I am a full-time analyst interested in a wide range of stocks. With my unique insights and knowledge, I hope to provide other investors with a contrasting view of my portfolio, given my particular background.If you have any questions, feel free to reach out to me via a direct message on Seeking Alpha or leave a comment on one of my articles.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the ...

Group 1 - Investors generally exhibit low patience for tech stocks, expecting either growth for premium valuations or decline leading to permanent devaluation [1] - Gary Alexander has extensive experience in technology sectors, having worked on Wall Street and in Silicon Valley, and advises seed-round startups [2] Group 2 - The article reflects the author's personal opinions and indicates a long position in TWLO shares, highlighting a beneficial investment stance [3]

Market Overview - The AI-driven bull run of 2023 and 2024 faced significant challenges in 2025 due to overstretched valuations, stock inflation, weak economic data, geopolitical conflicts, and concerns over the Trump administration's trade policies, impacting confidence in equities [1] - The technology sector, particularly AI-focused stocks, has been the most affected, but current low valuations present investment opportunities [2] Recommended AI Stocks - Five Internet-based AI stocks with favorable Zacks Rank recommended for purchase on the dip include Arista Networks Inc. (ANET), Fastly Inc. (FSLY), Five9 Inc. (FIVN), HubSpot Inc. (HUBS), and Twilio Inc. (TWLO), all carrying a Zacks Rank 2 (Buy) [3] Arista Networks Inc. (ANET) - Arista Networks is positioned well with a robust network architecture for cloud and AI networking, focusing on proactive products, zero-touch automation, and predictive operations [6] - The company’s AI suite enhances job monitoring and performance issue resolution, with expected revenue and earnings growth rates of 18.7% and 12.8% for the current year, respectively [8] - ANET is currently trading at a 31.6% discount from its 52-week high price [8] Fastly Inc. (FSLY) - Fastly provides cloud computing infrastructure and recently launched Fastly AI Accelerator, optimizing generative AI applications [10][11] - The company has expected revenue and earnings growth rates of 8.7% and 16.7% for 2025, respectively, and is trading at a 40.5% discount from its 52-week high price [12] Five9 Inc. (FIVN) - Five9 offers intelligent cloud software for contact centers, benefiting from the growing adoption of AI tools [13][15] - The expected revenue and earnings growth rates for the current year are 9.6% and 11.7%, respectively, with a 47.6% discount from its 52-week high price [16] HubSpot Inc. (HUBS) - HubSpot provides a cloud-based CRM platform and is experiencing steady adoption from enterprise customers, driven by its AI features [17][18] - The expected revenue and earnings growth rates for the current year are 15.4% and 14.9%, respectively, with a 30.2% discount from its 52-week high price [19] Twilio Inc. (TWLO) - Twilio focuses on generative AI offerings and has launched Customer AI technology to enhance customer engagement [20][21] - The expected revenue and earnings growth rates for the current year are 7.8% and 22.6%, respectively, with a 25.3% discount from its 52-week high price [24]

Group 1 - Twilio (TWLO) has experienced a strong rally from this year's lows, benefiting from a booming tech sector [1] - The company continues to deliver solid growth in both revenue and earnings while engaging in aggressive share repurchases to reward shareholders [1] - The financial analyst Julian Lin focuses on finding undervalued companies with secular growth potential, emphasizing strong balance sheets and management teams in sectors with long growth runways [1]

Core Viewpoint - Needham analyst Joshua Reilly maintains a Buy rating on Twilio (TWLO) with a price target of $125, expressing positive sentiment after attending the Twilio Signal customer conference, highlighting increased product usage and favorable customer feedback [1][2]. Group 1: Company Performance and Strategy - Reilly noted an increasing pipeline of projects and a more efficient implementation process utilizing AI, which positions Twilio strategically for cross-selling opportunities, particularly with the recent Microsoft partnership [2][4]. - The collaboration with Microsoft enhances Twilio's capabilities in building multi-channel AI agents and improving customer engagement through advanced features like Twilio Agent Copilot [3][7]. - Twilio has addressed many operational challenges over the past 24 months, allowing a stronger focus on product development and customer benefits moving forward [4][9]. Group 2: Product Development and Customer Experience - Twilio is working to streamline the billing process for its services, which currently operate on separate platforms, to improve customer experience and facilitate easier bundling [5][6]. - The company launched several new products at the Signal 2025 event, with Verify and Lookup receiving particularly positive feedback from customers [7][8]. - Discussions with management indicated a projected growth trajectory for voice volumes that could significantly exceed 2024 levels, reflecting sustained optimism among partners and customers [9][10]. Group 3: Financial Projections - Reilly projects fiscal 2025 revenue for Twilio at $4.82 billion and earnings per share (EPS) at $4.45, indicating confidence in the company's financial outlook [10].

