Shares of Twilio (TWLO -0.72%) and Zoom Video Communications (ZM -1.17%) have been brutally beaten down on the stock market in 2022 amid the tech stock sell-off.

While Twilio stock has plunged 68% so far this year, shares of Zoom are down 43.8%. However, Twilio's bigger plunge seems a tad surprising as the cloud communications specialist has been clocking terrific growth, which is not the case with Zoom -- demand for its telecommuting and video conferencing solutions has slowed down following terrific growth amid the pandemic, which forced people inside their homes.

So does this make Twilio a better buy right now following its steeper 2022 stock decline? Let's find out.

The case for Twilio

Twilio has been helping its clients bring their physical contact centers into the cloud with the help of its application programming interfaces (APIs). The company plays a critical role in helping companies connect with their customers through different channels such as voice, messaging, video, and email, among others.

For instance, Lyft uses Twilio's platform to enable interactions between its drivers and users, while Airbnb has automated messages between hosts and guests with Twilio's help to simplify the accommodation booking process. This communications platform-as-a-service (CPaaS) market in which Twilio operates is growing at a terrific pace. Juniper Research estimates that the global CPaaS market could hit $10 billion in revenue this year, and could be worth $34 billion by 2026 as more companies adopt APIs to bolster their customer interaction efforts.

Twilio is making the most of this lucrative opportunity. Its first-quarter 2022 revenue was up 48% year over year to $875.4 million. The company anticipates the trend to continue in the current quarter with an estimated 37% year-over-year revenue growth. Given that Twilio was sitting on a 38% share of the global CPaaS market last year and it was well ahead of second-placed Vonage's share of 11.8%, it is easy to see why it is one of the best bets on this massive opportunity.

It is worth noting that Twilio has made a string of acquisitions over the years to strengthen its grip over this space and expand its portfolio of offerings. This strategy has allowed the company to build a solid customer base while also giving rise to cross-selling opportunities that have helped it drive more spending from customers.

This is evident from the dollar-based net expansion rate, a metric that compares spending by Twilio's active customers during the quarter to the same cohort of customers in the prior-year period. The metric increases when Twilio customers buy more of its services or increase the usage of an existing service. Twilio's dollar-based net expansion rate stood at 127% last quarter, with a reading above 100% pointing toward an increase in spending by existing customers.

Twilio seems to be pulling the right strings to capitalize on a huge end-market opportunity, which explains why analysts expect its bottom line to increase at a compound annual rate of 155% for the next five years.

The case for Zoom Video Communications

Zoom is known for its communications platform, which allowed the world to connect with each other through video conferencing amid the pandemic. But the company is now building a diversified business to ensure that it remains relevant in a post-pandemic world.

The video conferencing market was reportedly worth $6.28 billion last year, and it is expected to hit nearly $14.6 billion by 2029, clocking a compound annual growth rate of 11.3%. Zoom, however, is now looking to go after a much bigger opportunity in the contact center market, which would bring it into direct competition with Twilio.

We have already seen how Twilio's control over the CPaaS market has helped the company clock terrific growth. Not surprisingly, Zoom has turned its attention toward this market and launched its contact center platform in the U.S. and Canada in February this year. The company plans to expand its contact center offering across the globe later this year.

It is worth noting that Zoom's contact center solutions can be integrated into existing products from the company, such as Zoom Meetings, Zoom Phone, and Zoom Chat. This could help Zoom scale up its contact center business quickly. That's because Zoom was reportedly the most widely used video call platform in 2021, with a global market share of nearly 49%.

The company had almost 199,000 enterprise customers at the end of the first quarter of fiscal 2023, which produced 52% of its total revenue. What's more, these enterprise customers reported a trailing-12-month net dollar expansion rate of 123%, which means that they increased their spending on its services or adopted additional offerings from the company. The company witnessed a 46% spike in the number of customers who contributed more than $100,000 toward its trailing-12-month revenue in Q1.

So Zoom already has a strong user base to whom it could cross-sell its contact center solutions. More importantly, success in this market could give Zoom's growth a nice shot in the arm. The company's revenue was up 12% year over year to $1.07 billion in the first quarter of fiscal 2023, which ended on April 30.

As the company is ramping up its research and development spending and is taking steps to tap fast-growing markets, it wouldn't be surprising to see its growth rates accelerate in the long run.

The verdict

While Twilio has been clocking red-hot growth, the same cannot be said about Zoom. We have also seen that analysts are quite upbeat about Twilio's bottom-line growth over the next five years, but Zoom's earnings are expected to grow at a much slower annual pace of 13.6%. Additionally, Twilio's revenue is growing at a much faster pace than Zoom's.

However, Zoom is richly valued at 7.9 times sales, compared to Twilio's price-to-sales ratio of 5.1. This makes buying Twilio a better idea -- the former is not only in fine form right now, but it also enjoys a head start in a market where Zoom is currently trying to cut its teeth.