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    TWLO
    Earnings call· Mar 2026(Q1 FY26)

    TWILIO Q1 FY26 earnings call TWLO

    Apr 30, 2026 Source

    Executive summary

    Twilio Inc. Q1 FY26 — Accelerating Revenue and Gross Profit Growth

    Twilio delivered a strong first quarter, marked by accelerating revenue and gross profit growth, driven by robust volumes and solid execution across its product portfolio. The company is increasingly positioned as foundational infrastructure for the AI era, with significant demand for voice AI use cases and cross-channel orchestration. Management raised its full-year organic revenue and non-GAAP operating income guidance, reflecting confidence in continued momentum and cost leverage.

    Highlights

    5

    • Revenue grew 20% year-over-year on a reported basis, reaching $1.4 billion.

    • Organic revenue growth accelerated to 16% year-over-year, the fastest rate since 2022.

    • Non-GAAP gross profit grew 16% year-over-year, its best growth rate since 2022, reaching $697 million.

    • Non-GAAP income from operations was a record $279 million, up 31% year-over-year, with operating margin at 19.8%.

    • Stock-based compensation as a percentage of revenue fell to 9.7%, below 10% for the first time since IPO and ahead of the 2027 target.

    Concerns

    2

    • Non-GAAP gross margin declined 180 basis points year-over-year and 40 basis points quarter-over-quarter to 49.6% due to $46 million in incremental carrier pass-through fees.

    • Incremental U.S. carrier fees are expected to reduce full-year 2026 non-GAAP gross margin by roughly 200 basis points compared to FY25.

    Guidance & targets

    10
    CategoryTargetConfidence
    Q2 Reported Revenue
    $1.42 billion to $1.43 billion
    high materiality
    High
    Q2 Organic Revenue Growth
    10% to 11%
    high materiality
    High
    Full Year Organic Growth
    9.5% to 10.5%
    high materiality
    High
    Full Year Reported Revenue Growth
    14% to 15%
    high materiality
    High
    Full Year Non-GAAP Gross Profit Dollar Growth
    similar to our organic revenue growth rate
    medium materiality
    Medium
    Full Year Incremental Pass-Through Revenue from U.S. Carrier Fees
    $235 million
    medium materiality
    High
    Full Year 2026 Non-GAAP Gross Margin Impact from Carrier Fees
    reduced by roughly 200 basis points
    medium materiality
    High
    Q2 Non-GAAP Income from Operations
    $250 million to $260 million
    high materiality
    High
    Full Year 2026 Non-GAAP Income from Operations
    $1.08 billion to $1.1 billion
    high materiality
    High
    Full Year Free Cash Flow
    $1.08 billion to $1.1 billion
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Voice Channel
    Marked its sixth consecutive quarter of accelerated growth, with AI being a catalyst. Voice AI use cases are expected to evolve to be more conversational and cross-channel. Self-service voice grew 45%.
    		—20%——
    Messaging
    Growth accelerated, driven by solid growth in SMS and aided by strength in WhatsApp and RCS. Incremental carrier fees contributed roughly 7 points to this growth. RCS volume more than doubled quarter-over-quarter. Organic growth was approximately 18% YoY.
    		—25%——
    Software Add-ons
    Driven by Verify and newer products such as Branded Calling and Conversational Intelligence. Branded Calling and Conversational Intelligence grew revenue more than 100% year-over-year. Voice add-on software grew in the mid-30s.
    		—20%+——

    Operational metrics

    13
    Reported Revenue Growth
    20%YoY
    Q1 FY26

    Highest growth rate in more than 3 years.

    Organic Revenue Growth
    16%YoY
    Q1 FY26

    Fastest organic revenue growth rate since 2022.

    Non-GAAP Gross Profit Growth
    16%YoY
    Q1 FY26

    Best non-GAAP gross profit growth rate since 2022, up from 10% in Q4 FY25.

    Non-GAAP Income from Operations
    $279 millionUp 31% YoY
    Q1 FY26

    Record non-GAAP income from operations, ahead of expectations.

    Self-Serve Revenue Growth
    25%+YoY
    Q1 FY26

    Driven by significant investments to simplify onboarding and upgrade process, leading to higher conversion rates.

    ISV Cohorts Revenue Growth
    25%+YoY
    Q1 FY26

    Strong performance from ISV channel.

    Non-GAAP Gross Margin
    49.6%Down 180 bps YoY, 40 bps QoQ
    Q1 FY26

    Impacted by incremental carrier pass-through fees associated with increased U.S. A2P fees.

    Non-GAAP Operating Margin
    19.8%Up 160 bps YoY, 110 bps QoQ
    Q1 FY26

    Record operating margin, driven by strong gross profit growth and continued cost leverage.

    GAAP Income from Operations
    $108 million
    Q1 FY26

    Driven by non-GAAP op profit growth, reduced SBC, and lower intangible amortization.

    Stock-Based Compensation as % of Revenue
    9.7%Down 220 bps YoY, 160 bps QoQ
    Q1 FY26

    First time since IPO that SBC has fallen below 10% of revenue, reached ahead of the 2027 target.

    Share Repurchases Executed
    $253 million
    Q1 FY26

    Part of the current share repurchase authorization.

    Remaining Share Repurchase Authorization
    $900 million
    Q1 FY26

    Remaining amount on the current authorization.

    Headcount
    roughly flat
    last 2-3 years

    Company intends to keep headcount around this level, focusing on OpEx control.

