Twilio Q4 2025 Results: Voice AI Growth and Margin Challenges

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Twilio's Q4 2025 Financial Results

Twilio (NYSE: TWLO) reported its Q4 CY2025 earnings, exceeding Wall Street's expectations with revenue up 14.3% year-over-year to $1.37 billion. The company's non-GAAP profit was $1.33 per share, 8.2% above estimates. Revenue guidance for Q1 CY2026 is projected at $1.34 billion. Adjusted EPS guidance for Q1 CY2026 is approximately $1.23.

• Revenue: $1.37 billion vs estimates of $1.32 billion
• Adjusted EPS: $1.33 vs estimates of $1.23
• Operating Margin: 4.2%, up from 1.1%

Key Performance Indicators

Twilio's Net Revenue Retention Rate was 108%, a slight decrease from 109% in the previous quarter. Billings reached $1.37 billion, a 12.7% year-over-year increase. The company's market capitalization stands at $16.74 billion.

• Net Expansion Rate: 109%
• Billings Growth: Up 12.7% year on year
• Stock Quote: TWLO

Management Insights

Twilio's management highlighted voice adoption, product innovation, and strategic customer wins as key performance drivers. CEO Khozema Shipchandler emphasized the company's transformation into a foundational infrastructure layer for customer engagement. CFO Aidan Viggiano noted that carrier fee increases would impact reported margins but not underlying profits.

• CEO Remarks: Khozema Shipchandler on customer engagement
• ISV Channel: Partners embedding Voice AI agents
• Multi-Product Adoption: Increased 26% year-over-year

Growth Drivers

Twilio is focused on expanding higher-margin products like Voice AI and Verify. Cost optimization initiatives, including supply chain improvements and direct carrier connections, are expected to drive operational efficiencies. Management anticipates that AI-driven capabilities will play a significant role in future growth.

• Voice AI: Prioritizing growth in AI-driven solutions
• Cost optimization: Improving supply chain
• Product Mix: Influence on margin gains

Key Metrics and Future Outlook

Twilio reported that Active Customer Accounts reached more than 402,000 as of December 31, 2025, compared to more than 325,000 the previous year. The Dollar-Based Net Expansion Rate was 109% for Q4 2025, up from 106% in Q4 2024.

• Active Customer Accounts: 402,000+
• Dollar-Based Net Expansion Rate: 109%
• Employee Count: 5,587

Share Repurchase Program

Twilio's Board of Directors authorized a share repurchase program to repurchase up to $2.0 billion in shares, expiring on December 31, 2027. In Q4 2025, Twilio repurchased $198.0 million in shares, with $854.6 million repurchased in 2025. Approximately $1.1 billion remains available for future repurchases.

• Share Repurchase Program: Up to $2.0 billion
• Q4 Repurchases: $198.0 million
• Remaining Amount: $1.1 billion

Q1 2026 Guidance

Twilio projects revenue between $1.335 and $1.345 billion for Q1 2026, representing a 14% to 15% increase. Organic revenue growth is expected to be between 10% and 11% year-over-year. Non-GAAP income from operations is projected to be between $240 and $250 million, with non-GAAP diluted earnings per share between $1.21 and $1.26.

• Revenue Guidance: $1.335 - $1.345 billion
• Organic Revenue Growth: 10% - 11%
• Non-GAAP EPS: $1.21 - $1.26

Full Year 2026 Guidance

For fiscal year 2026, Twilio anticipates revenue growth of 11.5% to 12.5% and organic revenue growth of 8% to 9%. Non-GAAP income from operations is expected to range from $1.04 billion to $1.06 billion, with a free cash flow range of $1.04 billion to $1.06 billion.

• Revenue Growth: 11.5% - 12.5%
• Organic Revenue Growth: 8% - 9%
• Free Cash Flow: $1.04 - $1.06 billion

Conference Call Highlights

During the Q4 2025 earnings call, Twilio reported a quarterly revenue of $1.4 billion, a 14% increase year-over-year. The company's full-year revenue reached $5.1 billion, with a non-GAAP income from operations of $256 million for the quarter and $924 million for the year. Free cash flow was $256 million for the quarter, and $945 million for the year.

• Q4 Revenue: $1.4 billion
• Annual Revenue: $5.1 billion
• Non-GAAP Income: $256 million (Q4), $924 million (Annual)

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