Twilio slides 10% despite strong Q3 results

Twilio Inc (NYSE: TWLO) reported market-beating results for its fiscal third quarter on Wednesday. Shares still tanked more than 10% in after-hours trading on weak guidance and news that COO George Hu is leaving.

Q3 financial performance

Twilio said it lost $224.1 million in Q3 that translates to $1.26 per share. On an adjusted basis, it earned 1 cent per share versus the year-ago figure of 4 cents per share, as per the earnings press release.

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The cloud communications platform generated $740.2 million in sales – a sharp increase from last year’s $448 million. According to FactSet, experts had forecast 14 cents of adjusted per-share loss on $681 million in sales.

The report comes weeks after Piper Sandler’s Brent Bracelin said Twilio was a good pick to play the cloud space.

Future guidance

For the current quarter, Twilio now forecasts up to 26 cents of adjusted per-share loss on $760 million to $770 million in sales. In comparison, analysts are calling for a narrower 10 cents of adjusted per-share loss on $745 million in sales.

In the back half of 2020, demand for Twilio was particularly strong as political campaigns turned to it to communicate with voters. The U.S. firm, therefore, faces tough comps in the last two quarters this year. According to analysts at JPMorgan:

We acknowledge tough comps in Q3/Q4 due to heavy political messaging traffic last year, and do not see improvement in gross margins yet due to traction of lower-margin core messaging products, but see very healthy demand signals from partners plus the rise of 2-way messaging causing investors to re-rate growth prospects and the stock into H1 of 2022.