Summary
Twilio's fiscal 2021 second quarter revenue reached $668.9 million, up 67% year over year. Revenue growth reflected higher usage of Programmable Messaging and Programmable Voice, adoption of additional products by existing customers, and contributions from acquisitions. That top-line growth came with much wider GAAP losses. Loss from operations widened to $202.3 million, and net loss widened to $227.9 million. Diluted GAAP net loss per share was $1.31. Operating cash flow was $21.7 million, up 1,437.3% from the prior-year quarter. Capital expenditures were $7.2 million, up 10.4%. Deferred revenue, current portion only, was $98.7 million, up 239.1% from the prior-year quarter. Gross margin slipped to 49.5%, down 2.7 percentage points from the prior-year quarter, while operating margin fell to -30.2%, down 4.6 percentage points. The gap between revenue growth and profitability remains wide.
Non-GAAP results show a smaller operating profit than a year earlier. Non-GAAP income from operations was $4.2 million, compared with $9.5 million in the prior-year quarter. Non-GAAP net loss per share was $0.11, compared with prior-year non-GAAP net income per share of $0.09. Customer metrics held up. Active Customer Accounts rose to more than 240,000 as of June 30, 2021, from 200,000 as of June 30, 2020. Dollar-Based Net Expansion Rate was 135% for the second quarter of 2021, compared with 132% for the second quarter of 2020. Twilio Segment results do not impact that metric in either period. Headcount reached 6,334 employees as of June 30, 2021. The company also announced Twilio Segment Journeys and released its 2020 Diversity, Equity and Inclusion report.
The company closed the acquisition of Zipwhip on July 14, 2021, for an aggregate consideration of $850.0 million. Management initiated guidance for the third quarter ending September 30, 2021. That guidance includes revenue contribution from Twilio Segment but excludes Zipwhip. For the next quarter, Twilio expects revenue of $670 million to $680 million, with year-over-year growth of 50% to 52%. Non-GAAP loss from operations is guided to ($30) million to ($25) million, and non-GAAP loss per share is guided to ($0.17) to ($0.14). The outlook assumes 177 million non-GAAP basic shares outstanding. The third-quarter target is a next-quarter number and does not include the recently closed Zipwhip business.
Margin pressure remains a central issue. Twilio said gross margin declined because of a re-acceleration in messaging growth, higher amortization of acquired intangibles, a larger mix of international product usage, and increases in network service provider fees in certain geographies. Those factors were partly offset by the Segment acquisition and operational improvements. The MD&A also flags COVID-19 uncertainty. The broader implications of the pandemic on results remain uncertain, and Twilio expects some volatility in customer demand and buying habits. Delayed sales cycles, customers reducing budgets or minimum commitments, and possible changes in consumer behavior are all called out as risks. Twilio plans a phased reopening of certain offices in the third quarter of 2021, with limited capacity and only for fully vaccinated employees. Other risks include intense competition, integration of recent acquisitions such as Segment, ValueFirst and Zipwhip, reliance on network service providers, changes in industry standards and laws, and the need to manage growth. The MD&A also notes that deferred revenue and customer deposits liability is not a meaningful indicator of future revenue.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2021 | Q1 FY2021 | QoQ | Q2 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $668.9M | $590.0M | +13.4% | $400.8M | +66.9% |
| Gross profit | $331.2M | $298.3M | +11.0% | $209.1M | +58.4% |
| Gross margin | 49.5% | 50.6% | -1.0 pp | 52.2% | -2.6 pp |
| Research & development | $181.3M | $174.8M | +3.7% | $120.7M | +50.2% |
| Sales & marketing | $238.1M | $210.6M | +13.0% | $129.8M | +83.4% |
| General & administrative | $114.2M | $110.3M | +3.6% | $61.3M | +86.4% |
| Total operating expenses | $533.5M | $495.6M | +7.6% | $311.8M | +71.1% |
| Operating income (loss) | -$202.3M | -$197.3M | -2.5% | -$102.6M | -97.1% |
| Operating margin | -30.2% | -33.5% | +3.2 pp | -25.6% | -4.6 pp |
| Net income (loss) | -$227.9M | -$206.5M | -10.3% | -$99.9M | -128.0% |
| Net margin | -34.1% | -35.0% | +0.9 pp | -24.9% | -9.1 pp |
| Diluted EPS | -$1.31 | -$1.24 | -$0.07 | — | — |
Risks
Gross margin was 49.5% in FY2021 Q2, down 2.7 percentage points from FY2020 Q2, and MD&A attributes the decline to messaging re-acceleration, higher amortization of acquired intangibles, greater international product mix, and higher network service provider fees. Twilio began passing through new U.S. carrier A2P SMS fees on May 1, 2021, which it expects to increase revenue and cost of revenue but negatively impact gross margins.
