Enterprise software company Twilio (NYSE:TWLO) delivered better-than-expected Q4 financials. However, its lower-than-expected Q1 revenue outlook irked investors, leading to a 15.4% decline in its share price on Thursday, February 15.
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Twilio expects its Q1 2024 sales to be in the range of $1.025 to $1.035 billion, lower than analysts’ estimate of $1.05 billion. The company has reported that its Data & Applications segment is persistently underperforming. Further, the company is conducting an extensive operational review of the segment and plans to provide details in March.
Notably, activist investor Anson Funds revealed a stake in TWLO in November 2023 and is pushing the management to either sell its entire business or divest its Data and Applications business. With this backdrop, let’s look at the company’s Q4 performance.
TWLO – A Brief Look at Q4 Performance
The company delivered total revenue of $1.08 billion in Q4, up 5% year-over-year. Its top line exceeded analysts’ estimate of 1.05 billion. Twilio’s Communications segment’s revenue increased 5% year-over-year to $1.00 billion, and total organic revenue jumped 8%.
Twilio posted adjusted earnings of $0.86 per share in Q4, up significantly from $0.22 in the prior-year quarter. Higher sales and cost discipline cushioned its bottom line. Further, its EPS surpassed the Street’s forecast of $0.57.
What Is the Prediction for Twilio Stock?
Twilio stock dropped about 19% in one year, underperforming the S&P 500’s (SPX) gain of 22.3%. Further, HSBC analyst Stephen Bersey downgraded TWLO stock to Sell ahead of Q4 results on February 13, citing its expensive valuation and low growth.
It has received 10 Buy, 12 Hold, and three Sell recommendations for a Moderate Buy consensus rating. Analysts’ average price target of $72.82 implies 19.08% upside potential.
