Twilio shares soared 20% on Friday, marking their biggest gain since the early days of the pandemic. The cloud communications company unveiled an optimistic profit outlook at an investor event, sending its stock price to $136.23 at the close—the highest level since 2022.
The event came just over a year after Khozema Shipchandler took over as CEO, replacing co-founder Jeff Lawson following pressure from activist investors. Shipchandler, a former GE executive, has led Twilio through strategic shifts aimed at improving profitability and expanding growth opportunities.
Twilio now forecasts its adjusted operating margin to reach between 21% and 22% by 2027, surpassing previous analyst expectations of 19.68%. The company’s latest quarterly adjusted operating margin stood at 16.1%, highlighting steady financial improvement.
Executives also announced an ambitious goal of generating $3 billion in free cash flow over the next three years, a significant leap from the $692 million accumulated between 2022 and 2024. Analysts had previously estimated free cash flow for 2025 through 2027 at $2.76 billion, making Twilio’s outlook even more optimistic.
“If we execute well in 2025, I think we write our own story from 2026 on,” Shipchandler stated during the event.
Although Twilio did not provide a specific revenue growth target for 2027, Shipchandler emphasized that the company is positioning itself for sustained double-digit growth. For 2025, Twilio expects free cash flow and adjusted operating income to fall between $825 million and $850 million, with projected revenue growth of 7% to 8% year over year. These figures align closely with analyst expectations.
Since its IPO in 2016, Twilio has evolved from a high-growth software company to a key player in cloud communications. The company benefited significantly from the remote work boom during the pandemic, with its stock skyrocketing over 240% in 2020. However, as market conditions shifted toward profitability, Twilio’s stock plummeted by over 80% in 2022. In response, the company cut 17% of its workforce in early 2023 while facing pressure from activist investors advocating for structural changes.
With its expansion into conversational AI and customer engagement solutions, Twilio now sees a $158 billion total addressable market by 2028—up from $119 billion previously estimated.
Following the company’s strong financial guidance, analysts upgraded Twilio’s stock rating and increased their price target to $160, signaling confidence in its strengthening profitability and cash flow trajectory.
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