01—Abstract
Summary
Summary of the 10-Q filed May 8, 2024. Cited figures are marked; the original filing is the authoritative source.
Twilio Inc. reported first-quarter 2024 revenue of $1.05 billiona, up from $1.01 billion in the prior-year quarter, and a net loss of $55.3 million, narrowed from a net loss of $342.1 million a year earlier.
Loss from operations improved to $43.5 millionb from $264.1 million, helped by lower restructuring costs ($9.9 million versus $121.9 million), the absence of prior-year impairments, and lower sales and marketing expense. Non-GAAP income from operations was $159.6 million, or 15% of revenue, versus $103.8 million, or 10%, a year earlier. Net cash provided by operating activities was $190.1 million, and free cash flow was $177.3 million, compared with negative figures in the prior-year period.
The Communications segment drove most of the growth, with revenue of $972.0 millionc and non-GAAP income from operations of $249.0 million. The Segment business, by contrast, generated revenue of $75.0 million and a non-GAAP loss from operations of $21.0 million, and management is targeting break-even non-GAAP operating income for Segment by the second quarter of 2025 and GAAP operating profitability on a consolidated basis by the fourth quarter of 2025. Cash and cash equivalents were $672.6 million and short-term marketable securities were $3.2 billion at March 31, 2024, against $1.0 billion of senior notes.
The company repurchased $384.3 milliond of Class A common stock in the quarter and had approximately $1.9 billion remaining under its repurchase authorizations. The filing also notes that Khozema Shipchandler was appointed Chief Executive Officer in January 2024 after co-founder Jeff Lawson resigned, and that the Oi SA bankruptcy reorganization affects collections on pre-petition receivables. Dollar-Based Net Expansion Rate was 102%, down from 106% a year earlier.
02—Key points
Key Highlights
- Revenue rose to $1.05 billion from $1.01 billion, a 4% increase, with Communications revenue of $972.0 million and Segment revenue of $75.0 million.
- Net loss narrowed to $55.3 million from $342.1 million, and loss from operations narrowed to $43.5 million from $264.1 million.
- Non-GAAP income from operations was $159.6 million, or 15% of revenue, compared with $103.8 million, or 10%, in the prior-year quarter.
- Operating cash flow was $190.1 million and free cash flow was $177.3 million, compared with negative operating cash flow of $97.9 million in the prior-year quarter.
- Segment non-GAAP loss from operations was $21.0 million; management targets break-even Segment non-GAAP operating income by the second quarter of 2025 and GAAP consolidated operating profitability by the fourth quarter of 2025.
- The company repurchased $384.3 million of Class A common stock and had approximately $1.9 billion remaining under its share repurchase programs, which expire December 31, 2024.
- Cash and cash equivalents of $672.6 million and short-term marketable securities of $3.2 billion were held at March 31, 2024, against $1.0 billion of senior notes.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q1 FY2024, Twilio lost $0.05.
- Revenue$1.05B100.0%
- Cost of revenue−$503.0M48.0%
- Gross profit$544.0M52.0%
- Operating costs−$587.5M56.1%
- Operating income−$43.5M4.2%
- Interest, other & tax−$11.8M1.1%
- Net income−$55.3M5.3%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 8, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $1.05B$1.01B | +4.0% |
| Cost of Revenue | $503.01M$515.87M | −2.5% |
| Gross Profit | $544.04M$490.69M | +10.9% |
| R&D Expenses | $260.46M$238.59M | +9.2% |
| Operating Expenses | $587.54M$754.77M | −22.2% |
| Operating Income | -$43.50M-$264.08M | +83.5% |
| Net Income | -$55.35M-$342.14M | +83.8% |
| EPS (Basic) | $-0.31$-1.84 | +83.2% |
| EPS (Diluted) | $-0.31$-1.84 | +83.2% |
| Shares Outstanding (Basic) | 181.02M186.40M | −2.9% |
| Shares Outstanding (Diluted) | 181.02M186.40M | −2.9% |
05—Questions
Frequently Asked Questions
How did Twilio's profitability change in the first quarter of 2024?
Net loss was $55.3 million compared with $342.1 million a year earlier, and loss from operations was $43.5 million versus $264.1 million. The improvement reflected lower restructuring costs ($9.9 million versus $121.9 million), no impairment charges in 2024 compared with $21.8 million in 2023, and a $45.9 million decline in sales and marketing expense.
Which business unit is driving growth, and how is Segment performing?
Communications generated $972.0 million of revenue, up $39.1 million or 4%, and non-GAAP income from operations of $249.0 million. Segment revenue was $75.0 million, up 2%, but it posted a non-GAAP loss from operations of $21.0 million. Management is targeting break-even Segment non-GAAP operating income by the second quarter of 2025.
What is the company's liquidity position and capital return activity?
At March 31, 2024, Twilio had $672.6 million of cash and cash equivalents and $3.2 billion of short-term marketable securities. It repurchased $384.3 million of Class A common stock in the quarter, leaving approximately $1.9 billion available under its authorizations. Senior notes outstanding totaled $1.0 billion, and the company stated it was in compliance with all covenants.
Has customer usage changed, and what are the main revenue risks?
Dollar-Based Net Expansion Rate was 102%, compared with 106% a year earlier. Communications' rate was 103%, while Segment's was 92%. Revenue is primarily usage-based (71% of revenue in the quarter), so it is sensitive to macroeconomic conditions. The filing also flags the Oi SA bankruptcy reorganization, under which $10.8 million of pre-petition receivables (net of $4.4 million of reserves) and $16.7 million of post-petition receivables were outstanding at March 31, 2024.
Who leads the company, and what changed in management?
In January 2024, co-founder Jeff Lawson resigned as Chief Executive Officer and as a director. Khozema Shipchandler, formerly President of Twilio Communications, was appointed CEO and a director. The filing notes that the transition may bring changes to strategy and corporate culture and that the company has experienced high attrition among senior management.
06—Continue