Replies to post #14567 on Keeping It Simple

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Cathie Wood Goes Bargain Hunting: 3 Stocks She Just Bought
By Rick Munarriz – Nov 7, 2023 at 10:45AM

https://finance.yahoo.com/m/64aec1f3-9434-3c41-b032-cbbc2114da2a/cathie-wood-goes-bargain.html


KEY POINTS
Twilio, Toast, and Block are three Ark Invest holdings that Wood added to on Monday.
Twilio and Toast are reporting quarterly results this week.
Block moved higher after reporting well-received financial results last week.

The growth-focused money manager is making moves this earnings season.

Last week's strong bounce for growth stocks was a potent tonic for Cathie Wood's investing style. Her largest exchange-traded fund has soared 17% over the last six trading days. She only added to one position on Thursday, and didn't buy anything at all on Friday with the market shooting higher. She's far more active early this week with some growth stocks pulling back after a monster run last week.

Twilio (TWLO 3.39%), Toast (TOST 1.88%), and Block (SQ 3.05%) are among the eight existing positions that she added to on Monday. Let's take a closer look at her shopping bag on a busy day for Wood's trading activity.

One of the most important companies behind the mobile revolution isn't a household name at all. Most people don't know about Twilio, but there's a good chance they interact with the leading provider of in-app communications solutions on a daily basis. Twilio's platform allows for real-time exchanges to take place within an app.

Is the driver with your food delivery nearby? Is the beach villa you wanted for your holiday escape still available? Can you reset the password to your streaming app without exiting the application? Twilio is the middleman that makes these real-time functions possible more often than not, a market leader with more than 304,000 active developer accounts on its platform.

Twilio reports its third-quarter results after Wednesday's market close, and Wood apparently wants to increase her exposure to the stock ahead of the critical financial update. Analysts see revenue clocking in at $988 million, barely above the $983 million it posted a year earlier. It should be the ninth consecutive quarter of decelerating year-over-year growth. The bigger story should be the bottom line, where analysts see a profit of $0.35 a share reversing a loss in last year's third quarter. If you think that's promising, here's a bonus: Twilio has exceeded Wall Street earnings targets by at least 80% in each of the past three quarters.

The stock rallied after its last quarterly update. The blowout adjusted profit helped, but even the 10% top-line gain was more than double Twilio's own guidance earlier this year. Its dollar-based net expansion rate hit a record low of 103% -- as existing accounts are spending just 3% more on the platform than they were in the prior 12 months -- but that's acceptable given Twilio's usage-based model. There have been cyclical slowdowns in the industries in some of its largest customers, but that shouldn't last long. If the market gets another beat on Wednesday afternoon and Twilio's dollar-based net expansion rate starts moving back up the shares could rally. Wood is making a strategic call to buy into Twilio two days ahead of that report.

Wood will have to wait even less time for Toast to earn its Monday purchase. The leading solution for restaurants to process payments and fulfill other essential functions reports fresh financials after Tuesday's market close. If you dine out regularly, you're probably all too familiar with using a Toast reader to settle your tab.

Toast also moved sharply higher after its previous quarter, impressing the market with better-than-expected 45% revenue growth. It also signed a record 7,500 net new adds to its platform during the second quarter, making it a core tool across more than 93,000 locations.

Analysts see Toast's quarterly loss narrowing substantially on a 42% surge in revenue in Tuesday afternoon's report. The stock has fallen sharply since peaking two years ago after going public. Toast shares are also trading slightly lower in 2023, but a strong performance this week can help turn that around.

Let's close with a stock that is not reporting quarterly results this week. The parent company of Square and Cash App delivered its financials late last week. It was an encouraging performance, with Block's gross profit rising 21% and strength in its largest financial ecosystems.

This has been a challenging investing climate for fintech stocks. Block shares are trading 21% lower this year, off a blistering 83% since peaking in the summer of 2021. An emphasis on processing payments naturally requires a buoyant economy to thrive, so Block's recovery is counting on the world skirting a recession in the near term. It's clearly growing right now, and Wood adding to her stake after a strong quarter indicates that she thinks the bounce will continue into the busy transactions-happy holiday season.

