Twilio Q2 Earnings Call Highlights

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Sun, August 9, 2026 at 3:04 PM GMT+3 7 min read

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Twilio delivered strong Q2 growth: Revenue rose 22% year over year to $1.5 billion, while non-GAAP operating income reached $285 million and free cash flow totaled $353 million. Messaging, voice and software add-ons all contributed, with voice AI demand showing broad-based traction.
AI and platform expansion are becoming key growth drivers: Twilio launched its next-generation conversational platform and redesigned Console, which has generated more than a 90% increase in conversion versus the prior experience. Management expects these tools to support future cross-selling and wider adoption of AI-enabled customer interactions.
Twilio raised its full-year outlook despite carrier-fee pressure: Organic revenue growth guidance increased to 13%–13.5%, while non-GAAP operating income and free-cash-flow guidance rose to $1.135 billion–$1.155 billion. Incremental U.S. carrier fees reduced reported margins, but the company said they do not affect gross-profit dollars, operating-income dollars or free cash flow.

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Twilio (NYSE:TWLO) reported second-quarter 2026 revenue of $1.5 billion, up 22% year over year on a reported basis and 17% on an organic basis excluding incremental U.S. carrier pass-through fees. The communications platform company said its results reflected strong volumes, customer additions and growth across messaging, voice and software products.

Chief Executive Officer Khozema Shipchandler called the quarter "exceptional," citing $285 million in non-GAAP income from operations and $353 million in free cash flow. Non-GAAP gross profit rose 18% year over year to $736 million, marking the company's fifth consecutive quarter of accelerating non-GAAP gross-profit growth, according to Chief Financial Officer Aidan Viggiano.

Messaging, Voice and Software Products Drive Growth

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Messaging revenue grew 28% year over year, aided by strong volumes and growth in WhatsApp and Rich Communication Services, or RCS. Viggiano said incremental carrier fees accounted for roughly 10 percentage points of messaging growth. Excluding those fees, messaging grew approximately 18%, she said during the question-and-answer session.

Voice revenue growth exceeded 20% year over year, supported by both usage volumes and software add-ons. Twilio said Branded Calling and Conversational Intelligence each posted triple-digit growth. Total software add-on revenue rose more than 25%, led by Verify, which grew more than 30%.

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Twilio's dollar-based net expansion rate was 116% in the quarter. Incremental carrier fees contributed about five percentage points to that figure, Viggiano said, though she added that expansion improved sequentially even excluding the fee effect. The company also cited accelerating revenue growth from customers using multiple Twilio products.

Chief Revenue Officer Thomas Wyatt said demand for voice artificial-intelligence capabilities was broad-based across enterprise customers, large independent software vendors and AI-native companies. He highlighted a horizontal conversational AI customer that grew into a $6 million annual run-rate customer and a vertical conversational AI company that reached a $9 million run rate after initially beginning with Twilio's voice services.

New Conversational Platform and Console Rollout

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At its SIGNAL user conference, Twilio announced general availability of its next-generation platform, including Conversation Memory, Conversation Orchestrator, Conversation Intelligence, Conversation Relay and Agent Connect. Shipchandler said the products are intended to help businesses manage context-rich customer conversations involving both human representatives and AI agents.

He pointed to automotive fintech company Car Finance 247, which joined Twilio's private beta program and later signed a seven-figure deal to use the Conversations Layer. Its AI assistant, Carla, has handled nearly 300,000 customer conversations, Shipchandler said. Customers interacting with Carla convert to approved leads 1.6 times faster, which the company said has created a multimillion-dollar annual revenue uplift across the customer's business.

Twilio also launched a redesigned Console in May. The company said the platform provides a centralized interface for managing Twilio workloads, includes AI-guided onboarding and offers trials designed to encourage product experimentation. A majority of existing customers have migrated to the new Console, and Shipchandler said Twilio has seen more than a 90% uplift in conversion compared with the prior experience.

Wyatt said the conversion metric reflects reduced friction in the process of signing up, launching initial campaigns and establishing workloads. While the Console had little impact on multi-product revenue during the second quarter because of its recent launch, Twilio expects its free credits and integrated product experience to support future cross-sell and upsell activity.

Carrier Fees Pressure Margins but Not Profit Dollars

Twilio incurred $71 million in incremental U.S. carrier pass-through fees during the quarter. The fees reduced non-GAAP gross margin to 49.1%, down 160 basis points from a year earlier and 50 basis points sequentially. Without the incremental fees, non-GAAP gross margin would have increased 60 basis points year over year and 30 basis points from the prior quarter, Viggiano said.

Non-GAAP operating margin was 19%, up 100 basis points year over year but down 80 basis points sequentially. The carrier fees represented an estimated 90-basis-point headwind to the quarterly operating margin. Twilio said the fees do not affect gross-profit dollars, operating-income dollars or free-cash-flow dollars, though they affect reported margin rates and create cost pressure for customers, particularly smaller businesses.

GAAP income from operations was $85 million and included a $33 million prepaid asset impairment. GAAP net income also benefited from a one-time, non-cash $944 million release of a valuation allowance against certain U.S. federal and state deferred tax assets. Twilio said neither item affected its non-GAAP results.

Raised Full-Year Outlook

For the third quarter, Twilio initiated revenue guidance of $1.505 billion to $1.515 billion, representing reported growth of 16% to 16.5% and organic growth of 11% to 12%. The outlook includes an expected $56 million in incremental U.S. carrier fees.

Full-year organic revenue growth guidance was raised to 13% to 13.5%, from 9.5% to 10.5% previously.
Full-year reported revenue growth guidance was raised to 18% to 18.5%, from 14% to 15% previously.
Full-year non-GAAP income from operations guidance was raised to $1.135 billion to $1.155 billion.
Full-year free-cash-flow guidance was also raised to $1.135 billion to $1.155 billion.

Twilio expects full-year non-GAAP gross-profit growth to be similar to its organic revenue growth rate. The company's full-year outlook assumes about $250 million of incremental U.S. carrier pass-through revenue. It also expects those fees, all else equal, to lower its full-year 2026 non-GAAP gross margin by about 210 basis points compared with 2025.

During the quarter, Twilio repurchased $66 million of shares and had roughly $800 million remaining under its current authorization. Shipchandler said the company views AI-related demand as being in "very early innings," with the most visible activity currently in voice, while expecting AI-enabled interactions to expand across additional channels over time.

About Twilio (NYSE:TWLO)

Twilio Inc (NYSE: TWLO) is a cloud communications platform-as-a-service (CPaaS) company that enables developers and enterprises to embed communications into web and mobile applications. Its core offering is a suite of programmable APIs that handle messaging (SMS, MMS, and chat), voice calling, video, and user authentication. Twilio's platform is designed to help businesses build customer engagement and communication workflows without managing telecommunications infrastructure directly.

The company's product portfolio includes programmable voice and messaging APIs, Twilio Video for real‑time video applications, and Twilio Authy for multi‑factor authentication.

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