Executive Summary

Q2 2025 delivered double‑digit growth and profitability: revenue $1.23B (+13% Y/Y), GAAP operating income $37M (3% margin), and record non‑GAAP operating income $221M (18% margin) and free cash flow $263M (21% margin) .
Results beat Wall Street consensus: revenue $1.23B vs $1.186B*, EPS $1.19 vs $1.051*; EBITDA printed below consensus ($86.8M vs $226.8M*) given the company focuses on non‑GAAP operating income rather than EBITDA (S&P Global data)*.
Twilio raised FY25 guidance: organic revenue growth to 9–10% (from 7.5–8.5%), initiated reported revenue growth at 10–11%, and raised free cash flow to $875–$900M while maintaining non‑GAAP operating income at $850–$875M .
Engagement metrics strengthened: Dollar‑Based Net Expansion Rate rose to 108% and Active Customer Accounts reached 349k, supporting improved expansion dynamics .
Potential stock reaction catalyst: the guidance raise and strong FCF/operating leverage, plus visible customer wins and platform innovation (Signal) underscore the narrative of disciplined growth and profitability .

What Went Well and What Went Wrong

What Went Well

Revenue acceleration with robust profitability: $1.23B (+13% Y/Y) and record non‑GAAP operating income $221M (18% margin) and free cash flow $263M (21% margin) .
Expansion strengthened: Dollar‑Based Net Expansion Rate improved to 108% (from 102% a year ago); Active Customer Accounts rose to 349k (from 316k a year ago) .
Management tone and strategic positioning: “focus and execution is paying off … another quarter of accelerated year-over-year revenue growth as well as record non-GAAP income from operations and free cash flow… Twilio showcased our latest innovations at Signal… combining communications, data, and AI” — Khozema Shipchandler, CEO .

What Went Wrong

Gross margin compression: GAAP gross margin fell to 49.1% vs 51.3% a year ago and 50.2% in Q4’24; non‑GAAP gross margin fell to 50.7% vs 53.3% a year ago .
Segment (CDP) revenue was flat Y/Y at $75.5M, implying limited top‑line momentum vs the Communications segment’s 14% growth .
Continued losses from equity method investment: share of losses was $(25.2)M in Q2, a recurring headwind to GAAP profitability .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$1,195	$1,172	$1,228
GAAP Diluted EPS ($)	$(0.08)	$0.12	$0.14
Non‑GAAP Diluted EPS ($)	$1.00	$1.14	$1.19
GAAP Operating Margin (%)	1.1%	2.0%	3.0%
Non‑GAAP Operating Margin (%)	16.5%	18.2%	18.0%
GAAP Gross Margin (%)	50.2%	49.6%	49.1%

Segment Breakdown	Q4 2024	Q1 2025	Q2 2025
Communications Revenue ($USD Millions)	$1,121	$1,097	$1,153
Segment (CDP) Revenue ($USD Millions)	$74	$76	$75
Communications Non‑GAAP Op Income ($USD Millions)	$275	$277	$281
Segment Non‑GAAP Op Income ($USD Millions)	$(10)	$(1.5)	$6.0

KPIs	Q4 2024	Q1 2025	Q2 2025
Active Customer Accounts	325k+	335k+	349k+
Dollar‑Based Net Expansion Rate (%)	106%	107%	108%
Messaging Revenue Mix (%)	54.5%	53.3%	54.4%
Free Cash Flow ($USD Millions)	$93	$178	$263

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Reported Revenue Growth (%)	FY2025	N/A	10%–11%	Initiated
Organic Revenue Growth (%)	FY2025	7.5%–8.5%	9%–10%	Raised
Non‑GAAP Income from Operations ($USD Millions)	FY2025	$850–$875	$850–$875	Maintained
Free Cash Flow ($USD Millions)	FY2025	$850–$875	$875–$900	Raised
Revenue ($USD Millions)	Q3 2025	N/A	$1,245–$1,255	Initiated
Organic Revenue Growth (%)	Q3 2025	N/A	8%–9%	Initiated
Non‑GAAP Operating Income ($USD Millions)	Q3 2025	N/A	$205–$215	Initiated
Non‑GAAP Diluted EPS ($)	Q3 2025	N/A	$1.01–$1.06	Initiated
Non‑GAAP Diluted Shares (Millions)	Q3 2025	N/A	161	Initiated