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Twilio Announces Third Quarter 2023 Results
November 08 2023 - 04:05PM

https://ih.advfn.com/stock-market/NYSE/twilio-TWLO/stock-news/92504146/twilio-announces-third-quarter-2023-results

Third Quarter Revenue of $1.03 billion, up 5% year-over-year

Third Quarter GAAP Loss from Operations of $109 million, a 76% improvement year-over-year

Third Quarter Non-GAAP Income from Operations of $136 million; raised full year guidance to $475 to $485 million

Twilio (NYSE: TWLO), the customer engagement platform that drives real-time, personalized experiences for today’s leading brands, today reported financial results for its third quarter ended September 30, 2023.

“Twilio had a strong third quarter, delivering another record quarter of non-GAAP income from operations and free cash flow,” said Jeff Lawson, Twilio’s Co-Founder and CEO. “We are building a foundation for profitable growth that enables us to invest in our CustomerAI vision to deliver even more compelling outcomes for our customers and our shareholders in the long-term."

Third Quarter 2023 Financial Highlights

Total revenue of $1.03 billion for the third quarter of 2023, up 5% year-over-year. Communications revenue of $906.7 million for the third quarter of 2023, up 5% year-over-year. Data & Applications revenue of $127.0 million for the third quarter of 2023, up 9% year-over-year.
Total organic revenue growth of 8% year-over-year for the third quarter of 2023. Communications organic revenue growth of 8% year-over-year for the third quarter of 2023.

GAAP loss from operations of $108.9 million for the third quarter of 2023, compared with GAAP loss from operations of $457.0 million for the third quarter of 2022.

Non-GAAP income from operations of $136.4 million for the third quarter of 2023, compared with non-GAAP loss from operations of $35.1 million for the third quarter of 2022.

GAAP net loss per share attributable to common stockholders, basic and diluted, of $0.78 based on 181.7 million weighted average shares outstanding in the third quarter of 2023, compared with GAAP net loss per share attributable to common stockholders, basic and diluted, of $2.63 based on 183.7 million weighted average shares outstanding in the third quarter of 2022.

Non-GAAP net income per share attributable to common stockholders, diluted, of $0.58 based on 184.0 million non-GAAP weighted average shares outstanding in the third quarter of 2023, compared with non-GAAP net loss per share attributable to common stockholders, basic and diluted, of $0.27 based on 183.7 million non-GAAP weighted average shares outstanding in the third quarter of 2022.

Key Metrics

More than 306,000 Active Customer Accounts as of September 30, 2023 compared to more than 280,000 Active Customer Accounts as of September 30, 2022.

Dollar-Based Net Expansion Rate of 101% for the third quarter of 2023 compared to Dollar-Based Net Expansion Rate of 122% for the third quarter of 2022.

5,905 employees as of September 30, 2023.

Share Repurchase Program

In February, Twilio announced the authorization of a share repurchase program pursuant to which it may repurchase up to $1.0 billion of its outstanding Class A common stock. As of today, Twilio has completed over $620 million of repurchases, representing over 62% of the total program amount. Twilio intends to continue making progress against the balance of its share repurchase authorization in future quarters. The program expires on December 31, 2024.

Divestitures

Twilio divested its ValueFirst business on July 3, 2023. The results of this business are excluded from Twilio’s results of operations in the third quarter of 2023 and will continue to be excluded in all future periods.
Executive Leadership Update

Twilio also announced that on November 3, 2023, Elena Donio informed the company of her intention to resign as President, Twilio Data & Applications, effective December 15, 2023. Ms. Donio will remain with Twilio as an employee in an advisory role during a transition period expected to conclude in the first quarter of 2024. Upon the effectiveness of Ms. Donio’s resignation, Jeff Lawson, Twilio’s Chief Executive Officer, will run the Twilio Data & Applications business unit until Ms. Donio’s replacement is appointed.
Outlook

Twilio is initiating guidance for the fourth quarter ending December 31, 2023 and raising its non-GAAP income from operations range for fiscal year 2023, originally provided on February 15, 2023 and subsequently revised upwards on May 9, 2023 and August 8, 2023.

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Anson Funds Buys into Twilio, Urges Sale

https://www.baystreet.ca/stockstowatch/16519/Anson-Funds-Buys-into-Twilio-Urges-Sale16519

Activist investor Anson Funds has built a stake in Twilio (NYSE:TWLO) and sent a letter to the enterprise software company’s board pushing for the sale of the entire business.

Twilio shares rose as much as 2% on the news in Tuesday morning trading, but later gave back most of those gains.

