Twilio's (TWLO 0.12%) communication-based ecosystem is resonating with customers, and there is still considerable growth to be had ahead. In this clip from "3 Minute Stocks Updates" on Motley Fool Live, recorded on May 11, Motley Fool contributor Brian Withers discusses Twilio's financials and growth potential long-term.
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Brian Withers: If you look at the three-year stock chart for Twilio, you'll actually be down 28%. Three years. Covid was just two. We're talking a three-year period, the stock is down. The company has grown considerably since then. When you look at the valuation, the price-to-sales valuation, it goes back five years when the company had an eighth of the revenue that it has today. I love this company and think this is a market beater from here for sure. Let's take a look at the quarterly results. Twilio, top-line growth: 48%. Look at this long history of 50s, 60s, whatever. But you got to remember, this isn't organic revenue growth. They've been acquisitive and they have a number of acquisitions over the past couple of years. When you have an acquisition, it's zero in the year before. All of a sudden, magically, millions of dollars of revenue show up in the current quarter, when you adjust for that, here is the historical revenue growth. Still incredibly solid: 34, 35, 38. Last three quarters: really, really solid revenue growth trends. You know what? Existing customers are spending more. The dollar-based net expansion means, with 127, the most recent quarter they spent a dollar a year ago. Now, they're spending a $1.27. This means that the ecosystem of Twilio's communication-based platform tools is really resonating with customers. One thing that really threw investors through a bit of a loop was their guidance. They expect second-quarter organic revenue growth to be 27% to 29%. Well, why is that bad? They have forecasted their organic growth targets to be 30% plus. If you do the math right, 27% to 29%, that's below 30%. Investors were a bit confused, but right after that, they said, "We are committed to our 30% organic growth rate and remain confident that the second half of the year we'll pull us out and we'll hit our target." I really like what this company has going on.
