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Twilio earnings Q3 2018

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Twilio Inc. founder and CEO Jeff Lawson (C, in glasses) reacts after ringing the opening bell to celebrate Twilio's initial public offering, at the New York Stock Exchange, June 23, 2016 in New York City.

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Twilio Inc. founder and CEO Jeff Lawson (C, in glasses) reacts after ringing the opening bell to celebrate Twilio’s initial public offering, at the New York Stock Exchange, June 23, 2016 in New York City.

Twilio shares jumped more than 12 percent on Tuesday after the cloud software company reported third-quarter results that beat expectations and provided guidance that also topped analysts’ estimates.

Here are the key numbers:

  • Earnings: 7 cents per share, excluding certain items, vs. 2 cents per share as expected by analysts, according to Refinitiv.
  • Revenue: $168.9 million, vs. $150.4 million as expected by analysts, according to Refinitiv.

Revenue jumped 68 percent from a year earlier, according to a statement.

Twilio’s after-hours gains mark the continuation of an extended rally, dating back to the company’s public market debut in 2016. The stock has more than tripled this year.

The company’s forecast provided further reason for optimism. Twilio, which provides software that company’s use for managing communications like text messages and video, said it’s expecting fourth-quarter earnings of 3 cents to 4 cents per share, excluding certain items, on $183 million to $185 million in revenue. Analysts were expecting profit of 2 cents per share on $161.4 million in sales, according to Refinitiv.

Twilio announced last month that it’s acquiring email marketing company SendGrid for $2 billion. SendGrid shares rose 10 percent on Tuesday after the company beat expectations for earnings and revenue.

Uber represented 4 percent of Twilio’s revenue in the quarter, down from 8 percent in all of 2017, and that starting in 2019 Twilio will not disclose revenue figures excluding Uber, outgoing Chief Financial Officer Lee Kirkpatrick said on a conference call with analysts on Tuesday. Meanwhile, Facebook’s WhatsApp business was responsible for 6 percent of Twilio’s third-quarter revenue, which is in line with its role in Twilio’s business in 2017, Kirkpatrick said.

Twilio, which competes with the likes of Avaya and Cisco, said it had 61,153 active customer accounts as of Sept. 30, up 31 percent year over year.

WATCH: Twilio to buy email marketing platform SendGrid for $2 billion



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Goldman says U.S.-China not likely to reach trade deal by March and more tariffs are coming

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President Donald Trump (L) and Chinese President Xi Jinping walk together at the Mar-a-Lago estate in West Palm Beach, Florida, April 7, 2017.

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President Donald Trump (L) and Chinese President Xi Jinping walk together at the Mar-a-Lago estate in West Palm Beach, Florida, April 7, 2017.

Goldman Sachs economists said it’s more likely than not that U.S.-China trade negotiators will not reach a deal in time to head off higher tariffs on March 1, and importers could rush to order their goods in January and February ahead of the deadline.

President Donald Trump and Chinese President Xi Jinping agreed to hold off on further tariffs until March 1 so the two sides could negotiate a trade agreement. China also agreed to remove new auto tariffs on U.S. imports, and Washington reported that Beijing is fulfilling another promise to purchase American soybeans, with its first significant order in six months, amounting to 1.13 million tons.

But they have to show some progress by the March 1 deadline in order to delay further action. “While we think it is a close call, we believe it is slightly more likely that negotiations will fall short of what is necessary for a further delay,” wrote the Goldman economists.

Goldman said international trade data reflect the front-loading of goods ahead of the last round of tariffs, and also the fact that soybean purchases had fallen off dramatically.

The October trade data were the first look at what happened after tariffs on $200 billion in Chinese goods and on $60 billion of U.S. goods went into effect in September. Goldman said imports and exports were both pulled forward before the $200 billion tariff round went into effect Sept. 24, and they both fell after tariffs were implemented, just as they had done after the first round.

Over the summer months, the U.S. had also implemented 25 percent tariffs on $50 billion in Chinese imports, and China responded in kind.

The effect was a widening in the U.S. trade deficit. “Declining exports along side modestly increasing imports pushed the trade deficit with China to an all-time high in October,” the economists wrote.

U.S. imports from China are about $5 billion lower on an annualized basis and exports are about $15 billion lower, due to seasonal factors surrounding soybean exports to China. The economists said there have been sizable shifts in a few large categories, which includes the impact from soybeans. About 60 percent of annual exports of soybeans to China are in the fourth quarter, about 25 percent in October alone.

“Excluding soybeans, exports to China are only modestly lower on a seasonably adjusted basis,” they wrote. As for imports, U.S. imports of electronic circuits and memory components rose ahead of the second round of tariffs and fell sharply after they were put in place

If there is no agreement by March 1, tariffs are scheduled to rise to 25 percent from 10 percent on $200 billion in Chinese goods.

WATCH:How big Harley-Davidson is and why it’s a trade-war target



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‘We are tired of people asking us about target prices’  

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In November, Lee cut his price target from $25,000 to $15,000. A key driver for the revision was bitcoin’s “break-even” point, the level at which mining costs match the trading price.

Bitcoin is closing out a miserable trading year. The cryptocurrency is down 75 percent since January, trading near $3,324 on Thursday, according to data from CoinDesk. From its high near $20,000 in December, the cryptocurrency has lost more than 82 percent of its value.

For bitcoin to stage a price rebound, Lee said user adoption needs to increase, and it needs to be embraced as a real asset class.

But looking out longer term, if the amount of bitcoin users approached even 7 percent of Visa’s total 4.5 billion currently, Lee’s regression model would place fair value at $150,000 per bitcoin.

“Hence, the risk/reward is still strong,” Lee said. “Given the steep discounts of [bitcoin] to our fair value models, the excessive bearish sentiment about fundamentals does not seem warranted.”

Still, Lee said technicals remain important in cryptocurrency trading and as long as bitcoin remains below its 200-day moving average, investors will likely still stay bearish.



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Slower IT spending could reveal Cisco’s ‘imperfections,’ analyst says

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While stronger technology spending across Wall Street and a spell of innovation at Cisco have boosted the stock to post-recession highs, shares now look a little expensive, according to Normura Instinet.

The brokerage downgraded Cisco’s stock to neutral from buy on Friday, arguing that the strong stream of IT purchases that has buoyed shares may reverse in 2019 to “reveal imperfections in Cisco’s story.”

“Through 2018, IT spending growth accelerated materially, Cisco’s new Catalyst 9000 series more than tripled its customer count, and Cisco’s software mix hit about 25 percent of sales. These drivers helped Cisco exceed consensus estimates through 2018,” analyst Jeffrey Kvaal wrote in a note to clients.

“However, spending may be wobbling; comments from Dell, HPE, and Broadcom suggest incremental caution in chief investment officer thinking,” Kvaal added. “Cisco’s ongoing product refresh leaves it insulated, though not immune, from a slowdown.”

The analyst reiterated his 12-month price target of $50, which implies just 5.3 percent upside over the next year from Thursday’s close of $47.47. That price target yields a multiple of about 15 times Nomura’s calendar year 2019 earnings per share expectation of $3.33.

Shares of Cisco fell more than 2 percent in premarket trading following the downgrade; shares are up 23.9 percent this year.



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