Anson did not hold any Twilio stock for the period ending Sept. 30, according to securities filings, but has since built a stake valued at around $50 million, the person familiar said. The letter to the board urges Twilio to either sell itself or at a minimum, divest its data and applications business, the person familiar said.

The growth of the stake coincided with Anson’s hiring of Sagar Gupta from Legion Partners. Gupta led Legion’s activist engagements with Twilio and Nutanix, a cloud computing firm.

“Twilio regularly engages with shareholders and appreciates constructive input that furthers our goal of creating sustainable long-term value,” a Twilio spokesperson told the media.

The continued activist attention caps off a challenging year for Twilio, which makes software that helps businesses engage with their customers. The company’s stock is up around 28% year-to-date but remains well off its 2021 highs. In February, the company cut around 1,500 employees, or 17% of its workforce citing a need for heightened efficiency. Those layoffs followed a similar headcount reduction in September 2022.

TWLO shares neared noon EST on Tuesday in the green $2.30, or 3.7%, to $65.15.

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Twilio Inc. (TWLO) Is a Trending Stock: Facts to Know Before Betting on It
Zacks Equity Research
Fri, November 24, 2023 at 7:00 AM MST·5 min read
https://finance.yahoo.com/news/twilio-inc-twlo-trending-stock-140006042.html

Twilio (TWLO) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.

Over the past month, shares of this company have returned +23.5%, compared to the Zacks S&P 500 composite's +8.2% change. During this period, the Zacks Internet - Software industry, which Twilio falls in, has gained 7.7%. The key question now is: What could be the stock's future direction?

Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.

Earnings Estimate Revisions

Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.

Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.

Twilio is expected to post earnings of $0.51 per share for the current quarter, representing a year-over-year change of +131.8%. Over the last 30 days, the Zacks Consensus Estimate has changed +19.8%.

The consensus earnings estimate of $2.06 for the current fiscal year indicates a year-over-year change of +1,473.3%. This estimate has changed +14% over the last 30 days.

For the next fiscal year, the consensus earnings estimate of $2.26 indicates a change of +9.4% from what Twilio is expected to report a year ago. Over the past month, the estimate has changed +17.7%.

With an impressive externally audited track record, our proprietary stock rating tool -- the Zacks Rank -- is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Twilio.

Even though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.

For Twilio, the consensus sales estimate for the current quarter of $1.04 billion indicates a year-over-year change of +1.1%. For the current and next fiscal years, $4.1 billion and $4.37 billion estimates indicate +7.2% and +6.5% changes, respectively.

Last Reported Results and Surprise History

Twilio reported revenues of $1.03 billion in the last reported quarter, representing a year-over-year change of +5.2%. EPS of $0.58 for the same period compares with -$0.27 a year ago.

Compared to the Zacks Consensus Estimate of $985.03 million, the reported revenues represent a surprise of +4.94%. The EPS surprise was +65.71%.

The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates each time over this period.

Valuation

No investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.

Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.

As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

Twilio is graded F on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

Bottom Line

The facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Twilio. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.

[eastunder]

TWLO cpps @ 65.14
Gaps @ 58.99 and 51.25

20 /50 cross 11/24

(Note: 20 day 58.68 currently and 52.30 L's)

Continue Build (based on EPS estimates for 2023) and target gaps 4 Repo's

457.30 H on 2/18/21
50% = 228.65
41.00 L on11/4/22(-91.03% off of High)

Consolidation 20 weeks on Weekly 71.24 pivot
Prior C&H 100 days Start 79.70 2/16/23 Handle 69.81 5/31/23
Pivot 69.81 approached but breeched on low volume resulting in consolidation from
71.24 to 49.86 (95 days with 71.24 pivot).

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TWLO currently +2.77 (4.41% ) BUT on below AVE volume.

Hopefully that's telling.

I hate it when someone jumps in and immediately pushes for sale of a company.

