Needham analyst Joshua Reilly maintained a Buy rating on Twilio TWLO and reiterated the $125 price forecast on Friday.Over the last couple of days, Reilly attended the Twilio Signal customer conference in San Francisco and came away incrementally positive about the company’s products, solutions, and customer relationships.Overall, feedback from partners and customers highlighted the platform’s increasing usage and complimentary reviews on the product roadmap.Also Read: Twilio Stock Darts Higher On Better-Th ...

Group 1 - Twilio (TWLO) is currently outperforming the Computer and Technology sector with a year-to-date return of 2.9%, while the sector has lost an average of 4.4% [4] - The Zacks Rank for Twilio is 2 (Buy), indicating a positive outlook based on earnings estimates and revisions, with a consensus estimate for full-year earnings increasing by 18.7% in the past quarter [3] - Twilio belongs to the Internet - Software industry, which has an average year-to-date gain of 5%, suggesting that Twilio is slightly underperforming its specific industry [5] Group 2 - Clearfield (CLFD) is another stock in the Computer and Technology sector that has shown strong performance, returning 17.3% year-to-date [4] - Clearfield's consensus EPS estimate has increased by 89.7% over the past three months, and it holds a Zacks Rank of 1 (Strong Buy) [5] - The Wireless Equipment industry, to which Clearfield belongs, is ranked 15 and has gained 3.4% so far this year [6]

Core Viewpoint - Twilio's recent quarterly report has revitalized its stock, which had previously declined over 4% this year, with a notable recovery of 23% in the past month, indicating potential for further growth in the second half of the year and beyond [1][2]. Financial Performance - In Q1 2025, Twilio reported a 12% year-over-year revenue increase to $1.17 billion, with earnings growing at a much faster rate of 42% due to increased adoption of AI-focused cloud communication tools [3]. - The company's dollar-based net expansion rate improved to 107%, up five percentage points from the previous year, indicating that existing customers are increasing their usage of Twilio's solutions [4][5]. AI and Growth Drivers - Twilio's AI-focused tools, such as Conversation Relay, are driving growth, allowing clients to integrate voice-enabled AI solutions into their customer service applications [5][6]. - The voice AI agents market is projected to grow at an annual rate of 35% over the next decade, presenting a significant opportunity for Twilio to attract more customers [6]. Customer Base and Guidance - Twilio has over 335,000 active customer accounts, a 7% year-over-year increase, suggesting strong potential for cross-selling AI offerings [7]. - The company has raised its full-year organic revenue growth guidance to 7.5% to 8.5%, a 50 basis point increase at the midpoint, and expects non-GAAP operating income to reach $862.5 million, a 38% increase from the previous year [8]. Future Outlook - Twilio's top-line growth has been accelerating for the past five quarters, with expectations for continued improvement as AI tool adoption increases [9]. - Analysts have set a 12-month median price target of $130 for Twilio, indicating a potential 30% increase from current levels, with further upside possible due to the adoption of AI solutions [10][12].

