Upgrade Henry Schein to Buy: Growth, Strong Tailwinds, and Solid Balance Sheet

Henry Schein is a healthcare company that demonstrates growth, strong tailwinds, and the ability to pass on price hikes to customers. Its fortress-like balance sheet and investment-grade credit rating also make it an attractive investment. The author recommends upgrading the stock from hold to buy.

Twilio Inc. (TWLO) reported strong second-quarter (Q2) 2025 earnings, demonstrating robust growth and innovation in the communication infrastructure market. The company's revenue reached $1.228 billion, marking a 13% year-over-year increase, with record non-GAAP operating income of $221 million and free cash flow of $263 million [1].

Key highlights of Twilio's Q2 performance include:

- Revenue Growth: Twilio's revenue grew by 13% year-over-year to $1.228 billion, driven by accelerating messaging growth and double-digit voice revenue growth. This growth was fueled by strong AI startup adoption and the launch of Conversation Relay, which completed nearly 1 million calls in its first quarter [1].
- Operational Efficiency: The company achieved another record quarter of non-GAAP income from operations and free cash flow, reflecting its progress in driving operational efficiencies and product-led innovation [1].
- Customer Wins and Partnerships: Twilio secured notable wins with customers such as Henry Schein One, JustFab, Manus AI, and The Phoenix Suns. Additionally, it announced a multiyear strategic partnership with Microsoft, which will benefit more than 10,000,000 Twilio developers and thousands of Microsoft managed customers [1].
- Innovation and New Products: The company showcased new products and features at its SIGNAL user conference, including the general availability of Conversation Relay, which empowers developers to create natural voice AI agents. It also announced conversational intelligence for messaging, event triggered journeys, and WhatsApp business calling via programmable voice [1].

Despite the strong performance, Twilio faced a decline in non-GAAP gross margin, which dropped 260 basis points year-over-year to 50.7%. This was attributed to a higher messaging mix, $6 million in pass-through carrier fees, and FX headwinds [1]. However, the company raised its full-year organic revenue growth guidance to 9–10% and free cash flow outlook to $875–900 million [1].

Twilio's Q2 results underscore its ability to drive growth through innovation and strategic partnerships. The company's strong performance and forward-looking guidance position it favorably for continued success in the communication infrastructure market.

References:
[1] https://www.marketbeat.com/earnings/reports/2025-8-7-twilio-inc-stock/