Twilio Gears Up to Report Q4 Earnings: Should You Buy the Stock?

Twilio Inc. TWLO is scheduled to report its fourth-quarter 2024 results on Feb. 13.

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In January 2025, Twilio reported preliminary results for the fourth quarter. It now projects fourth-quarter revenues to increase approximately 11% on a year-over-year basis. The Zacks Consensus Estimate is pegged at $1.17 billion, which implies growth of 9% from the year-ago reported figure.

Twilio now projects non-GAAP earnings for the fourth quarter to come above the previous guidance of 95 cents to $1 per share. The consensus mark for earnings is pegged at $1.02 per share, indicating year-over-year growth of 18.6%. The consensus mark for TWLO’s fourth-quarter 2024 non-GAAP earnings has been revised upward in the past 30 days.

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Twilio’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 31%.

Earnings Whispers for TWLO

Our proven model predicts an earnings beat for TWLO this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate ($1.05 per share) and the Zacks Consensus Estimate ($1.02 per share), is +3.28%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: TWLO sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Likely to Influence Twilio’s Q4 Results

Twilio’s fourth-quarter results are likely to reflect gains from sustained digital transformation efforts as enterprises continue to reconfigure their setup for a hybrid operational environment. TWLO’s initiatives in expanding the network with independent software vendors and its global partners are likely to have favored its fourth-quarter performance.

Twilio’s enhancement of its Segment platform for Amazon Redshift by making public beta availability of the Linked Audiences feature might have gained more customers in the to-be-reported quarter. Moreover, its product introductions like rich communication services, Agent Copilot and Segment Data Graph are likely to have attracted more customers in the fourth quarter as well.

In the last reported quarter, Twilio added around 8,000 new clients, taking the total active customer count to more than 320,000 as of Sept. 30. The trend is likely to have continued in the to-be-reported quarter. Additionally, Twilio’s integration of artificial intelligence (AI) in several communication and segment products is likely to have favored its fourth-quarter 2024 performance.

TWLO’s bottom line is likely to have benefited from its cost-saving initiatives, which include workforce reduction and the closure of several offices. The company ended the third quarter of 2024 with 5,535 employees, down from the year-ago quarter’s 6,428 personnel.

TWLO Price Performance & Stock Valuation

In the past year, shares of Twilio have rallied 102.7%, outperforming the Zacks Internet – Software industry, Zacks Computer and Technology sector and the S&P 500 index’s growth of 27.7%, 20.7% and 20.9%, respectively. TWLO stock has also outperformed its peers, including CrowdStrike CRWD, Fortinet FTNT and Check Point Software Technologies CHKP.

One Year Price Return Performance

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Now, let’s look at the value Twilio offers investors at the current levels. TWLO is trading at a premium with a forward 12-month P/S of 4.61X compared with the industry’s 3.31X, reflecting a stretched valuation.

Forward 12-Month P/S Valuation

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Investment Consideration

Twilio is a leader in customer engagement and communications space, offering programmable communications cloud software that allows developers to embed voice, messaging, video and authentication capabilities to their apps at a very low cost. TWLO’s APIs are used by the world’s most renowned companies like Netflix, Airbnb, Lyft, Zendesk, Uber, WhatsApp and DoorDash.

Twilio’s developer-friendly platform and extensive API ecosystem have made it a preferred choice for companies looking to build custom communication solutions. Its ability to offer highly customizable communication tools, alongside its extensive global reach in more than 180 countries, gives it a competitive edge over its competition.

To further its competitive edge in the ever-evolving technology landscape, Twilio is integrating AI-driven features into its customer engagement platform, enabling businesses to automate and personalize interactions at scale. Products like Twilio Verify and Voice Intelligence are expected to grow as businesses prioritize enhancing customer experiences with AI-driven personalization and operational efficiency. Among its most recent collaborations is the integration of OpenAI’s Realtime API into Twilio’s platform.

Conclusion

Twilio’s leadership in the customer engagement space, combined with its AI-driven innovations, positions it well for future growth. It has managed to carve out a unique space for itself in the highly competitive customer engagement and communications space, thanks to its developer-friendly platform and extensive API ecosystem. Considering all these factors we believe it is prudent to invest in TWLO stock.

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