Group 1 - Twilio (TWLO) is currently outperforming the Computer and Technology sector with a year-to-date return of 2.9%, while the sector has lost an average of 4.4% [4] - The Zacks Rank for Twilio is 2 (Buy), indicating a positive outlook based on earnings estimates and revisions, with a consensus estimate for full-year earnings increasing by 18.7% in the past quarter [3] - Twilio belongs to the Internet - Software industry, which has an average year-to-date gain of 5%, suggesting that Twilio is slightly underperforming its specific industry [5] Group 2 - Clearfield (CLFD) is another stock in the Computer and Technology sector that has shown strong performance, returning 17.3% year-to-date [4] - Clearfield's consensus EPS estimate has increased by 89.7% over the past three months, and it holds a Zacks Rank of 1 (Strong Buy) [5] - The Wireless Equipment industry, to which Clearfield belongs, is ranked 15 and has gained 3.4% so far this year [6]

Core Viewpoint - Twilio's recent quarterly report has revitalized its stock, which had previously declined over 4% this year, with a notable recovery of 23% in the past month, indicating potential for further growth in the second half of the year and beyond [1][2]. Financial Performance - In Q1 2025, Twilio reported a 12% year-over-year revenue increase to $1.17 billion, with earnings growing at a much faster rate of 42% due to increased adoption of AI-focused cloud communication tools [3]. - The company's dollar-based net expansion rate improved to 107%, up five percentage points from the previous year, indicating that existing customers are increasing their usage of Twilio's solutions [4][5]. AI and Growth Drivers - Twilio's AI-focused tools, such as Conversation Relay, are driving growth, allowing clients to integrate voice-enabled AI solutions into their customer service applications [5][6]. - The voice AI agents market is projected to grow at an annual rate of 35% over the next decade, presenting a significant opportunity for Twilio to attract more customers [6]. Customer Base and Guidance - Twilio has over 335,000 active customer accounts, a 7% year-over-year increase, suggesting strong potential for cross-selling AI offerings [7]. - The company has raised its full-year organic revenue growth guidance to 7.5% to 8.5%, a 50 basis point increase at the midpoint, and expects non-GAAP operating income to reach $862.5 million, a 38% increase from the previous year [8]. Future Outlook - Twilio's top-line growth has been accelerating for the past five quarters, with expectations for continued improvement as AI tool adoption increases [9]. - Analysts have set a 12-month median price target of $130 for Twilio, indicating a potential 30% increase from current levels, with further upside possible due to the adoption of AI solutions [10][12].

