Analyst(s): Keith Kirkpatrick
Publication Date: February 14, 2025
Twilio’s Q4 FY 2024 results reflect strong performance driven by messaging growth and operational improvements. The company’s continued focus on cost discipline and strategic product investments supported its profitability and margin expansion.
What is Covered in this Article:
- Twilio’s Q4 FY 2024 financial performance
- Communication segment growth and new use cases
- Expansion of AI-driven customer engagement solutions
- Strategic product innovations and Segment updates
- FY 2025 guidance and long-term financial targets
The News: Twilio Inc. (NYSE: TWLO) reported its Q4 FY 2024 results, with revenue of $1.2 billion, exceeding consensus estimates by 1% and reflecting an 11% year-on-year (YoY) increase. Communications revenue rose 12% YoY to $1.1 billion, while Segment revenue declined 1% YoY to $74.1 million. Non-GAAP income from operations reached $197 million, slightly below consensus by 0.5%, up from $172.6 million in Q4 FY 2023. The non-GAAP operating margin expanded to 16.5% from 16% in the same quarter last year. Non-GAAP net income stood at $161.2 million, representing a 2% YoY increase. Non-GAAP diluted earnings per share (EPS) was $1, down 3.5% from consensus estimates but up from $0.86 in Q4 FY 2023.
“I’m very pleased with the accelerated revenue growth we delivered in the fourth quarter as well as our ongoing cost discipline that is driving strong profitability and free cash flow,” said Aidan Viggiano, CFO of Twilio. “We are confident in our plans to drive durable revenue growth, continued margin expansion, and strong free cash flow generation in 2025.”
Twilio Q4 FY 2024 Performance Fueled by Communications and Margin Gains
Analyst Take: Twilio’s Q4 FY 2024 results highlight the company’s successful transition toward balancing growth and profitability, driven by its core communication business and strategic investments in AI and data innovation. Strong performance in messaging and email, along with operational improvements, helped Twilio achieve its second consecutive quarter of double-digit revenue growth and reach a major milestone – its first-ever GAAP operating profitability.
The Communication segment demonstrated resilience, while Twilio’s growing AI capabilities and product innovations positioned the company for new growth opportunities. Completing infrastructure upgrades for Segment and expanding integrations with key data platforms further bolstered Twilio’s competitive advantage, setting a solid foundation for sustained long-term growth.
Twilio’s Communication Segment Boosted by Messaging Growth and Strategic Wins
Twilio’s Communication segment posted 12% YoY growth in Q4 FY 2024, driven by rising messaging volumes, strong email performance, and solid demand across industries like healthcare, retail, and e-commerce. The company’s scalability and reliability were on full display during Cyber Week when Twilio handled 5 billion messages, 65 billion emails, and 678 million calls—maintaining 100% uptime during this high-traffic period.
Twilio continues to enhance its communication channels by introducing new features for Rich Communication Services (RCS) and WhatsApp, meeting evolving customer needs. RCS innovations like rich content cards and carousels create more interactive, media-rich messaging experiences, improving engagement while simplifying development with Twilio’s single messaging API and universal template management system.
Large deal activity further propelled growth. In Q4, Twilio closed 78 deals worth $500,000 or more, a 47% YoY increase. A standout deal involved a prominent U.S. healthcare system with 33 hospitals that expanded its Twilio use by adopting RCS messaging, branded calling, and the Engagement Suite to boost call adoption, strengthen brand presence, and enhance message deliverability and engagement. Twilio’s ability to scale its communication offerings, roll out innovative services, and secure high-value deals reinforces its growing influence across key industries and verticals.
AI and Data Innovation: Unlocking New Growth Levers
AI remains core to Twilio’s long-term strategy, driving both efficiency and new opportunities for customer engagement. In Q4 FY 2024, the company launched ConversationRelay in public beta, simplifying the development of AI-driven voice agents and advancing Twilio’s vision of creating more personalized and interactive voice experiences.
