Summary
Twilio's second quarter of fiscal 2024 delivered revenue of $1.08 billion, up 4% on a reported basis and 7% organic year over year. Gross profit was $555.8 million, up 9.9%, and gross margin was 51.3%, up 2.6 percentage points. The company continued to close the gap between GAAP and non-GAAP profitability. GAAP loss from operations was $19.0 million, an improvement of $122.8 million year over year. Non-GAAP income from operations was $175.3 million, compared with $120.1 million in the prior-year quarter. GAAP net loss was $31.9 million, an improvement of $134.3 million. GAAP diluted loss per share was $0.19, an improvement of $0.72. Operating margin was -1.8%, up 11.9 percentage points.
Cash generation remained a bright spot. Operating cash flow was $213.3 million, up 155.1%. First-half operating cash flow was $403.5 million, up 2937.3% from the prior-year period. Free cash flow was $197.6 million, compared with $71.9 million a year earlier. Deferred revenue was $138.7 million, down 0.5%, while remaining performance obligations were $152.6 million, up 23.7%. The company also stayed active on capital return. Twilio repurchased $898.6 million of stock, or 15.2 million shares, in the quarter. For the first half, repurchases totaled $1.3 billion, or 21.4 million shares. Twilio has completed over $2.2 billion of aggregate repurchases and is targeting the remaining $0.8 billion before the end of 2024.
Customer metrics were stable but not accelerating. Active Customer Accounts were more than 316,000 as of June 30, 2024, compared with more than 304,000 a year earlier. Dollar-Based Net Expansion Rate was 102%, down from 103%. Communications Dollar-Based Net Expansion Rate was 102%, and Segment Dollar-Based Net Expansion Rate was 93%. Twilio ended the quarter with 5,507 employees. The top 10 Active Customer Accounts generated 10% of revenue, down from 11%. Management continued to point to CustomerAI and the combination of Communications and Segment products as long-term growth drivers.
Guidance points to continued profit focus but slower top-line expansion. For the third quarter, Twilio expects revenue of $1,085 million to $1,095 million, with reported and organic revenue growth of 5% to 6%. Non-GAAP income from operations is guided to $160 million to $170 million, and non-GAAP diluted earnings per share is guided to $0.81 to $0.86 on 160 million non-GAAP weighted average diluted shares. For the full fiscal year 2024, Twilio raised its non-GAAP income from operations range to $650 million to $675 million from $585 million to $635 million. It narrowed full-year organic revenue growth guidance to 6% to 7% from 5% to 10%. Full-year 2024 free cash flow is expected to be in line with full-year 2024 non-GAAP income from operations.
Risks still deserve attention. Twilio faces collection risk from Oi SA's Brazilian reorganization, and management warns that failure to comply or resolve contingencies could lead to additional bad debt expense or revenue reductions. The wind-down of the Zipwhip software business is expected to weigh on revenue growth in 2024. The migration of part of Segment's architecture to a new infrastructure provider is expected to pressure Segment gross margins until the migration completes by the end of 2024. Macroeconomic uncertainty, competition, regulatory compliance, and network service provider fees remain broader risks. The share repurchase programs expire on December 31, 2024.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.08B | $1.05B | +3.4% | $1.04B | +4.3% |
| Gross profit | $555.8M | $544.0M | +2.2% | $505.8M | +9.9% |
| Gross margin | 51.4% | 52.0% | -0.6 pp | 48.7% | +2.6 pp |
| Research & development | $243.7M | $251.6M | -3.2% | $226.9M | +7.4% |
| Sales & marketing | $217.6M | $214.0M | +1.7% | $261.6M | -16.8% |
| General & administrative | $114.0M | $112.0M | +1.8% | $134.9M | -15.5% |
| Total operating expenses | $574.9M | $587.5M | -2.2% | $647.6M | -11.2% |
| Operating income (loss) | -$19.0M | -$43.5M | +56.2% | -$141.8M | +86.6% |
| Operating margin | -1.8% | -4.2% | +2.4 pp | -13.7% | +11.9 pp |
| Net income (loss) | -$31.9M | -$55.3M | +42.4% | -$166.2M | +80.8% |
| Net margin | -2.9% | -5.3% | +2.4 pp | -16.0% | +13.1 pp |
| Diluted EPS | -$0.19 | -$0.31 | +$0.12 | -$0.91 | +$0.72 |
Risks
Global economic and political conditions, including inflation, supply chain disruptions and geopolitical instability, have caused some Communications customers to reduce or terminate usage and Segment customers to renegotiate contracts on less advantageous terms, reduce contract value, default or fail to renew. Because a majority of revenue is usage-based, Twilio says it may be more immediately and severely impacted than subscription-based SaaS peers.
