tl;dr
Class A shares of Twilio (NYSE:TWLO) on Thursday slumped as much as 15.5%, as analysts focused on its weak current quarter guidance and expressed concerns over its operational review of one of its units. TWLO stock was last down 14.8% to $61.55 in afternoon trade. Twilio (TWLO) after hours on Wedne...
Class A shares of Twilio (NYSE:TWLO) on Thursday slumped as much as 15.5%, as analysts focused on its weak current quarter guidance and expressed concerns over its operational review of one of its units. TWLO stock was last down 14.8% to $61.55 in afternoon trade.
Twilio (TWLO) after hours on Wednesday reported Q4 2023 adjusted earnings of 86 cents per share on revenue of $1.08B. Analysts had been expecting the company to earn 58 cents per share on revenue of $1.04B. Its Q1 2024 revenue guidance of $1.025B to $1.035B came in below consensus.
San Francisco, Calif.-based Twilio (TWLO) provides a range of services involving cloud communications, including a customer data platform and application programming interfaces to support centralized messaging. The company also offers user verification solutions. The company reports results in two units, communications and segment. On Wednesday, along with the quarterly results, the company said that management was undertaking an operational review of the latter unit. Twilio's (TWLO) segment business was born of its $3.2B acquisition of customer data infrastructure firm Segment in 2020. It is now a customer data platform. TWLO said it recorded a $285.7M impairment charge related to the acquisition in Q4.
"Our Twilio Segment business, formerly Twilio Data & Applications, while still strategically important to Twilio (TWLO), continues to underperform. Although we drove sequential bookings improvement in Q4, growth is not yet accelerating up to our expectations," the company's top boss Khozema Shipchandler said on an earnings conference call.
"Over the past five weeks, I've been working with the team to conduct an extensive operational review of Segment, and this work is ongoing. We plan to do a read-out of these results in March at which time I'll be ready to share our findings, path forward, and any changes to Twilio's (TWLO) financial framework as a result," Shipchandler added.
Twilio (TWLO) last year also faced activist investor pressure from Legion Partners and Anson Funds, with the funds saying that they would like the company to sell of either the segment unit or the whole firm. Northland downgraded Twilio (TWLO) stock in response to the announcement about the operational review. If the review leads to a unit sale, that could minimize Twilio's (TWLO) AI strategy in Northland's view, the brokerage said, moving its rating on the stock to Market Perform from Outperform.
RBC Capital maintained its Underperform rating on the stock, noting that the new disclosures around the segment unit suggested "business challenges." While our checks did pick up weakness in Segment, we were surprised to see the numbers: 1) Segment (plus Engage) is ~$300MM in ARR, while we had estimated the business was ~$400MM in ARR; 2) Segment is only growing 4% YoY, significantly lower than expected," RBC analyst Rishi Jaluria said.
"Is a Segment divestment in the cards? Management seemed to dismiss the idea on the earnings call (although it is likely an option, in our view). While we understand the strategic rationale for Segment and that it underpins Twilio's "CustomerAI" strategy, given growing competition (especially from Salesforce (CRM) and Adobe (ADBE)), we think Twilio (TWLO) should consider divesting the asset as part of a 'shrink to grow' strategy," Jaluria added. JMP Securities maintained its Market Perform rating on TWLO stock.
"We think the company may divest from Segment and think such a move would be a net positive for several reasons, including conflict between Segment and the Communications business and the rapid evolution of the (customer data platform) industry," JMP analyst Patrick Walravens said.
More about Twilio Inc
Twilio Inc. is a technology company that provides a cloud communications platform for developers to build, scale, and operate customer engagement within software applications. The company operates in the services-prepackaged software industry and has a market capitalization of $13,083,978,000. In the past year, the stock has shown a 4.77% decrease in performance, with a current price of $22.28. The company's market sentiment is slightly bearish, with a negative change in the stock price of 0.214. The stock's trading volume is $4,102,569,000, and the Relative Strength Index (RSI) is at 74.29, indicating a potentially overbought situation. It is important to consider the potential risks and uncertainties associated with this analysis, as past market behavior is not always a reliable indicator of future performance.
More about Salesforce.com Inc
Key Financial Metrics: - Sales: $27,989,717,800 - Earnings Per Share (EPS): $2.63 - Price to Earnings (P/E) Ratio: 34.73 - Market Cap: $33,954,001,000 - Stock Price: $287.36 - Dividend Yield: 4.952% - Beta: 0.113
Stock Performance: Salesforce.com Inc. has shown strong sales growth and a high P/E ratio, indicating investor confidence in future earnings potential. The stock price is also relatively high, suggesting positive market sentiment towards the company's future prospects.
Market Sentiment: The market sentiment for Salesforce.com Inc. appears to be bullish, with strong sales and a high stock price. However, the high P/E ratio and beta indicate potential risks and uncertainties in the market, and caution should be exercised when considering future performance.
More about Adobe Systems Incorporated
Adobe Inc. is a major player in the technology sector, specializing in prepackaged software. With a market cap of $273.3 billion and a stock price of $652.57, Adobe has shown strong growth and stability. The company's stock performance has been bullish, with a 52-week high of $705.47 and a low of $451.66. However, the stock currently sits at a support level of $651.57, with potential for a breakout to new highs. Market sentiment is positive, with Adobe's expansion into digital marketing management software and its millions of users worldwide. However, there are potential risks and uncertainties in the market, and past performance is not always indicative of future results.
More about Amazon.com Inc
Amazon.com Inc is a leading multinational technology company with a focus on e-commerce, cloud computing, digital streaming, and artificial intelligence. As one of the Big Five companies in the U.S. information technology industry, it holds a significant position in the market. The company's stock performance has been strong, with a market capitalization of $1,776,037,528,000 and a current stock price of $204.87. While the stock has shown a bullish trend with a Relative Strength Index (RSI) of 55.78, it's important to note the potential risks associated with market volatility and uncertainty. The company's influence in the global economy and cultural landscape makes it a key player to watch in the coming months.
More about Snowflake Inc.
Key Financial Metrics: Snowflake Inc. has a market capitalization of $76.06 billion and reported a net income of -$2.69 per share. The company's revenue is $2.62 billion, with a stock price of $223.31.
Stock Performance: The stock has shown a positive performance with a 8.05% increase, indicating potential investor confidence.
Market Sentiment: The market sentiment for Snowflake Inc. appears to be positive, with a bullish trend indicated by a Relative Strength Index (RSI) of 0.318, suggesting potential upward momentum. However, caution is advised as the company operates in the volatile technology sector, and past performance may not be indicative of future results.
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