Twilio (NYSE: TWLO) is an American cloud-based platform-as-a-service business that enables software developers to use digital communication such as calls, texts, and emails to enhance the user experience. After reporting blowout Q4 2020 earnings, and the stock sitting close to all-time highs, is it still a good investment?
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Twilo has been one of the beneficiaries of the “shift to digital”, where companies would adapt to the internet and mobile in ways that could often take years in the past. Since COVID-19 hit, this timeline has been compressed to weeks and months and has acted as a secular tailwind for the company. This is demonstrated in a report published by Twilio last year surveying over 2,500 companies which found that 97% of companies found that the pandemic sped up this acceleration. Furthermore, companies’ digital acceleration strategy was accelerated by an average of six years. This acceleration has benefitted Twilio to date but looks set to continue in the coming years.
Twilio reported $548.1 million in revenue, an increase of 65% year-over-year, and full-year revenue growth of 55% to $1.76 billion in Q4 2020. It has a diversified revenue base with 27% of sales generated outside of North America and spread across different business types and sizes.
Whether you are aware of it or not, you have likely come across Twilio’s software in everyday life, whether to verify your number via Whatsapp or getting messages from Lyft or Airbnb. Along with several high-profile customers, Twilio reported 221,000 active customer accounts as of December 2020, compared to 179,000 a year prior. Twilio has suffered from losing the business of large customers, such as Uber, which accounted for roughly 12% of revenue. However, despite a short-term fall in the stock price, Twilio continued to grow revenue and decrease its customer concentration levels. Today, its top 10 customers account for 13% of revenue, a 1% decrease YoY. The stickiness of its business and increasing spend by customers is demonstrated in its dollar-based net expansion of 139% in Q4.
A passionate founding CEO is also a positive indicator. Twilio head, Jeff Lawson, has an impressive 95% approval rating on Glassdoor and still owns a large stake in the company. Twilio also has one of the most diverse leadership teams of any publicly-traded company, with women making up 6 out of 13 of its upper management.
Finally, Twilio has acquired SendGrid and Segment over the past 3 years, and while a strategy of growth by acquisition can be risky, it has demonstrated its ability to do so successfully.
Twilio’s valuation may be a cause for concern for investors as it is currently trading at roughly 37x price-to-sales ratio. This high multiple will mean that management will need to continue to execute on its forecasts. Twilio is also not the only player in the space, with Microsoft’s Azure Communication Services providing stiff competition.
Twilio is also still unprofitable despite a great year of revenue growth, reporting a net loss of $490.9 million in fiscal 2020 compared to $307 million a year prior. On an adjusted basis, this loss is lessened due to excluding items such as stock-based compensation. Nevertheless, it is clear that Twilio has some way to go.
Twilio’s gross margins are not as high as other SaaS companies either, coming in at 56% for Q4, a slight decrease YoY. Although management expects 60-65% margins over the long term, this is yet to materialize, and investors should keep an eye on it.
So, Should I Buy Twilio Stock?
Twilio is well-positioned to benefit from a shift to digital during COVID-19 and in a post-pandemic world and the visionary Jeff Lawson at the helm. Twilio has the numbers to back it up and could be a great addition to a portfolio. The stock is likely to be volatile due to the run-up in recent times, but investors should take advantage of any weakness in the stock as it is likely to continue to keep performing.
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Disclaimer Past performance is not a reliable indicator of future results.
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Nicholas Kyriacopoulos: How to invest properly in 2021 and beyond – mtltimes.ca
Entrepreneurs like Nicholas Kyriacopoulos know the importance of how to invest during uncertain times, and it would be fair to say that the last year or so has had a few surprises for everyone following investment markets. While this change and volatility can be very profitable for those who make the right decisions, it also makes those right decisions harder to discern.
The fundamentals of good investment have not changed, however, and will continue to help investors in the future:
Keep it simple
Keeping it simple is a good rule for many areas in life, and investment is definitely one of them.
How much time do you really want to spend managing your investment portfolio, and what kind of returns would make that commitment worth it to you?
If your investment portfolio takes careful attention and management to work, you need to be prepared to give it the time it needs. Keeping a simpler portfolio that doesn’t need as much attention paid to it can be a better option for people who have limited time to spend on their investment decisions.
That doesn’t mean you should necessarily take a ‘set it and forget it’ approach to investment, but absolutely consider the additional time commitment and stress of each potential investment and whether it is worth your time.
Diversification improves reliability and reduces the risk of just about every investment portfolio. Your investments should always be varied enough that even when a few of your investments are in a slump, you will still have enough winners to make a minimum return.
Many entrepreneurs like Nicholas Kyriacopoulos from Toronto recommend holding a variety of asset types as well as stocks. For example, consider bonds and real estate as part of your overall portfolio; make sure you have stocks associated with several different industries.
According to Nicholas Kyriacopoulos, be open to the concept of rebalancing. As market conditions changes, look to shift your portfolio away from investments that with less promising prospects and up your investments in markets that look ready to rise.
Nicholas Kyriacopoulos gives a simple example of rebalancing from the latter half of 2020. While oil prices were not looking great for most of the year, there were signs of incoming change. As a result, some investors sold oil assets over the summer and later purchase oil stocks. They then saw great returns when the stocks surged in November.
