Twilio Stock Soars Nearly 10% As Regulatory Filing Provides Bullish Indications
In a filing with the Securities and Exchange Commission (SEC) on Thursday evening, Twilio (NYSE: TWLO) seemed to suggest that its upcoming third-quarter results could be far better than the company had originally expected.
The rather terse statement simply read, “Twilio Inc. (the “Company”) announces that it expects the Company’s total revenue for the three months ended September 30, 2020 to be ahead of the Company’s previously released guidance of $401 million to $406 million.” The brief missive sent Twilio shares skyrocketing, gaining nearly 10% in after-hours trading.
Which give?
Companies will routinely provide forward-looking guidance, which is no more than management’s educated estimate of the company’s performance over the next quarter. It is not uncommon for business to be more dynamic than expected, forcing the company to exceed its own forecasts.
A quick look at Twilio’s results shows that it has exceeded management’s expectations in three of the past four quarters. In fact, in the first and second quarters of 2020, Twilio’s total revenue exceeded management forecasts by 8% and 8.3%, respectively. In neither case did Twilio file a filing with the SEC that it expected to exceed its forecast.
The fact that management has deemed it necessary to notify the SEC suggests that the company’s revenue growth will exceed its forecast by a much wider margin than it has on previous occasions. Given the high end of Twilio’s forecast of $406 million – which would represent 38% year-over-year growth – and the potential that revenue could exceed that estimate by more than 8%, suggests that revenue reached at least $438 million, up 49% — or potentially even more.
Importantly, the regulatory filing also reminded investors that Twilio’s “actual results may differ” from its preliminary estimates.
Stay tuned.
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