn't generate positive free cash flow at this point, that is by design as the company spends heavily to maximize its long-term potential in this new era of cloud-based communications services. Organizations around the globe are expanding on the ways they can stay in touch with employees and customers, and it goes far beyond simple voice and text enabled by legacy mobile telecom companies. Twilio unlocks the power of email, video, social media, and customer digital experience management so its customers can keep abreast of all the ways consumers like to interact and communicate in the virtual world.
Put another way, Twilio is likely to continue growing its revenue at a double-digit-percentage rate for the foreseeable future in a world where smartphones are ubiquitous and used for more than just voice calls.
Now what
Twilio has been busy since the last quarterly earnings update. It announced numerous new products resulting from the Segment acquisition, and another takeover -- this time a toll-free messaging software outfit called Zipwhip for $850 million.
As cloud computing continues to reshape the world and unlock new opportunities for companies of all sorts, Twilio is increasingly becoming a trusted partner for companies looking to expand their digital presence. Armed with lots of cash and growing at a rapid pace, this is a worthwhile cloud communications stock to keep tabs on -- even if it trades for a steep premium.
