Twilio Inc (TWLO)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 50.00% | 47.25% | 46.13% | 46.25% | 49.76% |
| Operating profit margin | -0.91% | -9.31% | -25.96% | -31.69% | -26.74% |
| Pretax margin | -1.99% | -23.99% | -32.50% | -33.81% | -28.63% |
| Net profit margin | -2.45% | -24.45% | -32.83% | -33.43% | -27.87% |
The analysis of Twilio Inc.'s profitability ratios over the period from December 31, 2020, to December 31, 2024, indicates a noteworthy improvement in the company's profitability metrics. The gross profit margin has demonstrated a gradual upward trend, increasing from 49.76% in 2020 to 50.00% in 2024, suggesting enhanced efficiency in core operations or improved pricing strategies that sustain a higher proportion of revenue after deducting cost of goods sold.
Conversely, the operating profit margin has shown a significant recovery from a negative-26.74% in 2020 to a near break-even position at -0.91% in 2024. This progression reflects substantial improvements in operating efficiency and cost management, reducing operational losses over the period. The positive movement signifies a shift towards operational profitability, although the company has yet to achieve consistent positive operating margins.
The pretax margin has similarly improved from -28.63% in 2020 to -1.99% in 2024. This pattern indicates that, before accounting for taxes, Twilio has been successfully mitigating its pre-tax losses, moving closer to profitability. The narrowing pretax margins suggest better control over non-operating costs and expenses, as well as potential gains in revenue or reductions in non-operating losses.
The net profit margin exhibits a parallel upward trend, improving from -27.87% in 2020 to -2.45% in 2024. Although still negative, the consistent decrease in net losses indicates ongoing progress toward sustainable profitability. The narrowing gap between net and gross margins further demonstrates effective management of operating expenses and other income or expense categories impacting the bottom line.
Overall, Twilio Inc. displays a trajectory of improving profitability ratios, marked by increased gross margins and substantial reductions in operational, pre-tax, and net losses. These developments suggest positive momentum in operational efficiencies and bottom-line performance, although the company has yet to attain consistent positive earnings. The trend points toward a trajectory of continued improvement, which, if sustained, could eventually lead to genuine profitability and financial stability.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | -0.41% | -3.33% | -7.91% | -6.93% | -4.97% |
| Return on assets (ROA) | -1.11% | -8.75% | -10.00% | -7.31% | -5.18% |
| Return on total capital | -1.11% | -10.24% | -11.78% | -8.71% | -5.67% |
| Return on equity (ROE) | -1.38% | -10.43% | -11.90% | -8.61% | -5.81% |
The analyzed profitability ratios for Twilio Inc. over the period from December 31, 2020, to December 31, 2024, reveal a consistent negative trend, indicating ongoing challenges in generating profit relative to its assets, capital, and equity.
Operating Return on Assets (Operating ROA):
This ratio reflects the company's ability to generate operating income from its assets. The data shows a deterioration from -4.97% in 2020 to -7.91% in 2022, suggesting declining efficiency in core operations during that period. Notably, there is a significant improvement in 2023 and 2024, with the Operating ROA moving closer to neutrality at -3.33% and then to -0.41%, respectively. This trend indicates a notable enhancement in operating performance, approaching break-even territory.
Return on Assets (ROA):
The ROA, representing overall net profitability relative to total assets, follows a similar negative trajectory, worsening from -5.18% in 2020 to -10.00% in 2022. As with Operating ROA, there is a recovery observed in 2023 and 2024, with the ratios improving to -8.75% and then to -1.11%. The narrowing of negative ROA suggests a substantial improvement in net profitability and asset utilization efficiency, although the company remains unprofitable in absolute terms.
Return on Total Capital:
This ratio also exhibits a declining pattern from -5.67% in 2020 to -11.78% in 2022, reflecting deteriorating returns on the total capital employed, which includes debt and equity. The subsequent years show a positive shift, with the ratio rising to -10.24% in 2023 and further to -1.11% in 2024. These movements suggest that Twilio is steadily improving its ability to generate returns on the total capital invested, moving towards breakeven.
Return on Equity (ROE):
ROE measures the profitability generated for shareholders' equity. Similar to other ratios, it declines from -5.81% in 2020 to -11.90% in 2022, indicating lower profitability attributable to shareholders. The ratio improves markedly over the later years, reaching -10.43% in 2023 and -1.38% in 2024. This trend reflects enhanced efficiency in generating returns for equity holders, although profitability has not yet turned positive.
Summary:
Overall, Twilio Inc.'s profitability ratios have demonstrated a significant negative trend up to 2022, illustrating challenges in generating consistent profits during that period. However, from 2023 onwards, a marked improvement is observed across all ratios, with ratios approaching—or in some cases, nearly reaching—break-even levels. This suggests that the company has been successful in improving operational efficiency, asset utilization, and profitability, though it remains in a loss position as of the latest data.