The recent dive in Twilio’s (TWLO) stock price after its earnings report has left investors pondering whether this is an opportune moment to invest or a cautionary sign.
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Strong Q4 Earnings
Twilio’s consistent performance in the fourth quarter once again surpassed expectations. Its earnings of $0.86 a share left estimates of $0.57 a share in the dust, marking a 51% beat. Moreover, Q4 earnings surged by a staggering 290% from a year ago. The company’s sales of $1.07 billion also exceeded estimates by 3% and rose 5% YoY.
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Soft Sales Guidance
While Twilio’s total sales for fiscal 2023 showed a 9% increase to $4.15 billion, the subdued revenue guidance for the upcoming quarter led to a decline in its stock price. The company’s projected sales growth of 2-3% for Q1 failed to impress investors, causing a dip in its stock value.
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EPS Outlook and Revisions
Twilio’s annual EPS of $2.45 per share in FY23, compared to an adjusted loss of -$4.44 a share in 2022, showed a remarkable turnaround. Although earnings are expected to dip by -3% this year, estimates suggest a strong rebound and a 23% increase in FY25 to $2.93 per share. Moreover, earnings estimate revisions have been slightly up over the last 60 days for both FY24 and FY25.
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Bottom Line
Despite the recent setback, Twilio’s stock still holds a Zacks Rank #2 (Buy), thanks to its robust growth potential. However, the fate of its buy rating hinges on the trend of earnings estimate revisions in the forthcoming weeks.
“Is it time for investors to call? Will Twilio’s stock emerge as a phoenix from the dip? Time will tell.”
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