Shares of Twilio (NYSE: TWLO) recently plunged over 25% after the cloud service provider reported its first quarter earnings, which beat analyst expectations but spooked investors with troubling news about its biggest customer. Twilio disclosed that Uber — which contributed 12% of its revenues during the quarter — would pivot away from its platform in favor of other internally developed or third-party alternatives.
In response, Twilio reduced its full-year sales growth forecast to 28%-31% growth, missing analyst expectations for 33% growth. It also guided for a non-GAAP loss between $0.27-$0.30 per share — which was well below the consensus forecast for a $0.16 per share loss.
Those numbers sound bad, but I believe the subsequent sell-off was far too steep. Let’s discuss three reasons why you shouldn’t follow those panicking sellers out the door just yet.
Much of the hysteria about Twilio stems from the misconception that Uber is dropping all of the company’s services. That simply isn’t true — CEO Jeff Lawson stated during the conference call that Uber was "optimizing" its platform by usage and geography with a "more active multi-sourcing program" which would also utilize some internally developed technologies.
This means that Uber will split its voice call, text, and […]