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Twilio Inc A TWLO

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Morningstar’s Analysis

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With Strong Second Quarter Results, Twilio Continues to Exceed Expectations; FVE Up to $153

Dan Romanoff, CPA Equity Analyst

Analyst Note

| Dan Romanoff, CPA |

Narrow-moat Twilio reported strong second-quarter results bolstered by coronavirus-related projects and guided above investor expectations. We think Twilio benefits from a wide host of use cases that support its resilience, as the company touted a diversified customer base of more than 200,000 organizations. Many of the uses for Twilio represent greenfield opportunities, and we believe the company has ample opportunity to increase revenue over the decade as it continues to expand uses for its platform. That said, the company benefited from the immediacy of COVID-19-related projects and existing customers even as it continued to rapidly gather new accounts. Management noted some green shoots and sees some signs of macro improvement. We are raising our fair value estimate to $153 per share, from $143, based on strong quarterly results and upside to our model with respect to third quarter guidance. Despite being above consensus through 2021 heading into the quarter, we see shares trading at a material premium to our fair value and therefore cannot recommend the stock to investors.

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Company Profile

Business Description

Twilio is a communication platform-as-a-service company that allows software developers to integrate messaging and communications functionality into existing or new applications via application programming interfaces and software development kits. The firm’s Programmable Communications Cloud addresses several use cases, including Programmable Voice to make and receive phone calls, Programmable Messaging for SMS and MMS delivery, and Programmable Video that allows developers to embed video functionality in mobile and web applications.

101 Spear Street, First Floor
San Francisco, CA, 94105
T +1 415 390-2337
Sector Communication Services
Industry Internet Content & Information
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Speculative Growth
Employees 3,284