Twilio Earnings: Continued Profitability Focus as Macro Mutes Top-Line Growth; Valuation Maintained

Narrow-moat Twilio reported strong third-quarter results with both revenue and profitability materially above our expectations. Guidance for the fourth quarter met our expectations for revenue and was a bit ahead of our profitability forecast as previous restructuring measures are paying dividends. We expect revenue to remain subdued as Twilio’s customers undertake internal cost-saving measures as a result of the macro environment. Based on results and guidance, we have made minor near-term adjustments to our model and are maintaining our fair value estimate of $64 per share. Shares popped to about $60 per share as of writing, and we view shares as fairly valued.