Twilio Raises 2026 Outlook as Q3 Revenue Grows 20%

Twilio Inc. (NYSE: TWLO) raised its full-year 2026 outlook after third-quarter revenue increased 20% and profitability and cash generation grew faster than sales. The cloud communications company now expects annual reported revenue growth of 20%, compared with its previous forecast of 18% to 18.5%, while projected organic growth rose to 15% from 13% to 13.5%.

Revenue reached $1.56 billion in the quarter ended in 2026, with organic revenue up 16% year over year. Twilio’s dollar-based net expansion rate was 114%, indicating higher revenue from the existing customer cohort included in the company’s calculation.

Non-GAAP gross profit increased 18% to $768 million, representing a 49.2% non-GAAP gross margin. Non-GAAP income from operations rose 39% to $326 million, with the corresponding operating margin reaching 21%. Twilio also reported a GAAP operating margin of 10%.

Free cash flow grew 49% to $370 million, or 24% of revenue. Stock-based compensation expense represented 9.9% of quarterly revenue.

AI and multichannel products support customer expansions

Twilio highlighted customer demand spanning Voice, Messaging, WhatsApp, Flex and its Conversations Layer, with several agreements involving AI-enabled customer engagement and contact-center tools.

Ushur signed a seven-figure expansion covering Twilio’s multichannel products and additional voice AI capabilities through Conversation Relay. Gong entered a seven-figure agreement to continue using Voice and software add-ons, while Chapter signed a seven-figure deal to move its contact center to Flex and deploy Messaging, Voice and Branded Calling.

Twilio also disclosed two eight-figure agreements. A health insurer selected Conversations Layer, Conversation Relay and Conversational Intelligence for voice AI, transcription and call tracking. A financial technology and payments company agreed to consolidate contact-center operations on Flex while adding Conversational Intelligence and Branded Calling.

Other disclosed activity included expansions or cross-sales involving ElevenLabs, Rivian, HUGO BOSS and several unnamed customers across travel, utilities, retail, financial services and telecommunications. Many of these deployments combined communications channels with real-time transcription, branded calling, compliance tools or AI-driven automation.

Full-year forecast increased

Twilio now expects full-year non-GAAP income from operations of $1.19 billion to $1.20 billion, above its previous range of $1.135 billion to $1.155 billion. It issued the same $1.19 billion-to-$1.20 billion range for free cash flow, also up from the earlier forecast.

The company expects full-year non-GAAP gross profit growth to be similar to organic revenue growth.

For the fourth quarter, Twilio forecast revenue of $1.595 billion to $1.605 billion, representing year-over-year growth of 17% to 17.5%. Organic revenue is expected to rise 11% to 12%, with non-GAAP gross profit growth at a similar rate.

Fourth-quarter non-GAAP income from operations is projected at $300 million to $310 million. Twilio expects non-GAAP diluted earnings per share of $1.48 to $1.53, based on approximately 163 million diluted shares and assuming no impact from foreign-exchange volatility.

Risks and measurement limitations

Twilio said its outlook is subject to risks including changes in customer platform usage, global economic and political conditions, competition, cybersecurity incidents, network provider fees, regulatory compliance and the rapidly evolving AI market. The company also cautioned that its dollar-based net expansion rate is calculated from internal data using a non-standardized methodology.

Organic growth, adjusted profitability and free cash flow are non-GAAP measures and should not be viewed as substitutes for GAAP results. Twilio did not provide GAAP reconciliations for certain forward-looking non-GAAP measures because of uncertainty around items including stock-based compensation.