TWLO - Twilio: The 'Growth Story' Needs A Comeback To Drive Investor Confidence

2024-04-09 03:08:19 ET

Summary

• Twilio has underperformed the S&P 500 and Nasdaq 100 YTD. Although the company has seen its revenue growth slow in FY23, it has made substantial progress in improving profitability.
• TWLO has laid forth its plans to boost operational improvement in its Segment business unit while continuing to drive product innovation in FY24.
• The risk-reward is not attractive at the moment, as macroeconomic headwinds could continue to dampen usage-based revenue, with companies cutting back on spending.

Introduction & Investment Thesis

Twilio (TWLO) is a cloud-based communications application software company that has severely underperformed the S&P 500 and Nasdaq 100 YTD. The company released its Q4 FY23 earnings report in February, where revenue rose 9% YoY to $4.15B, while non-GAAP operating income grew from -$4.5M in FY22 to $533M in FY23. On March 5th, the company released its Investor Update , where it laid out its roadmap for improving performance in its Segment business unit as it continues to underperform, incurring a loss of -$727M in FY23....

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