UPDATED 16:35 EDT / AUGUST 07 2017

APPS

Twilio earnings bounce back from big decline in Uber revenue

Twilio Inc. today announced a recovery from the impact of lower orders from Uber Technologies Inc. that slammed the cloud communications company a few months ago.

The San Francisco-based company reported second-quarter earnings today that came in higher than expected, lifting the shares by about 11 percent in after-hours trading today.

Twilio, whose service allows software developers such as Uber and WhatsApp to incorporate voice, video and text messaging into their apps and web services, reported a second-quarter loss before certain costs such as stock compensation of $4.8 million, or 5 cents a share, down from an 8-cent loss a year ago. Sales rose 49 percent, to $95.9 billion.

The results easily beat Wall Street forecasts, which called for an 11-cent adjusted loss on $86.2 million in revenue. As a result, Twilio’s shares, which rose 4.5 percent in regular trading to $30.53 a share, look poised to bounce back in trading Tuesday morning. Update: Indeed, shares rose 10 percent on Tuesday.

The quarter was a big turnaround from three months ago, when it lost a quarter of its valuation after issuing a lower-than-expected first-quarter outlook. That was the result of revenue from Uber, its largest customer, dropping from 17 percent of overall revenue to 12 percent as the ride-hailing giant added rival services and developed more of its own technology.

Twilio co-founder and Chief Executive Jeff Lawson (pictured) said he was “clearly not happy” with that trend but said that it didn’t change his outlook for the company at the time, partly because of the diversity of other customers such as WhatsApp, which is only 5 percent of revenue.

The company’s growth rate continued to be dampened by declining Uber revenue through mid-2018, Chief Financial Officer Lee Kirkpatrick said. Although he said the company expects Uber to remain a customer, sales declined to 9 percent of overall revenue, from 12 percent in the first quarter and 13 percent a year ago, translating to flat Uber revenue from the second quarter of 2016.

As Uber use cases for Twilio services moves from bulk notifications such as to thousands of drivers to higher-value cases such as notifying users a ride has arrived, Kirkpatrick said, Twilio expects a larger sequential-quarter decline in the third quarter and a lower decline in the fourth quarter.

“We feel great about the momentum of the business as we head into the second half of the year,” Lawson said on the earnings conference call. Lawson said Twilio added new customers across a wide variety of industries, with 43,431 active customer accounts, up from 30,780 a year ago and 40,696 last quarter.

The company also provided higher third-quarter and full-year guidance. It upped its third-quarter revenue from $91 million to $93 million and forecast an eight-cent adjusted loss, down a penny from its previous estimate.

For the full year, it upped estimated revenue by $4 million to $375 million, though it also said it expects a slightly higher 24-cent loss. Analysts had been forecasting a 29-cent adjusted loss on a 30 percent revenue rise, to $359.8 million.

Photo: Twilio

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