Summary
Twilio closed the first quarter of fiscal 2022 with revenue of $875.4 million, up 48.4% from the prior-year quarter. Zipwhip, acquired in July 2021, contributed $32.2 million, so organic revenue grew 35%. Management credited more usage of Programmable Messaging, Programmable Voice, Email and software products, plus the additional A2P fees imposed by certain carriers. Active Customer Accounts reached 268,000 as of March 31, 2022, up from 235,000, and the company had 8,199 employees. The Dollar-Based Net Expansion Rate slipped to 127% from 133%, which suggests expansion from existing accounts is cooling even as new accounts keep arriving.
Gross profit rose 42.5% to $425.1 million, but gross margin fell 2.0 percentage points to 48.6%. Cost of revenue climbed $158.6 million, or 54%, and that included a $136.6 million increase in network service provider costs. The fast-growing international messaging business, the carrier A2P fees that Twilio passes through at cost, and higher amortization of acquired intangibles all weighed on the margin. The GAAP operating loss widened to $217.8 million from the prior-year quarter, but operating margin improved 8.6 percentage points to -24.9% because revenue scaled faster than operating expenses. Net loss widened to $221.6 million. Diluted loss per share of -$1.23 was a touch better than the prior-year quarter.
The gap between GAAP and non-GAAP results stayed wide. Non-GAAP income from operations was $5.0 million, down from $17.3 million a year earlier, and non-GAAP diluted net income per share was $0.00 against $0.05. Those numbers exclude stock-based compensation, amortization of acquired intangibles and related payroll taxes, which is why they look so different from the reported loss. Cash generation turned negative in the quarter. Operating cash flow was -$17.6 million, down from a positive figure in the prior-year quarter, and capital expenditures were $7.0 million. Deferred revenue stood at $140.4 million and remaining performance obligations at $152.7 million at March 31, 2022. Management cautions that the deferred revenue balance says little about future revenue because few invoiced contracts require prepayment.
Guidance covers the second quarter ending June 30, 2022 only. Twilio expects growth of 36% to 38%, including organic growth of 27% to 29%, with a non-GAAP loss from operations of $40 million to $35 million and a non-GAAP loss per share of $0.23 to $0.20 on 182 million basic shares. That points to a swing from the slim non-GAAP operating profit just reported, and it reflects continued hiring and go-to-market spending. The release gave no figures beyond that quarter.
Leadership at the top of the sales organization changed abruptly. Elena Donio became President of Revenue on May 4, 2022 and resigned from the board, while Chief Revenue Officer Marc Boroditsky stepped down immediately and will stay briefly as an advisor. Twilio still plans a minority investment of $500.0 million to $750.0 million in Syniverse, now through an alternative structure after MBAC terminated its proposed merger on February 9, 2022 because shareholder redemptions left it short of the minimum cash condition. The 10 largest Active Customer Accounts generated 11% of total revenue, down from 12% a year earlier, so concentration is modest. The filing flags inflation, labor shortages, supply chain disruptions, foreign exchange swings and carrier fee pass-through among the risks that could keep pressure on gross margin.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2022 | Q4 FY2021 | QoQ | Q1 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $875.4M | $842.7M | +3.9% | $590.0M | +48.4% |
| Gross profit | $425.1M | $396.5M | +7.2% | $298.3M | +42.5% |
| Gross margin | 48.6% | 47.0% | +1.5 pp | 50.6% | -2.0 pp |
| Research & development | $240.6M | $223.2M | +7.8% | $174.8M | +37.6% |
| Sales & marketing | $287.9M | $331.4M | -13.1% | $210.6M | +36.7% |
| General & administrative | $114.4M | $125.5M | -8.9% | $110.3M | +3.7% |
| Total operating expenses | $642.9M | $680.2M | -5.5% | $495.6M | +29.7% |
| Operating income (loss) | -$217.8M | -$283.6M | +23.2% | -$197.3M | -10.4% |
| Operating margin | -24.9% | -33.7% | +8.8 pp | -33.5% | +8.6 pp |
| Net income (loss) | -$221.6M | -$291.4M | +23.9% | -$206.5M | -7.3% |
| Net margin | -25.3% | -34.6% | +9.3 pp | -35.0% | +9.7 pp |
| Diluted EPS | -$1.23 | -$1.67 | +$0.44 | -$1.24 | +$0.01 |
Risks
Gross margin declined to 48.6% in FY2022 Q1 from 50.6% in FY2021 Q1, driven by strong growth in international messaging, additional A2P SMS fees imposed by certain carriers, and higher network service provider fees passed through at cost. Twilio states these pass-through fees increase revenue and cost of revenue but mathematically reduce gross margins.
MD&A and risk factors highlight COVID-19, the war in Ukraine, inflation, labor shortages, and supply chain disruptions as conditions that may reduce business spending, lower renewal rates, delay sales cycles, and increase costs. Twilio says these adverse conditions may continue for an extended period.
Cross-border data transfer restrictions following Schrems II and the still-unestablished replacement for the EU-U.S. Privacy Shield have caused hesitancy, reluctance, or refusal by European and multinational customers to use Twilio's services. Twilio may face regulatory actions, substantial fines, injunctions, and significant expense to increase data processing capabilities in Europe.
Headcount grew from 5,482 employees on March 31, 2021 to 8,199 on March 31, 2022, and Twilio faces intense competition for skilled workers amid the 'great resignation' and cost inflation. The company also depends on co-founder and CEO Jeff Lawson and other key employees, none of whom are bound by written employment agreements.
Dollar-Based Net Expansion Rate declined to 127% from 133% for the three months ended March 31, 2022 versus 2021. Most customers have no long-term contractual financial commitments and can reduce or cease usage at any time, which could pressure future revenue growth.
Twilio relies on network service providers and internet service providers, many without long-term committed contracts, and fees may change daily or weekly while customer pricing changes more slowly. Termination or cost increases could disrupt service and harm results.
Twilio completed several acquisitions in fiscal 2021 and may not realize anticipated benefits. In February 2022, the MBAC merger with Syniverse was terminated because shareholder redemptions left insufficient cash, and Twilio will not purchase MBAC shares; it is still pursuing a $500.0 million to $750.0 million minority investment in Syniverse under the Framework Agreement.
Twilio carried $6.3 billion of goodwill and intangible assets as of March 31, 2022. Adverse market conditions or changes in assumptions could result in an impairment charge that adversely affects results of operations.
Twilio substantially relies on Amazon Web Services to operate its platform. Service interruptions, capacity constraints, or termination of the AWS agreement could cause outages, SLA credits, and customer loss; Twilio typically commits to 99.95% monthly uptime.
As an interconnected VoIP provider, Twilio is subject to FCC rules and evolving international telecommunications regulations. A 2019 Australian Communications and Media Authority finding for failure to upload emergency services data, plus CPaaS licensing uncertainty, could lead to fines, audits, or prohibitions.
Enterprise adoption requires longer, more complex sales cycles with multiple technical and business decision makers, extensive education, and protracted pricing negotiations that may not address inflationary pressure. Twilio expects higher costs and longer sales cycles as it expands enterprise sales.
Operating cash flow was negative $17.6 million in FY2022 Q1, down from positive $4.5 million in FY2021 Q1. Twilio had $1.0 billion of indebtedness outstanding as of March 31, 2022, and may need additional financing.
SaaS KPIs
All quarters →Dollar-Based Net Expansion Rate
Non-GAAP Gross Margin
Non-GAAP Operating Margin
Active Customer Accounts
Summary, forecast, risks and KPIs are extracted from TWILIO INC's SEC filings for Q1 FY2022 (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.