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Twilio Stock Jumps 7% as Q3 Earnings and Revenues Crush Estimates
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Key Takeaways
Twilio posted Q3 earnings of $1.25 per share, beating estimates and rising from $1.02 a year ago.
Q3 revenues climbed 15% to $1.3 billion, exceeding forecasts and driven by strong customer growth.
Twilio raised FY25 guidance, now expecting up to 12.6% revenue growth and higher operating income.
Twilio Inc. (TWLO - Free Report) shares gained 7.3% during Thursday’s extended trading session after the company reported better-than-expected third-quarter 2025 results. The company’s third-quarter non-GAAP earnings of $1.25 per share surpassed the Zacks Consensus Estimate of $1.05 per share.
Moreover, the bottom line witnessed a robust improvement from the year-ago quarter’s earnings of $1.02. The strong year-over-year growth in earnings was primarily driven by increased revenues and cost discipline.
Over the last four quarters, Twilio surpassed earnings estimates three times while missing the same on one occasion, the average surprise being 14.4%.
The cloud-based communications platform-as-a-service provider registered revenues of $1.3 billion, which surpassed the consensus mark of $1.25 billion and came ahead of management’s guidance of $1.245-$1.255 billion. On a year-over-year basis, the top line soared 15%.
Twilio’s dollar-based net expansion rate was 109% in the reported quarter, up from the previous quarter’s 108% and the year-ago quarter’s 105%. Active customer accounts increased to more than 392,000 as of Sept. 30, 2025 from 349,000 at the end of the second quarter of 2025.
Twilio’s Q3 Operating Results
The non-GAAP gross profit increased 8.7% year over year to $652.1 million. However, the non-GAAP gross margin contracted 280 bps year over year to 50.1%, mainly due to an unfavorable product mix.
The non-GAAP operating income jumped 28.6% year over year to $234.5 million. The non-GAAP operating margin of 18% for the third quarter expanded 190 bps on a year-over-year basis, mainly driven by reduced expenses, which more than offset the negative impact of a lower gross margin.
General & administrative (G&A) expenses on a non-GAAP basis decreased to $70.9 million from $74.8 million in the year-ago quarter. G&A expenses accounted for 5.5% of quarterly revenues, down from 6.6% in the year-ago quarter. Research & development (R&D) expenditures on a non-GAAP basis decreased marginally to $174.4 million from $174.9 million in the year-ago quarter. R&D expenses accounted for 13.4% of third-quarter revenues, down from 15.4% in the year-ago quarter.
Non-GAAP sales & marketing costs of $172.3 million were up from $167.9 million. The same represented 13.2% of third-quarter revenues, lower than 14.8% in the year-ago quarter.
Twilio’s Balance Sheet
The company exited the September quarter with cash and cash equivalents and short-term marketable securities of $2.56 billion, slightly up from $2.54 billion at the end of the previous quarter. As of Sept. 30, 2025, TWLO’s long-term debt was $991.9 million.
During the third quarter, Twilio generated an operating cash flow of $263.6 million and a free cash flow of $247.5 million. During the quarter, it repurchased shares worth $349.8 million.
During the first nine months of 2025, Twilio generated an operating cash flow of $731.7 million and a free cash flow of $688.5 million. During the first nine months of 2025, it repurchased shares worth $670.5 million. As of Sept. 30, it had approximately $1.3 billion remaining under the current $2 billion share repurchase authorization, which will expire on Dec. 31, 2027.
Twilio Raises FY25 Guidance
Buoyed by stronger-than-expected third-quarter results, Twilio raised its guidance for full-year 2025. The company now anticipates 2025 organic revenue growth in the range of 11.3-11.5%, up from the previous guidance of 9-10%. On a reported basis, it now expects revenue growth in the 12.4-12.6% range, up from the previous 10-11% range. The Zacks Consensus Estimate for 2025 revenues is pegged at $4.92 billion, indicating a year-over-year increase of 10.4% on a reported basis.
Non-GAAP income from operations is now projected in the range of $900-$910 million, up from $850-$875 million forecasted earlier. Free cash flow for the year is now projected to be in the range of $920-$930 million, up from the previous forecast of $875-$900 million.
Twilio also initiated guidance for the fourth quarter. For the quarter ending Dec. 31, 2025, the company anticipates revenues between $1.31 billion and $1.32 billion, which indicates a year-over-year increase of 9.5-10.5%. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $1.28 billion, implying a year-over-year increase of 6.8% on a reported basis.
Twilio projects non-GAAP income from operations in the range of $230-$240 million for the fourth quarter. It forecasts non-GAAP earnings per share in the band of $1.17-$1.22. The consensus mark for fourth-quarter earnings is pegged at $1.12 per share, indicating a year-over-year increase of 12% on a reported basis.
The Zacks Consensus Estimate for Credo Technology Group’s fiscal 2026 earnings has been revised upward by a cent over the past 30 days to $2.04 per share, implying an increase of 191.4% year over year. Credo Technology Group shares have surged 155.4% year to date.
The Zacks Consensus Estimate for Amphenol’s full-year 2025 earnings has moved upward to $3.22 per share from $3.18 per share in the past seven days, calling for 70.4% year-over-year growth. Amphenol shares have risen 100.3% year to date.
The Zacks Consensus Estimate for Impinj’s full-year 2025 earnings is pegged at $1.98 per share, revised upward by 4 cents over the past 30 days and suggests a year-over-year decline of 6.2%. Impinj shares have soared 41.9% year to date.
