In an increasingly digital, networked and thus open business world, the maintenance of customer relationships plays an increasingly important role. The technical implementation of "Customer Relationship Management", CRM for short, is Twilio's core competence. On a cloud-based platform, the US company makes it possible to establish customer contact in any form. Whether text messages on the smartphone or e-mail, phone calls or video messages - Twilio offers the entire spectrum of interaction. The exchange can take place via fully automated bots or physical advisors. With this service, the company, co-founded in 2008 by current CEO Jeff Lawson, has its finger on the pulse of the times: around 795 billion interactions in more than 100 countries have already been carried out on the platform. In the process, Twilio has processed over 3 billion phone numbers.
Its customers - as of the end of 2020, the platform had more than 221,000 active accounts - include companies that are at the spearhead of digitalization. Short messaging service Twitter uses Twilio, as do streaming giants Netflix and Spotify, online food delivery company Doordash and e-commerce equipment supplier Shopify. In addition, there are companies from "old" industries such as the British retailer Marks & Spencer or the US bank Morgan Stanley. As is well known, the digital economy flourished during the Corona pandemic. Twilio services were in corresponding demand. For Q4 2020, the company reported revenue growth of nearly two-thirds to USD 548 million (see chart). "These results confirm that we are addressing a generational opportunity," the CEO enthused.
Twilio exceeded expectations not only with its revenues for the final quarter. Jeff Lawson also surprised positively with the outlook: In the current first quarter of 2021, he expects sales between USD 526 and USD 536 m. The consensus was previously less than USD 500 m. On the other hand, Lawson was more pessimistic about the loss than Wall Street. He expects a loss per share of between USD 0.09 and USD 0.12 for the current quarter, whereas analysts were expecting a loss of only USD 0.02 per share. Whether this discrepancy changes anything in the timetable for the breakeven remains to be seen. To date, the market has assumed that Twilio will be in the black next year. Even if the company earns the expected USD 0.30 then, the valuation looks lush: The price-to-earnings ratio for 2022 is close to 1,400.
It is therefore entirely possible that Twilio will take it easy after the rally of the past few months, or even come back a little. Softcallable barrier reverse convertibles offer the right investment solution for such a scenario. Leonteq has launched two variants on the US high-flyer. Even in CHF, the new issue yields a high coupon payment of 14.00% p.a.. 100 basis points more are possible as soon as the value date is USD. The outlined yield opportunities are partially protected by the barrier of 55% of the initial fixing. If the cushion is not sufficient, Twilio must trade at or above the strike again by maturity in order to avoid redemption discounts. Please note the soft callable feature. Should Leonteq make use of the quarterly call right (first observation day after 6 months), investors would receive the transfer of the nominal and pro-rata coupon within a few days.
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