Financial Performance - Revenue for the three months ended March 31, 2025, was $1.17 billion, representing a 12% growth compared to $1.05 billion in the same period of 2024[106]. - Net income for the three months ended March 31, 2025, was $20.0 million, a significant improvement from a net loss of $(55.3) million in the same period of 2024[106]. - Total revenue for the three months ended March 31, 2025, was $1,172,463, an increase of 12% compared to $1,047,050 in the same period last year[148]. - Communications revenue increased by $124.8 million, or 13%, driven by increased usage by existing customers and a Communications Dollar-Based Net Expansion Rate of 108%[148]. - Segment revenue increased by $0.6 million, or 1%, primarily due to new Segment Active Customer Accounts, with a Dollar-Based Net Expansion Rate of 94%[149]. - GAAP gross profit for the three months ended March 31, 2025, was $581,567, with a gross margin of 50%, compared to $544,041 and 52% in the prior year[139]. - Non-GAAP income from operations for the same period was $213,408, with a non-GAAP operating margin of 18%, up from $159,610 and 15% in the previous year[141]. - Free cash flow for the three months ended March 31, 2025, was $178,315, with a free cash flow margin of 15%, compared to $177,298 and 17% in the prior year[142]. - Basic net income per share was $0.13 for the three months ended March 31, 2025, compared to a loss of $0.31 in the prior year[144]. Customer Metrics - Active Customer Accounts increased to 335,000 as of March 31, 2025, up from 313,000 in the same period of 2024[113]. - The Dollar-Based Net Expansion Rate for the three months ended March 31, 2025, was 107%, compared to 102% in the same period of 2024[113]. - 73% of total revenue in the three months ended March 31, 2025, was generated from usage-based fees, compared to 71% in the same period of 2024[122]. - 27% of total revenue in the three months ended March 31, 2025, was generated from subscription-based fees, down from 29% in the same period of 2024[123]. Cost and Expenses - Total operating expenses decreased to $558,485 from $587,545 year-over-year, reflecting a reduction in general and administrative costs[144]. - Cost of revenue increased by $87.9 million, or 17%, to $590.9 million for the three months ended March 31, 2025, primarily due to a $76.7 million increase in network service provider costs[151]. - Gross profit rose by $37.5 million, or 7%, to $581.6 million for the same period, influenced by revenue and cost factors[152]. - Total operating expenses decreased by $29.1 million, or 5%, to $558.5 million, with general and administrative expenses down by $20.5 million, or 18%[153][155]. - Research and development expenses decreased by $6.2 million, or 2%, to $254.3 million for the three months ended March 31, 2025[153]. Cash Flow and Financing - Cash and cash equivalents were $467.1 million, with short-term marketable securities totaling $2.0 billion as of March 31, 2025[159]. - Cash provided by operating activities was $191.0 million, compared to $190.1 million in the prior year[167]. - Cash used in financing activities was $125.8 million, primarily for repurchasing 1.2 million shares of Class A common stock[172]. - The company authorized a share repurchase program of up to $2.0 billion, expiring on December 31, 2027[164]. - Other income (expenses), net, increased by $5.2 million, or 311%, to $3.5 million, mainly due to a decrease in losses from equity method investments[156]. Strategic Focus - The company is focusing on product innovation and leveraging AI to drive revenue growth and market share[107]. - The company has realigned its business unit structure into a functional support model to enhance customer engagement[105]. - The company is monitoring macroeconomic conditions that may impact its results of operations[110]. Foreign Currency and Risk Management - The company does not anticipate material risks due to changes in interest rates, as a hypothetical 10% change would not have a material impact on financial statements[179]. - The functional currency of most foreign subsidiaries is the U.S. dollar, with local currencies including the Australian dollar, Brazilian real, and Euro among others[180]. - Revenue and expense accounts are remeasured at the average exchange rate during the transaction month, while monetary assets and liabilities are remeasured at period-end exchange rates[181]. - The company enters into foreign currency derivative hedging transactions to mitigate exposure to market risks from foreign currency exchange rate changes[182]. - A hypothetical 10% change in foreign exchange rates would not have a material impact on the company's financial statements[183].

Financial Data and Key Metrics Changes - Twilio reported Q1 revenue of $1,172,000,000, representing a 12% year-over-year increase, marking the third consecutive quarter of double-digit revenue growth [6][18] - Non-GAAP income from operations reached a record $213,000,000, up 34% year-over-year, with a non-GAAP operating margin of 18.2%, an increase of 300 basis points year-over-year [21][22] - Free cash flow for the quarter was $178,000,000, despite a $122,000,000 payment related to annual cash bonuses [22][23] Business Line Data and Key Metrics Changes - Revenue from the Communications business was $1,097,000,000, up 13% year-over-year, driven by growth in messaging both in the U.S. and internationally [18][19] - Segment revenue was $76,000,000, reflecting a 1% year-over-year increase, with improvements in leading indicator metrics such as AE productivity and win rates [19] - The dollar-based net expansion rate for the Communications segment was 108%, while for Segment it was 94% [20] Market Data and Key Metrics Changes - All top five verticals, including financial services, tech, professional services, retail, and e-commerce, experienced growth in Q1 [32] - The company noted strong international messaging growth, which is a focus area for expansion [20][61] Company Strategy and Development Direction - Twilio is focused on innovation, particularly in AI-driven products, and aims to enhance customer relationships through its platform [9][10] - The company is leveraging partnerships, such as with Eleven Labs, to enhance its AI voice capabilities [10][11] - Twilio is committed to returning 50% of its annual free cash flow to shareholders from 2025 through 2027, with a $2,000,000,000 share repurchase program authorized [23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about Q2 and the remainder of the year, despite acknowledging a dynamic macro environment [8][25] - There have been no notable adverse impacts on the business through April, but the company is monitoring the situation closely [8][25] - The guidance for Q2 revenue is set at $1,180,000,000 to $1,190,000,000, representing year-over-year growth of 9% to 10% [26] Other Important Information - Twilio was recognized as a leader in the IDC MarketScape for CPaaS and by Omnia for its CDP universe leadership [12] - The company is hosting its user conference, SIGNAL, to share more innovations and partnerships [12] Q&A Session Summary Question: Drivers of upside to growth in the Communications segment - Management noted broad strength across the business, particularly in messaging, with all top five verticals growing [31][32] Question: Resurgence in voice driven by generative AI - Management highlighted increased interest in voice capabilities, particularly in customer care applications, and noted higher ROI for customers using multiple products [36][39] Question: Multi-product adoption and international market attractiveness - Management indicated broad adoption of multiple products, with significant growth in advanced features and ISV relationships expanding internationally [45][46] Question: Impact of macro dynamics on customer momentum - Management stated that they are not seeing any slowdown in customer acquisition or transactional volumes, monitoring the situation closely [79][80] Question: Gross margin headwinds - Management explained that lower gross margins were due to non-recurring hosting credits and a higher mix of international messaging, which is a growth priority [60][61] Question: RCS messaging support - Management expressed cautious optimism about RCS messaging, noting that broad carrier support is still developing [68] Question: Free cash flow expectations - Management increased the free cash flow guidance for the year to $850,000,000 to $875,000,000, with expectations for Q2 to align with non-GAAP income guidance [71][72] Question: Customer growth drivers - Management attributed customer growth to self-service channel acceleration and increased demand for voice-enabled applications [77][78] Question: Coopetition in the segment strategy - Management indicated that coopetition is not expected to disrupt their strategy significantly, focusing on providing compelling solutions [83][84]

