Key Highlights

  • TWLO shares fell 22.05% to $188.55 after third-quarter results came out on October 29.
  • Third-quarter Revenue increased 20% to $1.56 billion, and organic revenue rose 16% to about $1.50 billion.
  • Non-GAAP diluted EPS was $1.65 against $1.25 a year earlier, while free Cash Flow reached $369.6 million.
  • Fourth-quarter revenue guidance of $1.595 billion to $1.605 billion points to organic growth of 11% to 12%.
  • Full-year free cash flow guidance now sits between $1.19 billion and $1.20 billion after an increase.

Solid Third Quarter Collides With a Steep Drop in Fourth-Quarter Organic Growth

Twilio (NYSE:TWLO) shares are down 22.05% today at $188.55, following third-quarter 2026 results released on October 29. The headline figures were strong and full-year targets moved higher, but guidance for the final quarter of the year appears to be what has investors' attention.

Revenue climbed 20% to $1,559.5 million from $1,300.4 million a year earlier. Organic revenue rose 16% to $1,504.6 million, and the dollar-based net expansion rate moved up to 114% from 109%.

For the fourth quarter, Twilio expects revenue between $1.595 billion and $1.605 billion, which equals reported growth of 17% to 17.5%. Organic growth within that band works out to only 11% to 12%, a noticeable drop from the 16% recorded in the third quarter.

Operating Income and Cash Flow Climb While Q4 Profit Guidance Falls Short of Q3

Non-GAAP income from operations jumped 39% to $325.7 million, a 21% margin. GAAP Operating Income was $148.6 million, up from a far smaller figure a year earlier, and GAAP diluted EPS came in at $1.00 versus $0.23.

Non-GAAP diluted EPS reached $1.65 compared with $1.25. Free cash flow hit $369.6 million, a 24% margin, up from $247.5 million in the third quarter of 2025.

The fourth-quarter outlook projects non-GAAP operating income of $300 million to $310 million and non-GAAP diluted EPS of $1.48 to $1.53 on roughly 163 million diluted shares. Both ranges fall beneath the third-quarter figures.

Raised Annual Targets and Buyback Progress Sit Beside Earlier Valuation Data

Twilio raised its full-year reported revenue growth outlook to 20% from a previous 18% to 18.5%, and organic growth to 15% from 13% to 13.5%. Non-GAAP operating income and free cash flow are both now projected between $1.19 billion and $1.20 billion, up from $1.135 billion to $1.155 billion.

During the quarter the company bought back $127.2 million of stock. About $1.3 billion of the $2.0 billion authorization has been used, leaving roughly $700 million available through December 31, 2027.

Before the decline, data providers put market Capitalization near $39 billion, with a price-to-earnings ratio of about 35 and a 52-week range of $105.00 to $308.40. Consensus among 31 analysts stood at Buy, with an average price target of $274.44, but those numbers predate the results.

Watching Whether Organic Growth Settles Near 11% to 12% in the Next Report

The share reaction appears to show investors weighing a strong third quarter and a higher annual outlook against a notably slower organic pace heading into year-end. The company finished the quarter with 5,625 employees. Updated analyst estimates and price targets after the report will show how views are shifting, and the next quarterly results will test whether organic growth steadies near the guided 11% to 12% range.