Twilio stock spikes as company reports highest revenue growth in three years

• TWLO rises as much as 21% on Friday after Q1 earnings, outlook for Q2 impress.
• Twilio beats adjusted EPS consensus in Q1 by 18%.
• Q1 revenue rises 20% YoY, management expects incremental growth in Q2.
• Wells Fargo raises TWLO price target by 36% to $200.

Twilio (TWLO) stock rose as much as 21% on Friday morning as the market digested the cloud communications platform's first-quarter results, released afterhours on Thursday.

Shares of TWLO hit a four-year high at $179.48 at market open on Friday as Wall Street analysts praised the company's surprise 20% annual revenue growth in Q1.

The wider US stock market is also being helped by impressive earnings from Apple (AAPL) late Thursday, as well as news that Iran has sent an updated peace deal to intermediaries in Pakistan. The latter has helped US Oil (WTI) drop 4%, which is bullish for equities.

Twilio Q1 earnings impress

For the quarter ended March 31, Twilio issued adjusted earnings per share (EPS) of $1.50 against the consensus estimate of $1.27. Revenue for the first quarter increased to $1.41 billion, about $70 million above consensus.

Management expects Q2 revenue of $1.425 billion, besting consensus by $35 million. Twilio projects adjusted EPS for Q2 to be in line with the prior $1.29 consensus estimate.

“Twilio had a terrific Q1, accelerating revenue and gross profit to their highest growth rates in more than three years,” said CEO & Director Khozema Shipchandler in a statement.

Twilio also hiked its full-year free cash flow estimate from a midpoint of $1.05 billion to $1.09 billion.

Wells Fargo raised its price target from $147 to $200 on the news.

"The Voice AI story appears to be taking shape, which likely gives investors confidence to stick around in the name longer. The setup for the rest of the year also now appears better, even as the comps get more challenging," wrote Wells Fargo analyst Ryan MacWilliams in a client note.

RBC Capital maintained its Underperform rating on TWLO but increased its price target on the stock to $120 from $100.

TWLO stock reaches four-year high

Twilio stock is now trading at its highest point since February 2022, and bulls will attempt for further upside in the coming weeks toward more bullish analysts' $200 price target.

On the downside, the monthly chart offers long-term support at $150, measured from the summer of 2019 ceiling to highs in January and February of 2025.

The Relative Strength Index (RSI) on the monthly chart shows momentum rising toward 65. This figure is not yet in overbought territory above 70 and should give bulls a picture of further upside on offer. Bulls will note that during the pandemic rally, TWLO routinely saw RSI values above 80.