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On Friday, Scotiabank (TSX:BNS) analyst Nick Altmann adjusted the price target for Twilio (NYSE:TWLO) shares, increasing it from $130.00 to $135.00. Altmann maintained a Sector Outperform rating on the company. The adjustment comes in the wake of Twilio’s reported third consecutive quarter of revenue growth acceleration, marking a 12% increase. This growth was primarily fueled by a 13% rise in Communications growth, alongside a notable improvement in free cash flow (FCF) and a raised guidance. According to InvestingPro data, Twilio’s market capitalization stands at $14.94 billion, with a healthy revenue growth rate of 7.32% over the last twelve months.
Altmann highlighted Twilio’s resilience, pointing out that the management team has not observed any macroeconomic impacts through April. This observation is particularly significant given the concerns previously raised about Twilio’s usage-based business model. InvestingPro data supports this resilience, showing that Twilio holds more cash than debt on its balance sheet and maintains a strong current ratio of 4.2, indicating robust liquidity. Altmann’s commentary suggests a growing confidence among investors regarding the company’s performance and outlook.
Further enhancing Twilio’s appeal, according to Altmann, is the company’s advancements in artificial intelligence (AI). Twilio has been actively introducing new products, features, and partnerships in the AI space, which Altmann believes could contribute to a more robust medium-term growth profile for the company. The AI-driven momentum, as noted by Altmann, is becoming increasingly evident and is expected to provide substantial tailwinds for Twilio. The company’s overall Financial Health Score is rated as GREAT by InvestingPro, with particularly strong scores in growth and cash flow metrics.
Despite some potential investor concerns over gross margins, which currently stand at 51.13% due in part to the international mix, Altmann underscored management’s careful approach to balancing international revenue and margin trade-offs. He expressed confidence that Twilio’s strategic decisions in this area are prudent and well-calculated.
In summary, Altmann’s analysis supports the view that Twilio’s latest financial quarter is impressive, with the possibility of sustaining double-digit growth throughout fiscal year 2025. With the narrative of Twilio’s involvement in the generational AI transformation and current trading levels suggesting the stock is slightly undervalued according to InvestingPro Fair Value analysis, Altmann considers the company’s valuation to be highly attractive, justifying the raised price target. For deeper insights into Twilio’s valuation and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Twilio reported impressive financial results for the first quarter of 2025, exceeding both earnings and revenue expectations. The company achieved an earnings per share of $1.14, surpassing the forecasted $0.96, and recorded revenue of $1.17 billion, which was higher than the anticipated $1.14 billion. Following these results, Goldman Sachs raised Twilio’s stock price target from $130 to $145, maintaining a Buy rating. The investment firm cited Twilio’s strong performance in strategic areas such as Independent (LON:IOG) Software (ETR:SOWGn) Vendor partnerships and international expansion as key factors for its positive outlook.
Twilio’s revenue grew by 12% year-over-year, marking the third consecutive quarter of accelerating double-digit growth. The company also improved its operating margin by 300 basis points year-over-year, reaching 18.2%. Twilio’s Segment division reported a dollar-based net expansion rate of 94%, returning to positive growth. Additionally, Twilio launched new AI-driven products and announced a significant share repurchase program, further indicating its strategic focus on innovation and shareholder value.
Looking ahead, Twilio provided second-quarter revenue guidance between $1.18 billion and $1.19 billion, representing a 9-10% year-over-year growth. The company also slightly raised its full-year 2025 revenue growth guidance to 8% from the previously stated 7.5%. Analysts from Goldman Sachs view Twilio’s second-quarter guidance as a reasonable baseline, supported by product cross-selling and momentum in artificial intelligence. The firm believes Twilio has reached an inflection point with promising upside potential for revenue and free cash flow in the fiscal year 2025 and beyond.
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