Twilio Inc (0LHL.L) Q2 2025 Earnings Report

Revenue: $1,228,425,000; YoY +13.48%, QoQ +4.77%
Gross Profit: $591,329,000; Gross Margin 48.14%; YoY +8.83%, QoQ +3.72%
Operating Income: $37,129,000; Operating Margin 3.02%; YoY +291.9%, QoQ +6.78%
Net Income: $22,423,000; Net Margin 1.83%; YoY +170.4%, QoQ +12.02%
EPS (Basic/Diluted): $0.15 / $0.14; YoY +178.95%, QoQ +15.38%
EBITDA: $88,776,000; EBITDA Margin 7.23%
Free Cash Flow: $263,492,000; Operating Cash Flow: $277,084,000
Cash & Equivalents: $969,229,000; Total Cash & Short-Term Investments: $2,542,600,000
Total Assets: $9,848,292,000; Total Liabilities: $4,480,? (see balance sheet below)
Total Debt: $1,102,590,000; Net Debt: $133,361,000
Cash Conversion Cycle: 32.32 days; DSO 43.08 days; Payables 10.76 days; CCC drivers indicate efficient working capital management
Current Ratio: 4.90; Quick Ratio: 4.90; Cash Ratio: 1.346
Gross Margin: ~48.1%; Operating Margin: ~3.0%; Net Margin: ~1.8%
Price-to-Sales: ~15.5x; Price-to-Book: ~2.37x; EV/Revenue: ~216x; Price/Earnings: ~212x; Free Cash Flow Yield to enterprise value remains a critical watchpoint
Shareholder activity: Common stock issued ~$23.1M; repurchased ~$196.99M; Net financing cash flow: -$175.9M

Notes: The earnings transcript for QQ2 2025 is not provided in the data set. As a result, the following highlights are derived from the disclosed financials and standard management themes for Twilio’s platform strategy.

- Growth engine and product mix: Revenue growth was broad-based across Twilio’s API-enabled communications stack, supporting a YoY revenue uplift of 13.5% and a QoQ gain of 4.8%, with gross margins remaining near 48%. This suggests continued lift from multi-product cross-sell, particularly in the core SMS/Voice/Messaging and newer engagement solutions. Management typically emphasizes platform breadth and developer ecosystem as accelerants for customer ARR.

- Profitability and operating leverage: Despite a modest margin profile, operating income rose meaningfully year over year, aided by disciplined expense management (R&D at $243.5M; SG&A at $310.7M; total operating expenses $554.2M). The company generated $277.1M of operating cash flow and $263.5M of free cash flow, underscoring Twilio’s capacity to fund growth initiatives while delivering cash returns.

- Balance sheet and liquidity: Cash balance of $969.2M and total cash+short-term investments of $2.54B support financial flexibility. Net debt of about $133M reflects a prudent leverage stance given solid cash flow. The company also engaged in capital allocation activity, including ~$197M in share repurchases, signaling confidence in intrinsic value and capital return policy.

- Revenue resilience amid macro backdrop: The strong top-line growth in QQ2 2025 aligns with continued demand for cloud communications APIs as enterprises modernize customer engagement. The persistence of high gross margins near 48% suggests the business model remains structurally scalable, though profitability remains contingent on continued revenue expansion and operating efficiency.

- Competitive and market context (inferred): Twilio operates in a competitive landscape with players that include other CPaaS providers and marketing cloud platforms. Market share gains will depend on platform viability, developer ecosystem strength, and the ability to monetize multi-product bundles with attractive pricing and performance.

Twilio’s QQ2 2025 results depict a company transitioning toward higher scale via a diversified cloud communications platform, delivering meaningful top-line growth and tangible free cash flow generation. The balance sheet remains solid, with ample liquidity and modest net debt, allowing continued investment in product development and selective capital returns. However, the stock’s valuation remains demanding given the current earnings profile, underscoring the need for sustained revenue growth, operating leverage, and a clear path to higher profitability to justify multiples. Investment thesis: Maintain a cautious to constructive stance. If Twilio can continue to expand ARPU and ARR through multi-product cross-sell, accelerate margin improvement via cost discipline and mix optimization, and translate platform adoption into higher enterprise retention, the upside potential supports a forward-looking stance. Risks include valuation risk, competitive pressures, and macro-driven IT spending variability. A balanced approach would emphasize a wait-for-growth-acceleration or modestly overweight position contingent on continued top-line strength and clearer profitability improvement signals in upcoming quarters.