What happened

Shares of Twilio (TWLO 1.20%) were sinking today after the software-as-a-service company posted weak results in its first-quarter earnings report and offered disappointing guidance.

The performance continued a long streak of slowing growth for the company, which continues to be hit hard by the macroeconomic slowdown.

As of 11:48 a.m. ET, the stock was down 16.5%.

So what

Twilio, which helps companies like Uber Technologies send automated messages to riders, said revenue in the first quarter rose 15% to $1.01 billion, which edged out estimates at $1 billion.

Active customer accounts topped 300,000 in the quarter, up from 12% in the quarter a year ago. Dollar-based net expansion rate was just 106%, showing existing customers increased their spending by 6%. 

Despite several rounds of layoffs, the company is still deeply unprofitable under generally accepted accounting principles (GAAP) with an operating loss of $264.1 million, which compared to a loss of $217.8 million a year ago.

However, adjusting for expenses like share-based compensation and restructuring costs, operating income improved significantly from $5 million in the quarter a year ago to $103.8 million.

On the bottom line, Twilio reported adjusted earnings per share of $0.47, which compared with breakeven in the quarter a year ago, and analyst estimates at $0.21.

CEO Jeff Lawson said, "We've structured our business with the aim of enabling Twilio to operate profitably in any financial climate, and our first quarter non-GAAP income from operations is a strong signal of our ability to do so."

Now what

Twilio's guidance seemed to be what really sank the stock today as the company forecast revenue growth of just 4% to 5% in the second quarter to between $980 million and $990 million, representing a sequential decline. That compared to the analyst consensus at $1.05 billion.

On the bottom line, it called for adjusted earnings per share of $0.27 to $0.31, which matched the consensus at $0.29. 

While the layoffs and cost-cutting efforts are clearly helping the bottom line, The deceleration in top-line growth remains a red flag for the company.

Economic conditions should eventually change, but buying the dip in Twilio has thus far proven to be a terrible strategy with the stock down roughly 90% from its peak in 2021.