Twilio (TWLO) to Report Q4 Earnings: What's in Store?

Twilio TWLO is slated to release fourth-quarter 2020 results on Feb 17.

The company anticipates revenues between $450 million and $455 million. The Zacks Consensus Estimate for quarterly revenues is pegged at $454.6 million, suggesting 37.3% growth from the $331.2 million reported in the year-ago period.

Twilio forecasts non-GAAP loss per share between 8 cents and 11 cents. The Zacks Consensus Estimate for the quarter under review is pegged at a loss per share of 8 cents. Notably, Twilio had posted earnings of 4 cents per share in the fourth quarter of 2019.

Let’s see how things have shaped up prior to the upcoming announcement.

Factors at Play

Twilio’s fourth-quarter performance is likely to have benefited from an increasing clientele and the Sendgrid buyout. Growing adoption of Twilio Flex is also anticipated to have been a tailwind.

Twilio Inc. Price, Consensus and EPS Surprise

Twilio Inc. Price, Consensus and EPS Surprise

Twilio Inc. price-consensus-eps-surprise-chart | Twilio Inc. Quote

Furthermore, its quarterly results are likely to have gained from the accelerated digital transformation projects across a number of industries in the wake of the pandemic-induced lockdown and social-distancing measures. Organizations are reconfiguring their set-up for a work-from-home operational environment in a bid to make nearly 100% e-commerce a reality.

The company is expected to have witnessed demand from health care, education, retail and crisis management organizations. However, soft demand from ride-sharing, hospitality and travel industries are likely to have slightly offset the benefits of the aforementioned factors.

Twilio’s expanding foothold among leading enterprises is also likely to have been a key catalyst. Remarkably, in the last reported quarter, the company had added more than 8,000 new clients, taking the total active customer count to more than 208,000.

Moreover, Twilio’s efforts to fortify its global footprint will likely reflect on the quarterly results. Further, the introductions of Twilio Conversations, SendGrid Ads and SendGrid’s Email Validation API are anticipated to have been conducive to the company’s performance.

Nonetheless, Twilio’s rising investments in lower-margin international regions might have dampened its profitability. The company has entered into new product and geography markets to continue its high growth momentum. In addition, the firm acquired customer-data start-up Segment Inc. for $3.2 billion during the fourth quarter.

Also, the firm is stepping up investments in its systems and infrastructure, go-to-market team and Flex, as well as in R&D, which is likely to have clipped the company’s profitability during the October-December period.

What Our Model Says

Our proven model predicts an earnings beat for Twilio this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Twilio currently carries a Zacks Rank of 3 and has an Earnings ESP of +34.78%.

Other Stocks With Favorable Combinations

Here are some other companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming releases:

Groupon, Inc. GRPN has an Earnings ESP of +230.91% and flaunts a Zacks Rank of 3, at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Agilent Technologies, Inc. A has an Earnings ESP of +4.64% and carries a Zacks Rank of 3, currently.

Analog Devices, Inc. ADI has an Earnings ESP of +0.69% and currently holds a Zacks Rank of 3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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