Twilio (TWLO) AI Stock Analysis

Compare

11,495 Followers

TWLO Dividends

Top Page

Twilio

(NYSE:TWLO)

63Neutral

Twilio's overall stock score reflects strong financial growth and positive earnings call sentiments, countered by technical weakness and valuation concerns. Persistent profitability issues and negative net income continue to weigh heavily. However, the company's strategic focus on AI and operational improvements provide a promising outlook if these challenges are addressed.

Positive Factors

AI-driven growth

Twilio's increasing adoption of AI-driven and cloud-based communication solutions is driving revenue and cash flow growth.

R&D and product development

Twilio is expected to drive long-term value creation through investments in R&D and new product development.

Stock valuation

The recent sell-off is seen as overdone, creating an attractive buying opportunity with TWLO trading at a discount to SaaS peer averages.

Negative Factors

Messaging volume growth

Total messaging volume growth continues to decelerate, with growth falling to 4% in the first quarter.

Sales headcount reduction

Sales headcount data suggests a reduction in net headcount adds, representing negative 9% growth year-over-year in total sales headcount.

Twilio (TWLO) vs. S&P 500 (SPY)

Market Cap

$13.02B

Dividend YieldN/A

Average Volume (3M)2.39M

Price to Earnings (P/E)―

Beta (1Y)1.53

Revenue Growth7.32%

EPS Growth88.51%

CountryUS

Employees5,535

SectorCommunication Services

Sector Strength75

IndustryInternet Content & Information

Share Statistics

EPS (TTM)-0.64

Shares Outstanding153,254,350

10 Day Avg. Volume2,407,782

30 Day Avg. Volume2,390,418

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)3.54

Price to Cash Flow (P/CF)36.40

P/FCF Ratio36.40

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$137.00

Price Target Upside61.23% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering24

Twilio Business Overview & Revenue Model

Company DescriptionTwilio Inc., together with its subsidiaries, provides a cloud communications platform that enables developers to build, scale, and operate customer engagement within software applications in the United States and internationally. Its customer engagement platform provides a set of application programming interfaces that handle the higher-level communication logic needed for nearly every type of customer engagement, as well as enable developers to embed voice, messaging, video, and email capabilities into their applications. The company was incorporated in 2008 and is headquartered in San Francisco, California.

How the Company Makes MoneyTwilio makes money primarily through a usage-based revenue model where customers pay for the communication services they use via its APIs. The company charges fees based on the volume of messages sent, minutes of voice calls made, or other communication activities conducted through its platform. Twilio's key revenue streams include programmable messaging, voice, email, and video services. Additionally, Twilio offers solutions such as Twilio Flex, a cloud-based contact center platform, and Twilio Segment, a customer data platform, which contribute to its revenue. Significant partnerships with major technology companies and telecommunications carriers also play a crucial role in expanding its global reach and accessibility, further driving revenue growth.

Twilio Financial Statement Overview

Summary

Twilio demonstrates strong revenue growth and a healthy balance sheet with minimal leverage. However, persistent profitability issues, as shown by negative net income and low return on equity, are significant challenges. The positive trajectory of cash flows and EBITDA improvements provide a hopeful outlook, but the company needs to address profitability to enhance its financial standing.

Income Statement

Positive

Twilio has shown significant revenue growth with a TTM revenue increase of 7.3% compared to the previous year. The gross profit margin is strong at approximately 50.5%, but the company is facing challenges with profitability, as indicated by negative EBIT and net income margins. Improvements in EBITDA margin from negative in 2023 to positive in TTM suggest operational efficiencies, though profitability remains a concern.

Balance Sheet

Positive

Twilio's balance sheet reflects a strong equity position with an equity ratio of 80.6%, which is stable and indicates low leverage. The debt-to-equity ratio is favorable at 0.015, showing minimal reliance on debt. However, the return on equity remains negative due to ongoing net losses, which is a critical area for improvement.

Cash Flow

Positive

The cash flow statement highlights a robust free cash flow growth of 85% in the TTM period, driven by positive operating cash flows. The operating cash flow to net income ratio indicates effective cash management despite negative net income. However, reliance on cash reserves, as indicated by significant cash and equivalents, suggests a need for sustained operational improvements.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
4.46B	4.15B	3.83B	2.84B	1.76B
	Gross Profit
2.28B	2.04B	1.81B	1.39B	915.66M
	EBIT
-53.71M	-876.54M	-1.03B	-915.58M	-492.90M
	EBITDA
165.55M	-100.34M	-751.82M	-653.76M	-343.24M
	Net Income Common Stockholders
-109.40M	-1.02B	-1.26B	-949.90M	-490.98M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.38B	4.01B	4.16B	5.36B	3.04B
	Total Assets
9.87B	11.61B	12.56B	13.00B	9.49B
	Total Debt
119.56M	1.18B	1.23B	1.27B	607.23M
	Net Debt
-301.74M	521.34M	575.69M	-204.84M	-326.66M
	Total Liabilities
1.91B	1.88B	2.01B	1.97B	1.03B
	Stockholders Equity
7.95B	9.73B	10.56B	11.03B	8.45B
Cash Flow		Free Cash Flow
716.24M	363.52M	-334.55M	-148.21M	-26.48M
	Operating Cash Flow
716.24M	414.75M	-254.37M	-58.19M	32.65M
	Investing Cash Flow
1.37B	228.60M	-616.45M	-2.49B	-845.86M
	Financing Cash Flow
-2.31B	-643.61M	45.01M	3.10B	1.49B

