Twilio Inc.

What they do

Twilio provides customizable communications APIs that let developers embed messaging, voice, email, and video into their own applications, plus software products for digital engagement centers, marketing campaigns, and user authentication and identity. These run on its Super Network software layer, which interconnects communications networks and inbox providers globally. It also offers customer data capabilities that collect and unify first-party data for personalized campaigns. As of December 31, 2025, it had over 402,000 Active Customer Accounts, ranging from small businesses to large enterprises.

Revenue drivers

• Messaging — Programmable Messaging API sends and receives SMS, MMS, RCS, and over-the-top messages globally; used for notifications, marketing, alerts, and conversational use cases. It is the largest revenue contributor as part of the communications APIs, though the filing excerpt does not give a segment-level dollar split.
• Voice — Programmable Voice API lets developers make, manage, and receive calls through browsers, applications, or phones; sold on usage-based fees alongside Messaging.
• Software products — Digital engagement centers, marketing campaigns, and user authentication and identity solutions, sold to target specific engagement needs and increasingly bundled with the APIs.
• Customer data capabilities — Collect, contextualize, and unify first-party and real-time customer data to support personalization across channels; complements the communications products.

Recent performance

Second quarter 2026 revenue was $1.50 billion, up 22% reported and 17% organic year-over-year, with GAAP gross profit of $725.9 million (48% margin) and non-GAAP gross profit of $735.7 million (49% margin). GAAP income from operations was $84.5 million, up 129%, and non-GAAP income from operations was $284.6 million, up 29%. GAAP diluted net income per share was $6.68, including a $5.91 non-cash benefit from releasing a significant portion of the U.S. deferred tax asset valuation allowance; non-GAAP diluted EPS was $1.47. Operating cash flow was $372.4 million and free cash flow was $352.6 million. The quarter also included a $32.8 million impairment on prepaid network services that hit operating expenses.

Strategy

Management says it is focused on durable, profitable growth through product innovation, predictive and generative AI, stronger ISV, reseller, and partner relationships, improved self-service, cross-selling, and international expansion. It is also cutting costs by simplifying and automating processes, modernizing infrastructure, using AI internally, and adjusting workforce and distributed-workforce utilization. Twilio is steering toward higher-margin products, and in January 2025 the board authorized a $2.0 billion share repurchase program running through December 31, 2027. In the second quarter of 2026 it repurchased $66.0 million of stock, bringing total repurchases to about $1.2 billion with $826.0 million remaining.

Risks

• History of losses — Twilio reported net losses every year from 2021 through 2024 before earning $34.0 million in 2025, and its 10-K risk factors still cite a history of losses and uncertainty about future profitability.
• Network service provider fees — Major U.S. mobile carriers have raised A2P messaging fees, which Twilio passes through at cost, creating a headwind to gross margin and possible further increases.
• Usage-based revenue variability — Revenue is primarily usage-based, making results more immediately sensitive to consumer spending and macroeconomic conditions and subject to fourth-quarter seasonality followed by lower first-quarter sequential revenue.
• Customer concentration and prepaid asset exposure — The second quarter of 2026 included a $32.8 million impairment of prepaid network services after two network service providers faced operational and financial challenges, and the 10-K cites risks from changes in relationships with larger customers.

Outlook

For the third quarter ending September 30, 2026, Twilio guided revenue of $1.505 to $1.515 billion, implying 16% to 16.5% reported growth and 11% to 12% organic growth year-over-year. It guided non-GAAP income from operations of $285 to $295 million and non-GAAP diluted EPS of $1.42 to $1.47. The implied third-quarter organic growth range is below the 17% organic growth reported in the second quarter.