    Industry KPIs

    6
    MetricValueDetails
    Headcount dsoroughly flat
    Customer logo metricsAloware, Grupo ProTG, Posh, Sela AI, Solace, PGA of America
    Large customer cohorts7-figure dealUSD
    Sales capacity productivityoptimized
    Net revenue dollar retention114%%
    Ai agentic channel product adoptionAI agent by integrating Voice, Messaging and ConversationRelay

    Product announcements

    3
    ProductTypeDetails
    Twilio Console Experienceupdate
    New Platform Capabilitieslaunch
    Embeddable Flex productslaunch

    Deals & partnerships

    11
    Sierracustomer contract

    Leading customer experience AI company signed a significant cross-sell deal to fuel their global expansion.

    Bland.aipartnershipmultiyear

    Committed to a multiyear partnership to use Messaging, Voice, and software add-ons (recordings, Branded Calling) to power their AI agent platform.

    Historic professional sports leaguecustomer contract7-figure

    Signed a 7-figure deal to use Verify as the high-trust authentication layer for millions of fans.

    KPN Netherlandscustomer contract

    Signed a notable RCS deal to power RCS across all major mobile operators in the Netherlands.

    Telavoxcustomer contract

    Signed a notable RCS deal to enable RCS for organizations in regulated industries.

    Alowarecustomer contract

    New customer signed in Q1.

    Grupo ProTGcustomer contract

    New customer signed in Q1.

    Poshcustomer contract

    New customer signed in Q1.

    Sela AIcustomer contract

    New customer signed in Q1.

    Solacecustomer contract

    New customer signed in Q1.

    PGA of Americapartnershipmultiyear

    Landed a key multiyear partnership to expand usage of the Twilio platform to power personalized engagement for 30,000 PGA of America golf professionals and millions of golfers.

    Risks & headwinds

    1
    Incremental U.S. carrier feesQ1 FY26, Q2 FY26, Full Year FY26

    $46 million in Q1; $71 million in Q2 guidance; $235 million for full year 2026

    Mitigation: While these fees do not impact Twilio's gross profit, income from operations, or free cash flow dollars, they reduce margin rates. Twilio focuses on ensuring customers understand channel choices, including over-the-top channels, to deliver use cases cost-effectively and maintain high ROI.

    Q&A highlights

    8

    Asked for drivers of strong messaging growth, including geographic and product specifics, and unique experiences driving voice acceleration, particularly with AI agents.

    Messaging grew 25% (18% organic ex-fees), broad-based geographically, with early RCS adoption and some AI native volume. Voice grew 20%, its highest in 19 quarters, driven by AI use cases and software add-ons. Self-service voice grew 45%, and voice add-on software grew mid-30s. Use cases include self-service agents for small businesses, AI Copilots for live agents, and AI assistants for sales leads.

    “Voice continues to accelerate, 20% growth in that product. That's the highest growth rate in that product in 19 quarters.”

    asked by Aleksandr Zukin · answered by Aidan Viggiano

    2 min read6 chapters

    Detailed Narrative

    01

    AI as a Foundational Infrastructure Layer

    Twilio is increasingly viewed by customers as a foundational infrastructure layer for the AI era, moving beyond just communications channels. The company is seeing unprecedented🌐 demand for voice, reimagined through AI, which serves as an entry point for both AI natives and enterprises. This shift is driving customers to rely on Twilio for critical infrastructure as they build out their AI capabilities.

    02

    Accelerated Voice and Messaging Growth

    Voice channel revenue grew 20% year-over-year, marking its sixth consecutive quarter of accelerated growth, with AI acting as a significant catalyst. Messaging revenue growth also accelerated to 25%, aided by strong growth in WhatsApp and RCS, with RCS volume more than doubling quarter-over-quarter. Software add-ons like Branded Calling and Conversational Intelligence grew over 100% year-over-year, demonstrating the value of the platform strategy.

    03

    Go-to-Market Efficiency and Customer Traction

    Twilio's go-to-market initiatives continue to perform strongly, with self-serve and ISV cohorts driving over 25% year-over-year revenue growth. Significant investments in simplifying onboarding and upgrade processes have led to higher conversion rates. The company secured new customers including Aloware, Grupo ProTG, Posh, Sela AI, and Solace, and expanded partnerships with companies like Sierra, Bland.ai, and the PGA of America, highlighting broad-based adoption.

    04

    Profitability and Capital Allocation Discipline

    The company achieved record non-GAAP income from operations of $279 million and a non-GAAP operating margin of 19.8%. Stock-based compensation as a percentage of revenue dropped to 9.7%, reaching the 2027 target significantly ahead of schedule. Twilio also generated $132 million in free cash flow and completed $253 million in share repurchases in Q1, with $900 million remaining on its authorization, demonstrating strong financial rigor.

    05

    Future Innovation and Platform Evolution

    Twilio plans to unveil significant innovations at its upcoming SIGNAL conference, introducing new capabilities for orchestrating context-rich conversations with persistent memory across all channels for humans and AI agents. The company aims to become the foundation for how businesses engage customers in the age of AI, building infrastructure that supports the evolving demands of AI-driven customer interactions. This strategic direction has garnered industry analyst recognition, positioning Twilio as a leader in communications engagement platforms.

    06

    Multiproduct Adoption and Cross-Channel Strategy

    Multiproduct customer count increased by 29% in Q1, with revenue from these customers also accelerating. The company emphasizes that customer use cases naturally require multiproduct solutions for personalization and consistent experiences across channels like email, voice, and messaging. This integrated approach, leveraging software orchestration and memory, allows customers to consolidate spend with Twilio, reinforcing its value as critical infrastructure.

    AI-generated summary of the company’s earnings call. Not investment advice.