Quick Profitability Turnaround for Twilio Coupled With New Share-Repurchase Program; FVE Still $95

Narrow-moat Twilio reported meaningful upside on the top and bottom lines for its fourth quarter, provided strong profitability guidance for 2023, and announced a $1 billion stock buyback, with $500 million occurring in the next six months. The firm dropped other news as well, including an additional 17% head count reduction on top of the 11% cut made last year, and a new business structure for the communications unit and the data and applications (formerly referred to as software) unit, both with new business leaders. We were already contemplating meaningful margin improvements over the next five years and see no change to our long-term outlook; therefore, we are maintaining our fair value estimate of $95 per share. We see the shares as undervalued but prefer some of our wide-moat names based on our concerns about the macroenvironment.