Earnings Call Insights: Twilio Inc. (TWLO) Q2 2025
Management View
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Khozema Z. Shipchandler, CEO, reported, “Twilio had a strong Q2, reaching over $1.2 billion in revenue and achieving another quarter of double-digit revenue growth and year-over-year growth acceleration.” He highlighted Twilio’s record non-GAAP income from operations and free cash flow, the first-ever non-GAAP income from operations for the Segment business, and four consecutive quarters of accelerating messaging growth as well as double-digit voice growth.
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CEO Shipchandler detailed strategic product launches, including ConversationRelay, which completed nearly 1 million calls in its first quarter of general availability and was adopted by a leading fintech to automate customer care requests. He also noted the launch of conversational intelligence for messaging (in private beta) and the general availability of WhatsApp Business calling via programmable voice. RCS adoption momentum was also emphasized, with Fresha achieving a 6% increase in appointment confirmations and a 7% uplift in customer reviews after adopting RCS.
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Shipchandler announced a multiyear strategic partnership with Microsoft, enabling more than 10 million Twilio developers and thousands of Microsoft managed customers to build future conversational AI solutions.
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Aidan Viggiano, CFO, stated, “Twilio had a strong second quarter, delivering our fourth consecutive quarter of double-digit revenue growth and year-over-year growth acceleration. For Q2, we generated record revenue of $1.228 billion, up 13% year-over-year, both on a reported basis and an organic basis.” She noted pricing and cost actions are underway to stabilize and improve gross margins and mentioned a record $263 million in free cash flow and $177 million in share repurchases during Q2.
Outlook
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Viggiano provided Q3 revenue guidance of $1.245 billion to $1.255 billion, representing 8% to 9% organic growth and 10% to 11% reported growth. Full-year 2025 organic revenue growth guidance was raised to 9% to 10%, up from the prior 7.5% to 8.5% range.
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The company is maintaining full-year non-GAAP income from operations guidance of $850 million to $875 million and raising full-year free cash flow guidance to $875 million to $900 million.
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Management stated, “We are taking the opportunity to make some accelerated R&D investments in response to strong customer demand in voice, RCS and our AI offerings.”
Financial Results
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Twilio reported Q2 revenue of $1.228 billion (up 13% year-over-year), record non-GAAP income from operations of $221 million, and free cash flow of $263 million.
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Communications business revenue was $1.153 billion (up 14% year-over-year), with messaging revenue growth accelerating for the fourth consecutive quarter and double-digit voice revenue growth for the first time in two years.
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Non-GAAP gross profit was $623 million, representing a non-GAAP gross margin of 50.7%, down 260 basis points year-over-year. Non-GAAP income from operations for Segment was $6 million, exceeding the breakeven target.
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The company purchased $177 million of shares in Q2, totaling $307 million for the year to date.
Q&A
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Jamie (Morgan Stanley) asked about ISV traction. Wyatt responded, “We’re seeing it across verticals, financial services, health care, professional services… use cases often start with messaging and from there, adding second and third channels.”
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James Edward Fish (Piper Sandler) questioned the price increase timing and impact. Viggiano clarified, “the price increase that we did in the U.S. for messaging was not tied to the A2P fee increase that came through from Verizon. Those 2 things are separate and distinct.”
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Michael James Turrin (Wells Fargo) inquired about durability of growth and gross margin stabilization. Shipchandler indicated growth feels durable across industries and regions, while pricing and cost optimization actions are being taken to stabilize gross margins.
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Mark Ronald Murphy (JPMorgan) focused on voice AI and RCS adoption. Shipchandler explained Twilio supports a range of voice AI use cases, from infrastructure to full-stack solutions. Wyatt noted, “We’re definitely encouraged with the trends that we’ve seen around RCS adoption.”
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Taylor Anne McGinnis (UBS) asked about Q4 growth outlook and seasonality. Viggiano explained tougher year-over-year comparisons in messaging due to prior political traffic and platform innovations, but emphasized broad-based growth momentum.
Sentiment Analysis
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Analysts pressed on gross margin headwinds, price increases, and the impact of new product investments, reflecting a neutral to slightly positive tone regarding growth durability but cautious on margin dynamics and the timing of pricing benefits.
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Management maintained a confident and optimistic tone in both prepared remarks and Q&A, emphasizing growth, innovation, and disciplined cost management. Shipchandler stated, “Growth has been pretty durable across a number of different industries.”
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Compared to the previous quarter, management’s tone has become more assertive regarding product innovation and revenue outlook, while analysts remain inquisitive but less focused on macro risks.
Quarter-over-Quarter Comparison
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Guidance for full-year organic revenue growth increased from 7.5%–8.5% to 9%–10%.
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Segment delivered positive non-GAAP income from operations for the first time, meeting and exceeding prior guidance.
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Messaging and voice revenue growth both accelerated, with notable large deal activity (57% year-over-year increase in deals over $500,000).
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Management’s tone became more confident about AI-related growth and product launches, moving from cautious optimism in Q1 to stronger conviction in Q2.
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Analysts shifted focus from macroeconomic risks to pricing, gross margin stability, and the scaling of new product wins.
Risks and Concerns
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Management cited gross margin declines driven by messaging mix, incremental carrier fees, and FX.
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Pricing actions and platform cost optimization are underway to stabilize margins.
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Regulatory changes were addressed, with Shipchandler stating, “We are very proactive with regulators in effectively every market… short term, no impact. Longer term, probably a mild positive impact.”
Final Takeaway
Twilio’s Q2 2025 results underscore accelerating revenue growth, significant momentum in AI and communications product launches, and expanded partnership activity, including with Microsoft. Management raised its full-year growth outlook and highlighted robust demand for new solutions, while addressing margin pressure with targeted pricing and efficiency initiatives. The company’s strong free cash flow and continued share repurchases reinforce confidence in durable, profitable growth for the remainder of the year.