Twilio CEO Khozema Shipchandler speaks at the Twilio Signal event on August 14, 2024 in Sao Paulo.
twillio
Cloud communication software manufacturer twillio On Thursday, it issued promising profit forecasts for the coming years.
As part of its three-year guidance framework, the company expects adjusted operating margin to expand to 21% to 22% in 2027. This was higher than the Visible Alpha consensus of 19.68%. Twilio Adjusted Operating Margin most recent quarter is 16.1%.
Twilio unveiled the new guidance at an investor event on Thursday. The company’s executives also committed to generating $3 billion in free cash flow over the next three years, with free cash flow expected to be approximately $692 million in 2022, 2023 and 2024. billion dollars.
The company’s shares rose more than 5% in after-hours trading after the company released a briefing on the event.
Twilio CEO Khozema Shipchandler told CNBC ahead of the company’s investor day that if 2024 is about rebuilding Twilio’s foundation, then 2025 is about execution.
“If we execute well in 2025, I think we’ll start writing our story in 2026,” said Shipchandler, who joined Twilio as finance chief in 2018 after 22 years at GE. Replacing co-founder Jeff Lawson He will serve as CEO in January 2024.
Twilio, which sends text messages and emails to customers, did not release a 2027 revenue growth target at Thursday’s event.
On Thursday, management also provided guidance for 2025. Visible Alpha’s consensus is for adjusted operating income of $814 million and free cash flow of about $808 million. 2025 revenue forecasts are in line with the LSEG consensus.
More than 9,000 artificial intelligence companies have built on Twilio services. These include OpenAI, which in December launched a 1-800-CHATGPT service leveraging Twilio’s voice tools.
“We hope to be able to accommodate more of these businesses and larger businesses,” Shipchandler said. “We’re in open season on both.”
Shareholder pressure intensifies
After Twilio stock went public on the New York Stock Exchange in 2016, investors flocked in as the company delivered consistently high revenue growth rates. The stock moved lower in 2022 as investors became more interested in profitable companies and interest rates continued to rise. Meanwhile, Twilio’s revenue growth is slowing.
Shareholder input influenced the restructuring, including Labor force reduced by 17% In early 2023, activist investors Anson Funds and Legion Partners Asset Management strongly advocated the sale of Twilio or one of its business units. CNBC reports.
Since activist investor Sachem Head Capital Management won a seat on Twilio’s board of directors last April, Twilio shares have risen about 81% as revenue growth accelerates and losses narrow.
Mizuho analysts said in a note earlier this month that Twilio has the opportunity to achieve double-digit growth in 2025 and beyond. Analysts have given the stock the equivalent of a buy rating.
Twilio said that by expanding into new areas such as conversational artificial intelligence, its total addressable market could reach $158 billion by 2028, compared with $119 billion when focusing solely on the communications and customer data platform categories. .
A spokesman said the company does not believe it needs to make acquisitions to enter new overall target markets.
Twilio’s preliminary fourth-quarter results showed revenue growth of 11%, with adjusted operating income exceeding the high end of the company’s forecast range of $185 million to $195 million. release October. Analysts surveyed by LSEG had expected revenue to grow 7.9%, with the consensus on adjusted operating income being about $190 million, according to Visible Alpha.
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