Twilio Soars 19% in a Month: Should Investors Buy the Stock Now?

Yahoo

05-06-2025

Twilio Inc. TWLO has delivered a solid 18.8% gain over the past month. This performance easily beats the Zacks Internet Software industry, which rose 15.8% in the same period.
The stock has also moved ahead of big cloud communication providers, including Amazon.com, Inc. AMZN, Cisco Systems, Inc. CSCO and Microsoft Corporation MSFT. Shares of Amazon, Cisco and Microsoft have risen 12%, 8.7% and 7.1%, respectively.
This outperformance shows investors are increasingly confident about Twilio's long-term story, even during a volatile market shaped by trade conflicts and geopolitical risks. We believe this momentum is grounded in strong fundamentals, and TWLO's long-term outlook justifies a buy position for now.
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Twilio maintains its leadership position in customer engagement by enabling real-time, personalized interactions for businesses globally. Its artificial intelligence (AI)-powered solutions play a key role in driving efficiency and customer satisfaction. Twilio Verify and Voice Intelligence leverage AI to automate and optimize customer interactions, delivering better security and valuable insights.
Twilio Segment, a rapidly growing customer data platform, is another growth driver. By unifying customer data from multiple touchpoints, Segment empowers businesses to run highly targeted, data-driven marketing campaigns, boosting retention and sales.
As enterprises increasingly adopt AI to streamline operations and enhance customer experiences, Twilio's data-rich, AI-driven platforms will continue to benefit from this trend. The company's strategic positioning in the growing customer engagement market makes the stock worth buying despite near-term challenges.
Twilio's application programming interface (API)-first approach differentiates it from larger tech rivals such as Microsoft, Amazon and Cisco. While these giants offer standardized, bundled solutions, Twilio's customizable APIs enable businesses to create tailor-made communication experiences, giving them a competitive advantage.
This flexibility appeals to a wide range of customers, from startups to large enterprises, enhancing customer stickiness and loyalty. Furthermore, Twilio's global reach across 180+ countries extends its market presence beyond many regional competitors. Its deep integration across messaging, voice, email and video makes it the go-to provider for comprehensive customer engagement solutions, strengthening its long-term growth prospects.
Twilio's latest financial results for the first quarter of 2025 demonstrate the company's resilient business model amid ongoing macroeconomic uncertainties. In the first quarter, the company delivered nearly 43% year-over-year EPS growth, with revenues climbing 12%.
Twilio Inc. price-consensus-eps-surprise-chart | Twilio Inc. Quote
Twilio's dollar-based net expansion rate improved to 107%, up from 106% in the previous quarter and 102% in the year-ago quarter, reflecting strong customer retention and upselling momentum. The company's active customer accounts grew to more than 335,000 as of March 31, 2025 compared to 325,000 in the previous quarter, highlighting its continued customer acquisition.
Twilio's balance sheet remains solid, with $2.45 billion in cash, cash equivalents and short-term investments as of Dec. 31, 2024. Its free cash flow generation of $178 million in the first quarter, along with $191 million in operating cash flow, demonstrates its financial stability and ability to fund growth initiatives.
Twilio's strong cash flow has helped it return cash through regular quarterly dividend payments and share repurchases. In 2024, Twilio repurchased $2.33 billion worth of shares, completing its $3 billion buyback program. In the first quarter of 2025, it bought back shares worth $126 million under the ongoing share repurchase authorization of $2 billion. Its share buyback strategy reflects management's confidence in the company's long-term value.
Despite its strong growth, Twilio stock still looks reasonably priced. It trades at a forward 12-month price-to-sales (P/S) multiple of 3.69X, which is lower than the industry average of 5.66. This discount adds to the appeal for long-term investors.
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Compared with its competitors in the cloud communication space, Twilio trades at a discounted valuation multiple against Microsoft and Cisco, while at a premium against Amazon. At present, Microsoft, Cisco and Amazon have a P/S multiple of 11.09X, 4.34X and 3.05X, respectively.
Twilio's strong performance demonstrates real progress in its business fundamentals, rising customer engagement, improving margins and a smart capital return program. With its AI-driven platform, flexible API-first strategy and compelling valuation, now is a good time to invest in TWLO stock.
Twilio carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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