$TWLO – Twilio Inc. – 2020 Research

Last Trade Price: $238.40

Price Objective: $305

                                

Business Strategy and Outlook

Twilio is a communication platform as a service, which developers can use to facilitate communication (text,voice) in 180 countries. CPaaS platforms provide the building blocks that enable individuals or enterprises to integrate real-time omnichannel communication tools into business applications. Twilio operates as the back-end communications infrastructure for companies and provides easy to use APIs and SDKs to allow integration with a customer’s applications. Simple examples of such integrations include enabling two factors authentication for a website or enabling push notification to remind customers about upcoming events.

Twilio Flex streamlines businesses to client communication through the power of AI and cloud-based services.  By using Ominchannel customer services, Twilio enables businesses to connect with their clients through WhatApp, SMS, or WebChat, powered by automated routine customer inquires with conversational IVRS and chat box to reduce wait. We see great value and long-term growth potential for this product as more companies are switching over to remote workplaces and the need to provide greater customer satisfaction and increase brand loyalty are essential.

Earlier this year, Twilio acquired SendGrid that allow customers send mass emails to their clients. We believe this platform was the missing link in Twilio’s communications tools and should drive material cross-selling opportunities. SendGrid brings another layer of marketing and communication to Twilio’s arsenal.

Product Line:

Twilio Flex

Programmable SMS

Elastic SIP Trucking

Twilio Conversations

Programmable Vide

Phone Numbers

Twilio SendGrid Email API

Programable Voice

Programmable Wireless 

 

Performance and Risk

At Tiger Wolf Capital, we look at two things: is the company profitable? Do people want to use this product.

As of Q2 earnings earlier this year, Twilio is not a profitable company due to their cost of operation being too extraordinary high. One of the biggest concerns is that Twilio relies on network service providers and internet service providers to be able to provide their services. Twilio is currently at the mercy of these companies and must pay whatever fee that they are charged. At times, network service providers have instituted additional fees due to regulatory, competitive or other industry related changes that increase Twilio’s network costs. As well, network service and connectivity and disruption or deterioration in the quality of these services could adversely affect Twilio’s business, results of operations and financial condition. On the other hand, the company’s total revenue as increased year over year with a 46% increase from Q2 of 2019 to Q2 of 2020. For us, this looks promising if Twilio is able to keep the cost under control and increase their operating margin.

Answering our second question, Twilio’s customer growth has been growing immensely year over year. Most notable gain is the growth from 2018 to 2019 when it from having 64,286 customers to 114,714. The demand for Twilios’ service is very evident and should not be overlooked.

We are looking forward to seeing what Q3 earnings will tell us about it performance during the pandemic.

Techincal Analysis :

After recently selling off, TWLO has found support around $218.26 and has recovered back up to $242.61. We are closely monitoring how price action well develop in the upcoming days as earnings is scheduled to be released on November 4th. We anticipate that price will run up higher if and when we get above the $250. Once we get above $250, we will go ahead and begin to target $266.95, $282, and finally $305.

 

 

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