Twilio Stock Soars on Strong Profit Forecasts: What to Know

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published 24 January 2025

Twilio (TWLO) stock soared out of the gate Friday after the cloud communications company announced its financial targets for fiscal years 2025 to 2027 at its Investor Day.

Among the financial targets Twilio provided in its presentation was achieving a 21% to 22% adjusted operating margin for fiscal year 2027, well ahead of analysts' expectations of 19.7%, and generating $3 billion in free cash flow from 2025 to 2027, ahead of expectations of $2.8 billion, according to CNBC.

"If we execute well in 2025, I think we write our own story from 2026 on," CEO Khozema Shipchandler told CNBC.

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Twilio also provided its guidance for fiscal year 2025 in the presentation. It expects to achieve revenue growth in the range of 7% to 8%, $825 million to $850 million in operating profit and $825 million to $850 in free cash flow. The revenue forecast arrived in line with analysts' expectations, while operating profit and free cash flow came in ahead of the $814 million and $808 million, respectively, that Wall Street is anticipating.

Here's Kiplinger contributor Will Ashworth explaining why free cash flow is such an important metric for investors to track: "If a company generates more cash than it needs to run its business, it can do a number of useful things with it, such as pay dividends, buy back its stock, acquire other companies, expand its business and knock out its debts."

Is Twilio stock a buy, sell or hold?

Wall Street is bullish on the tech stock. According to S&P Global Market Intelligence, the average recommendation among the 31 analysts following the stock that it tracks is a Buy.

However, analysts' price targets have had a tough time keeping up with TWLO's surging stock price.

Indeed, the large-cap stock is up more than 22% today, pushing its year-to-date gain to over 27%. The average analyst price target of $117.20 represents a discount of more than 15% to current levels.

Financial services firm Oppenheimer is one of the more bullish outfits on TWLO stock with an Outperform rating (equivalent to a Buy) and a $160 price target.

"We come away from Twilio's Investor Day positive on its direction and more confident in its ability to accelerate growth," says Oppenheimer analyst Ittai Kidron.

"While management's vision isn't completely new," the analyst wrote, "its actions (integration of Segment with communications, more automation, AI [artificial intelligence] enhancements, organizational realignment) are bringing the vision to reality, at a time when the need for an efficient and compelling omnichannel customer and contextually enhanced experience is rising."

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.