Twilio Inc. TWLO shares jumped 9.1% in the extended trading session on Thursday after the company reported better-than-expected first-quarter results and raised guidance for full-year 2025.
The company’s first-quarter non-GAAP earnings of $1.14 per share surpassed the Zacks Consensus Estimate of 92 cents. Moreover, the bottom line witnessed a robust improvement from the year-ago quarter’s earnings of 80 cents. The strong year-over-year growth in earnings was primarily driven by increased revenues and cost discipline.
Over the last four quarters, Twilio has surpassed consensus EPS estimates three times while missing the same on one occasion, the average surprise being 15.4%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Twilio Inc. Price, Consensus and EPS Surprise
Twilio Inc. Price, Consensus and EPS Surprise
Twilio Inc. price-consensus-eps-surprise-chart | Twilio Inc. Quote
The cloud-based communications platform-as-a-service provider registered revenues of $1.17 billion, which surpassed the consensus mark of $1.14 billion and came ahead of management’s guidance of $1.13-$1.14 billion. On a year-over-year basis, the top line soared 12%.
Twilio’s Revenues in Detail
Segment-wise, revenues from the Communications division came in at $1.10 billion, up 13% year over year. The Segment division’s sales inched up 1% year over year at $75.7 million.
Twilio’s dollar-based net expansion rate was 107% in the reported quarter, up from the previous quarter’s 106% and the year-ago quarter’s 102%. The company’s first-quarter dollar-based net expansion rates for the Communications and Segment divisions were 108% and 94%, respectively.
Active customer accounts increased to over 335,000 as of March 31, 2025, from 325,000 at the end of the fourth quarter of 2024. As of March 31, 2025, Communications and Segment active customer accounts were more than 328,000 and 7,200, respectively.
Twilio’s Q1 Operating Results
The non-GAAP gross profit increased 6.3% year over year to $602 million. However, the non-GAAP gross margin contracted 280 bps year over year to 51.3%. The first-quarter non-GAAP gross margin for the Communications and Segment divisions came in at 49.8% and 74%, respectively.
The non-GAAP operating income jumped 33.1% year over year to $213 million. The non-GAAP operating margin of 18.2% for the first quarter expanded 300 bps on a year-over-year basis.
General & administrative (G&A) expenses on a non-GAAP basis decreased to $62.2 million from $75.6 million in the year-ago quarter. G&A expenses accounted for 5.3% of quarterly revenues, down from 7.2% in the year-ago quarter. Research & development (R&D) expenditures on a non-GAAP basis decreased 2.3% year over year to $161.4 million. R&D expenses accounted for 13.8% of first-quarter revenues, down from 15.8% in the year-ago quarter.
Non-GAAP sales & marketing costs of $165 million were slightly down from $165.6 million. The same represented 14.1% of first-quarter revenues, lower than 15.8% in the year-ago quarter.
Twilio’s Balance Sheet
The company exited the March quarter with cash and cash equivalents and short-term marketable securities of $2.45 billion, up from $2.38 billion at the end of the previous quarter. As of March 31, 2025, TWLO’s long-term debt was $991 million.
During the first quarter, Twilio generated an operating cash flow of $191 million and a free cash flow of $178.3 million. During the quarter, it repurchased shares worth $126.3 million. As of March 31, it had $1.87 billion remaining under the current $2 billion share repurchase authorization, which will expire on Dec. 31, 2027.
Twilio Raises FY25 Guidance
Buoyed by stronger-than-expected first-quarter results, Twilio raised its guidance for full-year 2025. The company now anticipates 2025 organic revenue growth in the range of 7.5-8.5%, up from the previous guidance of 7-8%. The Zacks Consensus Estimate for 2025 revenues is pegged at $4.78 billion, indicating a year-over-year increase of 7.2% on a reported basis.
Non-GAAP income from operations is projected in the range of $850-$875 million in 2025, up from the earlier forecast of $825-$850 million. Free cash flow for the year is now projected to be in the range of $850-$875 million, up from the previous forecast of $825-$850 million.
Twilio also initiated guidance for the second quarter. For the quarter ending June 30, 2025, the company anticipates revenues between $1.18 billion and $1.19 billion, which indicates a year-over-year increase of 9-10%. The Zacks Consensus Estimate for second-quarter revenues is pegged at $1.16 billion.
Twilio projects non-GAAP income from operations in the range of $195-$205 million for the second quarter. It forecasts non-GAAP earnings in the range of 99 cents to $1.04 per share. The consensus mark for first-quarter earnings is pegged at $1.00 per share.
Twilio’s Zacks Rank and Stocks to Consider
Currently, Twilio carries a Zacks Rank #3 (Hold).
Paycom Software PAYC, Broadcom AVGO and StoneCo STNE are some top-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. All three stocks sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Paycom Software’s 2025 earnings has been revised upward by 4 cents to $8.72 per share over the past 60 days, and suggests a year-over-year increase of 6.2%. Paycom Software shares have soared 32.6% over the past year.
The Zacks Consensus Estimate for Broadcom’s fiscal 2025 earnings has been revised upward by 29 cents to $6.60 per share in the past 60 days, suggesting an increase of 35.5% from fiscal 2024’s reported figure. Broadcom shares have rallied 54.4% over the past year.
The Zacks Consensus Estimate for StoneCo’s 2025 earnings has moved upward by 12 cents to $1.38 per share in the past seven days, reflecting 2.2% year-over-year growth. StoneCo shares have plunged 17% in the trailing 12 months.
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