What happened
Shares of Twilio (TWLO 1.75%) charged sharply higher on Thursday, surging as much as 15.6%. As of 11:37 a.m. ET, the stock was still up 9.1%.
The catalyst that sent the cloud communications specialist higher was its quarterly earnings report that was far better than expected.
So what
For the fourth quarter, Twilio generated revenue of $842.7 million, which climbed 54% year over year. This resulted in an adjusted loss per share of $0.20, compared with adjusted earnings per share (EPS) of $0.04 in the prior-year quarter.
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To put those numbers in context, analysts' consensus estimates were calling for revenue of $771.3 million and an adjusted loss per share of $0.20.
The results were boosted by Twilio's recent acquisitions of Segment and Zipwhip, which increased sales by $57.4 million and $31.8 million, respectively. Excluding those segments, the company produced organic growth of 34% year over year, or 39% excluding uneven political traffic, which spikes in U.S. presidential election years.
Twilio's customer growth was equally robust. The company closed out the year with 256,000 active customer accounts, up 16% year over year. Additionally, Twilio's current clients are spending more with each passing quarter. The company's dollar-based net expansion rate -- which measures additional spending by existing customers -- clocked in at 126%, meaning current customers are spending 26% more than they did this time last year.
Now what
It was most likely the company's bullish outlook, however, that sent the stock soaring. Twilio is guiding for first-quarter revenue of $860 million at the midpoint of its guidance, which would represent year-over-year growth of roughly 46%. At the same time, analysts were forecasting revenue of $849.5 million, so management's forecast cleared that bar with ease.
Perhaps more importantly for investors, Twilio management said it expects the company to move to profitability, generating both operating income and adjusted profits sometime in 2023.
Co-founder and CEO Jeff Lawson said that until now, is was an "active decision" to invest in future growth rather than focus on short-term profits. A path to generating consistent income removes a significant concern for investors, helping push the stock higher.
