One stock that has struggled to recover from the 2022 bear market is Twilio (TWLO 1.47%). It was a darling during the pandemic, but investors turned on Twilio as growth slowed and investors became increasingly intolerant of money-losing companies. Consequently, the stock sells at an 87% discount to its 2021 high.

Nonetheless, Twilio has successfully integrated multiple types of communication into a single app, and its work to revolutionize the contact center has attracted increased attention from innovation investor Cathie Wood and her team at Ark Invest. Given its potential, should investors follow her lead on the software-as-a-service stock?

Twilio's innovations

Investors know Twilio best for its communication-platform-as-a-service (CPaaS) offerings. It provides voice, text, email, and video communications for its clients' apps. Its application programming interfaces (APIs) help make businesses such as Uber, DoorDash, and Airbnb possible.

Indeed, this technology is not proprietary. Still, Twilio was a first mover in this industry, and the difficulty of switching providers gives it a competitive moat. Also, the company may have widened its moat with its Twilio Flex contact center. This product saves its clients from having to build a contact center of their own.

Moreover, contact centers are a function that once required investments in real estate, equipment, and personnel. Thanks to Twilio's API, the same functions can occur over an internet connection and a mobile device, significantly reducing a company's overhead costs.

Additionally, investors will probably like that AI has helped Twilio perform such tasks. Its Twilio TaskRouter API helps route calls more quickly to the proper assistants. Its bots can also handle some messaging functions, even as the technology determines when human interaction is appropriate. This makes call center interactions more efficient while maintaining a human touch.

Furthermore, Grand View Research forecasts that the contact center market will grow at a 24% compound annual growth rate through 2030. That would take the current $33 billion market to a $150 billion market size over the next seven years.

Finally, investors should note that Wood's early recognition of the innovation at Tesla and Nvidia brought massive gains to her funds. That is noteworthy for investors, as following that playbook could also bring significant gains to Twilio over time.

Twilio's struggles

However, one thing that has so far stopped Wood and her team from experiencing comparable growth in Twilio is the company's financials. For the first six months of 2023, its revenue of just over $2 billion increased by 12% compared to the same period in 2022.

Unfortunately, cutting its operating expenses has still left it with significant operating losses. Twilio reported a net loss of $508 million in the first half of 2023, only slightly less than the $544 million loss in the same period in 2022.

Additionally, the company guided for flat year-over-year revenue growth in Q3. That factor likely led to disappointment, especially given the double-digit revenue growth in the past two quarters.

Still, the stock has risen by almost 25% this year despite its struggles in recent weeks. And after that growth, the stock still appears affordable at a price-to-sales (P/S) ratio of around 3. This is well below its sales multiple during the pandemic, which reached a high of 37 in early 2021. With that discount, investors can buy at a low cost -- an inducement that may persuade some investors to overlook what is probably a temporary slowdown.

Should I buy Twilio stock?

Given Twilio's ability to change the face of the contact center, following Ark Invest into this stock could pay off for investors. Admittedly, this stock will require patience as revenue growth slows and losses persist.

Nonetheless, Twilio plays a critical role in supporting many emerging companies. With its ability to revolutionize the fast-growing contact center market, it could become a Cathie Wood investment that drives innovation and handsomely profits shareholders in the process.