The News: Twilio released its Q4 2022 and full year earnings for the period ending December 31, 2022, beating analyst estimates. The company’s Q4 2022 revenues grew 22 percent for the quarter and 35 percent for the full fiscal year 2022. Read Twilio’s earnings release for more information.
Twilio Q4 2022 Earnings, up 22% YoY and Focusing on Profitability
Analyst Take: Twilio has grown its annual revenues from $399 million in fiscal year 2017 to $3.8 billion in fiscal year 2022, or a 57 percent compound annual growth rate, indicative of an organization in an emerging product category and in rapid customer acquisition mode. To be sure, the company grew its active customer accounts from 256,000 at the end of 2021 to 290,000 at the end of December of 2022.
Although Twilio Q4 2022 earnings beat analyst estimates, like other companies that are experiencing headwinds due macroeconomic pressures, Twilio grew its organic revenues (+21 percent) at its slowest pace in the last few years. To counterbalance negative market forces coupled with preserving profitability, the Twilio management team indicated that it is expeditiously adjusting its operating model from a growth-oriented organization to one that is fixated on profitable growth that will undoubtedly delight its stakeholders.
The management team laid out four major areas designed to help it accomplish its goals of achieving maximum profitability. Those areas include a new operating model that consists of two business units, a new leadership structure, a substantial and accelerated path to GAAP profitability and a new capital allocation strategy.
From an execution perspective and wasting no time, this week the company reduced headcount by an additional 17 percent following some job cuts that had already been made, with the bulk of this reduction in force coming from their communications business. Other planned actions include reducing employee perks, sunsetting the company’s sabbatical program, and taking action to reduce the company’s real estate footprint. The company also indicated it plans on using its balance sheet for share buybacks.
Here are Twilio’s Q4 2022 results by the numbers:
- Twilio Q4 2022 revenues were up 22 percent year-over-year.
- Twilio Q4 2022 non-GAAP from operations of $32.9M for Q4 2022 compared with non-GAAP loss from operations of $27.2 million for the Q4 2021.
Twilio Q1 2023 Guidance:
- Total Revenues are poised to be in the range $995 million to $1B, up 14 percent to 15 percent year-over-year.
- Non-GAAP operating profit is expected to be $45 million to $55 million.
- Non-GAAP EPS is expected to be in the range of $0.18 to $0.22.
Wrapping it up, our viewpoint is Twilio has been in rapid customer acquisition mode as evidenced by its impressive revenue and customer base growth. That said, although the company is starting to experience some headwinds like those experience by other tech companies, the time is right to shift its model, optimize its cost structure, remain laser focused on its core goals and continue seeking ways of unlocking more profitability. In fact, the company has been more aggressive at pruning its cost structure versus other IT organizations that have job cut ranges in the low to high single digit ranges. Ultimately, these actions should satisfy key Twilio stakeholders moving forward since the organization will be leaner, more focused, and exuding greater profitability. The company has already managed to produce 3 percent Non-GAAP operating margin in Q4 2022 indicating the company is on its way.
Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum Research as a whole.
Other insights from Futurum Research:
Twilio Q3 2022 Earnings: Up 33% Year-over-Year, Reflecting Strong CPaaS Market
Twilio Launches Twilio Engage, First-of-its-Kind Growth Automation Platform
Image Credit: Twilio
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Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
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