Summary
Twilio reported first-quarter fiscal 2025 revenue of $1.17 billion, up 12% from the prior-year quarter. That growth accelerated from 4% in the prior-year quarter. Gross profit rose 6.9% to $581.6 million. Gross margin was 49.6%, down 2.4 percentage points. The bottom line improved more sharply. Operating income was $23.1 million, a swing from a loss in the prior-year quarter. GAAP operating margin was 2.0%, up 6.1 percentage points. Net income was $20.0 million, also a swing to a profit. Diluted EPS was $0.12, compared with a loss per share a year earlier. The profitability improvement came even as gross margin faced pressure from network service provider costs and product mix.
Non-GAAP results showed the same direction. Non-GAAP income from operations was $213.4 million, compared with $159.6 million a year earlier. Non-GAAP operating margin was 18.2%, compared with 15.2%. Non-GAAP diluted EPS was $1.14, compared with $0.80. Cash generation was steady. Operating cash flow was $191.0 million, flat versus the prior-year quarter. Free cash flow was $178.3 million, compared with $177.3 million. Deferred revenue was $154.0 million, up 8.1%. Remaining performance obligations were $169.4 million, up 12.5%. The company's operating cash flow and free cash flow differ because free cash flow subtracts capitalized software development costs and purchases of long-lived and intangible assets.
Customer and product metrics gave a mixed picture. Active Customer Accounts totaled more than 335,000 as of March 31, 2025, compared with more than 313,000 a year earlier. Dollar-Based Net Expansion Rate was 107%, compared with 102%. The Communications segment grew faster than the Segment segment. Communications Dollar-Based Net Expansion Rate was 108%, while Segment Dollar-Based Net Expansion Rate was 94%. Segment non-GAAP loss from operations was $1.5 million, an improvement from a loss of $21.0 million a year earlier. Communications non-GAAP income from operations was $277.5 million, up 11%. Twilio ended the quarter with 5,502 employees. Revenue from the 10 largest Active Customer Accounts was 9% of total revenue in the quarter, down from 10% a year earlier.
For the second quarter of fiscal 2025, Twilio guided revenue to $1.180 billion to $1.190 billion, which implies 9% to 10% year-over-year growth. Non-GAAP income from operations is guided to $195 million to $205 million. Non-GAAP diluted EPS is guided to $0.99 to $1.04, with 157 million non-GAAP weighted average diluted shares. For the full year 2025, the company raised its organic revenue growth target to 7.5% to 8.5% from 7% to 8%. It also raised both its non-GAAP income from operations target and its free cash flow target to $850 million to $875 million, from $825 million to $850 million. The company has not provided forward-looking GAAP reconciliations for these non-GAAP targets because of uncertainty around items such as stock-based compensation. Risks include macroeconomic and political uncertainty, intense competition, network service provider fees, foreign exchange rate volatility, and execution on cost savings, partnerships, and international expansion. Twilio's board authorized a $2.0 billion share repurchase program in January 2025. The program runs through December 31, 2027.
Twilio realigned its business unit structure into a functional support model under one organization on January 1, 2025. The company still reports two segments, Communications and Segment. Management says the change should help it deliver one trusted, integrated platform and personalize communications at scale. The quarter showed progress on profitability, but the Segment business still faces churn and contraction, as reflected in its 94% Dollar-Based Net Expansion Rate. The company also continues to monitor macroeconomic and political conditions and uncertainty. Its cost-saving initiatives, partnership efforts, and international expansion remain key execution items for the rest of fiscal 2025.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2025 | Q4 FY2024 | QoQ | Q1 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.17B | $1.19B | -1.9% | $1.05B | +12.0% |
| Gross profit | $581.6M | $599.7M | -3.0% | $544.0M | +6.9% |
| Gross margin | 49.6% | 50.2% | -0.6 pp | 52.0% | -2.4 pp |
| Research & development | $254.3M | $252.6M | +0.7% | $251.6M | +1.1% |
| Sales & marketing | $212.1M | $216.7M | -2.1% | $214.0M | -0.9% |
| General & administrative | $92.1M | $116.8M | -21.2% | $112.0M | -17.8% |
| Total operating expenses | $558.5M | $586.0M | -4.7% | $587.5M | -4.9% |
| Operating income (loss) | $23.1M | $13.7M | +68.2% | -$43.5M | +153.1% |
| Operating margin | 2.0% | 1.1% | +0.8 pp | -4.2% | +6.1 pp |
| Net income (loss) | $20.0M | -$12.5M | +260.5% | -$55.3M | +136.2% |
| Net margin | 1.7% | -1.0% | +2.8 pp | -5.3% | +7.0 pp |
| Diluted EPS | $0.12 | -$0.08 | +$0.20 | -$0.31 | +$0.43 |
Risks
Twilio states a majority of revenue is usage-based and therefore more immediately exposed to adverse macroeconomic and political conditions than subscription revenue; 73% of revenue in the quarter ended March 31, 2025 was usage-based. It warns that such conditions can reduce or delay customer spending, lower renewal rates, and delay collections.
Multiple major U.S. mobile carriers have added A2P SMS fees, and Twilio says it may not be able to negotiate, absorb, or pass through future increases without material harm. Passing fees through can increase revenue and cost of revenue without increasing gross profit dollars, and GAAP gross margin declined 2.4 percentage points in the quarter ended March 31, 2025 versus prior year while cost of revenue rose 17%, including a $76.7 million increase in network service provider costs.
Twilio Segment revenue increased only $0.6 million, or 1%, in the quarter ended March 31, 2025, and Segment Dollar-Based Net Expansion Rate was 94%, reflecting churn and contraction among existing Segment customers. The company carries $5.5 billion of goodwill and intangible assets as of March 31, 2025 and previously recorded a $285.7 million impairment related to Segment, leaving further impairment risk if results do not improve.
Twilio derived 36% of revenue from customer accounts outside the United States in the three months ended March 31, 2025, and says international messaging has lower gross margins than U.S. messaging. Higher network service provider fees and other costs outside the United States can continue to adversely impact gross margin.
Twilio has reduced its sales force in recent years and is relying more on self-service and AI/automation, and it warns these changes may reduce productivity, take longer than expected to drive growth, or fail to increase adoption cost-effectively. The MD&A also highlights efforts to improve self-service capabilities and reduce time to value for Segment.
As Twilio focuses more on enterprise customers, including through Segment and AI-enhanced products, it expects longer, more complex sales cycles, multiple technical and business decision makers, and protracted pricing negotiations. These dynamics can raise customer acquisition costs and pressure gross margins if enterprises demand lower pricing as usage grows.
Twilio is committing significant resources to combine its communications products with contextual data and AI, but new products may not achieve market acceptance, may be rendered obsolete by competing or lower-cost offerings, and may face evolving AI and privacy regulation. The company also faces intense competition from larger CPaaS, CRM/CX, and customer data platform vendors.
Twilio recorded a $42.2 million reserve on its March 31, 2025 balance sheet for potential indirect tax payments and is in discussions with certain jurisdictions about prior-period sales and other indirect taxes. If jurisdictions challenge its assumptions, actual exposure could materially exceed the reserve and harm results.
SaaS KPIs
All quarters →Dollar-Based Net Expansion Rate
Non-GAAP Gross Margin
Non-GAAP Operating Margin
Active Customer Accounts
Free Cash Flow Margin
Communications Dollar-Based Net Expansion Rate
Free Cash Flow
Non-GAAP Income from Operations
Segment Dollar-Based Net Expansion Rate
Summary, forecast, risks and KPIs are extracted from TWILIO INC's SEC filings for Q1 FY2025 (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.