These small tech companies are soaring after crushing Q1 earnings

Key Points
  • Investors this week rewarded tech companies specializing in communication, emergency response, online content delivery and textbooks after they reported strong results.
  • Their stocks have outperformed even the largest technology companies, like Facebook.
Dan Rosensweig, CEO, Chegg
Scott Mlyn | CNBC

A few technology companies have shown signs of growth in the face of the coronavirus pandemic. This week, investors rewarded a several small tech companies that specialize in communication, emergency response, online content delivery and textbooks after companies that specialize in those fields reported strong results. Their stocks have outperformed even the largest technology companies, like Facebook.

Here are some of the smaller companies doing well right now.


Jeff Lawson CEO, Twilio
Scott Mlyn | CNBC

Shares of cloud communications software company Twilio on Thursday gained the most in a single day since the company's initial public offering in 2016.

The move came a day after the company released first-quarter earnings and guidance. "Monster beat, monster move. Finally, a clean quarter when we least expected it," Canaccord Genuity analysts David Hynes Jr. and Luke Morison wrote in the title of their note recommending that clients buy the stock. Shares closed at a record high, past levels not seen since July.

Twilio's technology can help companies send out text messages, deliver emails and make video calls. CEO Jeff Lawson said during the company's earnings call that, in some cases, projects customers had planned for the future suddenly became essential once the pandemic struck.

Twilio's stock has almost doubled in the past month, while the S&P 500 is up around 8% in the period. The largest technology companies are also lagging behind Twilio. By comparison, Facebook is up 25% in the past month, outperforming Alphabet, Amazon, Apple and Microsoft.


Fastly, whose content-distribution network quickly delivers videos and other data in websites in apps, also had its best day of trading on Thursday going back to its initial public offering last year.

"The structural changes we anticipate coming out of this pandemic help our business in the short and long term," CEO Joshua Bixby said Thursday after the company beat analysts' estimates for the first quarter and raised its full-year revenue guidance range by $25 million, easily exceeding expectations.

The company won more e-commerce business and saw increased traffic as social distancing measures kicked in, Bixby said.

"Fastly is the only company in our coverage universe (so far) to raise 2020 guidance, at a time when most companies are lowering or withdrawing 2020 guidance, which we view as an impressive feat," DA Davidson analysts Rishi Jaluria and Hannah Rudoff said in their buy recommendation.


David Meredith, CEO, Everbridge
Scott Mlyn | CNBC

Shares of Everbridge, a company that helps governments and businesses handle emergencies, shot up about 24% on Wednesday and 6% on Thursday, reaching a record high since the company's 2016 initial public offering. The gains came after Everbridge's first-quarter results showed a better-than-expected acceleration in revenue growth and revenue guidance.

"As you might expect, we saw an uptick in new customer interest during the quarter," CEO David Meredith told analysts on a Tuesday call. "Many of these customers had already been evaluating our platform, and the Covid-19 crisis accelerated the completion of some transactions that we had expected to close later in the year."

The company expanded business with the New York City Council and won new business with the NYC Education Department, in addition to new corporate customers.

"In a broader economy where growth will be increasingly hard to find, Everbridge's model should be fairly resilient, which means the stock can likely sustain a premium valuation for longer than expected," Canaccord Genuity analysts David Hynes and Luke Morison wrote in a Tuesday note with a buy rating on the stock,


Shelter-in-place orders have forced schools to try to quickly implement remote education tools. Chegg, which sells digital and physical textbooks and provides education services like homework help, reported an acceleration of its revenue growth in the first quarter on Monday. The company's second-quarter revenue guidance surpassed estimates, with subscription renewal rates going up and cancellations going down.

"As students were required to leave campus and learn from home, we began to see some remarkable trends," Chegg CEO Dan Rosensweig said on Monday's quarterly conference call. "We saw a substantial increase in new subscribers, both domestically and globally. We saw a marked increase in engagement from our existing subscribers, and we are seeing a meaningful increase in the take rate of our new Chegg Study Pack, much earlier than we expected." Chegg Study pack is a bundle that includes tools to check students' writing and help them solve math problems.

Hours after the firm's earnings call, Raymond James analyst Aaron Kessler raised his rating on Chegg stock to the equivalent of buy from the equivalent of hold. On Tuesday, Chegg stock rose an unprecedented 32%, vaulting the company to a new high since it went public in 2013.

WATCH: Chegg CEO on Q1 results, future of higher education post-pandemic

Chegg CEO on Q1 results, future of higher education post-pandemic
Chegg CEO on Q1 results, future of higher education post-pandemic