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Twilio Stock Jumps 7% as Q3 Earnings and Revenues Crush Estimates
Key Takeaways
Twilio Inc. (TWLO - Free Report) shares gained 7.3% during Thursday’s extended trading session after the company reported better-than-expected third-quarter 2025 results. The company’s third-quarter non-GAAP earnings of $1.25 per share surpassed the Zacks Consensus Estimate of $1.05 per share.
Moreover, the bottom line witnessed a robust improvement from the year-ago quarter’s earnings of $1.02. The strong year-over-year growth in earnings was primarily driven by increased revenues and cost discipline.
Over the last four quarters, Twilio surpassed earnings estimates three times while missing the same on one occasion, the average surprise being 14.4%.
Twilio Inc. Price, Consensus and EPS Surprise
Twilio Inc. price-consensus-eps-surprise-chart | Twilio Inc. Quote
The cloud-based communications platform-as-a-service provider registered revenues of $1.3 billion, which surpassed the consensus mark of $1.25 billion and came ahead of management’s guidance of $1.245-$1.255 billion. On a year-over-year basis, the top line soared 15%.
Twilio’s dollar-based net expansion rate was 109% in the reported quarter, up from the previous quarter’s 108% and the year-ago quarter’s 105%. Active customer accounts increased to more than 392,000 as of Sept. 30, 2025 from 349,000 at the end of the second quarter of 2025.
Twilio’s Q3 Operating Results
The non-GAAP gross profit increased 8.7% year over year to $652.1 million. However, the non-GAAP gross margin contracted 280 bps year over year to 50.1%, mainly due to an unfavorable product mix.
The non-GAAP operating income jumped 28.6% year over year to $234.5 million. The non-GAAP operating margin of 18% for the third quarter expanded 190 bps on a year-over-year basis, mainly driven by reduced expenses, which more than offset the negative impact of a lower gross margin.
General & administrative (G&A) expenses on a non-GAAP basis decreased to $70.9 million from $74.8 million in the year-ago quarter. G&A expenses accounted for 5.5% of quarterly revenues, down from 6.6% in the year-ago quarter. Research & development (R&D) expenditures on a non-GAAP basis decreased marginally to $174.4 million from $174.9 million in the year-ago quarter. R&D expenses accounted for 13.4% of third-quarter revenues, down from 15.4% in the year-ago quarter.
Non-GAAP sales & marketing costs of $172.3 million were up from $167.9 million. The same represented 13.2% of third-quarter revenues, lower than 14.8% in the year-ago quarter.
Twilio’s Balance Sheet
The company exited the September quarter with cash and cash equivalents and short-term marketable securities of $2.56 billion, slightly up from $2.54 billion at the end of the previous quarter. As of Sept. 30, 2025, TWLO’s long-term debt was $991.9 million.
During the third quarter, Twilio generated an operating cash flow of $263.6 million and a free cash flow of $247.5 million. During the quarter, it repurchased shares worth $349.8 million.
During the first nine months of 2025, Twilio generated an operating cash flow of $731.7 million and a free cash flow of $688.5 million. During the first nine months of 2025, it repurchased shares worth $670.5 million. As of Sept. 30, it had approximately $1.3 billion remaining under the current $2 billion share repurchase authorization, which will expire on Dec. 31, 2027.
Twilio Raises FY25 Guidance
Buoyed by stronger-than-expected third-quarter results, Twilio raised its guidance for full-year 2025. The company now anticipates 2025 organic revenue growth in the range of 11.3-11.5%, up from the previous guidance of 9-10%. On a reported basis, it now expects revenue growth in the 12.4-12.6% range, up from the previous 10-11% range. The Zacks Consensus Estimate for 2025 revenues is pegged at $4.92 billion, indicating a year-over-year increase of 10.4% on a reported basis.
Non-GAAP income from operations is now projected in the range of $900-$910 million, up from $850-$875 million forecasted earlier. Free cash flow for the year is now projected to be in the range of $920-$930 million, up from the previous forecast of $875-$900 million.
Twilio also initiated guidance for the fourth quarter. For the quarter ending Dec. 31, 2025, the company anticipates revenues between $1.31 billion and $1.32 billion, which indicates a year-over-year increase of 9.5-10.5%. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $1.28 billion, implying a year-over-year increase of 6.8% on a reported basis.
Twilio projects non-GAAP income from operations in the range of $230-$240 million for the fourth quarter. It forecasts non-GAAP earnings per share in the band of $1.17-$1.22. The consensus mark for fourth-quarter earnings is pegged at $1.12 per share, indicating a year-over-year increase of 12% on a reported basis.
Twilio’s Zacks Rank & Stocks to Consider
Currently, TWLO carries a Zacks Rank #3 (Hold).
Credo Technology Group (CRDO - Free Report) , Amphenol (APH - Free Report) and Impinj (PI - Free Report) are some better-ranked stocks that investors can consider in the Zacks Computer and Technology sector. Credo Technology Group and Amphenol each sport a Zacks Rank #1 (Strong Buy) at present, while Impinj carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Credo Technology Group’s fiscal 2026 earnings has been revised upward by a cent over the past 30 days to $2.04 per share, implying an increase of 191.4% year over year. Credo Technology Group shares have surged 155.4% year to date.
The Zacks Consensus Estimate for Amphenol’s full-year 2025 earnings has moved upward to $3.22 per share from $3.18 per share in the past seven days, calling for 70.4% year-over-year growth. Amphenol shares have risen 100.3% year to date.
The Zacks Consensus Estimate for Impinj’s full-year 2025 earnings is pegged at $1.98 per share, revised upward by 4 cents over the past 30 days and suggests a year-over-year decline of 6.2%. Impinj shares have soared 41.9% year to date.