Strategic partnerships with OpenAI, AWS, Databricks, Snowflake, and Google Cloud further strengthen Twilio’s presence across the AI value chain. One standout example is the 1-800-ChatGPT service, powered by Twilio’s call and messaging solutions, which saw significant traffic – demonstrating how Twilio is tapping into emerging AI-driven business models. Notably, 90% of Forbes 50 AI startups rely on Twilio’s infrastructure for customer engagement, reinforcing its critical role in the AI ecosystem.
Internally, Twilio leverages AI to boost operational efficiency. AI processes 80% of new inbound leads, improving response times, expanding multilingual support, and enhancing lead quality. Meanwhile, Twilio’s help center AI agents achieved a 75% ticket deflection rate, reducing customer service costs while delivering a better user experience. These advancements reflect Twilio’s ongoing commitment to using AI not only for internal improvements but also to power innovative solutions for its customers.
Product Innovation and Strategic Growth Initiatives
Twilio’s innovation roadmap continues to fuel its growth, with the company launching 251 new products and enhancements in FY 2024. These efforts emphasize improving security, simplicity, and personalized customer experiences to meet the rising demand for real-time, contextual engagement solutions. This innovation positions Twilio as a leader in the rapidly expanding Customer Experience as a Service (CXaaS) market.
Despite a modest revenue decline, the Segment business made significant progress. The infrastructure migration project for Segment was mostly completed by Q4 FY 2024, contributing to a sequential gross margin improvement of 240 basis points. Integration with major data warehouse platforms enables customers to achieve faster ROI from Segment’s offerings, boosting satisfaction and strengthening long-term growth prospects.
FY 2025 Guidance and Outlook
Twilio’s FY 2025 guidance reflects the company’s confidence in sustained growth and profitability as it continues its transformation into a platform-based software vendor. Organic revenue is expected to grow by 7%-8%, fueled by strategic investments in AI and an expanding product portfolio. Twilio’s expanding customer base also serves as a strong lever for growth and stability, which the Street will likely reward.
Twilio forecasts non-GAAP operating income between $825 million and $850 million, with free cash flow expected to align within the same range – highlighting the company’s strong cash-generation capability.
For Q1 FY 2025, Twilio anticipates revenue of $1.13 billion to $1.14 billion, representing 8%-9% YoY growth, along with non-GAAP operating income of $180 million to $190 million. The company projects non-GAAP EPS of $0.88 to $0.93 for the quarter.
Twilio’s longer-term outlook remains bright. As presented at its recent Investor Day, the company is targeting non-GAAP operating margins of 21%-22% by FY 2027. This ambitious goal will be driven by a mix of cost discipline and sustained sales momentum. Over the next three years, Twilio expects to generate more than $3 billion in cumulative free cash flow. CEO Khozema Shipchandler’s strategic focus on sales restructuring, AI integration, and product enhancements places Twilio in a strong position to accelerate growth and boost profitability in the years ahead.
Disclosure: The Futurum Group 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 The Futurum Group as a whole.
Other insights from The Futurum Group:
Twilio’s Q3 FY2024 Earnings: Leveraging AI to Drive Customer Engagement
Will Twilio Segment’s Solutions for Advertisers Help Deliver Better Performance?
Twilio’s RCS Expansion with Data-Driven Benefits
Author Information
Keith has over 25 years of experience in research, marketing, and consulting-based fields.
He has authored in-depth reports and market forecast studies covering artificial intelligence, biometrics, data analytics, robotics, high performance computing, and quantum computing, with a specific focus on the use of these technologies within large enterprise organizations and SMBs. He has also established strong working relationships with the international technology vendor community and is a frequent speaker at industry conferences and events.
In his career as a financial and technology journalist he has written for national and trade publications, including BusinessWeek, CNBC.com, Investment Dealers’ Digest, The Red Herring, The Communications of the ACM, and Mobile Computing & Communications, among others.
He is a member of the Association of Independent Information Professionals (AIIP).
Keith holds dual Bachelor of Arts degrees in Magazine Journalism and Sociology from Syracuse University.