Financial Data and Key Metrics Changes - Twilio reported Q1 2025 revenue of $1,172,000,000, representing a 12% year-over-year increase, marking the third consecutive quarter of double-digit revenue growth [5][15][20] - Non-GAAP income from operations reached a record $213,000,000, up 34% year-over-year, with a non-GAAP operating margin of 18.2%, an increase of 300 basis points year-over-year [15][18][20] - Free cash flow for the quarter was $178,000,000, despite a $122,000,000 payment related to annual cash bonuses [19][20] Business Line Data and Key Metrics Changes - Revenue from the Communications business was $1,097,000,000, up 13% year-over-year, driven by growth in messaging both in the U.S. and internationally [15][16] - Segment revenue was $76,000,000, reflecting a 1% year-over-year increase, with improvements in leading indicator metrics such as AE productivity and win rates [16][18] - The dollar-based net expansion rate for the Communications segment was 108%, while the Segment's rate was 94% [17] Market Data and Key Metrics Changes - All top five verticals, including financial services, tech, professional services, retail, and e-commerce, experienced growth in Q1 [29][30] - International messaging revenue mix increased year-over-year for the first time in over two years, contributing to the overall growth [60] Company Strategy and Development Direction - The company is focused on innovation, particularly in AI-driven products, and aims to enhance customer relationships through its platform [7][8][10] - Twilio is leveraging partnerships, such as with Eleven Labs, to enhance its AI voice capabilities and expand its product offerings [8][9] - The company is committed to maintaining price discipline and pursuing growth in international markets [60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about Q2 and the remainder of the year, noting that there have been no significant adverse impacts from the macro environment as of April [6][21] - The company is taking a prudent approach to its outlook, incorporating conservatism in its guidance due to potential macro risks [21][30] - Management highlighted strong customer engagement and usage, indicating a healthy business environment despite broader economic uncertainties [21][52] Other Important Information - Twilio was recognized as a leader in the IDC MarketScape for CPaaS and by Omnia for its CDP universe leadership [10] - The company authorized a $2,000,000,000 share repurchase program, targeting to return an average of 50% of annual free cash flow to shareholders from 2025 through 2027 [20] Q&A Session Summary Question: What drove the upside to growth in the Communications segment in Q1? - Management noted broad strength across the business, particularly in messaging, with all top five verticals showing growth [28][29] Question: How do you see voice playing out over the medium term? - Management indicated that voice, driven by AI, is gaining traction, with increased interest from both new and existing customers [34][36] Question: Can you elaborate on multi-product adoption? - Management reported strong growth in customers adding multiple channels, particularly in advanced features and software add-ons [41][42] Question: How are you addressing competition in the market? - Management emphasized the importance of providing compelling solutions and differentiating through a broad set of capabilities [110] Question: What is the breakdown of use case mix across transactional versus marketing in messaging? - Management stated that the use case mix is roughly evenly split between verification, customer notification, and marketing [116]

Q1 2025 Earnings Results May 1, 2025 This presentation and the accompanying conference call also contain operating metrics, including Active Customer Accounts and Dollar-Based Net Expansion Rate. We rely on assumptions to calculate these metrics, they are calculated using internal company data that has not been independently verified, and they are not based on any standardized industry methodology. More information about these operating metrics can be found in the Appendix. This presentation and the accompa ...

