Summary
Twilio's first quarter of fiscal 2023 showed solid top-line growth but wider GAAP losses. Revenue rose 15.0% year over year to $1.01 billion. Gross profit reached $490.69 million, up 15.4%, and gross margin was 48.7%, up 0.2 percentage points from a year earlier. The bottom line moved the other way. GAAP operating loss was $264.08 million, and the loss widened from the prior-year quarter. GAAP net loss was $342.14 million, also wider, and diluted GAAP net loss per share was $1.84. Operating margin was negative 26.2%, down from a year earlier. The quarter included costs tied to the February restructuring and office closures, which weighed on GAAP results.
Management pointed to cost actions that are already changing the shape of the business. Non-GAAP income from operations was $103.8 million, compared with $5.0 million in the prior-year quarter. Non-GAAP diluted net income per share was $0.47, compared with $0.00 a year earlier. Twilio reorganized into two units, Twilio Data & Applications and Twilio Communications, and cut roughly 17% of its workforce under the February 2023 plan. The company ended the quarter with more than 300,000 active customer accounts, up from more than 268,000 a year earlier. Dollar-based net expansion rate was 106%, down from 127%. That deceleration is a key watch item because it reflects how much existing customers are expanding their spend. Headcount stood at 6,766 employees as of March 31, 2023.
Twilio also returned capital to shareholders and kept a large buyback program in place. In February 2023, the board authorized a share repurchase program of up to $1.0 billion of Class A common stock. The company repurchased $125.0 million, or 1.9 million shares, in the first quarter. After March 31, 2023, it repurchased an additional $125.0 million. About $750.0 million of the original authorization remained available, and the program expires on December 31, 2024. The buyback does not fix the GAAP loss profile, but it signals that management sees value in the shares and has liquidity to act.
Cash generation was a weak spot. Operating cash flow was negative $97.87 million for the quarter, down from the prior-year quarter. Deferred revenue was $136.50 million, down 2.8% year over year. Remaining performance obligations were $165.90 million, up 8.6%. The deferred revenue decline is small in dollar terms, yet it contrasts with the top-line growth and the RPO increase. Management has said deferred revenue and customer deposits are not a meaningful indicator of future revenue because many invoiced customers do not prepay. Even so, the operating cash outflow is worth monitoring as the company works through restructuring and office exit costs.
Guidance points to a sharp deceleration. For the second quarter of fiscal 2023, Twilio guided revenue to $980 million to $990 million, or 4% to 5% year-over-year growth. It guided non-GAAP income from operations to $65 million to $75 million and non-GAAP diluted earnings per share to $0.27 to $0.31. For the full fiscal year 2023, the company raised the low end of its non-GAAP income from operations range to $275 million to $350 million. The revenue outlook implies that the strong first-quarter growth is not expected to persist in the near term.
The main risks are familiar but real. Macroeconomic uncertainty, customer demand and spending, inflation, foreign exchange volatility, and competition all can affect results. Twilio also faces execution risk around its cost-saving initiatives, the business unit reorganization, and the plan to reduce its global office footprint. The company expects to complete the shift to segment reporting during 2023, and prior periods will be recast. Investors will want to see whether the non-GAAP profitability improvement continues while revenue growth slows.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2023 | Q4 FY2022 | QoQ | Q1 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.01B | $1.02B | -1.8% | $875.4M | +15.0% |
| Gross profit | $490.7M | $481.1M | +2.0% | $425.1M | +15.4% |
| Gross margin | 48.8% | 47.0% | +1.8 pp | 48.6% | +0.2 pp |
| Research & development | $238.6M | $274.1M | -13.0% | $240.6M | -0.8% |
| Sales & marketing | $259.9M | $296.3M | -12.3% | $287.9M | -9.7% |
| General & administrative | $112.6M | $125.1M | -10.0% | $114.4M | -1.6% |
| Total operating expenses | $754.8M | $699.7M | +7.9% | $642.9M | +17.4% |
| Operating income (loss) | -$264.1M | -$218.6M | -20.8% | -$217.8M | -21.2% |
| Operating margin | -26.2% | -21.3% | -4.9 pp | -24.9% | -1.4 pp |
| Net income (loss) | -$342.1M | -$229.4M | -49.1% | -$221.6M | -54.4% |
| Net margin | -34.0% | -22.4% | -11.6 pp | -25.3% | -8.7 pp |
| Diluted EPS | -$1.84 | -$1.25 | -$0.59 | -$1.23 | -$0.61 |
Risks
Macroeconomic uncertainties and banking-sector volatility have constrained customer budgets, and because 71% of revenue in the three months ended March 31, 2023 came from usage-based fees, Twilio may be more immediately harmed than subscription SaaS peers. The filing states that some customers reduced or terminated usage without notice, renegotiated contracts on less advantageous terms, or failed to renew; in February 2023 Oi SA, a Brazilian telecom customer, initiated reorganization proceedings, exposing Twilio to pre-petition receivable collection and ongoing revenue risk.
Dollar-Based Net Expansion Rate declined to 106% for the three months ended March 31, 2023 from 127% for the prior-year period, and total revenue growth slowed to 15% from 48%. The filing says usage-based revenue and lack of long-term customer commitments mean customers can reduce or cease usage at any time without penalty.
Twilio reduced its workforce by approximately 11% in September 2022 and by an additional approximately 17% in February 2023, incurring $121.9 million of restructuring costs in the first quarter of 2023 and expecting an additional $20.0 million in 2023. The filing warns of unintended attrition, damage to culture and morale, loss of institutional knowledge, and reliance on a self-service model after reducing sales force size.
In the first quarter of 2023 Twilio reorganized into Twilio Communications and Twilio Data & Applications and expects to move from one to two reportable segments in 2023. The filing cites risks of significant expenditures, diversion of management attention, failure to preserve internal controls, loss of sales as sales positions are eliminated, and possible goodwill impairment.
San Francisco City and County assessed Twilio $38.8 million in taxes, interest, and penalties, which exceeded the $11.5 million accrued; Twilio paid the full amount and filed a lawsuit on May 27, 2021, with a case management conference scheduled for June 2023. The filing also notes that Section 174 capitalization of research and development expenditures impacts the effective tax rate and cash tax liability in 2023.
In the first quarter of 2023 Twilio recorded a $46.2 million non-cash impairment of a 2021 strategic investment and $21.8 million of impairment losses on operating lease and other long-lived assets from office closures, and expects an additional $10 million to $20 million of impairment in 2023.
In February 2023 the board authorized repurchases of up to $1.0 billion of Class A common stock; Twilio repurchased $125.0 million in the first quarter of 2023 and an additional $125.0 million after March 31, 2023. The filing says the program may fail to enhance long-term stockholder value and reduces cash available for working capital, capital expenditures, acquisitions, and other purposes.
Twilio signed an agreement in the first quarter of 2023 to divest its Internet of Things assets and liabilities, recording a $3.8 million loss on net assets held for sale and $2.2 million in related expenses. Closing is expected in the second quarter of 2023 and may result in an additional gain or loss.
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 FY2023 (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.