Twilio Inc. 2026 Q3 Earnings Call

Please go ahead. Good afternoon, everyone, and thank you for joining us for Twilio's third quarter 2026 earnings conference call.

Joining me today are Khozema Shipchandler, Chief Executive Officer, Aidan Viggiano, Chief Financial Officer, and Thomas Wyatt, Chief Operating Officer. As a reminder, we will disclose non-GAAP financial measures on this call. Definitions and reconciliations between our GAAP and non-GAAP results can be found in our earnings presentation posted on our IR website at investors.twilio.com. We will also make forward-looking statements on this call, including statements about our future outlook and goals. Such statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those described. Many of those risks and uncertainties are described in our SEC filings, including our most recent Form 10-K and our forthcoming Form 10-Q. Forward-looking statements represent our beliefs and assumptions only as of the date such statements are made.

We disclaim any obligation to update any forward-looking statements except as required by law. With that, I'll hand it over to Kozema and Aidan, who will discuss our Q3 results, and then we'll open the call for Q&A.

Thanks, Rodney. Good afternoon, everyone, and thank you for joining us today. Twilio had a great third quarter. Revenue grew 16% organically while non-GAAP gross profit grew 18% year over year. We generated $326 million in non-GAAP income from operations and $370 million in free cash flow, record quarters for both. We are in the very early stages of an AI super cycle. Voice and consumer AI have gained early traction, but penetration is still extremely low. This bodes very well for Twilio. Developers and enterprises alike choose Twilio because of our fast, trusted, and reliable infrastructure that works seamlessly with their existing technology stacks. Customers grow with Twilio because we provide global scale and rich context and integrate to virtually any technology as companies continue experimenting with which AI environments are optimally tuned for their purposes.

In short, we provide fast ROI so our customers can take advantage of the incredible innovation spurred by AI today and the inevitable innovations to come tomorrow. The leading voice in consumer AI companies are using our platform to power the first wave of agentic experiences. While the growth rates of these companies are incredible and the technology is awesome, as consumers, most of us have limited interactions with both voice and consumer AI in daily life. Part of this is just the natural adoption cycle, which should create enormous tailwinds for the company. Part of this has to do with trust, knowing who or what an agent represents, and always understanding what it is doing, why, and for how long. Finally, ROI has been hard to come by. This is a good setup for Twilio. We are building a company to accelerate AI adoption.

We have long provided a context layer that allows every customer to utilize personalized data to enrich every interaction with the consumer, yielding increased revenue and lower cost, plus a better consumer outcome. We have also provided tools such as Branded Calling and verification capabilities, which lead to higher conversion rates plus reinforced trust. At our SIGNAL conference, we included all of these capabilities in a massively simplified console that is easier than ever for developers to utilize and purpose-built for agents as tools like frontier models and vibe coding applications take off. In addition, we wrapped all of these offerings together so customers can utilize what they need, basic infrastructure, data-hydrated channels, or a complete solution such as ConversationRelay, which remains technology agnostic at the application layer, allowing customers to make their own technology decisions while ensuring easy integration to our technology partners.

We launched these capabilities as part of a broader conversations layer, which is gaining real momentum in the marketplace. More recently, we launched an identity offering into private beta, so businesses are able to safely validate who an agent is representing, irrespective of the AI modality they utilize, application, channel, or technology protocol. While it is extremely early, we have been encouraged by customer feedback and intend to launch an offering into general availability next year. The breadth of the AI opportunity was particularly evident at our annual Exec Connect customer event that we hosted a few weeks ago for top executives from Twilio's largest customers. The input from customers was encouraging relative to our recent releases and product roadmap. Businesses need trusted channels. They need global scale. They need context. They need higher conversion rates. Increasingly, they need secure identity, governance, and observability.

