Financial Performance & Guidance - The company delivered a solid quarter with accelerated growth, record non-GAAP income from operations, and free cash flow [1] - The company raised its guidance for the year, expressing confidence in the outlook [2] AI Opportunity & Investment - The company is seen as a beneficiary of the generational AI opportunity [1][3] - The company sees an opportunity to make short-term investments in AI, particularly voice AI, to drive medium-term benefits [5][7][8] - The company is investing in making its platform as simple as possible for customers to get started, especially with voice [15] Growth Strategy & Market Position - The company is taking market share from competitors in a price-disciplined way [5] - The company is focused on running the business with discipline, not growth at all costs [4][11] - The company's product-led growth strategy is successful, with many customers self-starting on the platform [14] - The company sees international opportunities for expansion [13] M&A Considerations - The company is always considering acquisitions but there is nothing specific to announce [7] - The company would not comment on potential M&A activity, but will always act in the best interests of shareholders [10]

Core Viewpoint - The S&P 500 is near all-time highs during a volatile Q2 earnings season, leading to investor concerns about high valuations in a potentially unstable economy. It is suggested that now is the time for cautious investment [1]. Group 1: Market Conditions - The S&P 500 index is experiencing volatility while hovering near historical peaks, indicating a mixed sentiment among investors [1]. - There is a growing apprehension regarding rich valuations in the context of an uncertain economic outlook [1]. Group 2: Analyst Background - Gary Alexander has extensive experience in covering technology companies on Wall Street and has worked in Silicon Valley, providing insights into current industry trends [1]. - He has been a contributor to Seeking Alpha since 2017 and has been featured in various web publications, indicating a strong presence in the investment community [1].

Core Insights - Twilio Inc. reported better-than-expected second-quarter 2025 results with non-GAAP earnings of $1.19 per share, surpassing the Zacks Consensus Estimate of $1.02 per share and showing a significant improvement from the previous year's earnings of 87 cents [1][11] - The company's revenues reached $1.23 billion, exceeding both the consensus mark of $1.19 billion and management's guidance of $1.18-$1.19 billion, reflecting a year-over-year growth of 13% [2][11] - Despite strong results, Twilio's shares fell 10.6% in after-hours trading due to third-quarter EPS guidance falling short of analysts' expectations [3] Revenue Breakdown - Communications division revenues were $1.15 billion, up 14% year over year, while Segment division sales increased by 0.4% to $75.5 million [4] - The dollar-based net expansion rate was 108%, up from 107% in the previous quarter and 102% in the year-ago quarter, with rates of 109% for Communications and 95% for Segment [4] Customer Metrics - Active customer accounts increased to over 349,000 as of June 30, 2025, up from 328,000 at the end of Q1 2025 [5][11] Operating Results - Non-GAAP gross profit rose 7.9% year over year to $623 million, but the non-GAAP gross margin contracted by 260 basis points to 50.7% due to an unfavorable product mix [6] - Non-GAAP operating income increased by 25.8% year over year to $221 million, with an operating margin of 18%, expanding by 180 basis points [7] Expense Management - General & administrative expenses decreased to $68 million from $70.3 million year over year, accounting for 5.5% of quarterly revenues [8] - Research & development expenditures increased by 0.2% to $160.4 million, representing 13.1% of revenues, down from 14.8% [8] - Non-GAAP sales & marketing costs were slightly down to $174 million, representing 14.2% of revenues, lower than 15.9% in the year-ago quarter [9] Financial Position - As of June 30, 2025, Twilio had cash and cash equivalents of $2.54 billion, up from $2.45 billion at the end of the previous quarter, with long-term debt at $991.4 million [12] - The company generated operating cash flow of $277.1 million and free cash flow of $263.5 million during Q2 2025 [12] Guidance Updates - Twilio raised its full-year 2025 organic revenue growth forecast to 9-10%, up from 7.5-8.5%, with reported revenue growth anticipated in the 10-11% range [14] - For Q3 2025, Twilio expects revenues between $1.245 billion and $1.255 billion, indicating a year-over-year increase of 10-11% [16] - Non-GAAP earnings per share for Q3 are projected in the range of $1.01 to $1.06, while the consensus estimate is $1.12 per share [17]

