Twilio shares drop 14% after hours despite Q3 profit beat

Twilio Inc. (TWLO) said on Oct. 29 that its third-quarter adjusted earnings topped estimates, and it raised its full-year revenue growth outlook.

Shares fell 14.0% in after-hours trading as of 4:28 p.m. ET, from a regular-session close of $242.09.

Adjusted earnings were $1.65 per share, topping the $1.50 consensus estimate compiled by Finnhub. Revenue of $1.56 billion was above the $1.54 billion estimate.

Here's how the company did:

• Adjusted EPS: $1.65 per share vs. $1.25 a year earlier, according to Finnhub estimate of $1.50
• Revenue: $1.56 billion vs. $1.30 billion a year earlier, according to Finnhub estimate of $1.54 billion
• GAAP diluted EPS: $1.00 per share vs. $0.23 a year earlier
• Non-GAAP income from operations: $325.7 million vs. $234.5 million a year earlier
• Free cash flow: $369.6 million vs. $247.5 million a year earlier

Revenue grew 20% from a year earlier and 16% on an organic basis, a measure that strips out acquired revenue and certain carrier fee increases, the company said in its release.

According to its SEC filings, revenue rose in each of the last three quarters, from $1.30 billion in the third quarter of 2025 to $1.50 billion in the second quarter of 2026.

Fourth-quarter guidance

For the fourth quarter, Twilio is initiating a revenue range of $1.595 billion to $1.605 billion, which implies reported revenue growth of 17% to 17.5%.

The company expects fourth-quarter non-GAAP income from operations of $300 million to $310 million, and non-GAAP diluted EPS of $1.48 to $1.53 on 163 million diluted shares.

Full-year 2026 outlook

For fiscal 2026, Twilio is raising its reported revenue growth outlook to 20%, compared with 18% to 18.5% in its Aug. 6 release.

Its organic revenue growth outlook is now 15%, up from the 13% to 13.5% range it gave on Aug. 6.

The company is raising its non-GAAP income from operations range to $1.19 billion to $1.20 billion, from $1.135 billion to $1.155 billion previously. It is also raising its free cash flow range to $1.19 billion to $1.20 billion, from the same $1.135 billion to $1.155 billion.

Cash flow and buybacks

Net cash provided by operating activities was $389.2 million in the quarter, compared with $263.6 million a year earlier.

The company repurchased $127.2 million of its Class A common stock in the third quarter. Its board authorized up to $2.0 billion of repurchases in January 2025, and the program expires Dec. 31, 2027.

As of Sept. 30, 2026, Twilio has completed about $1.3 billion of repurchases under that program and has about $700 million left.

Earnings and headcount

GAAP net income attributable to common stockholders was $161.2 million, compared with $37.2 million a year earlier. GAAP income from operations was $148.6 million, up 263%.

The company had 5,625 employees as of Sept. 30, 2026.

In the quote, CEO Khozema Shipchandler framed the quarter in the company's own terms. “Q3 was a great quarter for Twilio, driven by disciplined execution and broad-based strength across our product portfolio,” Shipchandler said.

Twilio provides the infrastructure for customer engagement in the AI era, according to the release.