Financial Performance - Revenue for the three months ended March 31, 2025, was $1.17 billion, representing a 12% growth compared to $1.05 billion in the same period of 2024[106]. - Net income for the three months ended March 31, 2025, was $20.0 million, a significant improvement from a net loss of $(55.3) million in the same period of 2024[106]. - Total revenue for the three months ended March 31, 2025, was $1,172,463, an increase of 12% compared to $1,047,050 in the same period last year[148]. - Communications revenue increased by $124.8 million, or 13%, driven by increased usage by existing customers and a Communications Dollar-Based Net Expansion Rate of 108%[148]. - Segment revenue increased by $0.6 million, or 1%, primarily due to new Segment Active Customer Accounts, with a Dollar-Based Net Expansion Rate of 94%[149]. - GAAP gross profit for the three months ended March 31, 2025, was $581,567, with a gross margin of 50%, compared to $544,041 and 52% in the prior year[139]. - Non-GAAP income from operations for the same period was $213,408, with a non-GAAP operating margin of 18%, up from $159,610 and 15% in the previous year[141]. - Free cash flow for the three months ended March 31, 2025, was $178,315, with a free cash flow margin of 15%, compared to $177,298 and 17% in the prior year[142]. - Basic net income per share was $0.13 for the three months ended March 31, 2025, compared to a loss of $0.31 in the prior year[144]. Customer Metrics - Active Customer Accounts increased to 335,000 as of March 31, 2025, up from 313,000 in the same period of 2024[113]. - The Dollar-Based Net Expansion Rate for the three months ended March 31, 2025, was 107%, compared to 102% in the same period of 2024[113]. - 73% of total revenue in the three months ended March 31, 2025, was generated from usage-based fees, compared to 71% in the same period of 2024[122]. - 27% of total revenue in the three months ended March 31, 2025, was generated from subscription-based fees, down from 29% in the same period of 2024[123]. Cost and Expenses - Total operating expenses decreased to $558,485 from $587,545 year-over-year, reflecting a reduction in general and administrative costs[144]. - Cost of revenue increased by $87.9 million, or 17%, to $590.9 million for the three months ended March 31, 2025, primarily due to a $76.7 million increase in network service provider costs[151]. - Gross profit rose by $37.5 million, or 7%, to $581.6 million for the same period, influenced by revenue and cost factors[152]. - Total operating expenses decreased by $29.1 million, or 5%, to $558.5 million, with general and administrative expenses down by $20.5 million, or 18%[153][155]. - Research and development expenses decreased by $6.2 million, or 2%, to $254.3 million for the three months ended March 31, 2025[153]. Cash Flow and Financing - Cash and cash equivalents were $467.1 million, with short-term marketable securities totaling $2.0 billion as of March 31, 2025[159]. - Cash provided by operating activities was $191.0 million, compared to $190.1 million in the prior year[167]. - Cash used in financing activities was $125.8 million, primarily for repurchasing 1.2 million shares of Class A common stock[172]. - The company authorized a share repurchase program of up to $2.0 billion, expiring on December 31, 2027[164]. - Other income (expenses), net, increased by $5.2 million, or 311%, to $3.5 million, mainly due to a decrease in losses from equity method investments[156]. Strategic Focus - The company is focusing on product innovation and leveraging AI to drive revenue growth and market share[107]. - The company has realigned its business unit structure into a functional support model to enhance customer engagement[105]. - The company is monitoring macroeconomic conditions that may impact its results of operations[110]. Foreign Currency and Risk Management - The company does not anticipate material risks due to changes in interest rates, as a hypothetical 10% change would not have a material impact on financial statements[179]. - The functional currency of most foreign subsidiaries is the U.S. dollar, with local currencies including the Australian dollar, Brazilian real, and Euro among others[180]. - Revenue and expense accounts are remeasured at the average exchange rate during the transaction month, while monetary assets and liabilities are remeasured at period-end exchange rates[181]. - The company enters into foreign currency derivative hedging transactions to mitigate exposure to market risks from foreign currency exchange rate changes[182]. - A hypothetical 10% change in foreign exchange rates would not have a material impact on the company's financial statements[183].

Financial Data and Key Metrics Changes - Twilio reported Q1 revenue of $1,172,000,000, representing a 12% year-over-year increase, marking the third consecutive quarter of double-digit revenue growth [6][18] - Non-GAAP income from operations reached a record $213,000,000, up 34% year-over-year, with a non-GAAP operating margin of 18.2%, an increase of 300 basis points year-over-year [21][22] - Free cash flow for the quarter was $178,000,000, despite a $122,000,000 payment related to annual cash bonuses [22][23] Business Line Data and Key Metrics Changes - Revenue from the Communications business was $1,097,000,000, up 13% year-over-year, driven by growth in messaging both in the U.S. and internationally [18][19] - Segment revenue was $76,000,000, reflecting a 1% year-over-year increase, with improvements in leading indicator metrics such as AE productivity and win rates [19] - The dollar-based net expansion rate for the Communications segment was 108%, while for Segment it was 94% [20] Market Data and Key Metrics Changes - All top five verticals, including financial services, tech, professional services, retail, and e-commerce, experienced growth in Q1 [32] - The company noted strong international messaging growth, which is a focus area for expansion [20][61] Company Strategy and Development Direction - Twilio is focused on innovation, particularly in AI-driven products, and aims to enhance customer relationships through its platform [9][10] - The company is leveraging partnerships, such as with Eleven Labs, to enhance its AI voice capabilities [10][11] - Twilio is committed to returning 50% of its annual free cash flow to shareholders from 2025 through 2027, with a $2,000,000,000 share repurchase program authorized [23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about Q2 and the remainder of the year, despite acknowledging a dynamic macro environment [8][25] - There have been no notable adverse impacts on the business through April, but the company is monitoring the situation closely [8][25] - The guidance for Q2 revenue is set at $1,180,000,000 to $1,190,000,000, representing year-over-year growth of 9% to 10% [26] Other Important Information - Twilio was recognized as a leader in the IDC MarketScape for CPaaS and by Omnia for its CDP universe leadership [12] - The company is hosting its user conference, SIGNAL, to share more innovations and partnerships [12] Q&A Session Summary Question: Drivers of upside to growth in the Communications segment - Management noted broad strength across the business, particularly in messaging, with all top five verticals growing [31][32] Question: Resurgence in voice driven by generative AI - Management highlighted increased interest in voice capabilities, particularly in customer care applications, and noted higher ROI for customers using multiple products [36][39] Question: Multi-product adoption and international market attractiveness - Management indicated broad adoption of multiple products, with significant growth in advanced features and ISV relationships expanding internationally [45][46] Question: Impact of macro dynamics on customer momentum - Management stated that they are not seeing any slowdown in customer acquisition or transactional volumes, monitoring the situation closely [79][80] Question: Gross margin headwinds - Management explained that lower gross margins were due to non-recurring hosting credits and a higher mix of international messaging, which is a growth priority [60][61] Question: RCS messaging support - Management expressed cautious optimism about RCS messaging, noting that broad carrier support is still developing [68] Question: Free cash flow expectations - Management increased the free cash flow guidance for the year to $850,000,000 to $875,000,000, with expectations for Q2 to align with non-GAAP income guidance [71][72] Question: Customer growth drivers - Management attributed customer growth to self-service channel acceleration and increased demand for voice-enabled applications [77][78] Question: Coopetition in the segment strategy - Management indicated that coopetition is not expected to disrupt their strategy significantly, focusing on providing compelling solutions [83][84]

