Free cash flow also turned decisively positive: FCF of $657.46M in 2024 vs $363.52M in 2023, a +80.86% increase. Operating cash flow improved to $716.24M, or 16.06% of revenue, up from $414.75M (9.99% of revenue) a year earlier. Those cash-flow improvements provide the financing source for the company's aggressive capital allocation moves in 2024.

For reference and traceability, the quarter-level operating and index news referenced below come from Twilio’s investor materials and public index announcements. See Twilio’s Q2 2025 release for quarterly specifics and the S&P press release on index inclusion Twilio Announces Second Quarter 2025 Results and Twilio Set to Join S&P MidCap 400 — S&P Dow Jones Indices Press Release.

Two data tables: multi-year income statement and balance-sheet / cash metrics#

Year	Revenue (USD)	Gross Profit (USD)	EBITDA (USD)	Operating Income (USD)	Net Income (USD)
2024	4,460,000,000	2,280,000,000	165,550,000	-53,710,000	-109,400,000
2023	4,150,000,000	2,040,000,000	-100,340,000	-876,540,000	-1,020,000,000
2022	3,830,000,000	1,810,000,000	-751,820,000	-1,210,000,000	-1,260,000,000
2021	2,840,000,000	1,390,000,000	-649,760,000	-915,580,000	-949,900,000

Year	Cash & Equivalents (USD)	Cash + ST Inv (USD)	Total Assets (USD)	Total Liabilities (USD)	Total Equity (USD)	Free Cash Flow (USD)	Net Debt (USD)	Common Stock Repurchased (USD)
2024	421,300,000	2,380,000,000	9,870,000,000	1,910,000,000	7,950,000,000	657,460,000	688,850,000	-2,330,000,000
2023	655,930,000	4,010,000,000	11,610,000,000	1,880,000,000	9,730,000,000	363,520,000	503,660,000	-668,750,000
2022	651,750,000	4,160,000,000	12,560,000,000	2,010,000,000	10,560,000,000	-334,550,000	587,560,000	0
2021	1,480,000,000	5,360,000,000	13,000,000,000	1,970,000,000	11,030,000,000	-148,210,000	-192,470,000	0

All figures above are taken from Twilio’s reported FY financial statements (company filings summarized in the provided dataset). The year-over-year math and margins are my independent calculations from those line items.

What the numbers reveal: improving operations, but capital allocation shifts the balance#

Twilio's operational story is unambiguous: revenue growth re-accelerated modestly to +7.47% in FY2024, gross margins ticked higher to 51.12%, and the company returned to positive EBITDA and near-breakeven operating income. Those are consistent with management messaging that expense discipline and product-led revenue gains are driving a recovery in profitability.

At the same time, Twilio deployed $2.33B in share repurchases in 2024, more than triple the $668.75M repurchased in 2023. That buyback scale is large relative to both FCF and market value: 2024 repurchases equal roughly 15.1% of the company’s current market capitalization of ~$15.43B (market cap per the latest quote). The repurchase program materially reduced cash + short-term investments from $4.01B at end-2023 to $2.38B at end-2024 (-$1.63B, -40.6%), and net debt increased from $503.66M to $688.85M.

This combination — stronger cash generation but heavy buybacks — means Twilio used operating and investment cash to buy shares aggressively rather than retain a higher liquidity buffer while investing in AI infrastructure. That's a capital-allocation choice that amplifies upside to earnings-per-share if growth and margins continue to improve, but it also reduces the company’s liquidity cushion while Twilio executes a product transformation that may carry near-term margin pressure (AI inference, model hosting, etc.).

Reconciling apparent metric conflicts: TTM vs FY-end calculations#

Some third-party summary metrics in the dataset (for example a reported current ratio of 4.9x and net-debt-to-EBITDA of 0.49x) differ from calculations based solely on the FY2024 line items above. Using the FY2024 balance sheet and FY2024 EBITDA yields a current ratio of 3.45B / 820.22M = 4.21x and a net-debt-to-EBITDA of 688.85M / 165.55M = 4.16x. The difference arises because the published TTM metrics use trailing-12-month aggregates and alternative definitions of EBITDA (or include more recent quarterly EBITDA), while the FY-level math is constrained to the year-end snapshots provided here. When encountering those discrepancies, I prioritize the underlying line-item arithmetic for transparency and call out differences explicitly rather than restating third-party rounded TTM ratios without context.

Earnings-quality and cash conversion: encouraging trend#

Beyond the headline operating-profit swing, the quality of the recovery is supported by cash-flow improvement. Operating cash flow turned positive at $716.24M, and free cash flow margin improved to ~14.74% of revenue in 2024 (657.46 / 4,460) from 8.76% in 2023. That conversion demonstrates the operating recovery is not solely an accounting artifact; cash generation increased materially. However, the company’s financing decisions converted that cash into buybacks, which materially reduced the firm's liquid assets.

Strategic transformation: AI-first CPaaS and monetization mechanics#

Twilio’s strategic shift toward embedding AI across its CPaaS stack is consistent with comments the company made around Q2 2025 and with the product roadmap described in the company’s investor disclosures. Management is steering the platform from pure CPaaS to CPaaS + AI — developer-first APIs that layer conversational intelligence, real-time voice transcription/synthesis and analytics atop Twilio’s messaging and voice channels. The logic is straightforward: AI can raise ARPU via premium, usage-priced endpoints and make workflows stickier through automation of higher-value interactions.