Core Insights - Twilio reported $1.23 billion in revenue for the quarter ended June 2025, marking a year-over-year increase of 13.5% and exceeding the Zacks Consensus Estimate by 3.66% [1] - The company's EPS for the same period was $1.19, up from $0.87 a year ago, representing a surprise of 16.67% over the consensus estimate of $1.02 [1] Financial Performance Metrics - The number of active customers reached 349,000, surpassing the average estimate of 337,550 based on two analysts [4] - The Dollar-Based Net Expansion Rate was reported at 108%, exceeding the estimated 104.8% [4] - Revenue from the Communications segment was $1.15 billion, compared to the average estimate of $1.11 billion, reflecting a year-over-year change of 14.5% [4] - Revenue from the overall segment was $75.47 million, slightly below the average estimate of $75.56 million, with a year-over-year change of 0.4% [4] Stock Performance - Twilio shares have returned +7.2% over the past month, outperforming the Zacks S&P 500 composite's +1.2% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Company Performance - Twilio reported quarterly earnings of $1.19 per share, exceeding the Zacks Consensus Estimate of $1.02 per share, and up from $0.87 per share a year ago, representing an earnings surprise of +16.67% [1] - The company posted revenues of $1.23 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 3.66%, and an increase from $1.08 billion year-over-year [2] - Over the last four quarters, Twilio has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Performance - Twilio shares have increased approximately 20.5% since the beginning of the year, compared to the S&P 500's gain of 7.9% [3] - The current consensus EPS estimate for the upcoming quarter is $1.12 on revenues of $1.2 billion, and for the current fiscal year, it is $4.49 on revenues of $4.82 billion [7] Industry Outlook - The Internet - Software industry, to which Twilio belongs, is currently ranked in the top 28% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that industry performance can significantly impact individual stock performance [5][8]

Financial Data and Key Metrics Changes - Twilio reported record revenue of $1,228,000,000 for Q2 2025, representing a 13% year-over-year increase on both a reported and organic basis [18] - Non-GAAP income from operations reached $221,000,000, up 26% year-over-year, with a non-GAAP operating margin of 18% [25][27] - Free cash flow was a record $263,000,000 for the quarter [26] Business Line Data and Key Metrics Changes - Revenue from the Communications business was $1,153,000,000, up 14% year-over-year, with messaging revenue growth accelerating for the fourth consecutive quarter [18][19] - Segment revenue remained flat at $75,000,000 year-over-year, with a dollar-based net expansion rate of 108% [20][21] - Non-GAAP gross margin for Communications was 49.2%, while Segment's was 74.3% [24] Market Data and Key Metrics Changes - The number of large deals closed (over $500,000) increased by 57% year-over-year, indicating strong market demand [9] - The dollar-based net expansion rate for Communications was 109%, reflecting improving growth trends [20] Company Strategy and Development Direction - Twilio is focusing on product-led innovation and operational efficiencies to drive growth, particularly in messaging and voice channels [8][18] - The company is investing in AI capabilities and enhancing its platform to support customer engagement, with a strategic partnership with Microsoft announced [15][16] - Twilio aims to stabilize and improve gross margins through pricing and cost actions, including announced price increases in messaging and voice [24][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of growth across various industries, despite tougher comparisons in the second half of the year [42][60] - The company is optimistic about the impact of AI on its growth trajectory and sees significant opportunities in the AI space [86][87] Other Important Information - Twilio's platform is increasingly recognized for its ability to deliver personalized customer experiences, with Gartner naming it a leader in the CPaaS Magic Quadrant for the third consecutive year [16] - The company is integrating Segment with its communications capabilities to create a more unified platform [26][98] Q&A Session Summary Question: Where is Twilio seeing the most traction with ISVs? - Management noted strong traction across verticals such as financial services and healthcare, with use cases starting with messaging and expanding to voice and RCS [31] Question: What is the impact of the price increase in the quarter? - Management indicated that the impact was not material [32] Question: Why implement a price increase now? - The price increase reflects the growth of the self-service business and the company's pricing power [36] Question: Where are new customers coming from? - New customers are primarily coming from the self-service channel, with innovations reducing onboarding friction [39] Question: How durable is the growth profile? - Management expressed confidence in the durability of growth across various industries and customer segments [42] Question: How is voice performing relative to expectations? - Voice is performing well, driven by demand from voice AI customers and new product launches [64] Question: How is Twilio prioritizing R&D investments? - The company is focusing on responsible investments in engineering to capture AI opportunities [92] Question: How are customers responding to the integration of customer profiles? - Customers are showing strong interest in the integration of Segment capabilities with communications, driving ROI [98]