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Morgan Stanley Raises Price Target on Twilio to $80 From $75, Keeps Overweight Rating
8:10 AM ET, 12/14/2023 - MT Newswires

Needham Raises Price Target on Twilio to $80 From $70, Keeps Buy Rating
8:34 AM ET, 12/13/2023 - MT Newswires

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TWLO

52(Gap day) to 76.22 33 days. +46%

71.24 pivot on double bottom
79.70 next Piv point (from 2/16)
Tgt: 81-84

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TWLO gap up on open from 69.50

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Regarding TWLO

https://finviz.com/chart.ashx?t=TWLO&ty=c&ta=1&p=d&s=l
______________________________________________________________

Activist Investors Are Acting Up
Motley Fool Staff, The Motley Fool
Wed, January 17, 2024 at 11:36 AM MST

https://finance.yahoo.com/m/29674f15-a255-31d0-82ba-71da70acb08b/activist-investors-are-acting.html

Dylan Lewis: We have three stories of stocks down big from the pandemic, facing slightly different fates, but all falling into the same theme here and some heavily followed fool stocks at that. Emily, the first to focus on activist investors and there's been quite a bit of interest this week from the activists. Twilio CEO and co founder Jeff Lawson announced he was stepping down this week from the executive chair in his board position, owing largely to pressure from activist and investors that have stakes in the business.

Emily Flippen: Twilio, such an interesting case because the business is sound in terms of demand and servicing for its products. It's had its up and downs, but as we've seen over the past year, what Lawson and Twilio's management team has failed to do, is really get costs under control. So coming out of the pandemic when he's seen incredible growth really sky high valuations for Twilio that have since come down to Earth, it's really ripe for activists to come in and say, hey, we need to change here. An activist defense, Twilio has had the better part of the last year to make those changes. To get rid of underperforming segments, to decrease their cost, improve profitability and while they've made strides in the area, it has been slow going and many investors and shareholders have lost out, on a lot of the potential that I think Twilio has moving forward. So if you're an activist investor, you're looking at this company and you're seeing the turnaround that's just waiting to happen. So it's not overly surprising to see loss and step down, especially with all the activists interest disheartening whenever you have not just a CEO but a co founder or founder, in this case somebody who has fearlessly led the company through so many different changes choosing to leave. I'm hopeful that the new management team will be able to accelerate the pace of change that Twilio has already set up. The business is trading at record low valuation, so it is ripe for a turnaround.

Dylan Lewis: So at issue here, as I understand it, is the company's data and applications business that is one segment in particular that Anson Funds and Leech Partners, the activists have really honed in on. Do you feel like we may be looking at a slimmer Twilio at some point down the road?

Emily Flippen: There's no doubt that Twilio has become a bloated company and these investments, these divisions, made sense again during the pandemic when they were experiencing really high levels of growth, but a lot of these segments have come back down to Earth. So what these businesses are trying to do is, look at what's the fastest growing segment which ones are producing the highest levels of profitability versus which ones are producing a lot of costs. So I think it's fair to look at the state and application segment and say, in general and in some segments within this segment itself have underperformed. What can we cut here and that includes, unfortunately, workforce as part of that to retain growth but also improve profitability.

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Could Twilio Become the Next Amazon?
Leo Sun, The Motley Fool
Sat, January 20, 2024 at 1:49 AM MST·5 min read
https://finance.yahoo.com/m/46d47b17-13b0-30e8-b6da-e0fa3d337c28/could-twilio-become-the-next.html


Twilio✔️ (NYSE: TWLO) and Amazon✔️ (NASDAQ: AMZN) can be considered the David and Goliath, respectively, of the cloud services market. Twilio's cloud platform processes text messages, voice calls, and videos for mobile apps. Instead of building those features from scratch, developers can outsource those features to Twilio with a few lines of code.

Amazon's cloud platform, Amazon Web Services (AWS), is the world's largest cloud infrastructure platform. Its customers can rent computing power and storage from its platform instead of buying lots of servers or building their own data centers. AWS also integrates other data processing and development tools into its platform.

Twilio was notably co-founded by Jeff Lawson, who helped develop the technology that would eventually evolve into AWS during his time as a technical product manager at Amazon. During his time at Amazon, Lawson recognized the growth potential of dedicated cloud services for mobile apps -- and that idea became the basis for creating Twilio.

Twilio is still a baby compared to Amazon, but could it grow into a cloud titan over the next few decades? Let's look back at its post-IPO trials and tribulations to find out.

It's gone on a wild ride since its public debut

Twilio went public at $15 per share on June 23, 2016, and it closed at its all-time high of $443.49 on Feb. 18, 2021. At its peak, its enterprise value reached $70 billion -- or 25 times the revenue it would go on to generate in 2021.

