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Twilio stock has recovered impressively in the past month, and its rally seems here to stay.
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The company’s focus on integrating AI tools into its cloud communications platform is paying off.
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Twilio’s earnings growth rate is expected to pick up going forward, and its attractive valuation suggests that investors are getting a good deal right now.
The broader weakness in the stock market has weighed on shares of Twilio (NYSE: TWLO) so far this year, with the cloud communications specialist losing more than 4% of its value as of this writing. But the company’s latest quarterly report has injected life into the stock.
Twilio jumped more than 2% after releasing its first-quarter 2025 results on May 1. What’s worth noting is that the stock has recovered 23% in the past month, and its solid quarterly results and guidance indicate that more upside could be in the cards.
Let’s look at the catalysts driving Twilio’s growth and check why this tech stock is capable of heading higher in the second half of the year and beyond.
Twilio reported a 12% year-over-year increase in revenue in Q1 to $1.17 billion. The company’s earnings grew at a much faster pace of 42% from the year-ago period as customers adopted more of its AI-focused cloud communications tools, which led to an increase in spending by existing customers.
This was evident from Twilio’s dollar-based net expansion rate of 107% during the quarter, an improvement of five percentage points from the year-ago period. The dollar-based net expansion rate compares the revenue generated by Twilio’s active customer accounts in a quarter to the revenue generated from those same accounts in the year-ago period.
A reading of more than 100% in this metric suggests that Twilio’s existing customer base is using more of its solutions or has increased the usage of existing solutions. That’s not surprising, as Twilio is now offering AI-focused tools such as Conversation Relay that allow clients to integrate voice-enabled AI solutions into their customer service applications.
Management points out that Conversation Relay can help clients build voice AI agents, as it offers more than 1,000 natural-sounding voices in 40 languages. The good part is that Twilio has started witnessing demand for its voice AI offerings, with one of its customers building a voice AI agent using the company’s tools. Importantly, the size of the voice AI agents market is expected to grow at an annual rate of 35% over the next decade, so there is a good chance that Twilio’s voice AI platform can attract more customers in the long run and drive stronger growth for the company.
