Twilio Drops on Big Miss for Profit Outlook, Earns Multiple Downgrades

© Reuters Twilio (TWLO) Drops on Big Miss for Profit Outlook, Earns Multiple Downgrades

By Senad Karaahmetovic

Shares of Twilio (NYSE:TWLO) are down over 8% in premarket trading after the software company offered a light forecast.

For the second quarter, Twilio delivered an adjusted loss per share of $0.11 on revenue of $943.4 million to top the analyst consensus of a loss of $0.20 on revenue of $918.2 million. Revenue soared 41% on a YoY basis as Twilio reported 275,000 active customer accounts, although slightly lower than the 275,697 consensus.

However, TWLO shares were hit after company said it sees an adjusted loss per share of between $0.37 and $0.43, much worse than the analyst estimate of a loss of $0.11. Revenue is expected to be between $965 million and $975 million, again lower than the consensus of $975.6 million.

“Based on our results and what we’re currently seeing, we remain confident in our growth trajectory,” the company said in a statement before adding that it is “closely following the macroeconomic environment and are taking proactive steps.”

A Stifel analyst downgraded TWLO stock to Hold from Buy with a $90 per share price target from $200.

“We are moving to the sidelines until we get a clearer picture on the progress towards 60%-plus G.M. and O.M. leverage,” the analyst said in a note.

Similarly, an Atlantic Equities analyst downgraded Twilio from Overweight to Neutral with a $100.00 per share price target.

"We are downgrading Twilio to Neutral on a longer than anticipated transition to higher-margin products and a worsening macro environment. Our positive stance had been predicated on faster adoption of higher-margin products while the core business continued to grow over 30% organically. However, visibility into the trajectory for higher-margin products has not improved as expected, and the ongoing deterioration in gross margin suggests traction has been limited,” the analyst told clients.