Summary
Twilio reported first quarter revenue of $590.0 million, up 61.7% from the prior-year quarter. Gross profit rose 54.1% to $298.3 million. Gross margin was 50.6%, down 2.5 percentage points. The decline came from a re-acceleration in the messaging business, higher amortization of acquired intangibles, a larger mix of international product usage, and higher network service provider fees in certain geographies. Those pressures were partly offset by the Twilio Segment acquisition and some operational improvements.
Revenue growth also reflected higher usage of Programmable Messaging and Programmable Voice products, adoption of additional products by existing customers, and the Twilio Segment acquisition. Active Customer Accounts reached more than 235,000 as of March 31, 2021, up from 190,000 a year earlier, a 24% increase. Dollar-Based Net Expansion Rate was 133%, compared with 143% in the prior-year quarter. Twilio ended the quarter with 5,482 employees.
The bottom line remained deeply negative. GAAP operating loss widened to $197.3 million, and operating margin was -33.4%, down 8.0 percentage points. GAAP net loss widened to $206.5 million. GAAP diluted loss per share was -$1.24, a wider loss. On a non-GAAP basis, income from operations was $17.3 million, compared with $6.1 million a year earlier. Non-GAAP net income per share was $0.05, compared with $0.06.
Cash generation was modest. Operating cash flow was $4.5 million, down 71.0%. Capital expenditures were $5.0 million, down 21.1%. The current portion of deferred revenue was $93.5 million, up 250.2%. Twilio said the deferred revenue and customer deposits balance is not a meaningful indicator of future revenue because most customers pay in arrears or draw down prepaid balances quickly.
For the second quarter, Twilio guided revenue to $591 million to $601 million, with 47% to 50% year-over-year growth. The company guided a non-GAAP loss from operations of $22 million to $27 million. Non-GAAP loss per share is expected to be $0.13 to $0.16. Non-GAAP basic shares outstanding are expected to be 174 million.
Twilio also completed a follow-on offering of Class A common stock and issued $1.0 billion aggregate principal amount of senior notes. It announced a partnership with Syniverse that includes an investment of up to $750.0 million and is expected to close before the end of 2021. In March 2021, Twilio acquired ValueFirst Digital Media for $70.2 million in cash. The company split its research and development function into three units and said Chief Product Officer Chee Chew will leave effective May 17, 2021.
Risks include the ongoing COVID-19 pandemic, which creates uncertainty around customer demand and sales cycles. Twilio also faces pressure from network service provider fees, foreign exchange movements, and the integration of Segment and ValueFirst. The Syniverse partnership remains subject to closing conditions and regulatory approvals. Competition, rapid technological change, and compliance with new industry standards and laws are other named risks.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2021 | Q4 FY2020 | QoQ | Q1 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $590.0M | $548.1M | +7.6% | $364.9M | +61.7% |
| Gross profit | $298.3M | $282.1M | +5.7% | $193.5M | +54.1% |
| Gross margin | 50.6% | 51.5% | -0.9 pp | 53.0% | -2.5 pp |
| Research & development | $174.8M | $158.9M | +10.0% | $114.3M | +52.9% |
| Sales & marketing | $210.6M | $180.0M | +17.0% | $116.7M | +80.4% |
| General & administrative | $110.3M | $128.6M | -14.2% | $55.2M | +99.8% |
| Total operating expenses | $495.6M | $467.4M | +6.0% | $286.2M | +73.2% |
| Operating income (loss) | -$197.3M | -$185.3M | -6.5% | -$92.7M | -112.9% |
| Operating margin | -33.5% | -33.8% | +0.4 pp | -25.4% | -8.0 pp |
| Net income (loss) | -$206.5M | -$179.4M | -15.2% | -$94.8M | -117.9% |
| Net margin | -35.0% | -32.7% | -2.3 pp | -26.0% | -9.0 pp |
| Diluted EPS | -$1.24 | — | — | — | — |
Risks
Extensive privacy laws including GDPR, CCPA, CPRA, LGPD, and APPI increase compliance costs and potential fines. The invalidation of the EU-U.S. Privacy Shield and uncertainty around Standard Contractual Clauses may decrease demand from European customers and require increased data processing capabilities in Europe at significant expense.
On February 26, 2021, a critical feature enablement service became overloaded, causing connection issues across multiple products for a limited number of hours. Twilio expects costs for customer credits and may lose or see reduced utilization from affected customers.
Major U.S. mobile carriers introduced new A2P SMS fees in early 2020. Twilio began passing these fees directly to customers on May 1, 2021, which will increase revenue and cost of revenue but negatively impact gross margins.
Intense competition in cloud communications, with Sinch AB offering to acquire Inteliquent in February 2021. Some competitors have lower list prices, and pricing pressures could reduce margins and revenue.
The Australian Communications and Media Authority issued a formal finding against Twilio and others for failure to upload data into a centralized emergency services database, potentially leading to fines or prohibition from providing services in a jurisdiction. International CPaaS regulations are evolving and uncertain.
Twilio had $1.3 billion of indebtedness as of March 31, 2021. The conditional conversion feature of the Convertible Notes was triggered during Q1 2021, making the notes convertible through June 30, 2021. Cross-default provisions and restrictive covenants could accelerate debt and harm liquidity.
Integration of Segment, acquired November 2, 2020, poses risks including loss of key employees and customers, higher than expected costs, and failure to achieve anticipated synergies. Purchase price accounting is preliminary and may change.
Twilio agreed to invest up to $750 million in Syniverse Corporation in February 2021, with a wholesale agreement for A2P message processing. Closing is subject to regulatory approvals and other conditions, and the investment may not realize expected benefits.
Headcount grew from 3,060 employees on March 31, 2020 to 5,482 on March 31, 2021, with international headcount growing from 815 to 1,907. Rapid growth strains corporate culture, operational infrastructure, and management, especially with virtual onboarding.
International revenue represented 29% of total revenue in Q1 2021. International gross margins are typically lower due to higher network service provider fees. Risks include regulatory compliance, data localization, Brexit, and foreign currency fluctuations.
Dollar-Based Net Expansion Rate declined to 133% for the three months ended March 31, 2021, from 143% in the prior year period. This decline may indicate reduced customer expansion and could impact future revenue growth.
GAAP gross margin declined to 50.6% in Q1 2021 from 53.0% in Q1 2020. The decline was driven by a re-acceleration in messaging growth, increased amortization of acquired intangibles, higher international mix, and increased network service provider fees.
The COVID-19 pandemic continues to create uncertainty. While Q1 2021 saw stable or increased usage in travel, hospitality, and ridesharing, Twilio may experience delayed sales cycles, reduced customer demand, and volatility in customer buying habits.
Twilio historically relied on self-service model but needs to increase enterprise adoption, which involves longer sales cycles, higher costs, and competition for experienced sales professionals. Enterprise customers may demand price reductions, impacting gross margins.
SaaS KPIs
All quarters →Dollar-Based Net Expansion Rate
Non-GAAP Gross Margin
Non-GAAP Operating Margin
Non-GAAP Income from Operations
Number of Active Customer Accounts
Summary, forecast, risks and KPIs are extracted from TWILIO INC's SEC filings for Q1 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.