U.S.-based cloud communications company Twilio’s (TWLO) stock soared after it announced a bold new guidance for 2027 at its investor event on Thursday. The company projects its adjusted operating margin will reach 21% – 22% in 2027, surpassing Wall Street’s consensus and the 16.1% margin from the most recent quarter (Q3 2024). Investors responded positively to the numbers, causing TWLO stock to surge 14.7% in after-hours trading on Thursday.
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Over the last six months, Twilio shares have gained over 100%, driven by its strong performance and the company’s strong vision for the future of communication powered by AI (artificial intelligence).
Twilio Reveals Financial Framework
As part of its financial framework, Twilio aims to generate $3 billion cumulative free cash flow from 2025 to 2027. This surpasses the Visible Alpha consensus, which projected $2.76 billion for the same period.
Additionally, the company provided guidance for 2025, forecasting free cash flow and adjusted operating income between $825 million and $850 million. It also expects year-over-year revenue growth of 7% to 8% in 2025. Meanwhile, Twilio expects a revenue growth of around 11% year-over-year in Q4, compared to its previous guidance of 7%-8%.
CEO Khozema Shipchandler expressed strong optimism about the company’s future, calling 2025 the “year of execution.” He added, “If we execute well in 2025, I think we write our own story from 2026 on.”
Furthermore, the company’s board approved a $2 billion share buyback program on January 16. Twilio’s previous share repurchase programs expired on December 31, 2024.
Is Twilio a Buy Right Now?
On Wall Street, analysts maintain a moderately bullish stance on TWLO stock, though they see limited upside potential. However, analysts may reevaluate their price targets following the company’s optimistic new guidance.
TipRanks consensus gives it a Moderate Buy rating, with 14 Buys, eight Holds, and two Sells. The price target for Twilio shares is $103.57, which is 9% below the current price.
