Twilio’s Ambitious Forecast: A New Era of Growth
A Three-Year Plan for Success
Cloud communications software maker Twilio has unveiled an optimistic profit forecast for the next three years, with its adjusted operating margin expected to widen to between 21% and 22% by 2027. This exceeds Visible Alpha’s consensus of 19.68%. The company’s current adjusted operating margin stands at 16.1%.
Free Cash Flow and Execution
Twilio has committed to generating $3 billion in free cash flow over the next three years, a significant increase from the $692 million expected for 2022, 2023, and 2024. The company’s stock price surged over 10% in extended trading following the announcement.
CEO Khozema Shipchandler’s Vision
According to Shipchandler, 2025 is all about execution. “If we execute well in 2025, I think we write our own story from 2026 on,” he said. Shipchandler, who joined Twilio as finance chief in 2018 and became CEO in January 2024, is confident in the company’s ability to drive growth.
Guidance for 2025
Twilio has provided guidance for 2025, expecting $825 million to $850 million in free cash flow and adjusted operating income, with 7% to 8% revenue growth year over year. This is in line with LSEG consensus.
Partnerships and Growth Opportunities
Over 9,000 AI companies, including OpenAI, are already building on Twilio services. The company aims to expand its partnerships with both AI startups and large enterprises. By venturing into new areas like conversational artificial intelligence, Twilio believes it can tap into a $158 billion total addressable market by 2028.
A Bright Future Ahead
Twilio’s stock has jumped about 81% since activist investor Sachem Head Capital Management won a board seat last April. With revenue growth accelerating and losses narrowing, analysts expect double-digit growth in 2025 and beyond.
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