As an experienced investor in Toronto, Nicholas Kyriacopoulos advises careful consideration of your current situation and future financial goals. For the most part, this is about the amount of risk you can take on and your ability to recover if an investment doesn’t go your way.
If you still have decades left to work and rebuild, you can afford to take more risks than if you are approaching retirement and are looking for holdings you can rely on for a long time.
Consider your long-term goals
Nicholas Kyriacopoulos observes that besides your current situation, you also need to think about long-term goals. Where do you want to be in five, ten, or twenty years, and what can you do along the way to ensure your investment takes you in the right direction? Setting goals and having plans is just as important in 2021 as it has always been.
Don’t ignore your instincts
As Nicholas Kyriacopoulos, investing does involve risk and it sometimes means going with what you feel deep in your gut. While your decisions should always be backed by data and analysis of the market, following your instincts make it easier to have confidence in your decisions.
Your instincts can come about as a result of noticing minor details others are not noticing. If the feeling is strong enough, take the risk.
Investor Education Month Encouraging Investment Opportunities – 91.9 The Bend
October is Investor Education Month, and the Financial and Consumer Services Commission (FCNB) is using the time to encourage New Brunswickers to think about investment opportunities.
Investor Education Month is a national initiative aimed to provide Canadians with more investor information.
“(As well), to understand their investment decisions, implications of them, and their responsibilities in the decision-making process, and particularly now with new online ways to investing,” said Marissa Sollows, director of education and communications for FCNB.
Sollows mentioned, FCNB has noticed over the years New Brunswickers are becoming more comfortable with investing.
“And as it becomes more accessible to people, we are seeing more New Brunswickers starting to put money away for their future, so that’s positive.”
The majority of New Brunswickers are investing in mutual funds, which is the most common product that investors hold.
Meantime, FCNB has also discovered investing is gaining popularity in young people.
“It could be due to increased media, or an increased use of social media coverage that they’re being exposed to investing topics, and wanting to get in and try a little bit earlier … and there are new trends that are becoming more popular with younger investors like DIY investing and using different online tools and apps,” said Sollows.
Sollows encourages new investors to meet with a registered investment professional and added the future looks quite exciting but will also present some challenges.
Throughout the month, FCNB will provide investor guides, videos, and social media posts on how to be an informed investor.
At any time of year, New Brunswickers can turn to the commission’s website for unbiased investor and consumer tools and information.
Bitcoin tops $60,000, nears record high, on growing U.S. ETF hopes
Bitcoin hit $60,000 for the first time in six months on Friday, nearing its all-time high, as hopes grew that U.S. regulators would allow a futures-based exchange-traded fund (ETF), a move likely to open the path to wider investment in digital assets.
Cryptocurrency investors have been waiting for approval of the first U.S. ETF for Bitcoin , with bets on such a move fuelling its recent rally.
The world’s biggest cryptocurrency rose 4.5% to its highest level since Apr. 17, and was last at $59,290. It has risen by more than half since Sept. 20 and closing in on its record high of $64,895 hit in April.
The U.S. Securities and Exchange Commission (SEC) is set to allow the first U.S. bitcoin futures ETF to begin trading next week, Bloomberg News reported on Thursday.
Such a move would open a new path for investors to gain exposure to the emerging asset, traders and analysts said.
“ETFs open up a raft of avenues for people to gain exposure, and there will be a swift move to these structures,” said Charles Hayter, CEO of data firm CryptoCompare, which tracks ETF products.
“It reduces the frictions for investors to gain exposure and gives traditional funds room to use the asset for diversification purposes.”
Bitcoin’s moves on Friday were spurred by a tweet from the SEC’s investor education office urging investors to weigh risks and benefits of investing in funds that holds bitcoin futures contracts, said Ben Caselin of Asia-based crypto exchange AAX.
Graphic: Bitcoin on the rise https://fingfx.thomsonreuters.com/gfx/mkt/movanjqkapa/bitcoin.PNG
Several fund managers, including the VanEck Bitcoin Trust, ProShares, Invesco, Valkyrie and Galaxy Digital Funds have applied to launch bitcoin ETFs in the United States.
Crypto ETFs have launched this year in Canada and Europe, growing in popularity amid surging interest in digital assets.
SEC Chair Gary Gensler has previously said the crypto market involves many tokens which may be unregistered securities and leaves prices open to manipulation and millions of investors vulnerable to risks.
Citing people familiar with the matter, the Bloomberg report said proposals by ProShares and Invesco, based on futures contracts, were filed under mutual fund rules that Gensler has said provide “significant investor protections”.
The SEC did not immediately respond to a request for comment on the report.
“It’s one of the final frontiers for mandate access,” said Joseph Edwards, head of research at crypto broker Enigma Securities.
“Plenty of Americans in particular have strings attached to how they deploy a lot of their wealth. It allows bitcoin to get in on the sorts of windfall that keep U.S. equities as consistently strong as they are.”
(Reporting by Tom Wilson in London and Alun John in Hong Kong, and Mrinmay Dey and Shubham Kalia in Bengaluru; editing by Alexander Smith and Jason Neely)
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