As of May 22, 2025, Twilio Inc has a Discounted Cash Flow (DCF) derived fair value of $163.54 per share. With the current market price at $114.55, this represents a potential upside of 42.8%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $58.98 |
| DCF Fair Value (10-year) | $163.54 |
| Potential Upside (5-year) | -48.5% |
| Potential Upside (10-year) | 42.8% |
| Discount Rate (WACC) | 6.5% - 9.0% |
Revenue is projected to grow from $4458 million in 12-2024 to $19026 million by 12-2034, representing a compound annual growth rate of approximately 15.6%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 12-2024 | 4458 | 7% |
| 12-2025 | 4992 | 12% |
| 12-2026 | 6088 | 22% |
| 12-2027 | 7517 | 23% |
| 12-2028 | 8503 | 13% |
| 12-2029 | 9704 | 14% |
| 12-2030 | 11682 | 20% |
| 12-2031 | 13578 | 16% |
| 12-2032 | 15138 | 11% |
| 12-2033 | 17054 | 13% |
| 12-2034 | 19026 | 12% |
Net profit margin is expected to improve from -2% in 12-2024 to 11% by 12-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 12-2024 | (109) | -2% |
| 12-2025 | 22 | 0% |
| 12-2026 | 166 | 3% |
| 12-2027 | 368 | 5% |
| 12-2028 | 591 | 7% |
| 12-2029 | 864 | 9% |
| 12-2030 | 1083 | 9% |
| 12-2031 | 1309 | 10% |
| 12-2032 | 1515 | 10% |
| 12-2033 | 1768 | 10% |
| 12-2034 | 2040 | 11% |
with a 5-year average of $68 million. Projected CapEx is expected to maintain at approximately 2% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 12-2025 | 78 |
| 12-2026 | 88 |
| 12-2027 | 105 |
| 12-2028 | 133 |
| 12-2029 | 164 |
| 12-2030 | 194 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 50 |
| Days Inventory | 0 |
| Days Payables | 20 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 9M/2025 | 91 | 0 | 84 | 51 | (44) |
| 2026 | 282 | 3 | 136 | 123 | 19 |
| 2027 | 511 | 7 | 168 | 171 | 165 |
| 2028 | 770 | 11 | 190 | 122 | 447 |
| 2029 | 1085 | 17 | 217 | 145 | 706 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 58.98 | -48.5% |
| 10-Year DCF (Growth) | 163.54 | 42.8% |
| 5-Year DCF (EBITDA) | 74.72 | -34.8% |
| 10-Year DCF (EBITDA) | 163.96 | 43.1% |
Is Twilio Inc (TWLO) a buy or a sell? Twilio Inc is definitely a buy. Based on our DCF analysis, Twilio Inc (TWLO) appears to be significantly undervalued with upside potential of 42.8%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $114.55.