Why Twilio (TWLO) Shares Are Surging

Twilio's TWLO AI-powered platform as a service (PaaS) continues to drive exceptional growth in Q1, despite the economic disruption. The company reported March quarter results Wednesday night and blew expectations out of the water on every metric estimated. TWLO shares were up over 25% on open Thursday morning, and they continue to rip higher.

Twilio's unmatched AI capabilities in its remarkable customer engagement platform could mark the end for foreign call centers. Wednesday's results have further illuminated the unique opportunity that TWLO can provide to investors' portfolios for the future.

I have been a believer in TWLO for some time and have consistently pitched these shares as a buy in my editorials. If you were lucky enough to get into this gold mine at any point before today, you are reaping the benefits.

The Rare Tailwind

In previous market downturns high-beta, growth-oriented, tech companies like Twilio would have gotten crushed by the economic uncertainty, but we are living in an entirely different world today. Society has never relied on technology more. Technology is what is allowing us to get through this pandemic, and it is what will thrive in the post-pandemic world.

The pandemic has illuminated the risk and expense associated with outsourcing overseas. US companies are looking for a way to bring their operations abroad back to the homeland, and there is no better or more cost-effective way to do that then automation.

Twilio's unique customer engagement cloud platform can automate call-centers and move this historically outsourced operation back home. The platform will reduce foreign reliance, cut costs, and overall improve enterprises' customer interactions.

In response to the recent pandemic, the company said, "at times, it feels like Twilio was built for the challenges brought about by the COVID-19 crisis. We provide three things the world has needed during this crisis: digital engagement, software agility, and cloud scale."

This business drove its revenues up 57% year-over-year (YoY) mostly organically and now has more than 190,000 active accounts. Twilio was one of the rare company's that provided forward guidance for Q2 earnings, though it did withdraw its full-year guidance. Q2 guidance came in substantially higher than current estimates, which added to some of TWLO's upward momentum. Twilio has beat analysts' estimates every quarter since the company went public in 2016, and I anticipate that this will continue.

We Are Using Twilio More Often Than We Think

Twilio's AI-powered PaaS is trusted by many enterprises that rely heavily on customer satisfaction for continued growth. Companies like Uber UBER, Lyft LYFT, Airbnb, DoorDash, Twitter TWTR, and countless others depend on Twilio's smart platform to keep their customers happy.

There is a good chance that you have interacted with this exceptional PaaS at some point in your recent life. Twilio's capabilities are only going to improve, and its adaptation will continue to grow.

Key Takeaways

Twilio controls a niche cloud market with an enormous addressable market. This pandemic has provided the platform with an opportunity to prove its value, and Twilio has not disappointed.

I would not chase this share price surge today but wait for a marginal pullback. Twilio is proving itself as a reliable long-term investment, and I do not think that we will see these shares come back to $100, but I wouldn't hesitate to buy TWLO at any price below $130.

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