Twilio's Growth Story Faces Near-Term Pressure Amid Gross Margin Concerns
ByAinvest
Monday, Sep 22, 2025 5:01 pm ET1min read
TWLO--
RBC Capital analyst Rishi Jaluria recently reiterated an Underperform rating and a $75.00 price target on the stock following a group call with company management and investors. Despite the analyst's rating, the firm expressed confidence in Twilio's ability to sustain its path toward double-digit growth, driven by messaging share gains and early traction in cross-selling and AI-enabled voice offerings [1].
Twilio's transition from a traditional CPaaS model to a more comprehensive Customer Experience as a Service (CXaaS) offering has been closely watched by investors and analysts. The company's financial performance has been strong, with revenue growth accelerating to 13% year-over-year in Q2 2025. However, the company's non-GAAP gross margin of 50.7% in Q2 2025 fell short of analyst expectations, highlighting ongoing pressure on profitability [2].
Twilio's strategic positioning as a leader in the unified CXaaS platform space aims to capture substantial cross-selling opportunities and drive higher-margin revenue. The company's strong customer base, with over 349,000 active customers, and its platform's integration of communications, customer data, and AI/ML capabilities provide a competitive advantage [2].
The addressable market for Twilio's services is substantial and growing, with analysts projecting it to reach $118 billion by 2028. Twilio's management has set ambitious targets, aiming for sustainable GAAP profitability from 2025 onward and raising its organic revenue growth rate guidance for 2025 to 9%-10% [2].
Analyst opinions on Twilio are mixed, with price targets ranging from $75 to $165. The diversity in analyst perspectives reflects the ongoing debate about Twilio's growth potential, profitability trajectory, and ability to execute its strategic transformation [2].
Twilio Inc. (TWLO) is a cloud communications platform-as-a-service (CPaaS) company facing near-term gross margin pressure from carrier fee increases. Despite this, management has highlighted offsetting strategies and partnerships, including a "neutral, model-agnostic posture" supporting its platform narrative. RBC Capital analyst Rishi Jaluria reiterated an Underperform rating and $75.00 price target on the stock.
Twilio Inc. (NYSE:TWLO), a leading cloud communications platform-as-a-service (CPaaS) company, is currently grappling with near-term gross margin pressure due to carrier fee increases. However, management has highlighted several offsetting strategies, including pricing actions, cloud cost optimization, and multi-product platform selling, to mitigate this pressure. Additionally, Twilio's strategic partnerships and its "neutral, model-agnostic posture" continue to support its platform narrative [1].RBC Capital analyst Rishi Jaluria recently reiterated an Underperform rating and a $75.00 price target on the stock following a group call with company management and investors. Despite the analyst's rating, the firm expressed confidence in Twilio's ability to sustain its path toward double-digit growth, driven by messaging share gains and early traction in cross-selling and AI-enabled voice offerings [1].
Twilio's transition from a traditional CPaaS model to a more comprehensive Customer Experience as a Service (CXaaS) offering has been closely watched by investors and analysts. The company's financial performance has been strong, with revenue growth accelerating to 13% year-over-year in Q2 2025. However, the company's non-GAAP gross margin of 50.7% in Q2 2025 fell short of analyst expectations, highlighting ongoing pressure on profitability [2].
Twilio's strategic positioning as a leader in the unified CXaaS platform space aims to capture substantial cross-selling opportunities and drive higher-margin revenue. The company's strong customer base, with over 349,000 active customers, and its platform's integration of communications, customer data, and AI/ML capabilities provide a competitive advantage [2].
The addressable market for Twilio's services is substantial and growing, with analysts projecting it to reach $118 billion by 2028. Twilio's management has set ambitious targets, aiming for sustainable GAAP profitability from 2025 onward and raising its organic revenue growth rate guidance for 2025 to 9%-10% [2].
Analyst opinions on Twilio are mixed, with price targets ranging from $75 to $165. The diversity in analyst perspectives reflects the ongoing debate about Twilio's growth potential, profitability trajectory, and ability to execute its strategic transformation [2].
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