SAN FRANCISCO — When Twilio ended Silicon Valley’s IPO drought with a slam-dunk offering this summer, analysts cautioned that the real test would be whether the cloud communications company could be successful long term.
Showing strong numbers Monday in its first earnings report as a public company, Twilio seemed eager to prove it will thrive even after the post-IPO hype dies away. The San Francisco-based cloud communications company reported revenue of $64.5 million for the second quarter of 2016 and a loss of 8 cents per share, beating the predictions of analysts polled by Thomson Reuters, who had expected revenue of $58.22 million and a loss of 14 cents per share.
Twilio’s revenue is up 70 percent from the second quarter of 2015 and 9 percent from the first quarter of 2016.
But the company did worse than expected when certain costs such as stock-based compensation and acquisition-related expenses were factored in, losing 45 cents per share compared to analysts’ predictions of 33 cents per share. Including those expenses, Twilio lost $10.9 million from operations during the second quarter, up from $9.5 million during the same period last year.
“This has been an unusually busy and special quarter for the company,” Twilio co-founder and CEO Jeff Lawson said Monday on a conference call with investors. “I’m proud that Q2 was another quarter of strong growth and accomplishments. But this is day one. As we look forward, we believe that the opportunity has never been greater.”
Twilio powers voice and messaging capabilities of companies such as WhatsApp and Uber, which uses Twilio technology to connect drivers and passengers. The cloud communications company made a splash in a $150 million IPO in June, with its shares nearly doubling in price during Twilio’s first day of trading on the public market.
Twilio’s stock has continued to rise since its market debut, and was trading at more than $42 when the market closed Monday — up from its IPO price of $15 and its first-day closing price of almost $29. Shares edged up less than 1 percent in after-hours trading Monday afternoon.
It’s difficult to judge a company based on its first earnings report, said San Jose technology analyst Tim Bajarin, president of Creative Strategies. But so far, things look good for Twilio, which has a potential market of millions of companies and developers who could use Twilio tools in their platforms.
“Their business model is pretty solid,” he said. “They have shown that they can make money.”
In these early reports, investors tend to focus on what a company has to say about its future financials, Bajarin said.
Twilio expects to bring in between $63 million and $65 million in revenue next quarter.
Referencing the company’s losses during Monday’s call, Chief Financial Officer Lee Kirkpatrick said Twilio is focused on growing its reach and scale, not its margins. The company expects to break even in the fourth quarter of 2017, he said. Twilio has $261 million in cash and more than 30,000 active customer accounts.
Lawson touted new partnerships with customers such as ING bank and Facebook, which is using Twilio technology in its Messenger platform, and expanded relations with customers such as Amazon Web Services. He also discussed several new product features — one allows Twilio to integrate with wireless carriers, while another helps businesses manage their messaging services across multiple platforms.
Investors on Monday’s call congratulated the Twilio executives on the company’s IPO and strong earnings, but questioned how much success it would have with non-tech customers such as ING, and in the possibly over-hyped world of chatbots. The Twilio executives said they remained optimistic about both areas.
Marisa Kendall covers startups and venture capital. Contact her at 408-920-5009 and follow her at Twitter.com/marisakendall.