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
AI/Technology Initiatives	Q4: Focus on innovation, first GAAP operating profitability ; Q1: “discipline, rigor, and focus”, continued innovation and AI mentions	CEO highlighted Signal innovations, positioning Twilio as infrastructure for customer experience combining communications, data, and AI	Strengthening platform narrative
Customer Expansion & Wins	Q4: DBDNR 106%; repurchase program initiated in Jan’25 [26 not needed]; Q1: DBDNR 107%	DBDNR 108%; multiple large wins and expansions across Communications and Segment (email, RCS, Verify, Flex + Copilot)	Improving expansion dynamics
Profitability & Cash Flow	Q4: Non‑GAAP op margin 16.5%; FCF $93M ; Q1: Non‑GAAP op margin 18.2%; FCF $178M	Non‑GAAP op margin 18.0%; record FCF $263M; raised FY25 FCF guidance	Positive leverage and cash conversion
Product Mix (Messaging)	Q4: Messaging mix 54.5% ; Q1: 53.3%	Q2: 54.4%	Stable‑to‑up mix
Credit/Counterparty	Q4: bad debt tied to Oi SA ($16.8M)	No specific new credit event disclosed; equity method losses persist	Stabilized vs Q4 one‑offs

Management Commentary

“The company’s focus and execution is paying off as Q2 marked another quarter of accelerated year-over-year revenue growth as well as record non‑GAAP income from operations and free cash flow… Twilio showcased our latest innovations at our user conference, Signal… We continue to combine communications, data, and AI to power amazing experiences for the world’s leading brands.” — Khozema Shipchandler, CEO .
Strategy centers on profitable growth, market share capture via ISVs/partners/resellers, and expanding higher‑margin products, with capital returns via repurchases (Q2 buyback $176.7M) .

Q&A Highlights

Not available: the Q2 2025 earnings call transcript could not be retrieved from the document system due to a data inconsistency. No Q&A excerpts to report.

Estimates Context

Metric	Consensus (Q2 2025)	Actual (Q2 2025)	Surprise
Revenue ($USD)	$1,186,455,620*	$1,228,425,000	+$41,969,380*
Primary EPS ($)	$1.05067*	$1.19	+$0.13933*
EBITDA ($USD)	$226,772,720*	$86,827,000*	−$139,945,720*

Values retrieved from S&P Global.*
Implication: topline and EPS beats support upward estimate revisions for FY revenue/EPS; Twilio guides on non‑GAAP operating income and FCF rather than EBITDA, so investors should anchor revisions to those metrics .

Key Takeaways for Investors

Strong beat and raise: revenue/EPS beats vs consensus*, FY25 organic revenue and FCF guidance raised, underpinning a positive estimate revision setup .
Operating leverage intact: non‑GAAP operating margin sustained at ~18% with record FCF ($263M, 21% margin), indicating disciplined cost control and cash conversion .
Expansion momentum: DBDNR reached 108% and active accounts rose to 349k+, reinforcing cross‑sell/upsell traction and usage growth .
Mix and margin watch: GAAP and non‑GAAP gross margins compressed Y/Y; messaging mix remained elevated (~54%), monitor carrier fees/product mix impacts on gross margin .
Segment turning: Segment (CDP) revenue flat Y/Y but non‑GAAP operating income positive ($6M); execution on data/AI and warehouse integrations could improve trajectory .
Capital returns: active buybacks ($176.7M in Q2) provide support, with repurchase authorization through 2027 .
Near‑term trading: guidance raise + strong FCF are likely positive catalysts; watch subsequent margin commentary and any updates on equity method investment losses in 10‑Q .

Notes:
- All company results, guidance, and KPIs cited directly from Q2 2025 press release, 8‑K and supplemental slides.
- Consensus/actual estimate comparisons sourced from S&P Global (Primary EPS, Revenue, EBITDA).*

TWILIO INC (TWLO)·Q2 2025 Earnings Summary