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Twilio’s Q4 was the championship trophy for a year defined by transformation. If Q2 was Federer in flow and Q3 showed Djokovic-like discipline, Q4 was the Alcaraz statement: record revenue of $1.4B and a first-ever full year of GAAP profitability. They generated $945M in FCF for the year and completed $855M in share repurchases, about 90% of that free cash flow. Twilio is backing its discipline with the balance sheet, having reduced the share count by 18% since the effort began in 2023.
The Good: Twilio’s Act III, the Identity Startup
Twilio built its business on messaging rails and then broadened the platform across voice and email. Now, the most interesting part of the model is the trust layer, and Verify sits at the center of it.
Verify grew more than 25% for the second consecutive quarter. It is still smaller than messaging, but its software economics and attach dynamics make it disproportionately important to the long-term model.
Twilio is bundling identity and authentication into communication flows to close the trust gap that AI-generated spam is widening. They also reinforced the direction with an acquisition in identity. The point is not the deal size; it is the intent. Twilio wants to be the verification and authorization layer that sits underneath every channel.
The Interesting: Analyst Grilling on Voice AI and Fees
The Q&A filled in what the prepared remarks didn’t.
Established ISVs are embedding voice as a core platform capability alongside growth from AI startups. Voice AI revenue accelerated above 60% YoY, but the long-term expectation is that enterprise carries the day as more agents move from experimentation to production.
Twilio will write a bigger check (by about $190M) in 2026 to the carriers in pass-thru fees and will recognize that as higher revenue, even though profit dollars don’t change.
I’ve written more on the dynamic between pass-thru fees and the asymmetric SMS market here.
The Unknown: Cross-sell Mechanics and the Single-product Pipeline
Twilio insists cross-sell is working, citing a 26% jump in multi-product customer counts and agent productivity bundles spanning Flex, Messaging, and Voice. I buy the direction; I’m still watching the mechanics.
Analysts pushed on 2026 compensation plans, and Thomas Wyatt confirmed they’ve updated comp to incent cross-sell and upsell, including a specialist function to support the general sales team with advanced tech. The open question is whether comp changes and a specialist overlay can touch the long tail of self-serve accounts or whether product-led growth has to do the heavy lifting.
Finally
With several quarters of double-digit growth, and healthy profitability, fiscal discipline is old news. The identity thesis is the high-margin tailwind I care about most. But I’m still watching the 2027 non-GAAP operating income target of at least $1.23B. It’s a bold number. It assumes the money follows the belief in high-margin software add-ons, even as carrier fees muddy the margin optics.