RiverPark Funds, an investment management company, released its “RiverPark Large Growth Fund” second quarter 2022 investor letter. A copy of the same can be downloaded here. The second quarter was extremely difficult for the fund which returned -34%. Year to date, the fund returned -47%. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
RiverPark Funds discussed stocks like Twilio Inc. (NYSE:TWLO) in the second quarter investor letter. Headquartered in San Francisco, California, Twilio Inc. (NYSE:TWLO) is a cloud communications platform provider. On September 20, 2022, Twilio Inc. (NYSE:TWLO) stock closed at $74.51 per share. One-month return of Twilio Inc. (NYSE:TWLO) was 2.19% and its shares lost 78.65% of their value over the last 52 weeks. Twilio Inc. (NYSE:TWLO) has a market capitalization of $13.645 billion.
Here is what RiverPark Funds specifically said about Twilio Inc. (NYSE:TWLO) in its Q2 2022 investor letter:
“Twilio Inc. (NYSE:TWLO) offers a full suite of cloud-based communications software, services and tools that allows companies in a wide range of businesses to build omni-channel communications capabilities (video, chat, voice, SMS, fax and email) directly into their customer facing applications without needing to build back-end infrastructure and interfaces. The company also provides software tools that allow its users to gather and categorize customer data (its Segments offering) and to create next generation call centers (Flex) to utilize this data in customer interactions. Twilio is the leader in this fast growing $80 billion Communications-Platform-as-a-Service (or CPaaS) market, having grown its customer base 5x in the past five years to 268,000 customers and to a $3.5 billion run rate revenue for 1Q22. The company’s net revenue retention rate has exceeded 125% every year since its 2016 IPO and its customer churn remains less than 4% (for customers with > $30,000 revenue), evidence of the loyalty of Twilio’s customers to its platform (and a high switching cost) as well as the company’s increasing number of offerings. The company’s revenue is generated from both recurring revenue from subscription fees as well as volume-based charges for usage.
TWLO expects to maintain a +30% annual organic revenue growth rate through at least 2024, with long-term gross margin expansion from 56% to 60%-65%, and EBITDA margins approaching 35% as revenue scales. As of 1Q22, TWLO had $4.2 billion net cash, and should turn FCF positive this year. Over the next several years, we expect the company to grow its excess cash significantly as the company operates an asset light business model with low capital needs of just over 1% of current revenue.
We forecast 30% annual revenue growth through 2027, with EBITDA margins approaching the company’s long-term model guidance of 27% to generate $11.49 of EPS. At its current stock price, TWLO trades at about 5x this 2027 EPS projection (and trades at only 3x our 2030 EPS estimate). We project that the company will generate nearly 65% of its current enterprise value in excess free cash over the next five years and all of its current enterprise value in excess cash by the end of the decade…” (Click Here to read the full text)
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Twilio Inc. (NYSE:TWLO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 64 hedge fund portfolios held Twilio Inc. (NYSE:TWLO) at the end of the second quarter which was 75 in the previous quarter.
We discussed Twilio Inc. (NYSE:TWLO) in another article and shared Carillon Tower Advisers’ views on the company. In addition, please check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other leading investors.
Disclosure: None. This article is originally published at Insider Monkey.