Key early indicators to watch include pricing for premium AI endpoints, reported dollar-based net expansion rates (DBNER) and any explicit disclosure of AI-driven ARR or revenue. Those metrics will show whether AI is delivering higher per-customer monetization or simply more usage without improved economics.

Competitive dynamics and moat analysis#

Twilio’s moat remains its broad set of channel APIs and a large developer ecosystem that eases adoption. That said, the CPaaS market's migration to AI increases competitive pressure from both specialized CPaaS peers and hyperscale cloud providers that can bundle AI-enabled communications into larger cloud stacks. Twilio’s strategic advantage will hinge on three things: low-latency, reliable delivery across channels; seamless developer experience; and the ability to monetize higher-value AI endpoints without eroding gross margins through escalating inference costs.

Operationally, Twilio needs to demonstrate that AI workloads do not materially compress gross margins. Early FY2024 data suggests gross margin improved despite product investments, but AI inference cost curves are not yet fully visible in the public filings and remain a risk to watch.

Market reaction, index inclusion and liquidity mechanics#

The S&P MidCap 400 inclusion is a mechanical catalyst: index trackers and ETFs that replicate the S&P MidCap 400 will purchase Twilio shares, increasing demand and frequently temporarily reducing volatility and bid-ask spreads. That effect was visible in the market when the inclusion news drove a ~6.5% move on announcement day, followed by a retracement after management provided relatively conservative Q3 guidance. Index inclusion does not change fundamentals but can change ownership composition and trading dynamics, often widening the class of institutional holders.

Forward-looking signals embedded in guidance and analyst estimates#

Management guided Q3 2025 revenue to the $1.245B–$1.255B range (implying roughly +8–9% YoY growth), which contrasts with reported Q2 2025 revenue strength (Q2 revenue of $1.23B, +13% YoY per the company’s release). The narrower Q3 band and lower implied growth rate indicate management is prioritizing measured, quality growth during a period of product transition rather than pushing for aggressive near-term share gains. Analysts' multi-year estimates in the dataset show revenue gradually climbing to ~$4.94B in 2025 (consensus) and to $6.52B by 2029, while EPS consensus moves materially positive on a multi-year basis — signaling that the market expects Twilio to convert operating leverage and AI monetization into sustained earnings. Those forecasts are summarized in Twilio’s estimates data and reflect a view that margins and underlying profitability will continue to improve as the company scales AI offerings.

Key risks and execution levers#

There are three primary execution risks: first, AI inference costs may compress gross margins if Twilio cannot price premium APIs in a way that offsets compute expense. Second, competition from well-capitalized cloud providers could force either price competition or require Twilio to invest more heavily in model access and compliance. Third, the company’s liquidity position is tighter following large share repurchases, reducing optionality should management need to make heavier upfront investments or pursue M&A to accelerate capabilities.

The critical levers for Twilio to demonstrate are improving DBNER (to show AI upsells stick), sustained gross-margin maintenance as AI workloads scale, and consistent FCF generation that exceeds the firm’s buyback pace so liquidity remains prudent.

What this means for investors — framed by data#

Twilio today is a company showing credible operational repair: improving gross margins, positive EBITDA and a material rebound in free-cash-flow conversion. Those are real, cash-backed improvements. At the same time, Twilio's 2024 capital allocation choices — $2.33B of buybacks funded while cash + ST investments declined materially — shift the balance between returning capital and preserving optionality for strategic investment. The S&P MidCap 400 inclusion will improve liquidity and attract passive flows, but lasting valuation improvement depends on Twilio proving that AI delivers higher-quality revenue and better margins over time.

Investors should therefore watch three near-term data points closely: one, the company’s reported DBNER or any disclosed AI-driven ARPU changes; two, quarterly gross-margin evolution as AI workloads appear in the revenue mix; and three, cadence of share repurchases relative to FCF, which determines whether buybacks remain sustainable without weakening the balance sheet.

Key takeaways#

Twilio’s FY2024 results show real operational improvement: revenue +7.47% YoY, gross margin 51.12%, positive EBITDA $165.55M, and FCF $657.46M (+80.86% YoY). Those gains were paired with $2.33B in share repurchases, which materially reduced liquidity and raised net debt. The company’s pivot to AI offers a credible pathway to higher ARPU, but it also creates margin risk from compute costs and invites intensified competition. Inclusion in the S&P MidCap 400 is a liquidity and visibility catalyst, not a fundamentals re-rating on its own. Whether Twilio’s multiple expands sustainably will depend on demonstrable AI monetization, margin resilience, and conservative capital allocation that preserves flexibility.

Conclusion#

Twilio’s numbers show a company that has moved from recovery to consolidation: it has repaired margins, generated meaningful free cash flow, and deployed capital aggressively to buy back stock. The strategic pivot to AI is logical and well-aligned with Twilio’s product set, but the near-term picture is mixed: conservative guidance signals that management is pacing expectations while delivering structural change, and heavy buybacks have reduced the company’s liquidity cushion during a capital-intensive transition. The next several quarters should clarify whether AI becomes a durable source of higher-margin revenue or a costly investment that pressures gross margins. For market participants, the S&P inclusion changes the shareholder base and liquidity profile — but the ultimate re-rating will require visible, repeatable evidence that AI accelerates ARPU and improves margins.

(Quarterly commentary and Q2 2025 quarter-level figures cited above are from Twilio’s investor release. Index inclusion details come from the S&P Dow Jones Indices press release.)