Twilio may have a market capitalization of about $34 billion, which places it 31st in a ranking of the top 100 listed software companies globally, but the cloud communications specialist has struggled to maintain an operating profit despite being in business since 2008.

That is all set to change from 2023, when Twilio aims to "deliver annual non-GAAP operating profitability consistently," said Jeff Lawson, co-founder and CEO.

In prepared remarks to accompany Twilio's results presentation for 2021, Lawson said the goal "aligns to the long-term model we've talked about of achieving a 20% non-GAAP profit margin over time."

Figure 1: Future forward: Software company Twilio has set a confident note for the coming years after a strong performance in 2021.
(Source: Reuters/Alamy Stock Photo)

Lawson is notably putting the emphasis on "non-GAAP" figures here. Indeed, full-year results for 2021 results show a stark contrast between a GAAP loss from operations of $915.6 million and a non-GAAP income from operations of $2.5 million.

During the company's earnings call, Twilio COO Khozema Shipchandler provided some insight into how the company will achieve this objective. In the short term, he said, "the improvements largely are going to come from operating expenses."

"But I think we're at the point now where we've got enough scale that we can actually start reaping the benefits of that scale and just become more efficient in our core operations. And so, we see a real efficiency opportunity as we move out, and we're really confident in our ability for non-GAAP profitability in 2023," Shipchandler said.

In terms of guidance for Q1 2022, the company expects an adjusted net loss of 26 cents to 22 cents per share on $855 million to $865 million in revenue. Shipchandler also reiterated confidence in Twilio's ability "to deliver 30%-plus organic revenue growth for at least the next three years."

Share boost

Twilio revolves around application programming interfaces or APIs that let developers easily access functions and data on offer from other sources.

The company certainly brought much delight to investors this week after strong Q4 2021 results caused huge spikes in its share price.

Q4 revenue increased 54% to $842.7 million, which included $57.4 million from Twilio Segment (the customer data platform acquired just over a year ago) and $31.8 million from Zipwhip (the toll-free messaging provider acquired last year). Organic revenue grew 34% year-on-year. According to Refinitiv, analysts had expected quarterly revenue of $767.8 million.

The non-GAAP loss from operations of $27.2 million compared with non-GAAP income from operations of $12.8 million for Q4 of 2020. The company also posted a Q4 loss of 20 cents per share, compared to a loss of 22 cents per share as expected by analysts, according to Refinitiv.

In the full year 2021, revenue increased 61% year-on-year to $2.84 billion, including $200.9 million from Twilio Segment, and $55.4 million from Zipwhip. The active customer base also rose from 221,000 to 256,000 over the year.

Want to know more about the cloud? Check out our dedicated cloud-native networks and NFV content channel here on
Light Reading.

"We accomplished a lot in 2021," Lawson said. "We processed nearly 1.7 trillion API requests on the Twilio platform, Twilio Segment processed over 10 trillion events, we delivered 1.3 trillion emails, including more than 13 billion on Black Friday and Cyber Monday, and we sent nearly 127 billion messages."

He also cited three "mega trends" that are set to shape its business in 2022 and beyond: the continued trend of digital transformation, the direct-to-consumer business model entering nearly every industry, and changes in the data privacy landscape.

Shipchandler also emphasized that while Twilio will always remain open to attractive M&A opportunities, "the reality is we're very, very focused on our organic growth rates right now. And we want to continue growing the business that we've got. We don't see a burning need to necessarily do anything."

He added: "And I would just reiterate…there was some speculation that we might purchase Syniverse, and we're certainly not going to do that."

Last year Twilio agreed to invest up to $750 million in Syniverse, which handles 740 billion text messages annually for carriers around the world, and become a "significant minority owner" of the company.

Related posts:

— Anne Morris, contributing editor, special to Light Reading