Twilio Inc: This Fast-Growing Tech Stock Could Be an Opportunity

Time to Check Out Twilio Stock

One of the best tech stocks on the market is Twilio Inc (NYSE:TWLO).

Note that I said it’s one of the best tech stocks, but not one of the best-performing tech stocks in the current market. While TWLO stock has indeed gone up by a lot over the years, it has pulled back quite a bit in recent months. In fact, at the time of this writing, Twilio stock is trading at about the same level it did eight months ago.

The pullback in share price, combined with the fundamentals of the business, is precisely why TWLO stock deserves investor attention now.

Founded in 2008, Twilio Inc is a cloud communications platform company that allows developers to build, scale and operate customer engagement within software applications.

The platform enables developers to programmatically make and receive phone calls, send and receive text messages, and perform other communication functions using a set of application programming interfaces.

Despite being a large-cap tech stock (the company has a market capitalization of about $55.0 billion at the time of this writing), Twilio stock isn’t in the league of Big Tech.

Still, the company has carved out a niche. As of March 31, the company had more than 235,000 active customer accounts. (Source: “Q1 2021 Earnings Results,” Twilio Inc, May 5, 2021.)

What really makes Twilio special, though, is the sheer growth in its business.

Just take a look at the following chart. It shows the company’s quarterly revenue since the beginning of 2019.

(Source: Ibid.)

Tech companies are known for delivering faster revenue growth than other sectors, but most of their reported growth rates are based on year-over-year comparisons. In the case of Twilio Inc, though, the company grows not just year-over-year, but also quarter-over-quarter—and on a very consistent basis.

What the above chart also shows is that even the COVID-19 pandemic didn’t put the brakes on Twilio’s growth momentum. In particular, the company generated $1.8 billion of revenue in full-year 2020, representing a 55% increase from 2019. (Source: “Twilio Announces Fourth Quarter and Full Year 2020 Results,” Twilio Inc, February 17, 2021.)

Keep in mind that 2020 was a year filled with serious challenges for numerous businesses—including many of Twilio’s customers. The fact that the company delivered this kind of revenue growth despite the extraordinary economic environment shows why TWLO is one of the top tech stocks.

And things got even better in 2021. In the first quarter of this year, Twilio earned $590.0 million in total revenue, marking a 62% increase year-over-year. (Source: “Twilio Announces First Quarter 2021 Results,” Twilio Inc, May 5, 2021.)

As mentioned earlier, Twilio had more than 235,000 active customer accounts as of the end of March. That represented a huge increase from the 190,000 active customer accounts it had at the end of March a year ago.

Moreover, the larger customer base helped reduce Twilio Inc’s customer concentration. In the first quarter of last year, the company’s top 10 customer accounts were responsible for generating 15% of the company’s total revenue. In the first quarter of this year, the revenue share of its top 10 customer accounts had dropped to 12%.

And the company isn’t done with its growth story. For the second quarter of 2021, management expects Twilio to earn $591.0 to $601.0 million of revenue, which would translate to a year-over-year growth rate of 47% to 50%.

Twilio Inc (NYSE:TWLO) Stock Chart

Chart courtesy of StockCharts.com

Analyst Take

There’s no shortage of fast-growing businesses in the tech sector, but the sheer size and consistency of Twilio Inc’s growth makes it stand out.

Considering that TWLO stock is down by about $100.00 per share since its peak in February, its recent price weakness could represent an opportunity for investors who want to get a piece of the action.