Twilio Inc (TWLO)

Short-term

Turnover ratios

The activity ratios of Twilio Inc. over the specified period reveal notable trends in operational efficiency and working capital management. Notably, the inventory turnover ratio was unavailable across all listed years, indicating that inventory management is not a significant component of Twilio’s operations or that inventory levels are minimal or maintained at negligible levels.

The receivables turnover ratio exhibits a gradual upward trend, increasing from 7.01 times in 2020 to 7.57 times in 2024. This suggests an improvement in the collection efficiency, implying that the company has become slightly more effective in converting receivables into cash over the period.

Similarly, the payables turnover ratio shows a consistent upward movement from 14.74 times in 2020 to 22.25 times in 2024. This indicates that Twilio is paying its suppliers more frequently relative to its average payables outstanding, which can reflect a strategy of optimizing payment terms or managing cash flow effectively.

The working capital turnover ratio presents a progressively increasing trend, rising from 0.60 in 2020 to 1.70 in 2024. This suggests that the company is generating higher sales revenue per unit of working capital employed, which indicates enhanced operational efficiency and better utilization of short-term assets relative to liabilities.

Overall, the data points to an improving efficiency in accounts receivable collection, better management of payables, and increased utilization of working capital, all of which are positive indicators of Twilio’s operational performance over the analyzed period.

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Average number of days

The activity ratios for Twilio Inc., specifically focusing on inventory, receivables, and payables, reveal several notable trends over the observed period from December 31, 2020, to December 31, 2024.

Inventory Turnover (Days of Inventory on Hand):
Data for this ratio is unavailable, marked by placeholders indicating no recorded days in inventory for all years under review. This absence suggests that inventory management is either minimal, highly optimized, or not a significant component of Twilio’s operational activities, consistent with a company primarily offering cloud-based communication services rather than physical products.

Days of Sales Outstanding (DSO):
The DSO figures demonstrate a slight but consistent decrease over the four-year span. Specifically, the DSO decreased from approximately 52.04 days in 2020 to around 48.19 days in 2024. This trend indicates that Twilio has been progressively improving its collections process, allowing the company to convert receivables into cash more rapidly than before. The reduction in DSO signifies enhanced efficiency in accounts receivable management and a possible strengthening of the company's credit policies or customer payment behaviors.

Number of Days of Payables:
The data shows a decreasing trend in the days of payables, from 24.76 days in 2020 down to 16.40 days in 2024. This decline suggests that Twilio is settling its payables more quickly over time. Shorter payment cycles may reflect improved cash management or willingness to pay suppliers sooner, potentially to maintain favorable supplier relationships or due to changes in cash flow strategies.

Summary:
Overall, Twilio’s activity ratios depict a company that is managing its receivables more efficiently, as evidenced by the declining DSO, and is also reducing its payables period. The absence of inventory data aligns with the nature of its cloud-based service offerings, which may not involve significant physical inventory. The concurrent decreases in receivables and payables days highlight a tightening of working capital cycles, which could improve liquidity and cash flow management. However, further context on revenue growth, customer credit policies, and supplier relationships would provide a more comprehensive understanding of these ratios' implications.

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Long-term

The long-term activity ratios of Twilio Inc. exhibit a notable upward trend over the period from December 31, 2020 to December 31, 2023. The fixed asset turnover ratio increased from 3.99 in 2020 to 9.93 in 2022, indicating a significant enhancement in the efficiency with which the company utilizes its fixed assets to generate revenue. This substantial rise suggests that Twilio has been improving its capital productivity in relation to its property, plant, and equipment, or has optimized its fixed asset base to support increased sales efficiently.

Similarly, the total asset turnover ratio demonstrates consistent growth over the same period, rising from 0.19 in 2020 to 0.36 in 2023. This reflects an improved overall efficiency in converting total assets into revenue, signaling better asset management and utilization. The increasing trend in both fixed asset and total asset turnover ratios signifies that Twilio has been expanding its revenue generated per unit of asset base, which could be due to strategic investments, operational efficiencies, or both.

The ratios for December 31, 2024, are not available, possibly indicating that data has not yet been reported or updates are pending. Overall, the data indicates a positive trajectory in the company's asset utilization efficiency, which is a favorable sign for its long-term operational performance.