Twilio Earnings: Hard to Reconcile Quarterly Strength Against Middling Guidance

Twilio reported strong second-quarter results, featuring meaningful upside against both our revenue and profitability expectations. However, despite a multitude of positive indicators and signs of momentum, management tightened its revenue guidance downward. Given the size of quarterly beats over the last several quarters, we think this level of conservatism borders on excessive. Still, profitability guidance was raised higher. We see continued progress on a variety of fronts, including margins, Segment performance, and product innovation. We are maintaining our $68 fair value estimate and see some upside for the stock, but we prefer our moatier companies during this cautious macro environment.