Twilio Shares Soar 20% After Company Issues Optimistic Profit Forecast
Twilio shares jumped 20% on Friday, the company’s biggest gain since the early days of the Covid pandemic, after issuing an upbeat profit forecast for the coming years. The cloud communications software vendor’s stock closed at $136.23, its highest close since 2022.
The company revealed its new guidance at an investor event on Thursday, where CEO Khozema Shipchandler committed to generating $3 billion in free cash flow over the next three years. This is higher than the Visible Alpha consensus of $2.76 billion. Twilio also expects its adjusted operating margin to widen to between 21% and 22% in 2027, higher than the 19.68% consensus.
Shipchandler told CNBC that if the company executes well in 2025, it will be able to write its own story from 2026 on. Twilio did not issue a revenue growth target for 2027, but Shipchandler said the company is orienting itself to deliver double-digit growth over time.
For 2025, Twilio expects $825 million to $850 million in free cash flow and the same amount in adjusted operating income, with 7% to 8% revenue growth year over year. The company’s preliminary results for the fourth quarter show 11% revenue growth, with adjusted operating income exceeding the top end of the range.
Analysts at Baird upgraded their stock to the equivalent of buy from the equivalent of hold, raising their price target to $160 from $115. They expect a potential beat-and-raise cadence to continue to push shares higher, particularly with the strengthening profitability, cash flow, and capital returns.