01—Abstract
Summary
Summary of the 10-K filed February 27, 2024. Cited figures are marked; the original filing is the authoritative source.
Twilio Inc. reported 2023 revenue of $4.15 billiona, up from $3.83 billion in 2022, with Communications revenue of $3.86 billion and Segment revenue of $295.3 million.
The company remained unprofitable on a GAAP basis, with a net loss of $1.02 billionb in 2023 versus $1.26 billion in 2022, though non-GAAP income from operations was $533.0 million compared with a loss of $4.5 million in 2022. Active Customer Accounts rose to over 305,000, while Dollar-Based Net Expansion Rate declined to 103% from 121%, and the Segment Dollar-Based Net Expansion Rate was 97%. The company undertook substantial restructuring, cutting its workforce by approximately 17% in February 2023 and approximately 5% in December 2023, after an 11% reduction in September 2022.
Restructuring costs were $165.7 millionc and impairment of long-lived assets was $320.5 million, including a $285.7 million impairment of Segment intangible assets. An operational review of the Segment business is expected to be completed in March 2024, and Jeff Lawson resigned as CEO in January 2024, succeeded by Khozema Shipchandler.
Capital position includes cash and cash equivalents of $655.9 milliond and short-term marketable securities of $3.4 billion, against $1.0 billion of senior notes due 2029 and 2031. The company repurchased $672.1 million of stock in 2023 under a $1.0 billion authorization, with $327.9 million remaining, and reported an accumulated deficit of $5.07 billion as of year-end.
02—Key points
Key Highlights
- Revenue of $4.15 billion in 2023, up from $3.83 billion in 2022; Communications contributed $3.86 billion and Segment $295.3 million.
- GAAP net loss of $1.02 billion in 2023 (EPS of $(5.54)), narrowed from $1.26 billion in 2022; non-GAAP income from operations was $533.0 million versus a $4.5 million loss in 2022.
- Dollar-Based Net Expansion Rate fell to 103% from 121% in 2022; Segment's rate was 97%, reflecting higher contraction and churn.
- Workforce reductions of about 17% (February 2023) and about 5% (December 2023), with restructuring costs of $165.7 million and a $285.7 million impairment of Segment intangible assets.
- Leadership transition: co-founder Jeff Lawson resigned as CEO in January 2024 and Khozema Shipchandler was appointed CEO; a Segment operational review is expected to complete in March 2024.
- Cash and cash equivalents of $655.9 million plus $3.4 billion in short-term marketable securities, against $1.0 billion of 3.625% 2029 and 3.875% 2031 senior notes.
- Repurchased $672.1 million of common stock in 2023 under a $1.0 billion program expiring December 31, 2024, with $327.9 million remaining.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2023, Twilio lost $0.24.
- Revenue$4.15B100.0%
- Cost of revenue−$2.11B50.8%
- Gross profit$2.04B49.2%
- Operating costs−$2.92B70.3%
- Operating income−$876.5M21.1%
- Interest, other & tax−$138.5M3.3%
- Net income−$1.01B24.4%
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 27, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $4.15B$3.83B | +8.6% |
| Cost of Revenue | $2.11B$2.01B | +4.8% |
| Gross Profit | $2.04B$1.81B | +12.7% |
| R&D Expenses | $942.79M$1.08B | −12.6% |
| Operating Expenses | $2.92B$3.02B | −3.3% |
| Operating Income | -$876.54M-$1.21B | +27.3% |
| Net Income | -$1.01B-$1.26B | +19.2% |
| EPS (Basic) | $-5.54$-6.86 | +19.2% |
| EPS (Diluted) | $-5.54$-6.86 | +19.2% |
| Shares Outstanding (Basic) | 183.33M182.99M | +0.2% |
| Shares Outstanding (Diluted) | 183.33M182.99M | +0.2% |
05—Questions
Frequently Asked Questions
Is Twilio profitable?
Not on a GAAP basis. Twilio reported a net loss of $1.02 billion for 2023, though this was smaller than the $1.26 billion loss in 2022. Non-GAAP income from operations was $533.0 million in 2023, compared with a $4.5 million loss in 2022. The filing states the company has incurred net losses in every year since inception and has an accumulated deficit of $5.1 billion.
What drove revenue growth in 2023?
Revenue rose $327.6 million, or 9%, to $4.15 billion. Communications revenue grew $308.6 million, primarily from a 5% increase in Communications Active Customer Accounts and higher usage by existing customers, partly offset by $59.8 million lost from divested ValueFirst and IoT businesses. Segment revenue grew $19.0 million, or 7%.
What risks did the company flag around customer retention?
Dollar-Based Net Expansion Rate declined to 103% from 121% in 2022, and the Segment rate fell to 97% due to higher contraction and churn. The filing notes that most usage-based customers have no long-term contracts and may reduce usage without penalty, and that macroeconomic conditions have led some Communications customers to reduce or terminate usage.
What is the status of the company's leadership and strategic review?
In January 2024, co-founder Jeff Lawson resigned as CEO and as a director, and Khozema Shipchandler, formerly President of Twilio Communications, was appointed CEO and director. The company is conducting an operational review of its Segment business, expected to be completed in March 2024, which will inform its future Segment strategy.
How much debt does Twilio carry and how is it funded?
Twilio had $1.0 billion of indebtedness outstanding at December 31, 2023, consisting of $500.0 million of 3.625% senior notes due 2029 and $500.0 million of 3.875% senior notes due 2031. The company reported $655.9 million of cash and cash equivalents and $3.4 billion of short-term marketable securities, which it states are sufficient for the next 12 months and beyond.
06—Continue