chewy (NYSE: WHO) and Twilio (NYSE: TWLO) they set the stock market on fire in 2020, as the shares of both companies tripled this year due to the coronavirus pandemic, which gave their business a nice blow to the arm.
ALL data by YCharts
While Chewy benefited from an increase in online purchases of pet goods during the pandemic, Twilio’s tailwind came as an acceleration in the adoption of cloud-enabled contact centers.
Let’s take a closer look at how the year unfolded for these two big categories and why they look like solid bets for 2021.

Image source: Getty Images.
1. Chewy has stepped on gas and can sustain his growth
Chewy started the year in first place with solid guidance in the first quarter, driven by favorable shopping behavior that led to an increase in the size of the purchase and a sudden increase in customers. In fact, Chewy saw an extraordinary increase in its active customer base in the first nine months of the year.
Metric |
Q1 2020 |
Q2 2020 |
Q3 2020 |
---|---|---|---|
Active customers (millions) |
15 |
16.6 |
17.8 |
Growth from year to year |
32.6% |
37.9% |
39.8% |
Net sales per active customer |
$ 357 |
$ 356 |
$ 363 |
Data source: chewy quarterly reports.
A combination of more customers and an increase in net sales per active customer helped Chewy to have an impressive increase in revenue and margins in 2020, as shown in the chart below.
CHWY (TTM) revenue data by YCharts
Chewy is about to end the year to the fullest, as indicated by the company’s recommendations for this quarter. It projects an annual revenue growth of 43% to 45% this quarter, while year-round sales are expected to reach between $ 7.04 billion and $ 7.06 billion – up from 45% to 46% from the previous year. This would be better than Chewy’s 40% revenue increase in 2019.
Chewy believes it can maintain this momentum in the new year – the customer retention rate has increased by 600 basis points by 2020. The company does not expect to incur additional customer retention expenses in 2021, as the new customers it has acquired this year they will continue to buy in a post-pandemic scenario, as suggested by the increase in the average value of the order.
Chewy’s expectations are not met. Online sales of pet products grew at a much faster rate than physical sales just before the pandemic. For example, the online pet retail market in the US grew by 275% in 2018, compared to a 14.4% increase in the physical retail channel, according to third-party estimates.
The good news for Chewy investors is that this market still has a lot of room for growth. The e-commerce channel reportedly accounted for only 13% of pet sales last year. The share of the online channel is expected to increase to 27% in 2020 and 34% next year, according to the estimates of the asset management company Needham & Company.
Chewy became a major player in this space in 2020. Management pointed to the earnings conference call in the second quarter earlier this year that online sales of pet products are set to grow by $ 3.9 billion in 2020 , according to the data provider in the pet industry. .
Chewy’s 2020 guidance suggests that it could add $ 2.2 billion in revenue this year, tipping the lion’s share of the global market’s incremental revenue and putting itself in a good position to seize the opportunity on the market. long term. Consider that Chewy has diversified into new, multi-billion dollar verticals, and this should give investors more reason to be optimistic about this long-term growth stock.
2. Twilio delivers another fantastic year
Cloud communications specialist Twilio had another solid year, despite a shaky start. The earnings guidance it issued in early 2020 was greeted with lukewarm guidance, but the company ended with tremendous growth quarter after quarter.
TWLO (TTM) Income Data by YCharts
Twilio’s revenues increased by 52% year-on-year in the third quarter of 2020, due to a 21% increase in the number of active customer accounts, as well as an increase in purchases by existing customers. The company expects revenues of between $ 450 and $ 455 million this quarter, up 36% to 37% from the previous year.
If Twilio reaches the midpoint of its fourth-quarter guidance range, its full-year revenue would increase by about 48% compared to 2019 levels. But it won’t be surprising to see that Twilio exceeds its own expectations, as the recent acquisition of The $ 3.2 billion customer data provider segment will open up additional cross-selling opportunities for the company.
The segment is expected to increase Twilio’s market opportunity by $ 17 billion and increase the terrible momentum the company is already witnessing. This is due to the fact that the customer data platform market is expected to reach $ 10 billion by 2025, compared to $ 2.4 billion last year, on a third-party estimate.
In addition, Twilio now has a new service for its existing customers. This could help Twilio further increase its net expansion rate based on dollars – a value that increases when the company’s existing customers buy additional offers or increase their spending on its services. As the chart below shows, Twilio’s net dollar-based expansion rate started to rise late, as the number of active customer accounts moved steadily north.

Data source: Twilio quarterly reports. Diagram by author.
Adding the segment to the mix could lead to a further increase in purchases made by Twilio customers. The segment should also help the company grow its customer base due to the fast growing market in which it operates.
Overall, the addition of a new growth path and the growing adoption of contact centers in the cloud after the COVID-19 crisis could help Twilio move up a step and exceed the 30% annual revenue growth rate that expects to touch it now. for the next four years. All this makes Twilio a technological stock that is worth keeping, even after a great 2020, because the New Year could bring more good news for investors.