Twilio Technical Analysis

Technical Analysis Sentiment

Negative

Last Price84.97

Price Trends

50DMA

106.57

Negative

100DMA

111.65

Negative

200DMA

89.52

Negative

Market Momentum

MACD

-6.21

Negative

RSI

34.12

Neutral

STOCH

39.88

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TWLO, the sentiment is Negative. The current price of 84.97 is below the 20-day moving average (MA) of 92.17, below the 50-day MA of 106.57, and below the 200-day MA of 89.52, indicating a bearish trend. The MACD of -6.21 indicates Negative momentum. The RSI at 34.12 is Neutral, neither overbought nor oversold. The STOCH value of 39.88 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TWLO.

Twilio Risk Analysis

Twilio disclosed 51 risk factors in its most recent earnings report. Twilio reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Twilio Peers Comparison

Overall Rating

UnderperformOutperform

Sector (58)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PINS	76 Outperform	$17.10B	9.34	47.49%	―	19.35%	―
YELP	74 Outperform	$2.15B	17.29	17.79%	―	5.61%	37.61%
OPRA	74 Outperform	$1.28B	15.75	8.64%	5.44%	20.42%	-36.54%
TWLO	63 Neutral	$13.02B	―	-1.24%	―	7.32%	88.51%
MTCH	60 Neutral	$7.27B	14.36	-865.98%	0.65%	3.41%	-10.41%
Sector *	58 Neutral	$13.10B	6.79	-2.53%	3.86%	2.36%	-36.74%
SNAP	58 Neutral	$13.37B	―	-28.69%	―	16.40%	48.48%

* Communication Services Sector Average

Performance Comparison

TWLO

Twilio

81.56

22.95

39.16%

YELP

Yelp

32.56

-6.97

-17.63%

SNAP

Snap

7.61

-3.53

-31.69%

OPRA

Opera

14.33

0.53

3.84%

PINS

24.21

-8.52

-26.03%

MTCH

Match Group

29.08

-2.50

-7.92%

Twilio Earnings Call Summary

Earnings Call Date: Feb 13, 2025 | % Change Since: -42.31% | Next Earnings Date: May 1, 2025

Earnings Call Sentiment Positive

The earnings call presents a positive outlook for Twilio, highlighting record revenue and profitability, significant progress in AI adoption, and strong large deal activity. However, there were some challenges, including a decline in Segment revenue, a notable bad debt expense, and a decrease in gross margin. Despite these issues, the positive aspects, such as achieving GAAP operating profitability and strong growth in key areas, outweigh the lowlights.

Highlights

Record Q4 Revenue

Twilio reached $1.195 billion in revenue for Q4 2024, marking an 11% increase year over year and the company's second consecutive quarter of double-digit growth.

First-ever GAAP Operating Profitability

Q4 2024 marked the first time Twilio delivered quarterly GAAP operating profitability, ahead of their initial target.

Strong Full Year Performance

For the full year 2024, Twilio generated $4.458 billion in revenue, representing 9% organic growth year over year.

Significant AI Adoption

90% of the Forbes 50 AI startups are building on Twilio, with more than 9,000 companies in the AI space utilizing Twilio services in 2024.

Record Non-GAAP Income and Free Cash Flow

Twilio achieved record non-GAAP income from operations of $197 million in Q4 and $93 million in free cash flow.

Strong Large Deal Activity

In Q4, Twilio closed 78 deals worth $500,000 or more, up 47% year over year, including the largest Segment deal ever.

Lowlights

Segment Revenue Decline

Segment revenue for Q4 2024 was $74 million, down 1% year over year, although bookings slightly accelerated year over year.

Bad Debt Expense Impact

Twilio incurred $17 million in bad debt expenses related to a Brazilian telecom company, impacting operating margin by 140 basis points in Q4.

Gross Margin Decline

Non-GAAP gross margin decreased by 40 basis points year over year and 100 basis points quarter over quarter due to higher hosting costs and increased messaging revenue mix.

Company Guidance

During the Twilio Inc. Fourth Quarter 2024 Earnings Conference Call, key financial metrics and guidance for the future were discussed. Twilio reported a Q4 revenue of $1.195 billion, marking an 11% year-over-year increase and achieving GAAP operating profitability for the first time. For the full fiscal year, Twilio's revenue was $4.458 billion with a 9% organic growth rate. The company also generated a record non-GAAP income from operations of $197 million for Q4 and $714 million for 2024, alongside a significant free cash flow increase to $657 million for the year. Looking forward to 2025, Twilio aims for a 7% to 8% organic revenue growth with continued profitability and free cash flow generation, targeting $825 million to $850 million in non-GAAP income from operations. The company plans to achieve GAAP operating profitability in 2025 and maintain this trajectory in subsequent years, aiming for a 21% to 22% non-GAAP operating margin by 2027. Twilio also emphasized its strategic focus on cross-selling, innovation, and AI integration, with 9,000 AI companies building on its platform, and highlighted its $2 billion share repurchase program set to run through 2027.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.