Twilio (TWLO) to Report Q1 Earnings: What's in the Offing? - Trade Oracle

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Twilio (TWLO) to Report Q1 Earnings: What’s in the Offing?

Twilio Inc. (TWLO – Free Report) is set to announce its first-quarter 2023 financial results on May 9. The company expects revenues in the range of $995 million to $1.005 billion for the first quarter. The Zacks Consensus Estimate for the same stands at $999.8 million, indicating a 14.2% increase from the year-ago quarter.

Twilio’s earnings have surpassed the Zacks Consensus Estimate in all the preceding four quarters, recording an average surprise of 130.1%. The cloud-based communications platform-as-a-service provider anticipates non-GAAP earnings between 18 cents and 22 cents per share. The consensus estimate for non-GAAP earnings stands at 20 cents per share, from a breakeven in the year-ago quarter.

Factors to Note

Twilio’s Q1 results are expected to reflect gains from accelerated digital transformation projects across several industries while the world economy is rebounding. Organizations are continuing to reconfigure their setup for a hybrid operational environment.

Since its acquisition in 2020, Segment has been aiding TWLO in enhancing its capabilities in the cloud-based communications platform space and gaining significant customers. The strong uptake of Segment, the growing adoption of Twilio Flex, and an increasing clientele base are likely to have favored first-quarter performance.

Twilio’s solutions like Journeys, Twilio Conversations, SendGrid Ads, and SendGrid’s Email Validation application programming interface are likely to have contributed to the first-quarter performance. The company’s efforts to fortify its global footprint are likely to get reflected in the to-be-reported quarter’s results.

In the last reported quarter, Twilio added around 10,000 new clients, taking the total active customer count to 290,000. In the first quarter, the company’s increasing scope among leading enterprises is expected to have acted as a key tailwind.

However, increased spending, investments in enhancing the product portfolio, and expansion across newer markets are likely to have impacted Twilio’s profitability negatively.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Twilio this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

Although TWLO carries a Zacks Rank #3, it has an Earnings ESP of 0.00% at present.

Stocks With the Favorable Combination

According to our model, Agilent Technologies (A – Free Report), HP (HPQ – Free Report), and Cisco Systems (CSCO – Free Report) have the right combination of elements to post an earnings beat in upcoming releases.

Agilent Technologies has an Earnings ESP of +0.40% and carries a Zacks Rank #2 at present. The company is set to report its second-quarter fiscal 2023 results on May 23.

HP has an Earnings ESP of +2.24% and carries a Zacks Rank #3 at present. The company is expected to report its second-quarter fiscal 2023 results on May 30.

Cisco has an Earnings ESP of +1.59% and carries a Zacks Rank #3 at present. The company is set to report first-quarter fiscal 2024 results on May 17.

Conclusion

Twilio’s Q1 earnings are expected to have gained from the growing adoption of its cloud-based communication platform and increasing clientele base. However, increased spending and investments in enhancing the product portfolio are likely to have impacted its profitability negatively.

Based on our model, we cannot conclusively predict an earnings beat for Twilio this season.

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