Twilio shares off 11%: We had a terrific Q3, I’m more exicted than ever,’ says CFO | ZDNet

Cloud communications firm Twilio this afternoon reported Q3 revenue that topped Wall Street’s expectations, and a surprise profit, and an outlook for this quarter’s revenue that was higher as well. 

The one apparent blemish in the quarter was that the company’s Dollar-Based Net Expansion Rate was 131%. That was down from 137% in the prior-year period.

The report sent Twilio shares down 11% in late trading.

“We had a terrific Q3, and we’re really exicted about our set-up for Q4,” said CFO Khozema Shipchandler, in an interview with ZDNet via Zoom following the report. 

Characterizing the quarter as “another fantastic growth quarter,” Shipchandler noted that the company generated 65% revenue growth in the quarter, of which 38% was”organic.”

“I’m more exicted than ever about the prospects of the company, and if you look at some of the things we announced at our developer conference, Signal, Twilio’s just getting started.”

“Customer engagment is a massive market opportunity, and one that we expect to lead,” Shipchandler added.  

Revenue in the three months ended in September rose 65%, year over year, to $740.2 million, yielding a net profit of a penny a share.

Twilio’s own forecast had been $670 million to $680 million in revenue and negative 14 cents to negative 17 cents per share.

Analysts had been modeling $681 million and a net loss of 14 cents per share.

Asked about the Dollar-Based Net Expansion Rate, Shipchandler noted that the 131% number is still within the range the company has been for many years. 

“131% is well within the range that we’ve kind-of been at, over the last several years,” said Shipchandler. “As you know, 130%, even 120%, is still world-class, and so we feel really great about the way our customers continue to grow and innovate with us.”

Among the factors Shipchandler emphasized was the company’s product line called Segment, which Twilio acquired with its purchase of the startup of that name in November of last year for roughly $3 billion. Revenue at Segment was up 12% from the prior quarter, and is now on pace to generate $200 million in annual revenue, said Shipchandler.  

“We’re really, really excited about Segment and the way that that business has been performing,” he said. 

Another highlight from the company’s developer conference is Twilio’s Engage product. “That is another pillar that now goes alongside Flex and Frontline and really allows us to serve the entirety of the customer value cycle.”

Twilio said it added 42,000 “active” customers for 250,000 in total at quarter’s end.

For the current quarter, the company sees revenue of $760 million to $770 million, and net loss in a range of 23 cents to 26 cents. That compares to consensus for $745 million and a 10-cent net loss per share.

In prepared remarks, CEO and co-founder Jeff Lawson called the results “another quarter of strong growth at scale in the third quarter as companies continue to turn to Twilio in this digital-first world.” 

Added Lawson, “We are extremely excited about the next generation of our customer engagement platform, and our newest pillar, Twilio Engage, which will allow companies of all sizes and in any industry to build and optimize hyper-personalized marketing campaigns on every channel for customer acquisition, conversion and retention.”

Also: Twilio beats Q2 expectations with 67% revenue growth