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Investing.com - Twilio (NYSE:TWLO) stock is indicated to fall 11% in after-hours trading following its second-quarter earnings report, despite posting its fourth consecutive quarter of growth acceleration. The company, with a market capitalization of $18.69 billion and a strong 101.86% return over the past year, has maintained steady growth with revenue increasing 9.27% over the last twelve months.
Goldman Sachs reiterated its Buy rating and $145 price target on Twilio after the company reported revenue growth of 13% year-over-year, up from 12% in the first quarter. The results exceeded consensus estimates by 3.4%, and the company provided above-consensus third-quarter revenue guidance. According to InvestingPro analysis, Twilio maintains robust financial health with a score of 2.81 (GOOD) and impressive liquidity metrics, including a current ratio of 4.78.
The negative market reaction appears driven by two factors: the fifth consecutive quarter of sequential gross margin degradation (down 60 basis points from the first quarter) and implied weaker second-half operating margin expectations as Twilio accelerates R&D investments in Voice, RCS, and AI products.
Despite these concerns, Goldman Sachs highlighted several positive developments supporting its thesis, including Dollar-Based Net Expansion Rate (DBNER) improving to 108% (the highest since Q4 2022), Voice returning to double-digit growth, and robust new logo activity in Communications (up 3.5x year-over-year).
At 15x calendar year 2026 EV/FCF based on after-hours pricing, Goldman Sachs believes Twilio still offers compelling risk-reward, particularly with prospects for durable low double-digit growth from strategic initiatives that remain in early stages, combined with steady operating leverage and an attractive shareholder return policy. Based on InvestingPro’s Fair Value analysis, Twilio appears undervalued, with analysts projecting profitability this year. For deeper insights into Twilio’s valuation and 12 additional ProTips, explore the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Twilio has made notable strides with the announcement of three new platform features aimed at enhancing customer engagement. These features include Event Triggered Journeys in Twilio Engage, Data Residency for Email (EU), and WhatsApp Business Calling on Programmable Voice, as stated in a company press release. Analysts have also weighed in on Twilio’s prospects, with JMP Securities reiterating its Market Outperform rating and setting a price target of $165. This confidence stems from insights shared during Twilio’s Signal 2025 conference, where the company’s leadership outlined strategic directions and product offerings.
Additionally, Wolfe Research has adjusted its outlook on Twilio, raising the stock price target to $155 from $140 while maintaining an Outperform rating. This adjustment followed Wolfe Research’s participation in Twilio’s SIGNAL conference, where analysts noted the vibrant atmosphere and real-world applications of Twilio’s technology. Meanwhile, Salesforce (NYSE:CRM) has also caught the attention of analysts, with Wolfe Research increasing its stock price target to $340 from $290, reflecting growing customer adoption and excitement around Salesforce’s offerings. These developments indicate a positive trend for both Twilio and Salesforce in their respective markets.
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