Key Points
- Twilio's Q2 revenue was $1.08 billion, beating management's guidance range of $1.05 billion to $1.06 billion.
- Non-GAAP income from operations reached $175 million, significantly above the guidance range of $135 million to $145 million.
- Twilio raised its full-year income guidance significantly.
Twilio (TWLO 2.21%), a leading company in cloud communications, released its second-quarter report on Aug. 1. The company reported revenue of $1.08 billion, exceeding management's guidance range of $1.05 billion to $1.06 billion. This represents a year-over-year increase of 4%, with organic growth at 7%. Its non-GAAP income from operations was $175 million, substantially surpassing its guidance range of $135 million to $145 million. Non-GAAP earnings per share (EPS) came in at $0.87, topping the upper end of the guidance range by $0.19. Overall, Twilio had a strong quarter, marked by robust revenue and improved profitability metrics.
| Metric | Q2 2024 | Q2 2024 Guidance | Q2 2023 | % Change (YoY) |
|---|---|---|---|---|
| Revenue | $1.08 billion | $1.05 billion to $1.06 billion | $1.04 billion | 4% |
| Non-GAAP income from operations | $175 million | $135 million to $145 million | $120 million | 46% |
| Non-GAAP EPS | $0.87 | $0.64 to $0.68 | $0.54 | 61% |
| GAAP income from operations | ($19 million) | N/A | ($142 million) | N/A |
| Free cash flow | $198 million | N/A | $72 million | 175% |
| Source: Management's guidance figures from the Q1 earnings report released May 7. |
Twilio's Business Overview
Twilio's cloud communications platform enables developers to build, scale, and operate real-time communications within their software applications. Founded in 2008, Twilio has grown to serve over 316,000 active customer accounts by providing APIs for messaging, voice, video, and email.
Recently, Twilio has focused on integrating artificial intelligence (AI) into its offerings and expanding its market reach. Products like CustomerAI are aimed at creating smarter and more personalized interactions for brands. It maintains a mixed revenue model that includes both usage-based and subscription-based fees, providing a balanced and predictable revenue stream.
Quarterly Performance Highlights
During Q2 2024, Twilio's performance showed significant accomplishments in both financial and strategic aspects. The communications segment -- its largest by far -- contributed $1.01 billion, reflecting a 4% year-over-year growth with an organic growth rate of 7%. Additionally, non-GAAP income from operations surged to $175 million, 46% higher than the $120 million achieved in Q2 2023.
One-time events such as crypto-related adjustments and the sunsetting of the Zipwhip software component impacted organic growth. These factors accounted for a 210 basis point headwind in Q2, which the company mitigated through efficiency measures and strategic AI enhancements.
It also made progress on cutting operating expenses -- total expenses fell to $574.8 million from $647.6 million in Q2 2023. This helped Twilio realize a GAAP loss from operations of $19 million, significantly better than its $141.8 million loss in the prior-year period.
As of June 30, Twilio had over 316,000 active customer accounts, up from 304,000 a year before. However, its dollar-based net expansion rate dipped slightly from 103% to 102%.
Cash flow metrics were also strong with net cash provided by operating activities reaching $213.3 million, and free cash flow expanding to $197.6 million, compared to $83.6 million and $71.9 million, respectively, in Q2 2023.
Looking Ahead
For Q3, Twilio has set a revenue guidance range of $1.085 billion to $1.095 billion and expects non-GAAP income from operations to be between $160 million and $170 million. Non-GAAP diluted EPS is projected to be in the range of $0.81 to $0.86. This positive outlook underscores Twilio's strategic initiatives, particularly around AI innovation and market expansion.
Furthermore, Twilio upgraded its full-year guidance range for non-GAAP income from operations to $650 million to $675 million, up from $585 million to $635 million previously. Organic revenue growth is also expected to be in the range of 6% to 7% for the entire year.