They want Twilio to help them innovate at AI speed. Our results reflect this demand. In Q3, we saw continued strong growth in self-serve and ISVs, as well as ongoing strength in voice and messaging. Our go-to-market team landed notable wins, including our first eight-figure conversations deal with a health insurance provider. This company's voice AI agent is powered by ConversationRelay and Conversation Intelligence's real-time transcription to enhance call tracking and reduce agent wrap-up time. We also signed deals with Chapter, Eltropy, ElevenLabs, Gong, Hugo Boss, Meera AI, Rivian, and Ushur. Our customers continue to expand their usage of the platform across multiple products as their customer needs become more complex, and revenue growth from multi-product customers continues to outpace our corporate average.

For example, Meera AI, an AI reachability platform connecting humans and AI agents with hard-to-reach consumers, expanded their messaging use case to include voice and our conversations layer. They are using both to coordinate multi-channel outreach, preserve conversation context, and support consultative sales conversations with proper lead qualification. Or Ushur, the AI-native platform for agentic customer experiences in healthcare, insurance, and the public sector, signed a seven-figure expansion with Twilio. Ushur uses Twilio Voice, Messaging, and WhatsApp for multi-channel engagement and is expanding its voice AI capabilities with ConversationRelay. Major health plans use Ushur to engage millions of members through multilingual, two-way conversations and have achieved 3x higher Medicaid re-enrollment completion rates compared with human-led outreach. Beyond Medicaid, Ushur's AI agents resolve inquiries and complete complex customer journeys end to end, with customers automating 20% or more of inbound call volume.

Another example is Gong, the leading revenue AI company, which signed a seven-figure deal to continue using voice and other software add-ons for Gong Engage, its AI-powered sales engagement solution. Or Eltropy, an agentic AI platform for credit unions and community banks, which has invested in Twilio's conversations layer, and its voice agents now resolve up to 70% of routine member calls on their own. In Q3, the company signed an expansion deal to use both RCS and Branded Calling to improve its trusted customer interactions across multiple channels. Finally, Chapter, a consumer services company, signed a seven-figure deal to migrate its contact center onto Flex, standing up a fully live deployment in a matter of weeks as part of a broader move to make Twilio the backbone of its customer service operations.

In addition, they will leverage messaging, voice, and software add-ons like Branded Calling to power a multi-channel experience for their customers. With these customer examples, you can see the power of Twilio. Consumers dictate the terms of how they want businesses to engage with them, in their preferred channels and at their preferred time. They want the ability to seamlessly escalate an interaction to a human agent whenever they want. This richness and flexibility requires significant breadth in technology capabilities. Our innovative platform continues earning validation from analysts as we were named a major player in IDC's 2026 Conversational Intelligence and Analytics MarketScape during the quarter. Over the past three years, we have accelerated revenue and gross profit growth, increased operating leverage, generated substantial free cash flow, and reduced dilution. We operate from a position of strength.

We are committed to creating great financial outcomes for investors and also have the capacity to invest organically and move nimbly on capital allocation, whether additional share repurchases or M&A. We will continue to innovate with focus, discipline, and rigor, anticipating our customers' needs so they can focus on building their companies. We have been building Twilio for this moment. Since inception, we provided essential technology infrastructure that accelerated customers through a variety of technology cycles. Today, our newest generation of technology allows another wave of companies in the AI era to move faster than ever. We continue to see an incredibly meaningful set of problems to solve on behalf of our customers in a landscape that is moving fast. We have the financial strength, trusted infrastructure, and innovation wherewithal to win through any cycle. With that, I will turn it over to Aidan.

Thank you, Kozema, and good afternoon, everyone. Twilio had a great Q3, delivering record revenue of $1.56 billion, up 20% year-over-year on a reported basis, and 16% year-over-year on an organic basis, which excludes incremental U.S. carrier passthrough fees. Non-GAAP gross profit grew 18% year-over-year. We also generated record non-GAAP income from operations of $326 million and record free cash flow of $370 million. Top-line performance was driven by broad-based strength across our product portfolio and key go-to-market focus areas. Our self-serve channel delivered 30% plus revenue growth, while ISV revenue grew 20% plus. Messaging revenue growth was 24%, driven primarily by strong volumes and aided by growth in WhatsApp and RCS. Incremental carrier fees contributed roughly seven points to messaging's growth. Voice revenue grew 20% plus, once again, driven by a balance of volume growth and software add-ons.