The News: Twilio released its third quarter (Q3) 2023 earnings for the period ending September 30. The company’s Q3 2023 revenue reached $1.03 billion, reflecting a 5% year-over-year (YoY) increase. Twilio continues to build on the strengths of its Twilio Communications and Twilio Data & Applications businesses, leveraging the benefits of its streamlined cost structure and driving innovation forward. Read the entire Q3 2023 earnings release on Twilio’s website for more information.
By the numbers:
- Twilio Q3 2023 non-generally accepted accounting principles (non-GAAP) income from operations was $136.4 million compared with non-GAAP loss from operations of $35.1 million for Q3 2022
- Twilio Q3 2023 revenue was up 5% YoY to reach $1.03 billion
- Twilio Communications revenue was $906.7 million for Q3 2023
- Twilio Data & Applications revenue reached $127.0 million for Q3 2023
Guidance for fourth quarter (Q4) full year (FY) 2023:
- Total revenue in the range of $1.03 billion to $1.04 billion, up 1%-2% YoY
- Non-GAAP income from operations in the range of $115 million to $125 million
- Non-GAAP diluted earnings per share (EPS) are expected to be in the range of $0.53-$0.57
Twilio updated its FY 2023 guidance, raising FY non-GAAP income from operations to between $475 million and $485 million.
Twilio Shows Strong Q3 2023 Results, Exceeding Revenue Targets
Analyst Take: Twilio reported a solid Q3 2023 as it continues to execute on its path toward growth while nurturing innovation. The engagement platform provider exceeded its revenue and non-GAAP profitability targets while having a record quarter of non-GAAP income from operations and free cash flow. Twilio revenue reached $1.03 billion, growing 5% YoY.
Aside from the strong financial results, this quarter saw Twilio launch a raft of solutions leveraging its CustomerAI technology, which is going to be a key piece of Twilio’s strategy to combine strengths in data and communications to support deeper personalization and better CX.
Twilio Communications Focuses on Efficient Growth and Executes Against Objectives
Twilio Communications’ revenue reached $906.7 million in Q3, up 5% YoY. The Communications segment had more than 291,000 active customer accounts this past quarter.
The Communications segment has improved on its go-to-market strategy to win new customers. Twilio acknowledged partnerships were part of its strategy to gain market share and pointed to a landmark expanded deal with Softbank as an example. Communications also had success with its cross-selling efforts, with roughly half of its expansion deals in North America being in non-messaging use cases. In addition to cross-sell successes, the group brought several new logos into its fold during the quarter including one of the largest European airlines and a global hotel brand.
Twilio Communications dug in on improving self-service and automation capabilities, which will create more ease of use for its customers and support its internal efficiency goals.
On the product side, the company had many notable announcements centered on its CustomerAI capabilities, including Voice Intelligence, Traffic Optimization Engine, Branded Calling, SendGrid Engagement Quality, and Fraud Guard.
Twilio Data & Applications Segment Continues to Make Progress
Twilio Data & Applications produced $127 million in revenue in Q3, demonstrating 9% YoY growth. Data & Applications had more than 33,000 active customer accounts during the quarter.
While the Data & Applications segment continues make progress, showing a small improvement in bookings over the quarter, the story seems to be that there is still work to be done. And Twilio is doing it.
During the earnings call, CEO Jeff Lawson shared that he will be interim head of Twilio Data & Applications as Elena Donio transitions into an advisory role. Twilio has been putting a lot of effort into its go-to-market strategy across the company, but with Lawson temporarily at the helm of Data & Applications and working closely with internal teams, the company will be looking to scale those efforts to grow at pace.
Data & Applications had some impressive wins this quarter. The segment won a deal with a leading fintech company and there was a Flex customer win of seven figures with a top insurance company. In another example of a cross-sell, a Communications customer, Sweetwater, brought all of its agents onto the Flex platform, migrating from an on-premises vendor. The International Federation of Red Cross and Red Crescent Societies also selected Twilio Flex to power its digital helpdesk in Hungary and the Netherlands.
On the product side, Predictions became generally available and the adopters of the technology are already seeing impressive results.
Looking Ahead
There were definitely some headwinds during Q3 2023 as companies across the globe tightened their spending. In the Data & Applications segment, Twilio faced challenges with churn and contraction but was still able to demonstrate solid successes. For Twilio Communications, usage volumes have stabilized, and churn has not been an issue, and in these turbulent times, that is a win.
Twilio is well positioned to keep taking its strategy forward to leverage one of its strongest assets – data – to help reach its goals of providing not more communications but better communications. The other piece is the ability to help customers wrangle that data and get it ready for all the AI use cases that will help push their businesses forward.
It is still early days for Twilio’s CustomerAI, and the company is just scratching the surface of the power and benefit that this solution will bring across its product portfolio. The insights that will be generated through these solutions will be able to fuel more friction-free interactions with customers and serve up the personalization that is the gold standard for CX.
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 Unveils a Robust Lineup of CustomerAI-Powered Solutions
Twilio Debuts CustomerAI Privacy Ladder and AI Nutrition Facts Labels
CX Research from Twilio, Leapsome, and Workhuman-Gallup
Author Information
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.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
As a detail-oriented researcher, Sherril is expert at discovering, gathering and compiling industry and market data to create clear, actionable market and competitive intelligence. With deep experience in market analysis and segmentation she is a consummate collaborator with strong communication skills adept at supporting and forming relationships with cross-functional teams in all levels of organizations.
Sherril holds a Master of Business Administration in Marketing from University of Colorado, Boulder and a Bachelor of Arts in Psychology from Rutgers University.
