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Twilio (NYSE:TWLO) Posts Better-Than-Expected Sales In Q2 But Stock Drops 10.6%
Twilio (NYSE:TWLO) Posts Better-Than-Expected Sales In Q2 But Stock Drops 10.6%

Yahoo

time07-08-2025

  • Business
  • Yahoo

Twilio (NYSE:TWLO) Posts Better-Than-Expected Sales In Q2 But Stock Drops 10.6%

Cloud communications infrastructure company Twilio (NYSE:TWLO) announced better-than-expected revenue in Q2 CY2025, with sales up 13.5% year on year to $1.23 billion. On top of that, next quarter's revenue guidance ($1.25 billion at the midpoint) was surprisingly good and 3% above what analysts were expecting. Its non-GAAP profit of $1.19 per share was 13.3% above analysts' consensus estimates. Is now the time to buy Twilio? Find out in our full research report. Twilio (TWLO) Q2 CY2025 Highlights: Revenue: $1.23 billion vs analyst estimates of $1.19 billion (13.5% year-on-year growth, 3.4% beat) Adjusted EPS: $1.19 vs analyst estimates of $1.05 (13.3% beat) Adjusted Operating Income: $220.5 million vs analyst estimates of $202 million (18% margin, 9.2% beat) Revenue Guidance for Q3 CY2025 is $1.25 billion at the midpoint, above analyst estimates of $1.21 billion Adjusted EPS guidance for Q3 CY2025 is $1.04 at the midpoint, below analyst estimates of $1.15 Operating Margin: 3%, up from -1.8% in the same quarter last year Free Cash Flow Margin: 21.4%, up from 15.2% in the previous quarter Customers: 349,000, up from 335,000 in the previous quarter Net Revenue Retention Rate: 108%, up from 107% in the previous quarter Market Capitalization: $19.88 billion 'The company's focus and execution is paying off as Q2 marked another quarter of accelerated year-over-year revenue growth as well as record non-GAAP income from operations and free cash flow,' said Khozema Shipchandler, CEO of Twilio. Company Overview Founded in 2008 by Jeff Lawson, a former engineer at Amazon, Twilio (NYSE:TWLO) is a software as a service platform that makes it really easy for software developers to use text messaging, voice calls and other forms of communication in their apps. Revenue Growth Examining a company's long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last three years, Twilio grew its sales at a 11.6% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the software sector, which enjoys a number of secular tailwinds. This quarter, Twilio reported year-on-year revenue growth of 13.5%, and its $1.23 billion of revenue exceeded Wall Street's estimates by 3.4%. Company management is currently guiding for a 10.3% year-on-year increase in sales next quarter. Looking further ahead, sell-side analysts expect revenue to grow 5.7% over the next 12 months, a deceleration versus the last three years. This projection is underwhelming and implies its products and services will face some demand challenges. Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend. Customer Retention One of the best parts about the software-as-a-service business model (and a reason why they trade at high valuation multiples) is that customers typically spend more on a company's products and services over time. Twilio's net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 107% in Q2. This means Twilio would've grown its revenue by 6.5% even if it didn't win any new customers over the last 12 months. Trending up over the last year, Twilio has a decent net retention rate, showing us that its customers not only tend to stick around but also get increasing value from its software over time. Key Takeaways from Twilio's Q2 Results We enjoyed seeing Twilio's customer growth accelerate this quarter. We were also glad its revenue guidance for next quarter exceeded Wall Street's estimates. On the other hand, its EPS guidance for next quarter missed. Overall, this print had some key positives. The market seemed to be hoping for more, and the stock traded down 10.6% to $109.65 immediately after reporting. So should you invest in Twilio right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it's free. Sign in to access your portfolio

Twilio (NYSE:TWLO) Surprises With Q1 Sales, Stock Jumps 11.5%
Twilio (NYSE:TWLO) Surprises With Q1 Sales, Stock Jumps 11.5%

Yahoo

time01-05-2025

  • Business
  • Yahoo

Twilio (NYSE:TWLO) Surprises With Q1 Sales, Stock Jumps 11.5%

Cloud communications infrastructure company Twilio (NYSE:TWLO) beat Wall Street's revenue expectations in Q1 CY2025, with sales up 12% year on year to $1.17 billion. Guidance for next quarter's revenue was better than expected at $1.19 billion at the midpoint, 1.3% above analysts' estimates. Its non-GAAP profit of $1.14 per share was 18.5% above analysts' consensus estimates. Is now the time to buy Twilio? Find out in our full research report. Revenue: $1.17 billion vs analyst estimates of $1.14 billion (12% year-on-year growth, 2.8% beat) Adjusted EPS: $1.14 vs analyst estimates of $0.96 (18.5% beat) Adjusted Operating Income: $213.4 million vs analyst estimates of $188.5 million (18.2% margin, 13.2% beat) Revenue Guidance for Q2 CY2025 is $1.19 billion at the midpoint, above analyst estimates of $1.17 billion Adjusted EPS guidance for Q2 CY2025 is $1.02 at the midpoint, below analyst estimates of $1.04 Operating Margin: 2%, up from -4.2% in the same quarter last year Free Cash Flow Margin: 15.2%, up from 7.8% in the previous quarter Customers: 335,000, up from 325,000 in the previous quarter Net Revenue Retention Rate: 107%, up from 106% in the previous quarter Market Capitalization: $14.77 billion 'Twilio saw another quarter of revenue growth acceleration and double-digit growth, illustrating that our commitment to operating with more discipline, rigor, and focus is paying off," said Khozema Shipchandler, CEO of Twilio. Founded in 2008 by Jeff Lawson, a former engineer at Amazon, Twilio (NYSE:TWLO) is a software as a service platform that makes it really easy for software developers to use text messaging, voice calls and other forms of communication in their apps. Reviewing a company's long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last three years, Twilio grew its sales at a 13.6% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the software sector, which enjoys a number of secular tailwinds. This quarter, Twilio reported year-on-year revenue growth of 12%, and its $1.17 billion of revenue exceeded Wall Street's estimates by 2.8%. Company management is currently guiding for a 9.5% year-on-year increase in sales next quarter. Looking further ahead, sell-side analysts expect revenue to grow 6.8% over the next 12 months, a deceleration versus the last three years. This projection is underwhelming and indicates its products and services will see some demand headwinds. Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we've identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link. One of the best parts about the software-as-a-service business model (and a reason why they trade at high valuation multiples) is that customers typically spend more on a company's products and services over time. Twilio's net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 105% in Q1. This means Twilio would've grown its revenue by 5% even if it didn't win any new customers over the last 12 months. Trending up over the last year, Twilio has an adequate net retention rate, showing us that it generally keeps customers but lags behind the best SaaS businesses, which routinely post net retention rates of 120%+. We were impressed by Twilio's strong growth in customers this quarter. We were also happy its revenue outperformed Wall Street's estimates. On the other hand, its EPS guidance for next quarter missed. Overall, this print had some key positives. The stock traded up 11.5% to $109.15 immediately following the results. So do we think Twilio is an attractive buy at the current price? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it's free.

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