Twilio Raises 2026 Outlook After Quarterly Revenue of $1.56 Billion and 20% Growth
Key Facts
Twilio reported third-quarter 2026 revenue of $1.56 billion, up 20% year over year on a reported basis and 16% organically, and raised its full-year outlook after results exceeded analysts’ estimates. The company said revenue was $1.559536 billion in the three months ended September 30, compared with $1.300402 billion in the same period of 2025. StreetInsider put the consensus revenue estimate at $1.52 billion, while adjusted diluted earnings per share were $1.65, $0.18 above analysts’ estimate of $1.47. The company announced the results on October 29, after previously scheduling their release after the market close that day. Its shares had closed at $253.77 on October 28, before the results were released, so that price does not represent the market’s response to the announcement.
The results also came with improvements in profitability and cash flow measures. Operating income under generally accepted accounting principles was $148.6 million, up 263% year over year, while non-GAAP operating income reached $325.7 million, up 39%. The company reported free cash flow of $369.6 million, compared with $247.5 million in the third quarter of 2025, while cash flow from operating activities was $389.2 million. Adjusted diluted earnings per share were $1.65, compared with $1.25 a year earlier, while GAAP earnings per share were $1.00, versus $0.23. These comparisons reflect improved profitability and cash generation alongside revenue growth during the quarter.
Management attributed the performance to disciplined execution and broad-based strength across its product portfolio. Chief Executive Khozema Shipchandler said, "The third quarter was an excellent quarter for Twilio, driven by disciplined execution and broad-based strength across our product portfolio." He added that consumer adoption of artificial intelligence is increasing demand for fast, reliable infrastructure, linking the growing use of AI applications to demand for the company’s services. The customer base provided another indicator of expanding spending: dollar-based net expansion was 114% in the third quarter of 2026, compared with 109% a year earlier. The rate measures spending growth among existing customers under the company’s definition and puts revenue performance in the context of continued expansion in existing accounts.
Twilio raised its 2026 reported revenue growth outlook to 20%, from a previous range of 18% to 18.5%, and lifted its organic growth outlook to 15%, from a range of 13% to 13.5%. The company raised its forecasts for non-GAAP operating income and free cash flow to a range of $1.19 billion to $1.20 billion for each. Previous forecasts put both figures between $1.135 billion and $1.155 billion. The revision covers revenue, operating profitability and cash, following quarterly free cash flow of $369.6 million compared with $247.5 million a year earlier. The quarter’s results also exceeded the company’s pre-announcement forecasts: it had projected revenue of $1.505 billion to $1.515 billion, adjusted operating income of $285 million to $295 million, and adjusted diluted earnings per share of $1.42 to $1.47.
For the fourth quarter of 2026, the company expects revenue of $1.595 billion to $1.605 billion, non-GAAP operating income of $300 million to $310 million, and adjusted diluted earnings per share of $1.48 to $1.53. The annual outlook increase coincided with a 15.4% drop in the company’s shares in after-hours trading on October 29, according to Investing.com. The platform said the fourth-quarter forecast implies organic growth of 11% to 12% year over year, compared with 16% organic growth in the third quarter, making the expected slowdown a focus for investors. It also reported that Twilio repurchased $127.2 million of its common stock during the third quarter. The earnings call was scheduled for October 29 at 2:00 p.m. Pacific time, or 5:00 p.m. Eastern time.