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Why Twilio Stock Plunged Today

By Joe Tenebruso – Oct 28, 2021 at 6:47PM

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Mounting losses and management turnover spooked investors.

What happened

Shares of Twilio (TWLO 5.06%) fell 17.6% on Thursday after the communications software provider offered a tepid financial outlook and announced the departure of a key executive. 

So what

Twilio's active customer base grew to over 250,000 accounts as of the end of September, up from 208,000 at the end of the year-ago quarter. The company also continues to find success with selling more services to its existing clients, as evidenced by its dollar-based net expansion rate of 131%. Together, this helped to drive Twilio's revenue higher by 65% year over year to $740.2 million.

"We delivered another quarter of strong growth at scale in the third quarter as companies continue to turn to Twilio in this digital-first world," CEO Jeff Lawson said in a press release.

A downwardly sloping stock chart.

Twilio's shares sank on Thursday. Image source: Getty Images.

Still, Twilio remains unprofitable on a generally accepted accounting principles (GAAP) basis. It posted an operating loss of $232.3 million, compared to a loss of $112.3 million in the prior-year period. Twilio's net loss per share, in turn, checked in at $1.26, versus $0.79 in Q3 2020.

Yet on an adjusted basis, Twilio reported per-share earnings of $0.01. That bested Wall Street's expectations for a loss of $0.15. 

Now what 

Investors, however, appeared to be more concerned about Twilio's guidance. Management expects the company to generate an adjusted per-share loss of between $0.23 and $0.26 in the fourth quarter. Analysts had forecast a loss of only $0.10 per share. 

Twilio also said that George Hu resigned from his position as chief operating officer. Chief financial officer Khozema Shipchandler will take on the role in addition to his existing duties.

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

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