At the time, investors were dazzled by Twilio's explosive growth rates. From 2015 to 2021, its revenue soared at a compound annual growth rate (CAGR) of 60% from $167 million to $1.76 billion. That feverish growth was largely driven by the increased integration of voice calls and text messages into mobile apps, but it was also fueled by its acquisitions of smaller companies like Beepsend and Segment.

Today, Twilio's stock trades at about $72 with an enterprise value of $10 billion -- which is just over 2 times the sales it's expected to generate in 2024. Twilio's stock tumbled as its revenue growth cooled off, its gross margin shrank, and rising interest rates compressed its valuations. It also failed to achieve its own ambitious long-term growth targets.

During its investor day presentation in October 2020, Twilio claimed it could grow its organic revenue by at least 30% annually through 2024. Its revenue actually increased 42% organically (and 61% as reported) in 2021, but rose just 30% organically (and 35% as reported) to $3.8 billion in 2022. It eventually abandoned its 30% growth target last year, and analysts expect its reported revenue to only rise 8% in both 2023 and 2024.

By comparison, AWS' sales rose 29% to $80.1 billion in 2022 and 13% year over year to $66.6 billion in the first nine months of 2023. It's generally a bright red flag when an underdog is growing at a much slower rate than the market leader.

Are Twilio's high-growth days over?

Twilio's growth slowed down as the macro headwinds forced companies to rein in their spending on cloud services. It also faced fierce competition from similar services like MessageBird, Bandwidth, and Ericsson's Vonage.

To make matters worse, it's generally difficult for Twilio to lock in its customers because it only charges usage-based fees -- which are paid whenever its service is accessed -- instead of selling stickier subscription plans. Meanwhile, its margins are being squeezed by rising carrier fees, which telecom companies now charge third-party apps to access their networks.

Twilio also runs its services on AWS' backbone instead of its own cloud infrastructure platform. Therefore, it probably won't evolve into a cloud giant like AWS without spending billions of dollars to build its own cloud infrastructure.

As Twilio's growth cooled off, it authorized a $1 billion buyback plan last February -- which was a troubling move because it strongly suggested it was running out of fresh ways to expand its business. It was also an odd decision to plow so much cash into buybacks when the company remains deeply unprofitable on a generally accepted accounting principles (GAAP) basis. To top it all off, Twilio's recent layoffs, intense pressure from activist investors, and Lawson's recent resignation from the CEO position all strongly indicate the company could struggle to grow over the next few years.

Twilio probably won't become the next Amazon

Twilio's early mover's advantage gave it a promising start in the cloud communications space, but I'm not convinced it can expand beyond its saturated niche. AWS was able to scale up its operations over the next two decades because it was funded by Amazon's larger e-commerce business, but Twilio needs to grow up on its own. Twilio's business might stabilize over the next few years, but investors looking for the "next Amazon" should check out other growing cloud-based companies instead.

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2 No-Brainer Growth Stocks Down 51% and 81% to Buy Right Now
Manali Bhade, The Motley Fool
Sun, January 21, 2024 at 5:45 AM MST·5 min read

https://finance.yahoo.com/m/b5d62321-755e-3b73-b426-82630ad9d373/2-no-brainer-growth-stocks.html


Over time, the U.S. market proved to be a powerful and cost-effective tool for building wealth for long-term investors. For example, the S&P 500 delivered a long-term average annual return of about 10% before inflation.

However, to fully leverage the compounding effect in the stock market, it makes sense for investors to avoid the hype and instead invest in companies with robust fundamentals and a solid vision. Investors should also be aware that corrections are a normal part of the investing cycle, and can help them pick up high-quality stocks at significant discounts.

Against this backdrop, here's why Snowflake (NYSE: SNOW) and Twilio (NYSE: TWLO) -- growth stocks that are trading at 51% and 81% discounts to their all-time highs -- are smart picks now.

Snowflake

Data has become the lifeblood of the current artificial intelligence (AI)-powered digital world. Many enterprises consider Snowflake's cloud-native data platform indispensable for their AI strategies. The company's platform enables organizations to manage, store, and process vast quantities of structured and unstructured data across various sources, formats, and systems.

Snowflake continues to benefit dramatically from legacy vendors migrating data and workloads from on-premise infrastructures to the cloud. Besides the initial migration phase, existing customers are also increasing usage of Snowflake's platform over time as well as adopting it for new and evolving workloads. Subsequently, the company's customer base expanded 23.5% year over year to 8,907 at the end of the third quarter of fiscal 2024 (ending Oct. 31, 2023). Besides focusing on U.S. clients, the company is also working on gaining traction in markets in Europe and Asia.

