Twilio’s third quarter results were driven by a strong uptick in both new and existing customer engagement, propelled by broader adoption of its messaging, voice, and software add-on products. Management credited the company’s operational discipline and focus on cross-selling as key contributors to the quarter’s momentum. CEO Khozema Shipchandler highlighted, “The team’s operational rigor and discipline is paying off as we executed across the board.” Standout wins included a record renewal with a leading cloud provider and notable growth from ISV and self-serve channels, reflecting Twilio’s ability to address diverse enterprise needs.
Is now the time to buy TWLO? Find out in our full research report (it’s free for active Edge members).
Twilio (TWLO) Q3 CY2025 Highlights:
- Revenue: $1.3 billion vs analyst estimates of $1.25 billion (14.7% year-on-year growth, 3.8% beat)
- Adjusted EPS: $1.25 vs analyst estimates of $1.07 (17% beat)
- Adjusted Operating Income: $234.5 million vs analyst estimates of $212.1 million (18% margin, 10.6% beat)
- Revenue Guidance for Q4 CY2025 is $1.32 billion at the midpoint, above analyst estimates of $1.29 billion
- Adjusted EPS guidance for Q4 CY2025 is $1.19 at the midpoint, above analyst estimates of $1.14
- Operating Margin: 3.1%, up from -0.4% in the same quarter last year
- Customers: 392,000, up from 349,000 in the previous quarter
- Net Revenue Retention Rate: 109%, up from 108% in the previous quarter
- Billings: $1.31 billion at quarter end, up 15.7% year on year
- Market Capitalization: $19.92 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Twilio’s Q3 Earnings Call
- James Fish (Piper Sandler) asked about the rationale for acquiring Stytch and its impact on Twilio’s authentication offering. CEO Khozema Shipchandler emphasized Stytch will accelerate capabilities in digital trust, and clarified the deal is immaterial financially.
- Sitikantha Panigrahi (Mizuho) sought details on voice AI adoption trends versus messaging growth. CFO Aidan Viggiano highlighted voice AI’s 60% year-over-year growth but noted it still represents a small portion of total revenue, with broad-based strength across the product suite.
- Alex Zukin (Wolfe Research) asked how gross margin will benefit from the non-messaging product mix shift. Viggiano responded that as more customers adopt high-margin products, margins should improve, with cross-sell and upsell efforts central to this shift.
- Taylor McGinnis (UBS) probed the factors behind strong Q3 performance and guidance for Q4 in light of seasonality. Viggiano pointed to broad-based product and channel growth, while noting holiday usage patterns can be unpredictable.
- Elizabeth Porter (Morgan Stanley) inquired about adoption of AI tools among traditional enterprises, not just AI start-ups. Chief Revenue Officer Thomas Wyatt explained that multiproduct and bundled solutions are gaining traction with both traditional and innovative customers.
Catalysts in Upcoming Quarters
In future quarters, we will be closely monitoring (1) the pace of enterprise adoption for Twilio’s AI-powered voice and bundled productivity solutions, (2) the impact of carrier fee changes on gross margin stability, and (3) continued strength in self-serve and ISV channels driving customer expansion. Additionally, successful integration of Stytch’s identity platform and effective execution during the holiday season will be important indicators of ongoing momentum.
Twilio currently trades at $131.67, up from $112.90 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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