Twilio Inc.
TWLO · NYSE
Next quarter
Expected to report Feb 11, 2027 — estimated from last year’s reporting date.
Consensus is $0.77 EPS for Dec 2026 across 9 estimates, ranging $0.65 to $0.88.
TWLO Sep 2026
- 21.62%
- -15.24%
- $0.74
- $0.90
- —
- $1.56B
Reported results
- $1.56B
- 48.77%
- $148.63M
- 9.53%
- $161.16M
- $1.00
Highlights
- Revenue growth: Q3 revenue rose 20% year over year to $1.56 billion; organic growth was 16%, and revenue increased about 4% sequentially from $1.50 billion in Q2.
- EPS: The supplied consensus comparison shows EPS of $0.90 versus $0.74 expected, a 21.6% beat. Twilio’s release reports GAAP diluted EPS of $1.00 and non-GAAP diluted EPS of $1.65.
- Profitability: Non-GAAP operating income reached a record $326 million, up 39% year over year, with a 21% margin, up 290 basis points. GAAP operating income was $149 million versus $41 million a year earlier.
- Cash generation: Record free cash flow was $370 million, up from $248 million a year earlier, at a 24% margin; operating cash flow was $389 million.
- Customer expansion: Dollar-based net expansion was 114%, up from 109% a year earlier; management said incremental carrier fees contributed about 4 points.
- Product momentum: Messaging grew 24%, including roughly 7 points from pass-through carrier fees; Voice grew more than 20%, software add-ons more than 25%, and self-serve revenue more than 30%.
- Raised outlook: FY2026 reported revenue growth guidance increased to 20% from 18%–18.5%, organic growth to 15% from 13%–13.5%, and non-GAAP operating income and free cash flow guidance each to $1.19–$1.20 billion.
- AI opportunity: Preliminary FY2027 guidance calls for at least 10% organic revenue growth and at least $1.35 billion each in non-GAAP operating income and free cash flow; management said voice AI remains about 1% penetrated.
Analysis
Twilio delivered a strong Q3, with $1.56 billion of revenue, up 20% year over year and 16% organically. Management said revenue beat the high end of its guidance by roughly 4 points, within its historical 2%–4% range, while the supplied consensus comparison shows EPS of $0.90 against $0.74 expected. The company’s release separately reports $1.00 GAAP diluted EPS and $1.65 non-GAAP diluted EPS. Revenue rose about 4% from Q2’s $1.50 billion; GAAP EPS was well below Q2’s $6.68, which was boosted by a large tax benefit, while Q3 operating income of $149 million compared with $85 million in Q2 and $41 million a year ago.
The print was defined by broad-based demand, expanding profitability and a higher outlook, alongside management’s bet on AI-enabled engagement. Organic growth remained solid, although Messaging growth moderated to 17% from 18% in Q2 as some ISVs lapped tougher comparisons. Voice, software add-ons and self-serve were growing faster, and DBNE improved to 114%. Record non-GAAP operating income and free cash flow demonstrate leverage, though Q3 operating income included about $11 million in platform credits. Twilio raised FY2026 targets and offered a preliminary FY2027 outlook of at least 10% organic growth, while emphasizing that broad AI adoption is still early.
Revenue and expansion
Revenue increased $259 million year over year to $1.56 billion, with organic growth of 16% after excluding $53 million of incremental U.S. carrier fees and $2 million of acquisition revenue. The increase reflected greater customer usage and new accounts; management said the Q3 beat was more normalized than the larger beats in the first half. Messaging, about 60% of revenue, was the main source of deceleration: organic growth eased from 18% in Q2 to 17% in Q3, primarily as ISVs faced tougher comparisons. The rest of the business was broadly consistent quarter to quarter.
- Messaging: Revenue grew 24%, with roughly 7 percentage points from carrier pass-through fees; underlying organic growth was 17%. WhatsApp and RCS also contributed to strength.
- Voice and add-ons: Voice grew more than 20%, driven by both usage volumes and software attachments. Total software add-on revenue grew more than 25%; Branded Calling and Conversation Intelligence were among the products management said were growing rapidly.
- Customer reach: Self-serve revenue grew more than 30%, while ISV revenue grew more than 20%. DBNE rose to 114% from 109% a year ago, though carrier fees contributed about 4 percentage points to the metric.
AI and voice adoption
Management positioned Twilio as neutral communications infrastructure that can serve competing AI platforms while layering on context, orchestration, identity and trusted channels. It described voice AI as roughly 1% penetrated and consumer AI as even less developed, so the opportunity remains prospective rather than a large, separately quantified current revenue driver. The company said proof-of-concept deployments are moving into production and cited strong self-serve adoption as an early signal, while noting that regulated sectors such as healthcare, insurance and financial services are still experimenting.
- New capabilities: Twilio introduced a simplified console and broader conversations offering, and placed an identity product into private beta. General availability is planned for next year; pricing and packaging are not yet set, but management expects usage-based monetization.
- Customer examples: A health insurer signed Twilio’s first eight-figure Conversations deal, using Conversation Relay and real-time transcription. Chapter signed a seven-figure Flex deployment, while Eltropy and Ushur are expanding multichannel and voice AI use cases.
- Adoption evidence: Management said self-serve voice was growing about 55% and noted that some voice AI proofs of concept have progressed to production. Broader enterprise adoption and the related revenue impact remain early.
Operating leverage and cash
Profitability advanced faster than revenue as gross profit growth and expense discipline translated into record non-GAAP operating income and free cash flow. GAAP gross margin held at 49%, while non-GAAP gross margin was 49.2%, down 90 basis points year over year but up 20 basis points sequentially. Carrier pass-through costs depressed the margin rate without affecting gross profit dollars; excluding them, management said non-GAAP gross margin would have increased 80 basis points year over year. Q3 operating profit also benefited from about $11 million in platform credits, above expectations.
- Operating income: Non-GAAP operating income was $326 million, up 39% year over year, with a 21% margin versus 18% a year ago. GAAP operating income was $149 million, compared with $41 million a year earlier.
- Cash generation: Free cash flow was $370 million versus $248 million in Q3 FY2025, and free cash flow margin expanded to 24% from 19%. Operating cash flow was $389 million.
- Capital returns: Twilio repurchased $127 million of shares in Q3. About $699 million remained on its $2.0 billion authorization as of September 30, 2026.
Guidance and outlook
The company lifted its full-year targets after year-to-date performance and Q4 expectations. Q4 guidance implies slower reported growth than Q3, partly reflecting the comparison base and carrier-fee contributions, while organic growth is expected at 11%–12%. Management said Q4 is a more volatile usage-based quarter, with holiday seasonality, and expects hosting costs to rise to support peak activity. It also said the email cloud-migration gross-margin tailwind is now fully in the run rate.
- Q4 FY2026: Revenue guidance is $1.595–$1.605 billion, implying 17%–17.5% reported growth and 11%–12% organic growth. The outlook assumes about $75 million of incremental U.S. carrier fees. Non-GAAP operating income is expected at $300–$310 million and non-GAAP diluted EPS at $1.48–$1.53.
- FY2026: Reported revenue growth guidance rose to 20% from 18%–18.5%, and organic growth to 15% from 13%–13.5%. Non-GAAP operating income and free cash flow are each forecast at $1.19–$1.20 billion, versus prior ranges of $1.135–$1.155 billion.
- FY2027 preliminary view: Twilio expects at least 10% organic revenue growth and at least $1.35 billion each of non-GAAP operating income and free cash flow. Non-GAAP gross profit growth is expected to be similar to organic revenue growth.
