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Twilio $TWLO 1Q22 Earnings
- Rev $875m +48%
(organic +35%)
- Gross Profit $425m +42% margin 49% -200 bps 
- NG EBIT $5m -71% margin 1% -236 bps
- NG Net Income $0m -96% margin 0% -159 bps
- OCF $-18m margin -2% -277 bps
- Rev $875m +48%
(organic +35%)- Gross Profit $425m +42%
margin 49% -200 bps - NG EBIT $5m -71%
margin 1% -236 bps - NG Net Income $0m -96%
margin 0% -159 bps - OCF $-18m
margin -2% -277 bps
Business Metrics
- Topline Rev $875m +48%
- Topline Rev ex $32m Zipwhip +35% organic
- DBNER 127% (vs 133% 1Q21,126% 4Q21)
- Active Customer Accounts 268K +33K +14%
- Topline Rev $875m +48%
- Topline Rev ex $32m Zipwhip +35% organic
- DBNER 127% (vs 133% 1Q21,126% 4Q21)
- Active Customer Accounts 268K +33K +14%
Management Guide
- 2Q22 Rev $922m +38% (organic +29%)
- 2Q22 NG EBIT -$35m
Strong 2Q21 Comps
“…in Q2 '21 that we had a really, really strong organic growth quarter at 50% yoY.”
- 2Q22 Rev $922m +38% (organic +29%)
- 2Q22 NG EBIT -$35m
Strong 2Q21 Comps
“…in Q2 '21 that we had a really, really strong organic growth quarter at 50% yoY.”
Twilio’s Sandbagging - Persistent Quarterly Revenue Beats
1 | Strong Quarter
“We delivered another strong quarter of results and continue to execute against our long-term strategy to build the world's leading customer engagement platform.”
“We delivered another strong quarter of results and continue to execute against our long-term strategy to build the world's leading customer engagement platform.”
2 | Mgmt Confident 30%+ Organic Revenue CAGR to 2024, & NG EBIT Profitability in 2023
“We remain confident in our ability to deliver 30% plus annual organic revenue growth through 2024, and we're committed to delivering annual non-GAAP operating profitability starting in 2023.”
“We remain confident in our ability to deliver 30% plus annual organic revenue growth through 2024, and we're committed to delivering annual non-GAAP operating profitability starting in 2023.”
3 | Twilio’s Inorganic Revenue Growth Trend 1Q22 +48%YoY 
4 | Twilio’s acquisitions masking the broader long-term seemingly more structural underlying Organic Revenue Growth Deceleration
5 | 
Coincides with Twilio’s declining Dollar Based Net Expansion Rates as well.
Coincides with Twilio’s declining Dollar Based Net Expansion Rates as well.
6 | Twilio’s Persistent Declining Gross Profit Margins over the last three years from an already low base to start with 
Twilio’s Persistent Declining Gross Profit Margins over the last three years from an already low base to start with
7 | Long-Term GPM Targets of 60%+ 
“…long-term targets around 60%+ over time, we continue to see a lot of tailwind there, and we continue to like the software businesses quite a lot.”
“…we feel great about our longer-term gross margin guidance of 60%+.”
“…long-term targets around 60%+ over time, we continue to see a lot of tailwind there, and we continue to like the software businesses quite a lot.”
“…we feel great about our longer-term gross margin guidance of 60%+.”
8 | Unclear Operating Leverage and Improving FCF Margins
When we invested, there were signs of operating leverage, and improving OCF and FCF margins, but it has not been the case for the last 3 years, with OCF and FCF margins flatlining between 0% to -10%.
When we invested, there were signs of operating leverage, and improving OCF and FCF margins, but it has not been the case for the last 3 years, with OCF and FCF margins flatlining between 0% to -10%.
Final Thoughts on Twilio $TWLO:Seemingly still strong organic revenue growth (30%+ 3Y), supported by still solid customer retention ~125%+, but unclear if declining GPM and still negative cash flow margins (OCF and FCF) can reverse in the right direction in 2023.
