Summary
Twilio's second quarter FY2022 revenue was $943.4 million, up 41% from the prior-year quarter. Organic revenue rose 33%. The increase came from higher usage of Programmable Messaging, Programmable Voice, Email and Software products, the adoption of additional products by existing customers, additional A2P fees imposed by certain carriers, and contributions from Zipwhip and other acquisitions. The company ended June 30, 2022 with more than 275,000 Active Customer Accounts, versus 240,000 a year earlier. Dollar-Based Net Expansion Rate was 123%, down from 135% in the prior-year quarter. Management highlighted the largest Flex deal ever signed. The 10 largest Active Customer Accounts generated 12% of total revenue, the same share as a year earlier. Twilio had 8,510 employees as of June 30, 2022, and it added Miyuki Suzuki to its board of directors.
GAAP gross profit rose 34.4% to $445.3 million, but gross margin fell to 47.2%. Non-GAAP gross margin was 51%. The decline reflected lower-margin international messaging growth, A2P fees passed through at cost, and higher amortization of acquired intangibles. GAAP operating loss widened to $311.9 million, and operating margin was negative 33.1%. Non-GAAP operating margin was negative 1%. Net loss widened to $322.8 million. Diluted EPS was negative $1.77. On a non-GAAP basis, loss from operations was $7.3 million, compared with non-GAAP income from operations of $4.2 million a year earlier. Non-GAAP net loss per share was $0.11 in both quarters. The non-GAAP figures exclude stock-based compensation, amortization of acquired intangibles, acquisition-related expenses, charitable contributions and payroll taxes related to stock-based compensation.
Headcount growth remained a major cost driver. Twilio said average research and development headcount rose 40%, sales and marketing headcount rose 41%, and general and administrative headcount rose 44%. The company has since frozen the vast majority of new hires outside software areas. Operating cash flow was negative $62.6 million in the quarter. Year to date, operating cash flow was negative $80.1 million. Capital expenditures were $3.8 million in the quarter and $10.8 million for the first six months. Twilio reported deferred revenue of $137.8 million and remaining performance obligations of $140.8 million.
In May 2022, the company acquired an equity method investment in Syniverse Corporation representing approximately 43% of its common shares. That investment will begin affecting results in the third quarter of 2022, when Twilio records its share of Syniverse's net income or loss and amortization of the excess investment basis. Twilio said its cash, cash equivalents and marketable securities balances, along with cash flows generated by operations, should be sufficient for working capital and capital expenditures for the next 12 months and beyond.
Guidance for the third quarter of FY2022 calls for year-over-year revenue growth of 30% to 32%, with organic growth of 29% to 30%. Non-GAAP loss from operations is projected at $70 million to $60 million, and non-GAAP loss per share at negative $0.43 to negative $0.37 on 183 million non-GAAP basic shares. The outlook includes an estimated $35 million non-cash accrual for a new sabbatical program for tenured employees. Management also expects $90 million to $110 million of non-cash impairment charges in the third quarter from office closures under its remote-first strategy. The company plans to reach non-GAAP operating profitability beginning in 2023.