Snowflake's capability to handle unstructured and streaming data also emerged as a major competitive advantage. The third quarter saw a 17x year-over-year increase in the consumption of unstructured data on its platform. Moreover, nearly 1,500 customers were also using Snowflake's Dynamic Tables streaming capability at the end of the third quarter.

Snowflake's innovation engine is also running at full speed, with Snowpark being a prime example. Many customers started using the Snowpark feature to write customized code in their preferred programming languages, which execute seamlessly on the Snowflake platform. The uptake of Snowpark has been quite healthy, with a 47% surge year over year in the third quarter and a 500% year-over-year spike in October 2023 alone. Another feature, Document AI, is helping convert unstructured data into more manageable semi-structured format for analytical processing. This is a crucial capability considering that unstructured data accounts for 80% of the world's total data.

Lastly, Snowflake's consumption-based pricing model is proving to be a masterstroke. This feature has proved particularly valuable in times of economic uncertainty since clients can ramp up or scale their usage easily.

All these tailwinds translated into impressive financial performance for Snowflake. In the third quarter, product revenue jumped 34% year over year to $698 million. Adjusted operating margin improved year over year by 200 basis points to 10%, driven by revenue outperformance as well as improved hiring scrutiny. Finally, the company posted a healthy adjusted free-cash-flow margin of 15% in the third quarter.

Considering these tailwinds, Snowflake seems to be a compelling pick now, despite being down 51% from its all-time high set in November 2021.

Twilio

Twilio, a prominent cloud communications platform, helps clients to seamlessly integrate multiple communication capabilities such as text, voice, email, video, and chat into their applications. The company emerged as a major beneficiary of the rising demand for scalable, reliable, and developer-friendly cloud-based communication solutions in the increasingly digital world.

Twilio's cloud-based customer service centers help clients realize significant cost savings since traditional setups involve heavy infrastructure investments such as office space and on-site servers. Further, cloud-based communication centers are also more flexible and scalable to meet the evolving needs of clients. Twilio also upsells multiple APIs (application programming interfaces) and pre-built solutions to its existing customers. This approach not only brings incremental revenue, but also entrenches the platform deeply in the clients' communication strategies.

Twilio's focus on developing new capabilities and features is also a significant growth driver. The company recently completed the migration of its communications business to a 10-digit long code (10DLC) system. While a challenging change, this capability is helping improve network security and reduce spam and fraud messaging as well as other malicious activities. Twilio also leveraged AI to accelerate and improve the efficiency of this migration. Another impressive feature, CustomerAI Predictions, is already being used by nearly 100 customers. Customers leverage the power of predictive AI for improved audience targeting and personalizing multichannel communication strategies based on the lifetime value that can be generated by their clients.

Twilio has been struggling with slowing top-line growth and the absence of generally accepted accounting principles (GAAP) profitability in recent quarters. However, the company is now focusing on cutting costs as is evident by a 16% year-over-year decline in stock-based compensation expenses in the first nine months of 2023 to $509 million. Further, the company is changing its management team to accelerate top-line growth and improve profit margins. Twilio is trading at a price-to-sales (P/S) ratio of 3.3x, far lower than its 12-year average valuation of 12.1x.

Despite being down 81% from its all-time high set in February 2021, Twilio's robust value proposition and bargain-basement valuation makes it a tempting pick now.

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Market Chatter: Twilio Potential Buyout Target of Dutch Startup Bird, Reports Say
4:01 PM ET, 02/01/2024 - MT Newswires
04:01 PM EST, 02/01/2024 (MT Newswires) -- Twilio (TWLO) shares were closing little changed, giving back a more than 2% gain earlier Thursday that followed a report by The Information that a venture-backed startup in the Netherlands may be working on a potential buyout of its larger, US-based rival.

Amsterdam-based Bird has been talking with investors to assist in funding a deal for Twilio, The Information said, citing people familiar with the discussions.

Twilio is valued at around $12.8 billion, based on its closing price on Wednesday. Activist investor Anson Fund has been pressing the company to consider putting itself up for sale after acquiring a stake in Twilio in late November, according to CNBC, while The Information said Legion Partners has similarly been pressing for change since May.

Twilio and Bird did not immediately respond to requests for comment from MT Newswires on Thursday.