Most revenue is usage-based and customers can reduce or cease use without penalty. Segment Dollar-Based Net Expansion Rate was 93% in the three months ended June 30, 2024 and 92% for the six months ended June 30, 2024, reflecting churn and contraction among existing Segment customers.
After an operational review of Segment in the first quarter of 2024, Twilio is targeting break-even non-GAAP Segment income from operations by Q2 2025 and GAAP operating profitability on a consolidated basis by Q4 2025. There is no guarantee these targets will be achieved, and segment reporting changes may result in future goodwill impairment charges.
Twilio has reduced its workforce by approximately 35% since September 2022, including sales force reductions, and now relies more heavily on self-service for Communications. The reductions may cause employee attrition, lower morale, loss of institutional knowledge and failure to meet operational or growth targets.
Twilio has experienced high attrition among senior management and key employees. In January 2024, co-founder Jeff Lawson resigned as CEO and Khozema Shipchandler was appointed, and the company may face strategy, culture and transition challenges.
Enterprise adoption, especially for Segment's complex customer data platform implementations, requires multi-stakeholder approval, extensive education and protracted pricing and contract negotiations, resulting in higher costs and longer, less predictable sales cycles. MD&A states Twilio intends to reduce time to value for Segment.
Twilio is investing significantly in AI and ML, including CustomerAI, but says there is no guarantee these investments will lead to wider product adoption. The risk factors also note that if user authentication practices evolve to reduce or eliminate one-time passwords, Twilio's revenue could be adversely affected.
The markets for Twilio's products are intensely competitive with relatively low barriers to entry in some segments, and some competitors are larger with greater resources. Pricing pressures and competitor bundling could lead to reduced prices, reduced revenue or reduced margins.
Twilio relies on network service providers and internet service providers for connectivity, and many providers lack long-term contracts. Multiple major U.S. mobile carriers have introduced A2P SMS fees; passing these fees through increases Communications revenue and cost of revenue but typically does not affect gross profit dollars and negatively impacts gross margins.
In the six months ended June 30, 2024, 35% of revenue came from customer accounts outside the United States. International Communications gross margin is typically lower than domestic gross margin because network service provider fees outside the U.S. are generally higher, and international operations carry additional regulatory, currency and collection risks.
As of June 30, 2024, Twilio had $6.4 million in pre-petition accounts receivable from Oi SA, net of $8.8 million in reserves, and $13.1 million in post-petition receivables. If Oi SA fails to comply with its reorganization plan or stops paying post-petition receivables, Twilio may incur additional bad debt expense or revenue reductions.
In the six months ended June 30, 2024, Twilio's 10 largest Active Customer Accounts generated an aggregate of 10% of revenue. The loss of, or decline in revenue from, any large customer could harm results.
Twilio is migrating part of Segment's architecture to a new infrastructure provider in 2024, expecting overlapping expenses with original and new vendors for much of 2024 and a negative impact on Segment gross margins until the migration completes by the end of 2024.
Twilio is winding down the software component of its Zipwhip business in 2024 and expects this to negatively impact revenue growth rates in 2024. Divested Internet of Things and ValueFirst businesses also reduced Q2 2024 Communications revenue by $24.8 million.
Twilio's business depends on obtaining and retaining geographic, mobile, regional, local and toll-free numbers and processing port requests in a timely manner under telecommunications regulations. Fraudulent or illegal usage of its products could also lead to liability, service disruption and reputational harm.
SaaS KPIs
All quarters →Dollar-Based Net Expansion Rate
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 Q2 FY2024 (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.