Twilio shares fall 17.5% premarket as expected organic growth slows
Key Facts
Twilio shares fell 17.5% in premarket trading on October 30 after the company reported third-quarter results and gave guidance pointing to slower organic revenue growth in the fourth quarter. Investors focused on management's forecast that organic growth would ease to between 11% and 12%, compared with 16% growth in the third quarter, Investing.com reported. The shares came under pressure even as the company topped analysts' estimates for revenue and earnings per share in the quarter ended September 30. Twilio closed at $241.9 a share on October 29, according to EL7 data. The company also raised its full-year outlook for reported and organic revenue growth in 2026, as attention turned to the nearer-term trajectory for the next quarter.
The company reported third-quarter revenue of $1.56 billion, up 20% year over year on a reported basis and 16% on an organic basis, according to a Twilio statement. Revenue topped the consensus estimate of $1.52 billion, while adjusted diluted earnings per share came in at $1.65, versus an estimate of $1.47. On a GAAP basis, diluted net income per share was $1.00, compared with $0.23 in the same period of 2025. Adjusted operating income also rose to $325.7 million, up 39% year over year. Chief Executive Khozema Shipchandler said it was a "great quarter," driven by disciplined execution and broad-based strength across the product portfolio.
For fourth-quarter guidance, Twilio set revenue at between $1.595 billion and $1.605 billion, a range that implies year-over-year organic growth of between 11% and 12%. That estimate puts the organic growth pace below the 16% recorded in the third quarter, the comparison Investing.com cited in explaining the premarket share decline. The company also forecast adjusted operating income of between $300 million and $310 million, and adjusted diluted earnings per share of between $1.48 and $1.53. The guidance covers the quarter ending December 31, 2026. The published results statement did not specify a date for the quarterly earnings announcement.
For the fiscal year, Twilio raised its 2026 reported revenue growth outlook to 20%, from a previous range of between 18% and 18.5%. It also raised its organic growth outlook to 15%, from a previous range of between 13% and 13.5%. The revisions show an improved annual outlook alongside expectations for slower organic growth in the fourth quarter. The annual outlook increase did not prevent the shares from falling in premarket trading, according to Investing.com. The market reaction centered on the gap between the latest organic growth pace and the forecast for the coming quarter.
Other third-quarter results showed an improvement in revenue expansion among existing customers, with dollar-based net revenue expansion reaching 114%, compared with 109% in the third quarter of 2025. Free cash flow also rose to $369.6 million, from $247.5 million a year earlier. Twilio said consumer adoption of AI had accelerated AI development and that this adoption requires fast, reliable infrastructure. The chief executive added that the company sees an opportunity to provide the infrastructure needed to meet that demand. The fourth-quarter results, for the period ending December 31, 2026, are the next quarterly milestone in the company's guidance.