Twilio — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue reached $1.56 billion, representing a 20% year-over-year increase and 16% organic growth.
• GAAP gross profit was $761 million (20% YoY growth) with a 49% margin; Non-GAAP gross profit was $768 million (18% YoY growth) with a 49% margin.
• GAAP income from operations was $149 million, a 263% increase year-over-year, resulting in a 10% margin.
• Non-GAAP income from operations was $326 million, a 39% increase year-over-year, resulting in a 21% margin.
• GAAP net income per share (diluted) was $1.00, compared to $0.23 in the third quarter of 2025.
• Non-GAAP net income per share (diluted) was $1.65, compared to $1.25 in the third quarter of 2025.
• Net cash provided by operating activities was $389.2 million, up from $263.6 million in the prior year period.
• Free cash flow was $369.6 million, up from $247.5 million in the prior year period.
• Dollar-Based Net Expansion Rate (DBNE) was 114% for the quarter, compared to 109% in the third quarter of 2025.
• Stock-based compensation expense totaled $153.9 million, representing 9.9% of revenue, down from 12.2% in the prior year period.

Guidance and Future Outlook:

• For the fourth quarter of 2026, Twilio expects revenue between $1.595 billion and $1.605 billion, implying 17% to 17.5% reported growth and 11% to 12% organic growth.
• Fourth quarter non-GAAP gross profit is expected to align with the organic revenue growth range.
• Fourth quarter non-GAAP income from operations is guided to $300 million to $310 million.
• Fourth quarter non-GAAP diluted earnings per share is guided to $1.48 to $1.53, based on 163 million non-GAAP weighted average diluted shares.
• For the full fiscal year 2026, reported revenue growth outlook was raised to 20% (previously 18% to 18.5%).
• Full-year 2026 organic revenue growth outlook was raised to 15% (previously 13% to 13.5%).
• Full-year 2026 non-GAAP income from operations outlook was raised to $1.19 billion to $1.20 billion (previously $1.135 billion to $1.155 billion).
• Full-year 2026 free cash flow outlook was raised to $1.19 billion to $1.20 billion (previously $1.135 billion to $1.155 billion).

Business Segments and Product Lines:

• The company reported broad-based strength across its product portfolio, driven by disciplined execution.
• Management highlighted the acceleration of consumer AI development and the demand for fast, reliable infrastructure built for AI speed.
• The platform supports messaging, voice, email, and other channels across 180+ countries.

Market and Competitive Landscape:

• Twilio positions itself as the infrastructure for customer engagement in the AI era, combining global communications, memory, and AI orchestration.
• The company serves hundreds of thousands of innovative companies, ranging from Fortune 500 firms to startups, and millions of developers.

Risks and Challenges:

• Forward-looking statements are subject to risks including global economic and political conditions, fluctuations in customer usage levels, and the ability to attract and retain customers.
• Risks include cybersecurity breaches, changes in network service provider fees, and the rapidly evolving AI landscape.
• The accuracy of forecasts and the ability to manage growth and strategic changes are cited as potential challenges.

Management Commentary and Tone:

• CEO Khozema Shipchandler described the quarter as "great," attributing success to disciplined execution and broad-based product strength.
• Management stated that Twilio is well-positioned to capitalize on the moment of accelerated AI development and the demand for AI-speed infrastructure.

Other Key Points:

• In January 2025, the Board authorized a share repurchase program for up to $2.0 billion, expiring December 31, 2027.
• During the third quarter of 2026, Twilio repurchased $127.2 million in aggregate value of shares.
• As of September 30, 2026, the company had completed approximately $1.3 billion in repurchases, leaving $700 million available under the program.
• The company employed 5,625 people as of September 30, 2026.
• Cash and cash equivalents increased to $1.06 billion as of September 30, 2026, from $682 million as of December 31, 2025.
• Long-term debt remained stable at approximately $994 million as of September 30, 2026.