Cloud communication provider Twilio(NYSE: TWLO) Rudde impressively higher in the last three months of 2024. It also started 2025 at a peak, but the shares of the company took a large beating after it was reached 52 weeks high on January 31.
Twilio shares fell by 40% of the 52 weeks of High that it achieved earlier this year. The general uncertainty on the stock market due to the tariff policy of the Trump administration, together with a mixed quarterly report in February, have combined in recent months to pack shares of this company.
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However, the sharp withdrawal of Twilio looks like an opportunity for investors to buy a company that benefits from the growing acceptance of artificial intelligence (AI) in the cloud communication space, especially in view of the fact that his fortunes could turn when it releases its quarterly results on 1 May.
Let’s look at the reasons why Twilio Stock could soon regain his mojo.
Twilio announced solid results for the fourth quarter of 2024 in February of this year. Turnover increased by 11% compared to the period of the year ago, while the non-Gaap income rose by 16% year by year to $ 1.00 per share. Twilio defeated Wall Street’s estimate, but the income was a bit lighter than the expectation of $ 1.03 per share.
Investors quickly pressed the panic button, and that was not surprising, because the guidance was lighter than expected. Twilio expects his top line to rise by 8% to 9% year after year in the first quarter of the tax 2025, which would be a slight delay about the Q4 performance. It predicts a leap of 13% on an annual basis in the profit up to $ 0.90 per share in the middle of his guidance range, which is far below the consensus estimate of $ 0.98 per share.
However, there is a possibility that the income and income of Twilio can land before the expectations. That is because the demand for the company’s AI-oriented communication tools helps to win a larger part of the portfolios of customers, which encourages them to spend more money on her offer. This is apparent from an increase in cross-selling statistics from Twilio.
In the presentation of the investor day in January of this year, Twilio Management pointed out that the number of active customers who bought ADD-on-products from the company jumped by 16% in the third quarter last year year after year. That was an improvement of five percentage points that were seen in the previous quarter. It is important that the possibility for cross-selling will also remain solid in the future, given that Twilio had more than 325,000 active customer accounts at the end of 2024.
Of these, 9,000 customers AI-oriented cloud communication tools used the Twilio platform last year. So there is still a huge part of the existing customer base of Twilio that still has to accept the AI-based solutions-such as AI assistants, AI-driven customer involvement tools and predictive analysis tools to help its customers improve the sales conversion figures.
Twilio anticipates the demand for AI tools in cloud communication and on the market for Customer Data Platform (CDP) that it serves to considerably increase its addressable market in the future. It estimates that the existing markets of the company will give it a addressable income chance of $ 119 billion in 2028. Cenversational AI is expected to add another $ 39 billion to that opportunity in the coming three years.
Twilio finished 2024 with just under $ 4.5 billion in income. So AI could ultimately help to offer considerable growth in its top and bottom line by helping Twilio attract more customers, and also by enabling it to cross his AI offers to existing customers. As such, do not be surprised to see Twilio’s first quarter of 2025 results that are planned for release after the market is closed on 1 May, beat expectations.
The extra income for income that AI creates for Twilio is good for his guidance. Moreover, investors should not forget that the company expects a nice gear in its margins in the coming three years, which could translate into solid profit growth.
Twilios Non-Gaap-Operational margin in 2024 was 16%. The company expects this figure to increase to a reach of 21% to 22% in 2027. This seems feasible in view of the points discussed above, which is why investors can expect a solid bottom-line growth from the company in the future.
As the graph below tells us, the income from Twilio in 2026 is expected to increase by 17% and almost 22% in 2027.
Twlo EPS estimates for current data from the financial year by YCHARTS.
Assuming the income of Twilio in 2027 will increase to $ 6.22 per share and it is in accordance with the tech loading Nasdaq-100 Index’s Forward income several of 24 at that time (using the index as a proxy for technical shares), the shares could reach $ 149. This points to potential profit of 69% in the next three years.
Given that Twilio now acts in the profit of 20 times, the time seems good for investors to buy it. A potential change in his fortunes next month could be the scene for a bull run in this cloud computing stock.
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Harsh Chauhan has no position in one of the aforementioned shares. The Motley Fool has positions and recommends Twilio. The Motley Fool has a disclosure policy.
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