Q2 2026 Twilio Inc Earnings Call Transcript
Key Points
- Twilio Inc (TWLO) delivered record Q2 revenue of $1.5 billion, with organic growth accelerating to 17% year-over-year and non-GAAP gross profit growth accelerating to 18%.
- The company saw strong momentum across its product portfolio, with messaging revenue growing 28%, voice growth accelerating above 20%, and software add-ons growing 25% plus, led by Verify at 30% plus.
- Twilio Inc (TWLO) reported record non-GAAP income from operations of $285 million and record free cash flow of $353 million, while raising full-year guidance for both metrics.
- The launch of the new Twilio console and conversations layer is driving customer adoption, with a 90% plus uplift in conversions and early wins like a 7-figure deal with Carfinance247.
- Twilio Inc (TWLO) is seeing strong growth in AI-related voice and messaging volumes, with AI-native customers expanding rapidly, and the company is well-positioned as a neutral infrastructure provider in the agentic era.
- The company raised its full-year organic revenue growth guidance to 13% to 13.5%, up from 9.5% to 10.5% previously, reflecting confidence in sustained momentum.
- Twilio Inc (TWLO) faces margin pressure from incremental US carrier pass-through fees, which reduced non-GAAP gross margin by 160 basis points year-over-year and are expected to reduce full-year gross margin by roughly 210 basis points.
- Q3 revenue guidance implies a slowdown in organic growth to 11% to 12%, down from 17% in Q2, due to tougher comparisons in voice and software add-ons in the back half of the year.
- The company's dollar-based net expansion rate of 116% was inflated by about 5 points from carrier fees, and even excluding fees, the acceleration was modest at 1 point quarter-over-quarter.
- Twilio Inc (TWLO) incurred a $33 million prepaid asset impairment in Q2, which negatively impacted GAAP income from operations.
- The company acknowledged that carrier fee increases create pressure for its customers, particularly small businesses, which could impact customer retention or usage over time.
- While AI-driven growth is strong, it is still early innings, and the company noted that most interactions remain human-to-human, with potential for volatility in the AI story.
Good day, and thank you for standing by. Welcome to Twilio, Inc.'s second-quarter 2026 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Rodney Nelson, Vice President of Investor Relations. Please go ahead.
Good afternoon, everyone, and thank you for joining us for Twilio's second-quarter 2026 earnings conference call. Joining me today are Khozema Shipchandler, Chief Executive Officer; Aidan Viggiano, Chief Financial Officer; And Thomas Wyatt, Chief Revenue 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
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