Twilio (TWLO) Stock Forecast & Price Target

Twilio has demonstrated a positive financial trajectory, with total revenue increasing by 14.7% year-over-year and a notable improvement in the total dollar-based net expansion rate, which rose to 109%. The company has also recorded a 23% year-over-year growth in active customer count, reaching 392,000, alongside strong performance in segments such as voice and revenue from independent software vendors (ISVs) and self-serve solutions, both exceeding 20% growth. Additionally, Twilio's anticipated gross margin expansion towards 52–53% by 2026, combined with ongoing market share gains in its diverse product portfolio, underpins a favorable outlook for the company's future financial performance.

Twilio's gross margin decreased to 50.1%, reflecting a decline of 280 basis points year-over-year and falling short of estimates due to a 25.1% year-over-year increase in cost of goods sold (COGS), which was 4.1% higher than anticipated. The company's growth outlook is tempered by expected slowdowns from macroeconomic challenges and heightened competition in the communications Platform-as-a-Service (CPaaS) market, which may lead to limited pricing power and lower future free cash flow multiples. Furthermore, while international messaging is outpacing domestic demand, it adversely impacts gross margins, with U.S. messaging generating margins significantly higher than those from international operations, contributing to a less favorable financial outlook.