Twilio shares tumble despite stellar quarter

Twilio Inc. shares tumbled as much as 7% in extended trading Thursday after it announced second-quarter results that beat analysts’ expectations and announced for the first time it had reached a $1 billion annual revenue run-rate. Read More...

Twilio Inc. shares tumbled as much as 7% in extended trading Thursday despite announcing second-quarter results that beat analysts’ expectations and announced for the first time it had reached a $1 billion annual revenue run-rate.

Blame the Fed.

The Federal Reserve’s decision to cut interest rates by 25 basis points may have contributed to market instability that spoiled Twilio’s TWLO, -0.64% otherwise strong results, company CEO Jeff Lawson told MarketWatch, though he declined to elaborate on what drove the sell-off among investors.

Read: Fed’s hawkish rate cut could be good for the stock market in the long run, analysts say

“We had a great quarter. Everything else is just speculation,” Lawson said in a phone interview shortly after the results were announced. (Twilio shares later rallied, and are currently down 2%.)

The San Francisco-based cloud-communications platform company reported second-quarter net income of 3 cents a share, compared with a loss of 3 cents a year ago. Revenue soared 86% to $275 million from $147.8 million in the year-ago period, as Twilio continued to add customers — now up to 161,000, compared with 57,000 a year ago.

Analysts surveyed by FactSet had estimated EPS of 2 cents on revenue of $264 million. Twilio stock is up 56% this year, with the S&P 500 index SPX, -1.09% gaining 20%.

Twilio, which went public in mid-2016 amid one of the driest patches in the tech IPO market, offered fiscal-year guidance of $1.113 billion, topping analysts’ forecasts of $1.106 billion.

The company’s pay-as-you-go revenue model — its products let customers integrate voice, video, messaging, and VOIP into their mobile app or on the web — was a curiosity among corporate customers when it debuted on public markets. Since then, the business model has flourished with the advent and growth of mobile technology, apps, artificial intelligence and cloud computing.

Lawson attributed the growth in customers and revenue, in part, to Twilio’s 2018 acquisition of SendGrid, a leading email API platform, for about $2 billion to enhance its cloud-computing tools.