Twilio Stock Has a Lot to Prove on Monday

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Twilio (NYSE: TWLO) is ready for its close-up. The in-app communications specialist reports fresh financials after Monday's close. If investors are getting jittery, it's hard to blame them: Twilio shares plummeted 26% the day after it posted disappointing first-quarter results last time out.

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Twilio stock has gone on to make back nearly half of that slide since its early May report. The biggest dagger in Twilio's poorly received first quarter was the warning that Uber would be relying less on Twilio's platform in some markets. There's no shortage of developers leaning on Twilio for their cloud-based communications needs, but Uber still accounted for more than 10% of its revenue last year. 

Under the hood

Wall Street pros are holding out for another period of big, but ultimately decelerating, top-line growth. They see revenue for the second quarter clocking in at $86.2 million, a 34% pop since the prior-year's showing. Year-over-year gains have slowed with every passing quarter in Twilio's brief tenure as a publicly traded company. Twilio was growing its revenue twice as fast a year ago -- up 70% in the second quarter of last year -- only to see that pace decelerate to 62%, 60%, and 47% in subsequent quarters. 

Analysts are bracing for an adjusted deficit of $0.11 a share. Twilio's too busy expanding its platform's popularity to turn a profit, but it's notable that Twilio has posted a narrower loss than Wall Street's been expecting every single time.

We can't give Twilio a free pass here, dismissing it as a company that lowballs guidance just to impress us on earnings day. The 26% plunge last time out is more than just a cautionary tale. The forecast that it put out three months ago -- calling for $85.5 million to $87.5 million in revenue -- was lower than where analysts were perched. Unless guidance lands at the high end of that range, Twilio will be reporting its first quarter of a sequential decline in revenue.

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Twilio has been a growth beast in the past, playing an important role in many of the hottest apps. From Airbnb booking confirmations to ride-sharing communiques to password resets on the hottest streaming services, Twilio's in-app features are hot. Investors will want to tune in on Monday night to see if Twilio can offer an update on Uber and any other potential large accounts.

Most of the recent analyst updates have been positive, and there was even a temporary pop on buyout speculation. As long as Twilio can keep its growth rate at a heady pace and avoid another large account bombshell like it had with Uber in early May, we should see the the stock that has nearly doubled in its first year of trading come through with another period of encouraging growth.

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Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Twilio. The Motley Fool has a disclosure policy.