Risks remain prominent. Twilio flagged macroeconomic uncertainty, inflation, a possible recession, labor shortages and supply chain disruptions. It also noted softness in cryptocurrencies, consumer on-demand and social media, plus some longer sales cycles. Network service provider fees, especially A2P SMS fees, continue to pressure gross margin. Foreign exchange and the mix of U.S. versus international revenue also matter. The new sabbatical accrual and potential office impairments will weigh on third-quarter GAAP results. Even with those headwinds, the quarter showed strong top-line growth and demand across the customer engagement platform.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $943.4M | $875.4M | +7.8% | $668.9M | +41.0% |
| Gross profit | $445.3M | $425.1M | +4.8% | $331.2M | +34.4% |
| Gross margin | 47.2% | 48.6% | -1.4 pp | 49.5% | -2.3 pp |
| Research & development | $279.6M | $240.6M | +16.2% | $181.3M | +54.3% |
| Sales & marketing | $335.0M | $287.9M | +16.3% | $238.1M | +40.7% |
| General & administrative | $142.6M | $114.4M | +24.7% | $114.2M | +24.9% |
| Total operating expenses | $757.2M | $642.9M | +17.8% | $533.5M | +41.9% |
| Operating income (loss) | -$311.9M | -$217.8M | -43.2% | -$202.3M | -54.2% |
| Operating margin | -33.1% | -24.9% | -8.2 pp | -30.2% | -2.8 pp |
| Net income (loss) | -$322.8M | -$221.6M | -45.6% | -$227.9M | -41.7% |
| Net margin | -34.2% | -25.3% | -8.9 pp | -34.1% | -0.2 pp |
| Diluted EPS | -$1.77 | -$1.23 | -$0.54 | -$1.31 | -$0.46 |
Risks
MD&A and risk factors cite recent softness in revenue from cryptocurrency, consumer on-demand, and social media customers, as well as some instances of longer sales cycles. Inflation, rising interest rates, recession risk, labor shortages, and supply chain disruptions could reduce customer spending, delay contract signings or renewals, and disproportionately pressure small and medium-sized business customers.
Gross margin declined to 47.2% in FY2022 Q2 from 49.5% in FY2021 Q2, down 2.3 percentage points, and MD&A attributes the decline primarily to lower-margin international messaging growth and A2P fees passed to customers at cost. Amortization of acquired intangibles and international mix are also cited as pressures.
MD&A reports Dollar-Based Net Expansion Rate of 123% for the three months ended June 30, 2022, compared with 135% for the prior-year period, and total revenue growth rate was 41% compared with 67%. Risk factors cite complex, longer, and less predictable sales cycles for enterprise, government, and regulated customers, plus the need to make new sales hires productive.
In May 2022 Twilio paid $750.0 million for approximately 43% of Syniverse and will begin recording its share of Syniverse net income or loss and basis amortization in Q3 2022. Remote-first office closures may trigger $90 million to $110 million of non-cash impairment charges in Q3 2022, and a new sabbatical program adds approximately $35.0 million of non-cash expense in Q3 2022.
The cloud communications market is intensely competitive, and risk factors note larger competitors, lower-priced alternatives, and pricing pressure in an inflationary environment. If Twilio cannot maintain pricing, margins could be reduced; A2P fees passed through at cost mathematically hurt gross margins.
Risk factors disclose employee turnover amid the ongoing 'great resignation,' high attrition among senior management and key employees, and uncertainty over whether the Open Work hybrid model will meet workforce expectations. MD&A notes Twilio has frozen most new hires and backfills outside Segment, Engage, and Flex.
As of June 30, 2022, Twilio carried a net $6.2 billion of goodwill and intangible assets. Adverse market conditions or changes to critical assumptions could result in an impairment charge that adversely affects results of operations.
International revenue represented 35% of total revenue for the six months ended June 30, 2022, and international headcount grew from 2,250 employees at June 30, 2021 to 3,481 at June 30, 2022. International gross margin is typically lower than domestic, and expansion subjects Twilio to regulatory, currency, tax, and compliance risks.
Risk factors detail evolving privacy and telecom rules including GDPR, CPRA effective January 1, 2023, LGPD, FCC/CPNI, SHAKEN/STIR, and international licensing and Numbering Resource requirements. Twilio has faced government inquiries and audits for Numbering Resource non-compliance and may face fines, reclamations, or restrictions in certain jurisdictions.
As of June 30, 2022, Twilio had $1.0 billion of indebtedness outstanding, with variable-rate exposure to rising interest rates and restrictive covenants plus cross-default provisions. Operating cash flow was negative $80.14 million for the six months ended June 30, 2022, down from positive $26.22 million in the prior-year period, which could pressure debt service and liquidity.
SaaS KPIs
All quarters →Dollar-Based Net Expansion Rate
Non-GAAP Gross Margin
Active Customer Accounts
Summary, forecast, risks and KPIs are extracted from TWILIO INC's SEC filings for Q2 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.