The company relies on network service providers and intermediaries, many without long-term committed contracts, and fee changes may not be passed through quickly or fully to customers. MD&A reported a $120.3 million increase in network service provider costs in FY2021 Q2, and risk factors note U.S. mobile carriers have introduced new A2P SMS fees.
Headcount grew from 3,284 employees on June 30, 2020 to 6,334 employees on June 30, 2021, and international headcount grew from 924 to 2,250 over the same period. Risk factors state that this rapid growth places significant demands on corporate culture, operational infrastructure, and management controls.
Twilio completed the $850.0 million Zipwhip acquisition on July 14, 2021 and has made several fiscal 2021 acquisitions, including Segment and ValueFirst. Risk factors cite unproven ability to integrate larger or more complex businesses, potential loss of key employees and customers, and higher than expected integration costs.
The Schrems II decision invalidated the EU-U.S. Privacy Shield and raised doubts about Standard Contractual Clauses, and Twilio has experienced hesitancy, reluctance, or refusal by European or multinational customers to use its services due to data transfer risk. GDPR, CCPA, CPRA, LGPD, APPI, and data localization laws increase compliance costs and potential fines.
The global COVID-19 pandemic may still cause delayed sales cycles, reduced customer demand or minimum commitments, and difficulty forecasting usage levels. MD&A says the broader implications remain uncertain, though FY2021 Q2 saw stable or increased usage in travel, hospitality, and ridesharing industries.
Twilio is subject to FCC, CPNI, SHAKEN/STIR, and international telecommunications regulations, and it has faced government inquiries and audits over Numbering Resource compliance. It received a 2019 formal finding from the Australian Communications and Media Authority for failure to upload data into an emergency services database.
International revenue was 32% of total revenue in FY2021 Q2, up from 27% in FY2020 Q2, and international gross margin is typically lower than domestic. Risk factors cite regulatory, political, tax, currency, and operational challenges from expanding in over 180 countries.
Twilio continues to expand enterprise sales, where decision makers are multiple, sales cycles are longer and less predictable, and pricing negotiations can pressure margins. MD&A reported sales and marketing expenses rose 83% in FY2021 Q2, including a 102% average increase in sales and marketing headcount.
As of June 30, 2021, Twilio had $1.0 billion of indebtedness outstanding, including the 2029 Notes and 2031 Notes. Risk factors cite restrictive covenants, cross-default provisions, and the need to generate sufficient cash to service debt obligations.
As of June 30, 2021, Twilio carried $5.6 billion of net goodwill and intangible assets. An adverse change in market conditions or critical assumptions could result in an impairment charge to earnings.
A critical feature enablement service on Twilio's platform became overloaded on February 26, 2021, causing connection issues across multiple products and a widespread impact on customers for a limited number of hours. Risk factors note possible loss or reduced utilization by customers and that service level commitments include a minimum 99.95% monthly uptime.
SaaS KPIs
All quarters →Dollar-Based Net Expansion Rate
Non-GAAP Gross Margin
Non-GAAP Operating Margin
Number of Active Customer Accounts
Summary, forecast, risks and KPIs are extracted from TWILIO INC's SEC filings for Q2 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.