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Twilio notched its fifth straight quarter of accelerating double-digit growth, reaching $1.3B in revenue. It set a new record in both profit ($235M non-GAAP op income, 18% margin) and free cash flow ($248M).
It raised full-year guidance across the board and repurchased $350M in stock this quarter alone.
Voice, Verify, and Messaging all carried growth. Like Bandwidth experienced last quarter, Twilio is seeing AI breathe new life into voice communications. RCS continues to increase in traffic, though I remain unconvinced that it’s margin-expanding. Like the rest of the industry, Twilio may be underwriting its customers’ experiments. Also, the company continues to iterate with cross-selling.
Oh, and it made a small sub-$100M acquisition—in identity. Twilio the identity company? Maybe.
If Q2 was Federer in flow, Q3 showed Djokovic-like discipline and efficiency. The call’s tone was controlled, confident, and understated. Tanla, take notes.
The Good: Double Digit Growth, Healthy Metrics
Revenue, margin, and cash flow all came in ahead of expectations. Dollar-Based Net Retention (DBNR) climbed to 109%, driven by steady expansion across self-serve, ISVs, and enterprise.
Voice growth hit the mid-teens, the fastest in three years. The voice-AI cohort grew 60% YoY, and Twilio’s top-10 AI voice customers expanded 10x. According to Khozema, more agents are moving from experimentation to production, powered by ConversationalRelay, which tripled call volume QoQ.
Messaging also grew in the high teens, while Verify (the identity product) rose 25%+ YoY, keeping its title as Twilio’s fastest-growing product.
RCS is now generally available worldwide, and message volume more than doubled. It showcased customers like Partiful, which sends branded event invites and reminders, early proof that richer, verified messaging can build trust at scale.
GTM displayed broad swaths of efficiency. Both self-serve and ISV channels rose 20%+ each, and a nine-figure renewal with a top cloud provider—Twilio’s largest deal ever—cements its enterprise mindshare. CRO Thomas Wyatt pointed to voice AI and multi-product “agent productivity” bundles as early catalysts for larger deals.
Twilio bought back $657M of stock YTD, nearly 95% of its free cash flow. A declarative show of confidence in its own future
And remember: None of this is stock advice.
The Interesting: Pricing Power, Cross Selling
In US messaging, few things are as certain as death, taxes, and pass-through fees. Verizon’s pass-through fees drove gross margin down to 50.1%, a decline of 280 bps YoY and 60 bps sequentially.
Pricing power is back. Ending free tiers for email and campaign APIs converted thousands of dormant accounts into active paying customers, boosting net adds. The ability to push pricing and still grow volume runs counter to the narrative that CPaaS pricing elasticity is tapped out.
Voice AI adoption drew heavy analyst attention.
Management described a healthy mix—startups using Twilio as voice infrastructure and enterprises layering AI on existing messaging contracts. Twilio is pitching flexibility: It can be infrastructure or a full-stack partner, positioning it well no matter how the AI tooling stack shakes out.
International expansion came in at ~18% growth, driven by multi-channel wins (SMS, WhatsApp, RCS) and bundled solutions that help Twilio beat single-channel competitors. Thomas told analysts the market increasingly rewards platforms that integrate trust and orchestration—not just connectivity.
Cross-sell remains the story of ambition. Twilio’s new compensation plans and marketing programs now align incentives around multi-product outcomes. Wyatt noted early traction in “agent productivity” bundles combining voice, SMS, chat, and Verify. The idea is that each sale broadens customer engagement and defends margin. The company is getting better at it.
The Unknown: Cross Selling (yes), Messaging Reliance
Cross-selling is also unknown. Twilio is trying new things and willing to share what’s working. The company is landing multi-product deals, but messaging and voice still account for the majority of revenue.
I’ve seen Twilio pricing proposals to a multi-product client, and the client got two different price sheets, one each for email and messaging. If it isn’t easy for your salespeople, it’s not your main deal.
Everything else, including Segment, Conversations, and the new “agent productivity” suite, remains a sidecar to the messaging engine. Until non-messaging products make up a larger slice, the growth mix will stay messaging heavy.
Twilio is riding the AI hype, but does it have a plan when AI goes through its inevitable, seemingly distant down cycle? Outside of Khozema and Aidan, the rest of the C-suite is new. But both of them, along with many Twilions (as employees call themselves), remember the hangover the crypto crash created. The fall was as inevitable as the rise.
Voice AI is scaling fast, but from a small base. If startup funding tightens or AI adoption stalls, that 60% growth cohort could fade quickly. Twilio will still be the plumbing, but its near-term multiple depends on AI’s staying power.
As AI runs through its own hype cycle and pulls Twilio up alongside it, I’ll be surprised if the company doesn’t already have contingency plans ready for when the cycle ends.
Everyone is talking about RCS volume, but no one, including Twilio, is showing how much it contributes to margins. It’s no surprise that I’m a strong believer in the once-in-a-generation opportunity of RCS, but I’d love to see the money follow the belief.
Finally
Twilio is selling well, tightening spend, and investing prudently. The company has earned the right to play offense again. Voice AI, Verify and identity, and RCS are growing double digits. The product core is keeping its flagship status while the new products are expanding rapidly. Five quarters in, the growth playbook feels repeatable.