Twilio Inc (TWLO)

The liquidity ratios of Twilio Inc. from September 2020 through June 2025 demonstrate a pattern of sustained high liquidity levels, with some gradual declines over time.

Starting with the current ratio, which measures the company's ability to meet short-term obligations using total current assets relative to current liabilities, the values remained robust initially, peaking at 12.19 in March 2021. Subsequently, the ratio experienced some fluctuation, generally trending downward, but remaining well above the commonly accepted threshold of 1.0, indicating a strong liquidity buffer. By the end of the period in June 2025, the current ratio settled at approximately 4.90, reflecting continued ample short-term asset coverage.

The quick ratio, which excludes less liquid assets such as inventory, follows a similar pattern. It started at a high of 11.93 in March 2021 and showed a gradual decline over time, reaching approximately 4.35 in June 2025. Despite the downward trend, the quick ratio consistently remained significantly above 1, indicating that Twilio maintained sufficient liquid assets to cover immediate liabilities even without relying on inventory sales.

The cash ratio, which is the most conservative liquidity measure focusing solely on cash and cash equivalents relative to current liabilities, also demonstrated a declining trend. It was at its highest, 11.42, in March 2021, and decreased over time to approximately 3.53 in June 2025. Nonetheless, this ratio remained well above 1 throughout the period, suggesting that Twilio consistently held enough cash and equivalents to meet its short-term commitments without requiring additional liquid assets.

Overall, the trend across all three liquidity ratios indicates that Twilio Inc. maintained a strong liquidity position over the analyzed period. Although the ratios exhibit a gradual decline, they remain comfortably above critical thresholds, signifying the company's capacity to meet short-term obligations with its liquid assets. This stability in liquidity metrics reflects prudent cash management practices and a solid short-term financial footing, even as ratios decline over time.

---

Additional liquidity measure

The analysis of Twilio Inc.'s cash conversion cycle (CCC) over the period from September 2020 to June 2025 indicates notable fluctuations characterized by periods of reduction followed by increases. The CCC commenced at approximately 29.38 days in September 2020 and exhibited a general decreasing trend through March 2021, reaching a low of around 16.46 days in June 2021. This decline suggests an improvement in the company's operational efficiency during this interval, potentially due to faster receivables collection, more efficient inventory management, or extended supplier payment periods.

Subsequently, the cycle lengthened somewhat, returning to nearly 29.20 days in September 2021, and remained relatively stable through December 2021 and into early 2022, with values ranging around 27.89 to 30.41 days. This stability indicates that the company maintained a consistent operational cycle during this period.

Beginning in mid-2022, a gradual increase is observable, with the CCC reaching approximately 30.41 days as of June 2022 and slightly fluctuating around this level until September 2022. The cycle then saw a slight upward drift, settling at about 30.16 days in December 2022. By the first quarter of 2023, the cycle increased to approximately 32.31 days, reflecting a modest elongation in the cash conversion process.

A substantial shift occurs starting in the second quarter of 2023, with the CCC sharply rising to approximately 49.34 days in June 2023. This substantial increase suggests a significant deterioration in operational efficiency, potentially due to longer receivables collection periods, extended inventory holding, or delayed payables. Following this peak, the cycle decreases again to about 32.08 days in September 2023 and further stabilizes around 29.48 days by the end of 2023.

In 2024, the CCC exhibits mild fluctuations within a range of approximately 31.78 to 35.79 days. Notably, in March 2024, it reaches about 33.22 days, and in June 2024, it peaks at roughly 35.79 days. The third quarter of 2024 shows a slight decrease to 34.42 days, and the cycle continues to hover around this level through December 2024.

The early part of 2025 witnesses a decline in the cycle to approximately 29.02 days in March 2025, followed by an increase to roughly 33.85 days in June 2025. This suggests some operational adjustments that have led to shorter collection and payment cycles, yet remaining somewhat volatile.

Overall, Twilio's cash conversion cycle has experienced periods of improvement, stabilization, and deterioration, reflecting ongoing operational dynamics and strategic changes within the company's working capital management. The significant spike in mid-2023 warrants further investigation into specific factors affecting receivables, inventory, or payables during that period, while the subsequent stabilization indicates a return toward more typical operating efficiency levels.