Twilio Inc (TWLO)

Short-term

Turnover ratios

The activity ratios for Twilio Inc. over the periods provided reflect various aspects of operational efficiency and management of receivables, payables, inventory, and working capital.

Inventory Turnover:
The inventory turnover ratio is notably absent through most of the provided periods, with the exception of the quarter ending June 30, 2023, where it recorded a value of 33.00. Prior to this, the ratio is unspecified, likely indicating that inventory levels are either negligible or management does not focus on inventory management for this business model. The significant spike suggests minimal or no inventory holdings, consistent with a technology or service-oriented company.

Receivables Turnover:
The receivables turnover demonstrates a relatively stable pattern, fluctuating between approximately 6.87 and 8.04 times annually. The lowest point appears in March 2023 at 6.87, with a gradual increase to 8.04 by June 2025. This indicates a moderate efficiency in collecting receivables, with slight improvements over time, reflecting steady credit and collection policies.

Payables Turnover:
Payables turnover shows more variability. Early in the period, it fluctuates between about 11.28 and 19.44 times annually. Notably, in June 2024, it reaches a high of 34.86, indicating the company is paying its suppliers more quickly relative to its accounts payable balance, while during some periods like June 2021, it dipped to 11.28, suggesting delays or extended payment terms. The recent trend indicates a significant increase in turnover, supporting the possibility of shorter payable periods or improved payables management.

Working Capital Turnover:
This ratio exhibits a steady upward trend from 0.48 in September 2020 to approximately 1.68 in June 2025. The increasing trend indicates enhanced efficiency in utilizing working capital to generate sales or revenue. The gradual rise suggests improved operational management, with the company generating more sales per unit of working capital over time, which is favorable from an efficiency standpoint.

Summary:
- Inventory management appears limited or insignificant, with a major spike in turnover ratio only in mid-2023.
- Receivables turnover remains reasonably stable, with slight upward movement signaling consistent collection efficiency.
- Payables turnover demonstrates variability with a trend toward acceleration, possibly indicating improved cash flow management or strategic payment timing.
- Working capital turnover shows a positive trajectory, reflecting increased operational efficiency and better utilization of working capital resources.

Overall, Twilio Inc.’s activity ratios suggest a company that manages its receivables and payables efficiently, with ongoing improvements in working capital utilization. The minimal inventory turnover points towards a predominantly service or software-based business model where inventory holdings are minimal or nonexistent.

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Average number of days

The activity ratios for Twilio Inc., specifically covering days of inventory on hand (DOH), days of sales outstanding (DSO), and days of payables, reveal key insights into the company's operational efficiency over the analyzed period.

Days of Inventory on Hand (DOH) data shows that for most of the period, inventory levels are either not applicable or not reported, except for the fiscal quarter ending June 30, 2023, where a value of 11.06 days is recorded. This relatively low figure implies efficient inventory management during that quarter, with inventory turnover occurring approximately every 11 days. The lack of data in other periods suggests that inventory levels are either minimal or not a significant component of Twilio’s operations, possibly reflecting the nature of the digital or SaaS-based business model where physical inventory is less relevant.

The Days of Sales Outstanding (DSO) figures have fluctuated slightly over time, indicating the company's collection cycle. Starting at approximately 48.16 days on September 30, 2020, the DSO increased to a peak of around 54.03 days by June 30, 2023. Afterwards, it demonstrated variability but generally trended downward, reaching as low as 45.38 days by June 30, 2025. These movements suggest periods of slower and faster collection times, with the more recent data indicating improvements in receivables management, potentially leading to better cash flow efficiency.

Regarding the number of days of payables, there is a notable reduction over the period. The company extended payment terms up to about 24.76 days in December 2020, but subsequently, these periods generally decreased. As of June 30, 2024, the average payable period is around 10.47 days, and it remains relatively stable through June 30, 2025, with approximately 11.52 days. Shorter payable periods may suggest either improved cash management practices or increased pressure from suppliers for quicker payments.

Overall, Twilio's activity ratios show a trend toward operational efficiencies: inventory levels (where reported) are low; receivables are managed within a reasonable collection period that has improved over time; and payables have been shortened, possibly reflecting a strategic aim to optimize cash flows. The data indicates a company likely leveraging its digital platform to minimize inventory holdings while maintaining effective receivables and payables management practices.

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Long-term

The analysis of Twilio Inc.’s long-term activity ratios reveals notable trends over the periods observed.

Starting with the Fixed Asset Turnover ratio, which measures how effectively the company utilizes its fixed assets to generate revenue, there has been a consistent upward trajectory from September 30, 2020, through September 30, 2023. Specifically, the ratio increased from 4.22 in September 2020 to 13.61 in September 2023. This trend indicates a significant enhancement in the efficiency of fixed asset utilization, suggesting that Twilio has been able to generate more revenue per dollar of fixed assets over time. The sharp increase, particularly between December 2022 and September 2023, signals improved operational efficiencies or a more optimal deployment of fixed assets relative to revenue.

Regarding the Total Asset Turnover ratio, which assesses how effectively the company employs all of its assets to generate sales, there has been a steady improvement throughout the period. It increased from 0.23 on September 30, 2020, to 0.48 on June 30, 2025. This consistent growth reflects a progressive enhancement in overall asset utilization efficiency, with the company generating more sales for each dollar of assets employed. The upward trend suggests effective asset management and possibly strategic asset optimization over time.

In summary, Twilio Inc. demonstrates substantial improvements in long-term activity ratios over the examined period. The notable increase in fixed asset turnover indicates enhanced efficiency in utilizing fixed assets, while the steady rise in total asset turnover signals overall better asset management and operational productivity. These trends collectively suggest a positive trajectory in Twilio’s asset utilization efficiency, supporting its capacity to generate revenue more effectively relative to its long-term assets.