Twilio CEO Josema Shepchandler speaks at Twilio's Signal event in São Paulo on August 14, 2024.
Courtesy: Twilio
Cloud communications software maker Twilio On Thursday it released hopeful earnings forecasts for the next few years.
The company expects adjusted operating margin to expand to between 21% and 22% in 2027 as part of a three-year guidance framework. This is higher than the Visible Alpha consensus of 19.68%. Twilio's adjusted operating margin last quarter It was 16.1%.
Twilio revealed Its new directives At an investor event on Thursday. There, company executives also committed to generating $3 billion in free cash flow over the next three years, compared to about $692 million in free cash flow for 2022, 2023 and 2024. The Visible Alpha consensus for Twilio from 2025 through 2027 is $2.76 billion.
The company's stock price rose more than 10% in extended trading after the company released its presentation for the event.
If 2024 is about rebuilding Twilio's organization, 2025 is about executing, CEO Josima Schepchandler told CNBC ahead of the company's investor day.
“If we execute well in 2025, I think we'll write our own story from 2026 on,” said Shipchandler, who joined Twilio as CFO after 22 years at GE in 2018. He replaced co-founder Jeff Lawson As CEO in January 2024.
Twilio, which sends text messages and emails to customers, did not release a 2027 revenue growth target at its event Thursday.
Management on Thursday also provided guidance for 2025. It called for $825 million to $850 million in free cash flow and the same amount in adjusted operating income, with revenue growing 7% to 8% year over year. Visible Alpha's consensus was $814 million of adjusted operating income and about $808 million of free cash flow. Revenue forecasts for 2025 were in line with the LSEG consensus.
More than 9,000 AI companies already rely on Twilio's services. This includes OpenAI, which in December announced a 1-800-CHATGPT service based on Twilio's voice tools.
“We want to be able to accommodate more of those, as well as larger companies,” Shipchandler said. “We're kind of open season on both.”
Shareholder pressure increases
After Twilio stock debuted on the New York Stock Exchange in 2016, investors piled in as the company achieved consistently high revenue growth rates. The stock has drifted lower in 2022 as investors become more interested in profitable companies, with interest rates pushing higher. Meanwhile, Twilio's revenue growth has been slowing.
Shareholder input influenced the reorganization process, which included: 17% workforce reduction In early 2023, activist investors Anson Funds and Legion Partners Asset Management called for the sale of Twilio or one of its business units, CNBC reported.
Since activist investor Sachem Head Capital Management won a seat on Twilio's board last April, Twilio stock has jumped about 81%, with revenue growth accelerating and losses shrinking.
Twilio has a chance to show double-digit growth in 2025 and beyond, Mizuho analysts said in a note earlier this month. Analysts have the equivalent of a Buy rating on the stock.
By expanding into new areas, such as conversational AI, Twilio says it can sell to a total market worth $158 billion by 2028, compared to $119 billion when focusing only on communications platform categories and customer data.
A company spokesperson said the company does not believe acquisitions will be necessary to reach the total new addressable market.
Twilio's preliminary fourth-quarter results show revenue growth of 11%, with adjusted operating income exceeding the high end of the $185 million to $195 million range set by the company Issued In October. Analysts surveyed by LSEG were expecting revenue growth of 7.9%, and according to Visible Alpha, total adjusted operating income was about $190 million.
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