Since the start of the week, the actions of Twilio (NYSE: TWLO) were down 18.1% as of 12:58 p.m. EDT Friday, according to data provided by S&P Global Market Intelligence. The company reported strong third-quarter earnings on Thursday, but a weak fourth-quarter outlook weighed on the share price.
Shares are now down 13.4% year-to-date, compared to a 19.9% return for the Nasdaq Composite index.
Overall, the results for the last quarter were strong. Revenue growth was stable compared to previous quarters, up 65% year on year. The company ended the quarter with more than 250,000 active accounts receivable, up from 208,000 in the same quarter a year ago. Customers also continue to spend more after subscribing to Twilio’s core communications products, including marketing tools for messaging, video, email and other solutions, with the net dollar expansion rate remaining at 131% .
One thing that stood out was the introduction of Twilio Engage on October 20, which is another step towards further investing in its customer engagement platform strategy. Twilio Engage can help businesses create personalized marketing campaigns and gain a greater share of the wallet with customers. Twilio Engage rollout follows last year Acquisition of segments for $ 3.2 billion, which combined Segment data insights with Twilio’s cloud communications platform.
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For now, market players are more concerned with the expected deceleration in growth in the fourth quarter. Management expects revenue for the next quarter to grow 39% to 40% year-on-year, which is below the over 60% level that investors have become accustomed to lately.
With many stocks trading at high valuations, market participants are currently on pins and needles. Any sign of weakness is likely to cause growth stocks getting slammed in this market environment, and that seems to be what happened with Twilio.
Investors will need to adjust their expectations so stocks could remain volatile, but management expects to maintain growth of at least 30% over the next three years.
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