Why Twilio Inc (NYSE: TWLO) stock is under pressure

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Twilio Inc (NYSE: TWLO) stock fell over 4.4% in the pre-market session of Feb 6th, 2020 (as of 7:29 am GMT-5 ; Source: Google finance) after the company posted better than expected results for the fourth quarter of FY 19. The company had finished the year with more than $179,000 active customer accounts. Revenue from the top 10 active customer accounts contributed 14% of total revenue in Q4, compared to 13% last quarter and 20% in Q4 of 2018.

TWLO in the fourth quarter of FY 19 has reported the adjusted earnings per share of 4 cents, beating the analysts’ estimates for the adjusted earnings per share of 1 cents, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 62 percent to $331.22 million in the fourth quarter of FY 19, beating the analysts’ estimates for revenue by 6.01%. Organic base revenue was $253 million, up 36% year-over-year. Twilio SendGrid had a great finish to the year, as it reported nearly $54 million of revenue in the fourth quarter, up more than 30% over last year. Dollar-based net expansion calculated using base revenue was 124% in Q4. WhatsApp represented about 6% of revenue in the fourth quarter.

Gross margins came in at 57% for Q4, which was down slightly from last quarter due to some increased international usage the company saw in the quarter, along with the normal puts and takes, including customer, product and country mix, carrier fees, FX and others.

For 2020, the company expects gross margins to continue to be in the mid to high-50s. For 2020, the company expects revenue to be in the range of $1.475 billion to $1.490 billion for growth of 30% to 31%, due to strength in the core products and continued high growth of newer products like email and Flex. The company projects a non-GAAP operating loss to be in the range of $50 million to $60 million for 2020.

Further, the company expects a loss to be in the range of $22 million to $25 million in Q1 and the company currently expect Q2 to show a higher loss. Afterwards, the company expects smaller losses in Q3 and then get back to break-even in Q4. The company is stepping up the investments in the systems and infrastructure to drive further efficiencies in the internal processes and position the company for scale with the anticipated growth in the coming years.

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