Financial Data and Key Metrics Changes - Twilio reported record revenue of $1,228,000,000 for Q2, up 13% year over year on both a reported and organic basis [18] - Non-GAAP income from operations reached $221,000,000, a 26% increase year over year, with a non-GAAP operating margin of 18% [24][27] - Free cash flow was $263,000,000, marking a strong cash generation performance [26][27] Business Line Data and Key Metrics Changes - Revenue from the Communications business was $1,153,000,000, up 14% year over year, with messaging growth accelerating for the fourth consecutive quarter [18][19] - Segment revenue remained flat at $75,000,000 year over year, with a dollar-based net expansion rate of 108% [20][21] - Non-GAAP income from operations for the Communications segment was $281,000,000, while the Segment business exceeded its breakeven target with $6,000,000 in non-GAAP income [25] Market Data and Key Metrics Changes - The number of large deals closed (over $500,000) increased by 57% year over year, reflecting strong demand in the communications market [7] - The dollar-based net expansion rate for Communications was 109%, indicating robust growth trends [20] Company Strategy and Development Direction - Twilio is focusing on product-led innovation and operational efficiencies to drive growth, particularly in messaging and voice channels [6][18] - The company is enhancing its platform capabilities, including the introduction of new products like Conversation Relay and conversational intelligence, to improve customer engagement [9][11] - A strategic partnership with Microsoft was announced, aimed at leveraging AI capabilities for customer engagement [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of growth across various industries, despite tougher comparisons in the second half of the year [44][61] - The company is taking actions to stabilize and improve gross margins, including price increases and cost optimization [22][46] - Management highlighted the significant opportunity presented by AI and voice technologies, positioning Twilio as a key player in the evolving landscape [84] Other Important Information - Twilio was recognized as a leader in the CPaaS Magic Quadrant for the third consecutive year, reinforcing its market leadership [16] - The company is integrating its Segment capabilities with communications to enhance customer experiences and drive ROI [96] Q&A Session Summary Question: Can you speak to the traction where you're seeing the most traction with ISVs? - Management noted strong growth across verticals like financial services and healthcare, with ISVs starting with messaging and expanding to voice and RCS [31][32] Question: Is there any impact from the price increase in the quarter? - Management indicated that the impact was not material [34] Question: Can you walk us through why now for a price increase? - The price increase was not tied to the Verizon A2P fee increase and reflects the growth in the self-service business [38][39] Question: Where are the new customers coming from? - New customer acquisition is strong, particularly in the self-service channel, driven by innovations that reduce onboarding friction [40] Question: How did voice perform relative to expectations? - Voice is performing well, with significant demand from voice AI customers contributing to growth [65] Question: How are you thinking about the balance of market share growth for messaging in international markets? - Management emphasized the importance of cross-selling and the growth of international messaging, which is seen as a pathway to expand market share [76] Question: How are you prioritizing R&D investments relative to financial targets? - Management confirmed that R&D investments are being made responsibly to capture the AI opportunity while maintaining strong cash flow [90][91]

