Twilio To Top 3Q Sales Fueled By Cloud Demand; Shares Surge 10%

Shares of Twilio soared 9.8% in Thursday’s extended trading session after the company said revenues for the quarter ended September 30, 2020 (third-quarter) will be higher than its previously announced guidance.

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In an SEC filing, Twilio (TWLO) said “that it preliminarily expects that total revenue for the quarter ended September 30, 2020 will be ahead of the Company’s previously issued guidance of $401 million to $406 million.” Wall Street analysts are projecting 3Q revenues of $403.7 million, reflecting year-over-year growth of 37.1%.

The cloud service platform provider is benefiting from accelerated digital transformation in the wake of the COVID-19 pandemic-induced work-from-home trend. On August 4, Twilio reported 2Q revenues of $400.8 million, which increased 46% year-over-year. The company’s adjusted EPS jumped three-fold to $0.09 year-on-year. (See TWLO stock analysis on TipRanks)

On Oct. 1, Oppenheimer analyst Ittai Kidron reiterated a Buy rating and a price target of $300 (16.7% upside potential) on the stock, after attending Twilio’s virtual Investor Day. Kidron said that “We have a high degree of confidence in Twilio’s outlook as it’s underpinned by a growing number of new use cases (healthcare, Flex, IoT, etc.), which have been accelerated by COVID-19 (digital communications accelerated by six years).”

Overall, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 17 Buys and 4 Holds. With shares up over 161% year-to-date, the average price target of $294.50 implies further upside potential of about 14.6% to current levels.