Financial Data and Key Metrics Changes - Twilio reported Q1 2025 revenue of $1,172,000,000, representing a 12% year-over-year increase, marking the third consecutive quarter of double-digit revenue growth [5][15][20] - Non-GAAP income from operations reached a record $213,000,000, up 34% year-over-year, with a non-GAAP operating margin of 18.2%, an increase of 300 basis points year-over-year [15][18][20] - Free cash flow for the quarter was $178,000,000, despite a $122,000,000 payment related to annual cash bonuses [19][20] Business Line Data and Key Metrics Changes - Revenue from the Communications business was $1,097,000,000, up 13% year-over-year, driven by growth in messaging both in the U.S. and internationally [15][16] - Segment revenue was $76,000,000, reflecting a 1% year-over-year increase, with improvements in leading indicator metrics such as AE productivity and win rates [16][18] - The dollar-based net expansion rate for the Communications segment was 108%, while the Segment's rate was 94% [17] Market Data and Key Metrics Changes - All top five verticals, including financial services, tech, professional services, retail, and e-commerce, experienced growth in Q1 [29][30] - International messaging revenue mix increased year-over-year for the first time in over two years, contributing to the overall growth [60] Company Strategy and Development Direction - The company is focused on innovation, particularly in AI-driven products, and aims to enhance customer relationships through its platform [7][8][10] - Twilio is leveraging partnerships, such as with Eleven Labs, to enhance its AI voice capabilities and expand its product offerings [8][9] - The company is committed to maintaining price discipline and pursuing growth in international markets [60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about Q2 and the remainder of the year, noting that there have been no significant adverse impacts from the macro environment as of April [6][21] - The company is taking a prudent approach to its outlook, incorporating conservatism in its guidance due to potential macro risks [21][30] - Management highlighted strong customer engagement and usage, indicating a healthy business environment despite broader economic uncertainties [21][52] Other Important Information - Twilio was recognized as a leader in the IDC MarketScape for CPaaS and by Omnia for its CDP universe leadership [10] - The company authorized a $2,000,000,000 share repurchase program, targeting to return an average of 50% of annual free cash flow to shareholders from 2025 through 2027 [20] Q&A Session Summary Question: What drove the upside to growth in the Communications segment in Q1? - Management noted broad strength across the business, particularly in messaging, with all top five verticals showing growth [28][29] Question: How do you see voice playing out over the medium term? - Management indicated that voice, driven by AI, is gaining traction, with increased interest from both new and existing customers [34][36] Question: Can you elaborate on multi-product adoption? - Management reported strong growth in customers adding multiple channels, particularly in advanced features and software add-ons [41][42] Question: How are you addressing competition in the market? - Management emphasized the importance of providing compelling solutions and differentiating through a broad set of capabilities [110] Question: What is the breakdown of use case mix across transactional versus marketing in messaging? - Management stated that the use case mix is roughly evenly split between verification, customer notification, and marketing [116]