Sign in Subscribe

Twilio - $TWLO - Earnings Analysis: Revenue growth accelerated with double-digit growth in the last two quarters.

By sagebytes in Business —

Business Model

Twilio generates revenue primarily through sales of its communications APIs, including messaging, voice, and email services, and through its Segment customer data platform.

Revenue Sources

  • Communications revenue (including messaging, voice, email) - $1.12 billion in Q4 2024
  • Segment revenue (customer data platform) - $74 million in Q4 2024

Revenue Distribution by Channel

  • Communications segment accounted for approximately 94% of total revenue, with Segment accounting for about 6%

Income Statement Analysis

  • Revenue increased by approximately 11% year-over-year.
  • Operating income improved from a loss of $361.7 million to a profit of $13.7 million.
  • Net loss narrowed significantly from $365.4 million to $12.5 million.

Balance Sheet Analysis

  • Total assets decreased by approximately 15% year-over-year.
  • Total stockholders' equity decreased by approximately 18% year-over-year.
  • Total liabilities increased slightly by approximately 1.9%.

Cash Flow Analysis

  • Operating cash flow increased by approximately 73% year-over-year.
  • Investing cash flow increased significantly due to sales and maturities of marketable securities.
  • Financing cash outflows increased significantly due to share repurchases.
  • Cash and cash equivalents decreased by approximately 34%.

Capital Allocation

Twilio does not pay dividends but focuses on share repurchases and business reinvestment. In 2024, the company completed a $3 billion share repurchase program and authorized a new $2 billion program. Twilio continues to invest in innovation, particularly in AI and machine learning.

Management Commentary

Twilio had a terrific Q4, reaching $1,195,000,000 in revenue, an 11% increase year over year and our second consecutive quarter of double digit growth.

Q4 also marked an important milestone for Twilio, as it's the first time we've delivered quarterly GAAP operating profitability in the company's history, well ahead of our initial target.

We are confident in our plans to drive durable revenue growth, continued margin expansion and strong free cash flow generation in 2025.

During the quarter, we incurred $16.8 million in bad debt expenses related to our customer Oi SA, a Brazilian telecom company, as a result of a slowdown in their ongoing payment activity.

The decline in gross margins was driven by expected higher hosting costs during Cyber Week, along with an increase in revenue mix from messaging.

Overall Sentiment: Management's sentiment is positive, emphasizing strong operational performance, revenue growth, and achieving GAAP profitability while acknowledging challenges such as bad debt expenses and margin pressures.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.