Twilio Inc. (TWLO) shares rose nearly 20% near the end of Tuesday's session after the company reported better-than-expected second quarter financial results. Revenue rose 54% to $147.8 million – beating consensus estimates by $16.74 million – while net income of three cents per share beat consensus estimates by eight cents per share. The company's dollar-based net expansion rate was also 137% compared with 131% during the year-ago period.
In addition to beating second quarter estimates, the company provided upbeat guidance for the third quarter. Revenue is expected to reach between $150 million and $152 million, while earnings per share are expected to come in at two to three cents. These figures are better than the $134.8 million revenue estimate and the breakeven net income estimate for the third quarter, which helped send shares higher on the day. (See also: Twilio Stock Breaks Out From Reaction Highs.)
From a technical standpoint, the stock rebounded from its pivot point and 50-day moving average at around $59.43 to break out from upper trendline and R2 resistance at around $70.12 on Tuesday. The relative strength index (RSI) moved to overbought levels of 75.47, but the moving average convergence divergence (MACD) experienced a bullish crossover. These indicators suggest that the stock could see some near-term consolidation before continuing its trend higher over the coming weeks.
Traders should watch for consolidation above the upper trendline and R2 resistance levels at around $70.00 before Twilio shares make a move higher. If the stock breaks down from these levels, traders could see a move to close the gap near R1 support levels at $64.01 or move to retest the lower trendline and 50-day moving average support at around $60.00 – although the latter scenario seems less likely given the second quarter earnings beat. (For more, see: 5 Overlooked Techs That Are Beating the Market.)
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.