Twilio’s (NYSE:TWLO) stock recently surged to an all-time high after the company posted strong fourth-quarter numbers that easily beat analysts’ expectations. Its revenue soared 65% year over year to $548.1 million, beating estimates by $93.2 million.
Its non-GAAP net income grew 13% to $6.5 million, or $0.04 per share, which also cleared estimates by $0.11. Those headline numbers look healthy, but is Twilio stock getting overvalued after rallying more than 1,200% over the past three years? Let’s delve deeper into its strengths and weaknesses to find out.
Evaluating Twilio’s strengths
Twilio’s cloud-based platform allows developers to easily integrate voice calls, text messages, and other content into their apps with a few lines of code. In the past, developers needed to create those features from scratch, which was buggy, time-consuming, and difficult to scale.
By outsourcing those communication features to Twilio, companies like Lyft and Airbnb can focus on developing their core features instead of fretting over integrated calls and messages. Twilio enjoys an early-mover’s advantage in this market, and it deploys a “land and expand” strategy — wherein it locks in customers with one service to cross-sell additional services — to boost its revenue per user…