Prime Highlights:
Stock rises to $136.23, marking its biggest gain since the early Covid pandemic days.
Twilio projects adjusted operating margin to reach 21%-22% by 2027, exceeding analyst expectations of 19.68%.
The company aims to generate $3 billion in free cash flow over the next three years, a significant increase from past figures.
Twilio expects $825 million to $850 million in free cash flow and adjusted operating income, with 7%-8% revenue growth year-over-year.
Key Background:
Twilio’s stock experienced a notable 20% surge on Friday, marking its biggest rally since the early stages of the Covid-19 pandemic. This impressive increase followed the company’s release of a strong growth forecast for the coming years, which has reinvigorated investor confidence.
The rally pushed Twilio’s stock to $136.23, its highest closing price since 2022. The surge came after Twilio executives unveiled a robust three-year outlook during an investor event on Thursday. Under the new guidance, the cloud communications company expects its adjusted operating margin to grow to between 21% and 22% by 2027, surpassing analyst expectations of 19.68%. In comparison, Twilio’s adjusted operating margin for the latest quarter stood at 16.1%.
Additionally, Twilio projected $3 billion in free cash flow over the next three years, a significant leap from the $692 million the company expects to generate in 2022, 2023, and 2024. The 2025 forecast includes free cash flow and adjusted operating income of between $825 million and $850 million, alongside expected revenue growth of 7% to 8% year-over-year.
Twilio CEO Khozema Shipchandler, who took over the leadership role in 2023, expressed confidence in the company’s future trajectory. “If we execute well in 2025, I think we write our own story from 2026 on,” Shipchandler stated in an interview.
The company’s focus on expanding its offerings, including venturing into conversational AI, positions it to tap into a $158 billion addressable market by 2028, up from $119 billion in the current business segments. Twilio also reported preliminary fourth-quarter results showing an 11% revenue growth, surpassing analyst expectations.