Twilio stock soared after the company issued a bullish forecast for 2027.
Twilio CEO Khozema Shipkanderler speaks at Twilio’s Signal event on August 14, 2024 in Sao Paulo.
Courtesy: Twilio
Cloud communication software maker Twilio On Thursday, it released an optimistic profit forecast for the next few years.
The company sees adjusted operating margin expanding to 21% and 22% in 2027 as part of its three-year guidance framework. This is higher than the observed alpha consensus of 19.68%. Twilio’s adjusted operating margin at The most recent quarter It was 16.1%.
Twilio is revealed The new guide Thursday at the investor event. There, company executives are committed to generating $3 billion in free cash flow over the next three years, with approximately $692 million in free cash flow for 2022, 2023 and 2024. Twilio’s 2025 to 2027 apparent alpha deal was $2.76 billion.
The company’s stock price rose more than 10 percent after the company announced its plans for the event.
In the year If 2024 is about rebuilding Twilio’s foundation, 2025 is all about execution, CEO Khozema Shiphandler told CNBC ahead of the company’s investment day.
In the year He joined Twilion in 2018 after 22 years as chief financial officer at GE and replaced co-founder Jeff Lawson in January 2024. “I think if we do a good job in 2025, we will write our own history,” Shipkander said.
Twilio, which sends text messages and emails to customers, did not release its revenue growth target for 2027 at Thursday’s event.
Last Thursday, management gave guidance for 2025. It has $825 million to $850 million in free cash flow and the same amount in adjusted operating income, which calls for annual revenue growth of 7 to 8%. The apparent Alpha deal had adjusted operating income of $814 million and free cash flow of about $808 million. The 2025 revenue forecast was consistent with the LSEG agreement.
More than 9,000 AI companies are already building on Twilio services. That includes OpenAI, which announced the 1-800-CHATGPT service on Twilio’s voice devices in December.
“We want to be able to take more of those and also the larger enterprises,” Shipchanler said. “We’re kind of open season on both.”
Shareholder pressure increases
In the year After Twilio shares debuted on the New York Stock Exchange in 2016, investors piled in as the company delivered consistently high earnings growth rates. Stocks were lower in 2022 as investors showed more interest in profitable companies, with interest rates moving higher. At the same time, Tiwilio’s revenue growth was slowing.
The inclusion of shareholder input influenced the reorganization. In the year By early 2023, a 17 percent workforce cut and activist investors Anson Fund and Legion Partners Asset Management are pushing to sell Twilio or one of its business units, CNBC reported.
Since activist investor Sachem Capital Management won a seat on Twilio’s board last April, Twilio shares have jumped nearly 81 percent as revenue growth accelerated and losses narrowed.
Twilio has the potential to show double-digit growth in 2025 and beyond, Mizuho analysts said in a note earlier this month. The analysts have a buy rating on the stock.
By expanding into new areas such as conversational artificial intelligence, Twilio said it could reach a total addressable market of $158 billion by 2028, compared to $119 billion if it focused solely on the communications and customer data platform categories.
The company does not believe an acquisition will be necessary to reach its new general market, the spokesman said.
Twilio’s preliminary results for the fourth quarter show revenue growth of 11 percent, with adjusted operating income of $185 million to $195 million, higher than the company’s peak. Given In October. Analysts surveyed by LSEG had expected revenue growth of 7.9%, and according to Visible Alpha, the adjusted operating income consensus was around $190 million.
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