Analyst Note| Dan Romanoff, CPA |
Narrow-moat Twilio reported a strong second quarter that exceeded both our and management’s expectations, and provided a mixed outlook. We are raising our fair value estimate to $388 from $370 per share, reflecting our confidence in Twilio’s significant growth runway amidst its expanding footprint in the customer engagement space. At current levels, we view shares as fairly valued. Outperformance in the quarter was driven by strength in messaging and the acquired Segment business. Journeys is the latest innovation within Segment, allowing for personalization of customer engagement by utilizing real-time first-party data to engage with customers most efficiently and within the confines of broader industry data-privacy laws. This product release, in conjunction with the June acquisition of ZipWhip, a toll-free business messaging provider, confirms Twilio’s focus on building a diverse portfolio that complements and enhances the core communication API capabilities.