01—Abstract
Summary
Summary of the 10-Q filed August 1, 2024. Cited figures are marked; the original filing is the authoritative source.
Twilio Inc. reported revenue of $1.08 billiona for the three months ended June 30, 2024, up from $1.04 billion a year earlier, a 4% increase as stated in the filing.
Net loss attributable to common stockholders narrowed to $31.9 millionb, or $(0.19) per share, from $166.2 million, or $(0.91) per share. For the six months, revenue was $2.13 billion and net loss was $87.2 million, compared with $508.3 million in the prior-year period, which included restructuring costs of $136.8 million. Communications revenue grew 4% in the quarter, while Segment revenue grew 3%.
Communications non-GAAP income from operations rose to $249.9 millionc from $192.5 million, while Segment non-GAAP loss narrowed to $15.8 million from $19.0 million. Non-GAAP operating margin was 16% versus 12% a year earlier. Cash generation improved significantly.
Net cash provided by operating activities was $403.5 milliond for the six months, compared with $14.2 million used in the same period of 2023. Free cash flow for the quarter was $197.6 million, or an 18% free cash flow margin, versus $71.9 million, or 7%, a year earlier. At June 30, 2024, the company held $755.1 million in cash and cash equivalents and $2.4 billion in short-term marketable securities against $1.0 billion of senior notes.
The company repurchased 15.2 million shares for $898.6 million in the quarter and 21.4 million shares for $1.3 billion in the six months. Approximately $1.0 billion remained available under its authorized repurchase programs, which expire December 31, 2024. Management reiterated targets for Segment break-even non-GAAP operating income by the second quarter of 2025 and GAAP operating profitability on a consolidated basis by the fourth quarter of 2025.
Key operating indicators were mixed. Active Customer Accounts rose to 316,000 from 304,000, though management said this metric is now less informative about growth. Dollar-Based Net Expansion Rate was 102% for the quarter, down from 103%, and Segment's rate was 93%.
The filing notes that the wind-down of Zipwhip's software business in 2024 will negatively affect revenue growth, and that migration of part of Segment's architecture will weigh on Segment gross margins until completed by the end of 2024. The accumulated deficit stood at $6.4 billion.
02—Key points
Key Highlights
- Revenue was $1.08 billion for Q2 2024, up 4% from $1.04 billion, with Communications up 4% and Segment up 3%.
- Net loss narrowed to $31.9 million ($(0.19) per share) from $166.2 million ($(0.91) per share) in Q2 2023.
- Operating cash flow was $403.5 million for the six months ended June 30, 2024, versus $(14.2) million used in the prior-year period; Q2 free cash flow was $197.6 million, an 18% free cash flow margin.
- Non-GAAP income from operations rose to $175.3 million, a 16% non-GAAP operating margin, with Communications non-GAAP income of $249.9 million and Segment non-GAAP loss of $15.8 million.
- The company repurchased 15.2 million shares for $898.6 million in Q2 and about $1.0 billion of its authorized programs remained available at June 30, 2024; the programs expire December 31, 2024.
- Dollar-Based Net Expansion Rate was 102% (Segment 93%), and Active Customer Accounts were 316,000 versus 304,000.
- Management targets Segment break-even non-GAAP income from operations by Q2 2025 and consolidated GAAP operating profitability by Q4 2025; the workforce has been reduced by approximately 35% since September 2022.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q2 FY2024, Twilio lost $0.03.
- Revenue$1.08B100.0%
- Cost of revenue−$526.7M48.7%
- Gross profit$555.8M51.3%
- Operating costs−$574.9M53.1%
- Operating income−$19.0M1.8%
- Interest, other & tax−$12.8M1.2%
- Net income−$31.9M2.9%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed August 1, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $1.08B$1.04B | +4.3% |
| Cost of Revenue | $526.66M$532.01M | −1.0% |
| Gross Profit | $555.85M$505.75M | +9.9% |
| R&D Expenses | $242.78M$226.90M | +7.0% |
| Operating Expenses | $574.88M$647.58M | −11.2% |
| Operating Income | -$19.04M-$141.83M | +86.6% |
| Net Income | -$31.86M-$166.19M | +80.8% |
| EPS (Basic) | $-0.19$-0.91 | +79.1% |
| EPS (Diluted) | $-0.19$-0.91 | +79.1% |
| Shares Outstanding (Basic) | 170.22M183.49M | −7.2% |
| Shares Outstanding (Diluted) | 170.22M183.49M | −7.2% |
05—Questions
Frequently Asked Questions
How did Twilio's profitability change in the second quarter of 2024?
Net loss attributable to common stockholders was $31.9 million, or $(0.19) per share, compared with $166.2 million, or $(0.91) per share, in the second quarter of 2023. Loss from operations was $19.0 million versus $141.8 million a year earlier. Gross margin was 51% compared with 49%, and restructuring costs and impairment charges were lower than in the prior-year quarter.
How much cash and debt does Twilio have, and how is it returning capital?
As of June 30, 2024, Twilio had $755.1 million in cash and cash equivalents and $2.4 billion in short-term marketable securities. Its debt consisted of $500.0 million of 3.625% senior notes due 2029 and $500.0 million of 3.875% senior notes due 2031. The company repurchased $898.6 million of stock in the quarter and approximately $2.0 billion under its programs to date, leaving about $1.0 billion available.
Which parts of the business are driving results?
Communications revenue rose $42.8 million, or 4%, to $1.01 billion, supported by usage growth from existing customers and $48.6 million from new Communications Active Customer Accounts. Communications non-GAAP income from operations increased to $249.9 million. Segment revenue rose $2.0 million, or 3%, to $75.2 million, but its Dollar-Based Net Expansion Rate was 93%, and Segment non-GAAP loss from operations was $15.8 million.
What risks and near-term headwinds does the filing highlight?
The filing cites the wind-down of Zipwhip's software business in 2024, which it expects to negatively affect revenue growth, and the migration of part of Segment's infrastructure, which will pressure Segment gross margins until completed by year-end 2024. It also notes Oi SA, a Brazilian customer in reorganization, with $6.4 million of pre-petition receivables net of $8.8 million of reserves and $13.1 million of post-petition receivables as of June 30, 2024.
What operational and leadership changes are described?
The company has reduced its workforce by approximately 35% since September 2022 and has targeted Segment break-even non-GAAP income from operations by the second quarter of 2025 and consolidated GAAP operating profitability by the fourth quarter of 2025. In January 2024, co-founder Jeff Lawson resigned as Chief Executive Officer and board member, and Khozema Shipchandler was appointed Chief Executive Officer and board member.
06—Continue