Twilio (TWLO) is expected to sustain growth driven by messaging and artificial intelligence-driven voice services, but continues to face margin pressures, increasing competition, and execution risks, RBC Capital Markets said in a note Monday.

Analysts said they came away from a group call with Twilio management and investors more positive about the company's chances of keeping growth in the double digits.

However, RBC noted that Twilio's core short message service, or SMS, business is becoming more commoditized, and growing competition could drive down prices or lead to loss of market share. Its Flex platform remains relatively small even after being in the market for almost five years, and the integration of Segment has been disappointing, the firm said.

Twilio's efforts to improve profit margins are encouraging, analysts said. "But we also worry that, structurally, Twilio's long-term margins are not compelling enough," analysts added.

RBC maintained an underperform rating on Twilio, with a $75 price target.

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