Exhibit 99.1 Twilio Announces First Quarter 2025 Results • Non-GAAP Income from Operations of $213 million; raised full year guidance to $850 to $875 million SAN FRANCISCO--(BUSINESS WIRE)--May 1, 2025--Twilio (NYSE: TWLO), the customer engagement platform that drives real-time, personalized experiences for today's leading brands, reported financial results for its first quarter ended March 31, 2025. "Twilio saw another quarter of revenue growth acceleration and double-digit growth, illustrating that our co ...

Core Viewpoint - Twilio Inc. is set to report its first-quarter 2025 earnings on May 1, with expectations of improved earnings and revenue compared to the previous year, despite facing some macroeconomic challenges [1][10]. Earnings Expectations - Twilio anticipates non-GAAP earnings per share between 88 cents and 93 cents, with a consensus estimate of 92 cents, reflecting a 15% increase from last year's 80 cents [1]. - The company expects revenues between $1.13 billion and $1.14 billion, with the consensus estimate at $1.14 billion, indicating an 8.5% improvement from the previous year's $1.05 billion [1]. Recent Performance - In the last four quarters, Twilio has beaten the Zacks Consensus Estimate three times, with an average surprise of 17.8% [2]. - The company has an Earnings ESP of 0.00% and a Zacks Rank of 4 (Sell), indicating uncertainty regarding an earnings beat this time [3][4]. Influencing Factors - Twilio's first-quarter results are expected to benefit from ongoing digital transformation efforts and partnerships with independent software vendors [5]. - New product launches, including AI enhancements and integrations with OpenAI's Realtime API, are anticipated to positively impact performance [6]. - The company added approximately 5,000 new clients in the last quarter, bringing the total active customer count to 325,000, which is likely to continue in the upcoming quarter [7]. Cost Management - Twilio's bottom line is expected to benefit from cost-saving initiatives, including workforce reductions and office closures, with employee count decreasing from 5,867 to 5,535 year-over-year [9]. Market Performance - Over the past year, Twilio's shares have increased by 58.3%, outperforming the Zacks Internet – Software industry's growth of 21.9% [11]. - Currently, Twilio is trading at a forward 12-month price-to-sales (P/S) ratio of 3.01X, which is lower than the industry's 4.88X [13]. Competitive Position - Twilio is recognized as a leader in customer engagement and communications, offering a programmable communications cloud that is widely used by major companies [17]. - The company's developer-friendly platform and extensive API ecosystem provide a competitive edge, allowing for customizable communication solutions across more than 180 countries [18].

Core Viewpoint - Twilio is set to report earnings on May 1, 2025, with projected earnings of $0.92 per share, reflecting a year-over-year growth of 15% and quarterly revenue expected to reach $1.14 billion, up 8.54% from the previous year [2]. Group 1: Recent Performance - Twilio's stock closed at $95.07, showing a +1.65% increase from the previous day, outperforming the S&P 500's gain of 0.74% [1]. - Over the past month, Twilio shares have declined by 8.14%, which is worse than the Computer and Technology sector's loss of 6.23% and the S&P 500's loss of 4.77% [1]. Group 2: Earnings Estimates - For the full year, Zacks Consensus Estimates project earnings of $4.20 per share and revenue of $4.78 billion, indicating increases of +14.44% and +7.18% respectively from the prior year [3]. - Recent changes in analyst estimates for Twilio suggest a favorable outlook on the company's business health and profitability [3]. Group 3: Valuation Metrics - Twilio is currently trading at a Forward P/E ratio of 22.28, which is lower than the industry average of 25.94, indicating a potential discount [6]. - The company has a PEG ratio of 1.18, compared to the Internet - Software industry's average PEG ratio of 2.13, suggesting Twilio may be undervalued relative to its growth expectations [7]. Group 4: Analyst Ratings - The Zacks Rank system currently rates Twilio at 4 (Sell), with a recent 2.95% decline in the Zacks Consensus EPS estimate [5]. - The Zacks Industry Rank places the Internet - Software industry in the top 36% of all industries, indicating a relatively strong position within the Computer and Technology sector [7][8].