• Q4 Revenue: $1.195 billion, 11% year-over-year growth.
• Full Year Revenue: $4.458 billion, 9% organic growth year-over-year.
• Q4 Non-GAAP Income from Operations: $197 million.
• Q4 Free Cash Flow: $93 million.
• Full Year Non-GAAP Income from Operations: $714 million.
• Full Year Free Cash Flow: $657 million.
• Q4 Communications Revenue: $1.121 billion, 12% year-over-year growth.
• Q4 Segment Revenue: $74 million, down 1% year-over-year.
• Q4 Non-GAAP Gross Margin: 52%, down 40 basis points year-over-year.
• Q4 Dollar-Based Net Expansion Rate: 106%.
• Q4 Non-GAAP Operating Margin: 16.5%, up 40 basis points year-over-year.
• Stock-Based Compensation as a Percentage of Revenue: 13%.
• Q1 2025 Revenue Guidance: $1.13 billion to $1.14 billion, 8% to 9% year-over-year growth.
• Full Year 2025 Organic Revenue Growth Guidance: 7% to 8%.
• Q1 2025 Non-GAAP Income from Operations Guidance: $180 million to $190 million.
• Full Year 2025 Free Cash Flow Guidance: $825 million to $850 million.

• Warning! GuruFocus has detected 6 Warning Signs with TWLO.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Twilio Inc (NYSE:TWLO) achieved a record revenue of $1.195 billion in Q4 2024, marking an 11% year-over-year growth and the second consecutive quarter of double-digit growth.
• The company reported its first-ever quarter of GAAP operating profitability, ahead of its initial target.
• Twilio Inc (NYSE:TWLO) increased its annual free cash flow by nearly $1 billion since 2022, demonstrating strong financial discipline.
• The company launched 251 products, enhancements, and services in 2024, aligning with its strategy to build a trusted, simple, and smart platform.
• Twilio Inc (NYSE:TWLO) has a strong presence in the AI sector, with 90% of the Forbes 50 AI start-ups building on its platform, showcasing its essential role in customer engagement.

Negative Points

• Segment revenue for Q4 was down 1% year-over-year, indicating challenges in this business unit.
• The company incurred $17 million in bad debt expenses related to a Brazilian telecom customer, impacting operating margins by 140 basis points.
• Non-GAAP gross margin for the Communications business unit declined by 110 basis points quarter-over-quarter due to higher hosting costs and increased messaging revenue mix.
• Twilio Inc (NYSE:TWLO) faces challenges in the RCS market, with interoperability issues and limited use cases affecting its growth potential.
• The company's guidance for 2025 indicates a cautious approach, with expected revenue growth of 7% to 8%, reflecting the uncertainties in its usage-based revenue model.

Q & A Highlights

Q: How much of the strength in messaging and email is due to the return of the crypto world? A: Aidan Viggiano, CFO: We see stronger volume from crypto customers, but it's not near the levels of 2020-2022. It's relatively immaterial to our overall business in messaging or email.

Q: Is the Segment business seeing a bottom, and how much is the billing strength attributable to the big deal referenced? A: Aidan Viggiano, CFO: The growth is driven by bookings growth and multiyear deals. Over 50% of deals booked were multiyear, which is reflected in the bookings metric. Khozema Shipchandler, CEO: Operational improvements are showing up in the balance sheet, and we feel good about the Segment business contributing to our overall growth story.

Q: How do you ensure the growth improvements are durable, and what are the swing factors for double-digit growth? A: Aidan Viggiano, CFO: Growth wasn't driven by one factor; it was broad-based across products and industries. We're guiding 7%-8% growth for the year but are oriented towards double-digit growth internally. Khozema Shipchandler, CEO: We're running the business towards double-digit growth, with momentum from innovation and technology.

Q: What are the keys to success in the RCS market, and how is it scaling? A: Khozema Shipchandler, CEO: It's early days for RCS. Interoperability is a challenge, but we're ready to support customers. The branded nature of RCS is exciting, but volumes are still low.

Q: How are you using AI internally, and where is it working well? A: Khozema Shipchandler, CEO: AI is significantly improving customer support with high ticket deflection rates and enhancing SDR processes by vetting leads, leading to more productive sales efforts.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.