0001447669-25-000122
SEC filingRevenue grew 13% YoY to $1.23B, driven by Communications; net income turned positive to $22.4M; gross margin declined to 49% due to higher network costs.
In the three months ended June 30, 2025, Twilio reported total revenue of $1.228 billion, a 13% increase compared to $1.083 billion in the same period last year. The growth was primarily driven by the Communications segment, which contributed $1.153 billion, up 14% YoY, driven by increased usage from existing customers and new customer acquisition. Segment revenue remained nearly flat at $75.5 million. Gross profit rose 8% to $602.7 million, but gross margin declined to 49% from 51% due to a 19% increase in cost of revenue, largely from higher network service provider fees. GAAP operating income improved to $36.9 million from a loss of $(19.0) million, reflecting revenue growth and disciplined expense management. Net income attributable to common stockholders was $22.4 million ($0.15 per share basic) compared to a net loss of $(31.9) million ($(0.19) per share) in the prior year. Non-GAAP operating margin expanded to 18% from 16%, and free cash flow increased to $263.5 million (21% margin) from $197.6 million (18% margin), underscoring improved operational efficiency.
The Communications segment remains the primary growth engine, with Dollar-Based Net Expansion Rate of 109% for the quarter, indicating strong retention and expansion. Revenue growth was driven by both existing customers increasing usage and a $55.2 million contribution from new Communications Active Customer Accounts. However, network service provider costs increased by $94.5 million, reflecting higher A2P messaging fees and a new fee from a major U.S. carrier, which is passed through to customers at cost but creates a gross margin headwind. The Segment segment saw revenue essentially flat, as growth from new accounts was offset by churn and contraction among existing customers (Dollar-Based Net Expansion Rate of 95%). Segment non-GAAP operating income improved significantly to $6.0 million from a loss of $(15.8) million, driven by a $20.9 million reduction in operating expenses, primarily from lower personnel costs.
Management emphasized a focus on innovation, durable profitable growth, and leveraging AI. Key strategic priorities include driving product innovation, expanding partner relationships, and optimizing costs through automation and workforce initiatives. The recent increase in A2P messaging fees by a major U.S. carrier is expected to be a modest headwind to gross margins going forward, though it is neutral to gross profit as fees are passed through. The company maintains a strong liquidity position with $969.2 million in cash and $1.6 billion in short-term marketable securities, and a $2.0 billion share repurchase program authorized through 2027. No specific quantitative guidance was provided, but the company continues to target durable, profitable growth through operational efficiency and customer expansion.
As of June 30, 2025, Twilio held $969.2 million in cash and cash equivalents and $1.57 billion in short-term marketable securities, for a total liquidity position of approximately $2.54 billion. Total assets stood at $9.85 billion, with goodwill of $5.24 billion and intangible assets of $184.3 million. Total liabilities were $1.80 billion, including $991.4 million in long-term debt (net of discounts and issuance costs). Stockholders' equity was $8.04 billion, up from $7.95 billion at year-end 2024, driven by net income and stock-based compensation partially offset by share repurchases.
During the six months ended June 30, 2025, Twilio entered into new non-cancelable contractual commitments totaling $40.0 million with cloud infrastructure providers, network service providers, and other vendors, with terms up to three years. The company also has operating lease liabilities of $111.2 million (current and noncurrent). As of June 30, 2025, total remaining performance obligations for contracts with durations over one year were $158.8 million, of which 63% is expected to be recognized over the next 12 months. Deferred revenue and customer deposits were $148.0 million.
In January 2025, Twilio's board authorized a new $2.0 billion share repurchase program expiring December 31, 2027. During the six months ended June 30, 2025, the company repurchased 3.0 million shares for $306.5 million, leaving $1.69 billion remaining. No dividends were declared. Capital expenditures (including capitalized software development costs and purchases of long-lived assets) totaled $26.3 million for the six months, representing 1.1% of revenue. Long-term debt remained essentially unchanged at $991.4 million, with no new issuances or repayments.
Twilio operates two reportable segments: Communications and Segment. For the three months ended June 30, 2025, Communications generated $1.15 billion in revenue (93.9% of total) and $280.6 million in segment non-GAAP income from operations (24.3% margin). Segment generated $75.5 million in revenue (6.1% of total) and $6.0 million in segment non-GAAP income from operations (8.0% margin). Geographically, 64% of total revenue came from the United States and 36% from international markets, consistent with the prior year.