Twilio: Strategic Review Complete, With Good 2024 Guidance, More Share Buybacks, Segment Retained

We are maintaining our fair value estimate of $73 per share after Twilio announced the results of its strategic review and initiated its 2024 outlook. In short, Twilio will keep its Segment business, introduced Thomas Wyatt as the president of the segment business, announced an additional $2 billion stock buyback, offered solid guidance for 2024, and presented a profitability target for 2025. While these are important steps in the company’s ongoing restructuring efforts, execution will be paramount. In particular, we think segment is immature and will require investment, which runs counter to the margin expansion targets laid out by the company. Overall, we welcome the clarity and see some value in the shares for patient investors, but we still see the road as long and challenging.