Twilio shares jumped about 19% in after-hours trading to their highest level in four years after the cloud communications firm reported first-quarter revenue of $1.41 billion, a 20% year-over-year rise that topped analyst forecasts. Earnings also surprised to the upside, with non-GAAP diluted EPS of $1.50 and GAAP operating income of $107.7 million. CEO Khozema Shipchandler said Twilio's push to weave data and AI into its products, and the decision to keep Segment, helped lift customer monetization, and the company raised full-year revenue-growth and profit guidance.

Earnings beat and the market response

Twilio reported first-quarter revenue of $1.41 billion. That was up 20% from a year earlier. The top line beat the $1.34 billion analyst estimate noted in market reporting.

Twilio posted non-GAAP diluted earnings per share of $1.50. That surpassed the consensus of $1.13. GAAP income from operations rose sharply to $107.7 million, a year-over-year increase of 366%.

Investors reacted quickly. Shares climbed roughly 19% after hours and reached their highest level in four years. The move pushed the company's market value into the tens of billions of dollars and reset technical levels that had lagged since the post-pandemic sell-off.

Twilio also reported a Dollar-Based Net Expansion Rate of 114%, up from 107% a year earlier. That metric tracks revenue from existing customers and signals stronger monetization from the installed base.

Where the growth came from

Company executives pointed to a mix of product adoption and improved unit economics. Twilio said organic revenue growth was 16% in the quarter, indicating that new cloud services and higher usage from current clients both played a role.

Management highlighted several internal efficiency moves made since CEO Khozema Shipchandler took over in early 2024. The company completed a year of GAAP profitability in the prior year and generated nearly US$1 billion in free cash flow, according to the company's public statements.

Shipchandler, who was previously Twilio's chief financial officer, said the company had already been rethinking cost structure before activist investors pushed for deeper changes. He called some activist proposals, such as selling the Segment customer-data business, short-sighted and said keeping Segment proved consequential.

Mastheads

AI agents, Segment and product strategy

Twilio has leaned into AI as a core part of its product roadmap. The company positions its communication APIs and data stack as infrastructure for conversational AI agents. Chief executive Shipchandler said clients need context to power interactions, and that Twilio's mix of messaging, voice and customer-data tools helps provide that context.

Twilio is using third-party AI models internally, including Gemini and Claude Code, and reported productivity gains among employees. Shipchandler said staff saw roughly a 15% boost in productivity from AI tools used for coding, customer support and sales workflows.

The company has framed Segment, the customer-data platform it acquired, as central to that effort. Twilio integrated Segment data into AI models to help customers personalise communications and increase engagement. Shipchandler described the decision to retain Segment as one of the most consequential moves the company made while reshaping operations.

Industry research cited by Twilio projects a large market for AI agents. One third-party projection put the potential footprint of agents at 80 million to 100 million by 2029. Twilio argues it can be the underlying infrastructure for many of those agents because its services connect apps, data and messaging channels.

Guidance, cash flow and investor moves

Following the quarter, Twilio raised its full-year revenue-growth forecast to 14% to 15%, up from an earlier range of 11.5% to 12.5%. Management also lifted full-year non-GAAP operating income guidance to US$1.08 billion to US$1.10 billion. Free cash flow guidance was bumped to the same US$1.08 billion to US$1.10 billion band.

The company gave second-quarter revenue guidance of US$1.42 billion to US$1.43 billion, a range that implies reported growth of 15.5% to 16.5% versus the year-ago period.

At the same time, a recent Securities and Exchange Commission filing disclosed that Vanguard Capital Management had reported a beneficial stake of 8.11 million shares, roughly 5.35% of Twilio's common stock. The filing said the stake was held in the ordinary course of business with no intent to influence control.

Those moves come after a period when Twilio had been seen by some investors as a potential takeover target. The shift to faster revenue growth and stronger profitability has altered that narrative. Customers are upgrading and spending more, the company said, and that shows up in expansion metrics and cash flow guidance.

Twilio linked the stronger quarter to AI-related demand in multiple ways. Executives pointed to higher usage of communication APIs, deeper monetization of existing customers and the role of Segment in supplying the data needed to power personalised AI interactions.

The company emphasised AI agents as a growth area and cited a large market projection for agent deployments. Management also said internal use of external models raised employee productivity and helped speed product development.

Those elements combined to change several financial levers at once. Revenue growth accelerated. Operating income recovered. Free cash flow improved. Each of those is measurable in the company's reported results and outlook.

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Twilio raised full-year revenue-growth guidance to 14% to 15% and projected Q2 revenue of US$1.42 billion to US$1.43 billion.

This article was created with AI assistance.