Twilio Q1 2025 slides: Revenue growth accelerates to 12%, raises full-year outlook

Twilio Inc (NYSE:TWLO) reported accelerating revenue growth and improved profitability for the first quarter of 2025, according to the company’s earnings presentation released on May 1. The cloud communications platform provider also raised its full-year guidance, signaling confidence in its growth trajectory.

Quarterly Performance Highlights

Twilio reported total revenue of $1.17 billion for Q1 2025, representing a 12% year-over-year increase. This marks a continued acceleration from the 4% growth seen in the first quarter of 2024. The company’s non-GAAP income from operations reached $213 million, resulting in an 18% operating margin, up from 15% in the year-ago quarter.

As shown in the following chart of quarterly revenue growth, Twilio has demonstrated consistent improvement in its growth rate over the past five quarters:

The company’s organic revenue growth has also shown steady improvement, reaching 12% in Q1 2025 compared to 7% in Q1 2024:

Twilio’s customer metrics remained strong, with active customer accounts exceeding 335,000 and a dollar-based net expansion rate of 107%, indicating that existing customers are increasing their spending on Twilio’s platform. This expansion rate has improved from 102% a year ago.

While the company’s non-GAAP gross profit increased to $602 million, the gross margin decreased slightly to 51.3% compared to 54% in Q1 2024:

A significant improvement was seen in Twilio’s operating profitability, with non-GAAP income from operations increasing to $213 million, representing an 18% margin:

Notably, Twilio achieved GAAP profitability with income from operations of $23 million (2% margin), compared to a loss of $44 million (-4% margin) in Q1 2024:

Segment Performance Analysis

Twilio’s business is divided into two segments: Communications and Segment (its customer data platform). The Communications segment, which includes messaging, voice, and email services, continues to be the primary growth driver for the company.

The Communications segment generated $1.1 billion in revenue, growing 13% year-over-year with a non-GAAP operating margin of 25.3%. This segment maintains a healthy dollar-based net expansion rate of 108% and serves over 328,000 active customer accounts.

In contrast, the Segment business showed minimal growth of just 1% year-over-year, generating $76 million in revenue. While this segment has a higher gross margin of 74%, it reported a non-GAAP operating loss of $2 million, representing a -2% operating margin. The Segment business also experienced a lower dollar-based net expansion rate of 94%, indicating some challenges in expanding usage among existing customers.

The company has been working to improve the profitability of the Segment business, which aligns with comments from the previous quarter’s earnings call where management indicated they were targeting breakeven for this segment by Q2 2025.

Forward Guidance

Based on its strong Q1 performance, Twilio provided optimistic guidance for Q2 2025 and raised its full-year outlook. For the second quarter, the company expects:

• Revenue between $1.18 billion and $1.19 billion (9-10% year-over-year growth)
• Non-GAAP income from operations of $195-205 million
• Non-GAAP diluted earnings per share of $0.99-$1.04

For the full year 2025, Twilio raised its guidance across all key metrics:

• Organic revenue growth of 7.5-8.5% (up from previous guidance of 7-8%)
• Non-GAAP income from operations of $850-875 million (increased from $825-850 million)
• Free cash flow of $850-875 million (increased from $825-850 million)

The raised guidance suggests management’s confidence in the company’s growth trajectory and operational efficiency improvements for the remainder of the year.

Customer Wins & Strategic Initiatives

Twilio highlighted several significant customer wins during the quarter across both its Communications and Segment businesses. In the Communications segment, the company secured deals with Sierra for its voice platform for AI agents, an eight-figure deal with a leading identity and access management company for 2FA messaging, and a competitive takeout with Ylopo, a real estate digital marketing platform.

Other notable Communications wins included Textus consolidating all their messaging traffic onto Twilio, Yext (NYSE:YEXT) expanding their services with Twilio’s WhatsApp, Engagement Suite, and Conversations, and several deals in the financial technology and recruiting sectors.

For the Segment business, key wins included RSG Group signing a deal to improve customer support by unifying customer profiles, Hargreaves (LON:HRGV) Lansdown entering a multi-year agreement, and a seven-figure expansion deal with a medical devices company.

These customer wins demonstrate Twilio’s ability to attract new customers while expanding relationships with existing ones, supporting the company’s growth strategy across both business segments.

Market Context

Twilio’s stock responded positively to the earnings release, with shares rising 5.2% in after-hours trading to $103, according to market data. The stock has been volatile over the past year, with a 52-week range of $52.51 to $151.95.

The company’s continued focus on profitability improvement appears to be resonating with investors, as evidenced by the reduction in stock-based compensation expense from 15% of revenue in Q1 2024 to 12% in Q1 2025. This aligns with the broader market’s increased emphasis on sustainable profitability rather than growth at all costs.

Twilio’s performance in Q1 2025 represents a continuation of the positive trends seen in previous quarters, with accelerating revenue growth and improving profitability metrics. The raised full-year guidance suggests management’s confidence in maintaining this momentum throughout 2025, despite potential macroeconomic uncertainties.

Full presentation:

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