Shares of Twilio (TWLO +0.78%) fell 15.4% on Thursday despite stronger-than-expected quarterly results from the communication software tools provider. It seems the market is focused on Twilio's light forward guidance.
NYSE: TWLO
Key Data Points
Twilio ended 2023 on a high note
For its fourth quarter of 2023, Twilio saw revenue climb 5% year over year to $1.08 billion, while its adjusted (non-GAAP) net income nearly quadrupled over the same period to $0.86 per share. By comparison, most Wall Street analysts were modeling earnings of only $0.58 per share on revenue closer to $1.04 billion.
Twilio CEO Khozema Shipchandler called it a "terrific" quarter, noting the company continues to make strides toward GAAP profitability. Indeed, based on generally accepted accounting principles -- which includes items like stock-based compensation -- Twilio's full-year 2023 net loss narrowed to $5.54 per share from $6.86 per share in 2022.
Delving deeper into Twilio's results, active customer accounts grew by 5.2% year over year to over 305,000 to end 2023, while Twilio's dollar-based net expansion rate contracted by 8 percentage points to 102%.
What's next for Twilio investors?
For the first quarter of 2024, however, Twilio issued guidance for revenue in the range of $1.025 billion to $1.035 billion, with adjusted net income per share of $0.56 to $0.60. This outlook was technically mixed relative to expectations; most analysts were looking for adjusted earnings of $0.55 per share, but on higher revenue of $1.05 billion. Twilio opted not to provide specific full-year guidance.
During the subsequent conference call, management explained that the expected sequential decline in revenue is partly driven by elevated seasonal activity on its platform in the fourth quarter -- though they also suggested they were "planning prudently" due to the usage-based nature of the business.
It's obvious, then, that our forward-looking market is displeased with the lack of clarity. Though if Twilio ends up underpromising and overdelivering when all is said and done in Q1, this pullback might well prove temporary.
