Twilio Set to Report Q2 Earnings: What's in Store for the Stock?

Twilio Inc. TWLO is scheduled to report second-quarter 2025 earnings on Aug. 7, after market close.

Twilio anticipates non-GAAP earnings per share between 99 cents and $1.04. The consensus mark for second-quarter earnings has been revised downward by a penny to $1.02 per share over the past 60 days, suggesting an improvement of 17.2% from the year-ago quarter’s 87 cents.

For the second quarter, the company anticipates revenues between $1.18 billion and $1.19 billion. The Zacks Consensus Estimate for revenues is pegged at $1.19 billion, indicating an improvement of 9.5% from the year-ago quarter’s revenues of $1.08 billion.

TWLO’s earnings beat the Zacks Consensus Estimate thrice in each of the trailing four quarters, while missing on one occasion, the average surprise being 15.4%.

Earnings Whispers for Twilio

Our proven model does not conclusively predict an earnings beat for Twilio this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Twilio has an Earnings ESP of 0.00% and a Zacks Rank #5 (Strong Sell) at present. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Factors Likely to Influence TWLO’s Q2 Results

Twilio’s second-quarter results are likely to reflect gains from sustained digital transformation efforts as enterprises continue to reconfigure their setup for a hybrid operational environment. TWLO’s initiatives to expand its network with independent software vendors and its global partners are likely to have positively impacted the second-quarter performance.

New product launches, including rich communication services and artificial intelligence (AI) enhancements, particularly with the integration of OpenAI’s Realtime API into Twilio’s platform, are expected to positively impact the to-be-reported-quarter results. Previous enhancements of Twilio’s Segment and Flex platforms with new products like Agent Colpilot, Linked Audiences and the Segment Data Graph are likely to have attracted more customers in the second quarter as well.

In the last reported quarter, Twilio added around 10,000 new clients, taking the total active customer count to 335,000 as of March 31, 2025. The trend in the growth of the customer base may have continued in the to-be-reported quarter.

Solutions like Twilio Conversations, SendGrid Ads and SendGrid’s Email Validation application programming interface are likely to have contributed to the second-quarter performance. Moreover, the company’s integration of AI in several communication and segment products is expected to have favored its second-quarter 2025 performance.

However, ongoing macroeconomic challenges are likely to have hurt TWLO’s top line in the to-be-reported quarter. Enterprises are postponing their large IT spending plans amid the still-high interest rates and protracted inflationary conditions.

TWLO Price Performance & Stock Valuation

In the past year, shares of Twilio have surged 102.2%, outperforming the Zacks Internet – Software industry’s rise of 52.5%. TWLO stock has also outpaced its industry peers, including Paycom Software PAYC, Bandwidth BAND and Five9 FIVN. Over the past year, shares of Paycom Software have soared 43.2%, while Bandwidth and Five9 have plunged 9.9% and 39.6%, respectively.

One-Year Price Return Performance

Now, let’s look at the value that Twilio offers to its investors at the current levels. Currently, TWLO is trading at a discount, with a forward 12-month price-to-sales (P/S) of 3.68X compared with the industry’s 5.65X.

Compared with industry peers, Twilio trades at a lower valuation than Paycom Software, while it has a higher P/S multiple than Bandwidth and Five9. At present, Paycom Software, Bandwidth and Five9 have a P/S multiple of 6.12, 0.5 and 1.53, respectively.

Investment Consideration for TWLO

Twilio is a leader in the customer engagement and communications space, offering programmable communications cloud software that allows developers to embed voice, messaging, video and authentication capabilities into their apps at a very low cost. TWLO’s APIs are used by the world’s most renowned companies like Netflix, Airbnb, Lyft, Zendesk, Uber, WhatsApp and DoorDash.

Twilio’s developer-friendly platform and extensive API ecosystem have made it a preferred choice for companies looking to build custom communication solutions. Its ability to offer highly customizable communication tools, alongside its extensive global reach in more than 180 countries, gives it a competitive edge over its peers.

Nonetheless, Twilio’s near-term prospects might be hurt by softening IT spending. Enterprises are postponing their large IT spending plans due to a weakening global economy amid ongoing macroeconomic and geopolitical issues.

Conclusion: Sell TWLO Stock

Twilio’s fundamentals remain solid, and its focus on AI-driven customer engagement solutions positions it for long-term growth. However, near-term headwinds stemming from macroeconomic uncertainties warrant a cautious approach. Considering the short-term headwinds, it is prudent to sell the stock for now and wait until the upcoming quarterly results to get clarity on further investment decision-making.

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This article originally published on Zacks Investment Research (zacks.com).

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