[eastunder]

TWLO earnings drop

Start RB of shs sold on pre earning Capital protect
1/2 back 2-15
Tgt finline and/or gap

[eastunder]

Legion Partners Sends Letter to Twilio (TWLO) Board
https://www.streetinsider.com/Corporate+News/Legion+Partners+Sends+Letter+to+Twilio+%28TWLO%29+Board/22829490.html

February 26, 2024 7:00 AM EST

Legion Partners Asset Management, LLC, together with its affiliates (collectively, “Legion Partners”), which beneficially owns 601,050 shares, of Twilio Inc. (“Twilio” or the “Company”) (NYSE: TWLO) common stock, today sent a letter to the Company’s Board of Directors encouraging it to announce a strategic alternative process to sell the Segment business and immediately expand its stock buyback program by at least an additional $3 billion.

The full text of the letter follows:

February 26, 2024

Board of Directors
Twilio Inc.
101 Spear Street, First Floor
San Francisco, CA 94105

Dear Members of the Board:

Legion Partners Asset Management, LLC, together with its affiliates (collectively, “we” or “Legion Partners”) are stockholders of Twilio Inc. (“Twilio”, “TWLO”, or the “Company”), beneficially owning 601,050 shares of the Company’s outstanding stock. Legion Partners’ strategy entails highly concentrated equity positions, with a long-term investment horizon and active involvement with our portfolio companies. We are very focused on promoting strong operational and governance discipline at each of the companies in which we invest, as we believe this is essential in achieving sustained, superior long-term returns. We are writing to Twilio’s Board of Directors (the “Board”) as a follow up to our one-year long engagement with the Board to unlock shareholder value.

First, we would like to acknowledge the progress that has been made in the last year since we began our engagement:

Reducing costs by meaningfully rightsizing the employee count to the business during calendar year 2023;
Transitioning Jeff Lawson, Twilio’s founder and CEO, out of the Company;
Adding an independent director with significant software expertise;
Announcing the Company’s first-ever stock buyback program of $1 billion and executing $730 million on the buyback to date; and
Breaking out segment operating profitability for both the Communications and Segment businesses.

However, our view is that Twilio is not achieving anywhere close to an appropriate valuation in its current form, and therefore significant work remains to be done to unlock meaningful value. To illustrate this view, we believe Twilio’s Communication business (plus related corporate expense) is trading at a very low multiple of only 7.0x Legion Partners’ estimate of 2025 Adjusted EBITDA, as depicted below ($ in millions):

TWLO at $56.25/share - Current market cap. $10,184
Less: Cash (4,012)
Plus: Debt 988
Less: Segment value (1,000)
Net Communications + Corp. implied value $6,160
2025 Adj. EBITDA - Legion Partners’ estimate $881

Multiple 7.0x

After carefully studying Twilio for more than a year and digging into the numbers, we believe that the appropriate path forward for the Board to unlock shareholder value is as follows:

1. Announce a strategic alternatives process to sell Segment. We believe this business is highly valuable (we estimate value at $1.0 billion) and could flourish under new ownership. Segment’s ownership under Twilio has been challenged and this business has been underachieving its potential as the leading Customer Data Platform.

2. Immediately execute a stock buyback of at least an additional $3 billion. Over the last year, Twilio has generated nearly enough cash flow to entirely cover the previously referenced $1 billion stock buyback with almost no reduction in the level of cash on the balance sheet at December 31, 2023, as compared to a year earlier.

We believe these steps should unlock the fair value of Twilio’s stock, which we conservatively estimate is greater than $90 per share. As always, you can feel free to contact us to discuss these matters further.

Sincerely,

Chris Kiper Managing Director
Ted White Managing Director

About Legion Partners

Legion Partners is an activist investment manager based in Los Angeles, CA, focused on U.S. small-cap companies. Legion Partners seeks to generate attractive long-term returns employing deep fundamental research, a concentrated portfolio and responsible, collaborative engagement as a catalyst for value creation. Founded in 2012, Legion Partners takes a value-driven approach to managing a high-conviction portfolio on behalf of sophisticated institutional and individual investors. Learn more at www.legionpartners.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240226523989/en/

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Nathaniel Garnick/Liam Walsh

Gasthalter & Co.

(212) 257 - 4170

Source: Legion Partners Asset Management, LLC

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TWLO Gap 58.58