Twilio Posts Double-Digit Revenue Growth

An expanding customer base, cost reductions and focus on AI integration make Twilio’s stock even more attractive. The company’s strategic moves to address activist pressure and improve profitability, combined with its potential for further growth in dynamic markets, suggest a positive outlook for the future.

The stock trades at 26.5 times the company’s forward earnings forecast. That seems high but we feel that multiple is justified by the company’s continued high growth in the rapidly expanding cloud communications and customer engagement markets.

TWILIO INC. (Symbol TWLO on Nasdaq; www.twilio.com) offers a key service to software developers who create mobile apps. Specifically, its own software is used to connect apps to essential functions elsewhere on a device, including dealing with phone calls and messaging.

In the quarter ended December 31, 2024, revenue rose 11%, to $1.19 billion from $1.08 billion. The company continues to add to its client base, with a growing emphasis on markets outside of North America; it now has 325,000 active customer accounts (up 6.6% from 305,000 a year ago).

Excluding one-time items, Twilio made $1.00 a share in the latest quarter. That was up 16.3% from $0.86. The big earnings jump came from improved operational efficiencies, as well as reductions in marketing and other costs.

The company holds a huge cash balance of $2.4 billion. Its long-term debt is just $990.6 million.

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Growth Stocks: Activist investors spur changes at Twilio

Early last year, Twilio appointed a partner at activist investment firm Sachem Head Capital Management to its board of directors. The company made the move in the face of pressure from several activist investment firms looking for significant changes.

Twilio added Andy Stafman and expanded the size of the board by one person for a total of 10 directors.

The change removed the chance of a boardroom challenge from Sachem Head in 2024 when three Twilio directors, including new CEO Khozema Shipchandler and board Chairman Jeff Epstein, were scheduled to stand for election. (In January 2024, Twilio founder Jeff Lawson stepped down as CEO and board member and was replaced by Khozema Shipchandler as CEO.)

The company has come under pressure from Sachem as well as other activist investors including Legion Partners and Anson Funds. All have been pushing the company to explore strategic alternatives, including divesting itself of its data and applications business or selling the whole company.

All in all, Twilio’s outlook is positive. The company’s impressive customer base, leading products and high R&D (over 30% of sales) all bode well for its future success in rapidly growing markets. And meantime, how Twilio will respond to the pressure from its activist investors is uncertain. Still, their interest does draw attention to the company’s assets and growth prospects.

The stock trades at 26.5 times its forecast 2025 earnings per share of $4.35—but that’s reasonable given its growth prospects.

Recommendation in Power Growth Investor: Twilio Inc. is a buy.

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Scott Clayton

Scott is an associate editor at TSI Network. He is the lead reporter and analyst for Dividend Advisor, Power Growth Investor and Canadian Wealth Advisor and a member of the Investment Planning Committee. Scott began his investment and financial career working with Pat McKeough at The Investment Reporter in the 1980s. Subsequently, he worked at the Financial Post Corporation Service for 10 years. He joined TSI Network in 1998. He is a Bachelor of Economics graduate of York University, and he also has an M.B.A. from the Schulich School of Business.

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