Core Insights - Twilio reported Q2 FY2025 results with revenue of $1.23 billion, exceeding consensus estimates by 3.5%, and non-GAAP earnings per share of $1.19, surpassing expectations of $1.05 [1][2] - The company experienced its third consecutive quarter of accelerating revenue growth, improved profitability, and strong cash generation, driven by robust performance in the Communications segment and AI-driven innovation [1][5] Financial Performance - Non-GAAP income from operations reached $221 million, a 26.1% increase year-over-year, while free cash flow hit $263 million, marking a 33% rise [2][6] - Revenue grew 13.5% year-over-year, with the Communications segment revenue increasing by 14% to $1.15 billion [2][5] - Active customer accounts rose to over 349,000, an increase of more than 33,000 from the previous year [5] Operational Highlights - The company reported a GAAP gross margin of 49.1%, down from 51.3% a year ago, attributed to the end of one-time hosting partner credits and a higher mix of lower-margin international messaging [7] - The Segment customer data platform (CDP) business saw flat GAAP revenue at $75.5 million but remained profitable on a non-GAAP basis with $6 million in income from operations [8] Strategic Focus - Twilio's priorities include scaling Communications products, enhancing AI capabilities, improving reliability, and expanding customer relationships [4] - The company is investing in new AI products, such as Conversation Relay and Generative Custom Operators, to automate and analyze customer interactions [10] Future Guidance - Management raised its guidance for organic revenue growth to 9-10% for FY2025, projecting Q3 2025 revenue between $1.245 billion and $1.255 billion [11] - Full-year free cash flow expectations were increased to $875-900 million, reflecting confidence in operational execution despite macroeconomic uncertainties [12]

Q2 2025 Financial Performance - Total revenue reached $1,228 million, with a year-over-year growth of 13%[9] - Non-GAAP gross profit amounted to $623 million, resulting in a non-GAAP gross margin of 50.7%[9] - Non-GAAP income from operations was $221 million[9] - Free cash flow stood at $263 million[9] - The dollar-based net expansion rate was 108%[9] - Active customer accounts exceeded 349,000[9] Communications Segment - Communications revenue was $1,153 million, showing a year-over-year growth of 14%[12] - Communications non-GAAP gross profit was $567 million, with a non-GAAP gross margin of 49.2%[12] - Communications non-GAAP income from operations reached $281 million, resulting in a non-GAAP operating margin of 24.3%[12] - Communications dollar-based net expansion rate was 109%[12] - Communications active customer accounts exceeded 342,000[12] Segment Performance - Segment revenue was $75 million, with 0% year-over-year growth[15] - Segment non-GAAP gross profit was $56 million, resulting in a non-GAAP gross margin of 74.3%[15] - Segment non-GAAP income from operations was $6 million, with a non-GAAP operating margin of 8.0%[15] - Segment dollar-based net expansion rate was 95%[15] - Segment active customer accounts exceeded 7,000[15] Q3 2025 Guidance - Total reported revenue is projected to be between $1.245 billion and $1.255 billion, representing a 10% to 11% year-over-year increase[22] - Organic revenue growth is expected to be between 8% and 9% year-over-year[22] - Non-GAAP income from operations is projected to be between $205 million and $215 million[22] - Non-GAAP diluted earnings per share are expected to be between $1.01 and $1.06[22] Full Year 2025 Guidance - Total reported revenue growth is projected to be between 10% and 11% year-over-year[23] - Organic revenue growth is expected to be between 9% and 10%, an increase from the previous guidance of 7.5% to 8.5%[23] - Non-GAAP income from operations is projected to be between $850 million and $875 million[23] - Free cash flow is expected to be between $875 million and $900 million, an increase from the previous guidance of $850 million to $875 million[23]

Exhibit 99.1 Twilio Announces Second Quarter 2025 Results • Revenue of $1.23 billion, up 13% year-over-year on both a reported and organic basis • GAAP Income from Operations of $37 million, a $56 million improvement year-over-year • Non-GAAP Income from Operations of $221 million, up 26% year-over-year SAN FRANCISCO--(BUSINESS WIRE)--August 7, 2025--Twilio (NYSE: TWLO), the customer engagement platform that drives real-time, personalized experiences for today's leading brands, reported financial results fo ...