Twilio Inc. Q4 2025 Earnings Call - Record revenue and profit as Voice AI accelerates, carrier fees weigh on margins

Conference Operator: Good day, and thank you for standing by. Welcome to the Twilio Inc. Fourth Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. Please be advised that today’s conference is being recorded. After the speaker’s presentation, there will be a question-and-answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. I would now like to hand the conference over to your speaker today, Rodney Nelson, Vice President, Investor Relations.

Rodney Nelson, Vice President, Investor Relations, Twilio: Thank you, operator. Good afternoon, everyone, and thank you for joining us for Twilio’s fourth quarter 2025 earnings conference call. Joining me today are Khozema Shipchandler, Chief Executive Officer, Aidan Viggiano, Chief Financial Officer, and Thomas Wyatt, Chief Revenue Officer. As a reminder, we will disclose non-GAAP financial measures on this call. Definitions and reconciliations between our GAAP and non-GAAP results can be found in our earnings presentation posted on our IR website at investors.twilio.com. We will also make forward-looking statements on this call, including statements about our future, outlook, and goals. Such statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those described. Many of those risks and uncertainties are described in our SEC filings, including our most recent Form 10-Q and our forthcoming Form 10-K.

Forward-looking statements represent our beliefs and assumptions only as of the date such statements are made. We disclaim any obligation to update any forward-looking statements except as required by law. With that, I’ll hand it over to Khozema and Aidan, who will discuss our Q4 results and will then open up the call for Q&A.

Khozema Shipchandler, Chief Executive Officer, Twilio: Thank you, Rodney. Good afternoon, everyone, and thank you for joining us today. Twilio had a great Q4 as we reached record heights with $1.4 billion in revenue, $256 million of non-GAAP income from operations, and $256 million in free cash flow. For the full year, we generated $5.1 billion in revenue, $924 million of non-GAAP income from operations, and $945 million of free cash flow. Our strong fourth quarter capped off what I believe is one of the most balanced and successful years of execution in our company’s history. Throughout 2025, we’ve operated with a level of discipline, rigor, and focus that has fundamentally transformed our financial profile and innovation velocity.

Reflecting on 2025, Twilio stood out with accelerating revenue growth, expanding operating margins, and by delivering significant growth in free cash flow. We did this all while continuing to increase our innovation velocity. Even more validating is what we’re hearing from our customers, that we are moving beyond being a provider of communications channels and data toward becoming a foundational infrastructure layer in the age of AI. Revenue from our voice channel continues to accelerate, aided in part by voice AI, which we believe is just the beginning, as these use cases will evolve to be more conversational and cross-channel, an area where Twilio is uniquely differentiated. Our go-to-market motion is firing on all cylinders. In Q4, we saw particular strength in self-serve as revenue grew 28% year-over-year, led by accelerating voice revenue growth.

ISVs were also a bright spot, with revenue growing 26% year-over-year. In Q4, the number of large deals closed of $500,000 or more increased 36% year-over-year. With this solid foundation, 2026 is set up to be a great year. We are focused on delivering the essential infrastructure that powers experiences across communications, driven by contextual data and evolving automation like Voice AI, to help customers build personalized, lifelong relationships with their own customers. During the quarter, our go-to-market team delivered several notable wins, including a nine-figure renewal with a leading marketing automation platform, the largest deal in Twilio’s history. Other customer wins included Agnes AI, Creditas, Elise AI, GenSpark, Grubhub, Lofty, Nestlé, Pneuma, PolyAI, Ramp, Retail AI, Sierra, and others, who are turning to Twilio as their infrastructure partner to help drive outcomes and scale their businesses.

We also signed a strategic partnership with an existing customer, AEG, a leading global sports and live entertainment company. AEG will use the Twilio platform to better understand fan behavior and power real-time, personalized communications before, during, and after live events at select venues and for sports teams owned by the organization. In Q4, we saw healthy signs that reinforced our shift from selling features and products to selling solutions, as our multi-product customer count grew 26% year-over-year, and our software add-on revenue grew over 20% year-over-year.... Agent productivity is a great example, as it lets customers take advantage of a bundled offering that spans multiple Twilio products. One customer, Exalab, an Italian systems integrator, signed a cross-sell agreement for its client, Dental Pro, to adopt our agent productivity solution, powered by Flex, Messaging, and Voice.

Together, they built a virtual agent for customer care and inbound and outbound booking management. In the first two months, clinics using Conversation Relay for AI agents reported a meaningful uplift in service levels, with the virtual agent handling a significant share of booking confirmations. Finally, during Cyber Week, Twilio hit record highs. Twilio sent 6.99 billion messages, a 34.5% year-over-year increase, handled 1.07 billion calls, up 58% year-over-year, and processed 75.1 billion emails, a 14.6% increase year-over-year. Importantly, this week was a powerful reminder of the trust our customers place in us. As the foundational infrastructure that handles their critical workloads, we help them strengthen the relationships they have with their own customers and earn their trust. On the innovation front, 2025 was a breakout year for Voice.

Voice year-over-year revenue growth accelerated throughout the year, with customers adopting products like Branded Calling, Conversation Relay, and Conversational Intelligence. For example, Sierra, a leading company in the customer experience AI space, signed a new deal to continue leveraging Twilio’s voice functionality to power their platform. Additionally, they will use voice software products like conferencing to support additional use cases like multi-party calling or taking payment over the phone. While still early days, during Q4, Twilio’s Branded Calling revenue grew roughly 6x year-over-year. RCS continued to gain traction as volume grew roughly 5x quarter-over-quarter. Ramp, a leading financial operations company, signed a deal to leverage RCS as the branded messaging experience to power account notifications and two-way capabilities, such as adding a purchase reason or sending a receipt. Our innovation strategy and execution continued to be validated by industry analysts.

Throughout the year, we were recognized as a leader in major evaluations by Gartner, IDC, and Omdia, and ended the year by being named the company to beat in CPaaS AI by Gartner. They noted, "Twilio’s combination of omni-channel communications, contextual data, AI frameworks, developer base, and technology partnerships makes it the company to beat in CPaaS AI," and we’re just getting started. A lot of our innovation roadmap is about capturing what’s important in AI today and in the future. We’re providing customers with the foundational infrastructure layer that embeds persistence, memory, context, and the ability to spin up an agent, no matter what its capabilities are, all on the Twilio platform. Several of these products launched into private beta earlier this month, and we look forward to sharing more at Signal in May. In summary, 2025 was a terrific year.

We made tremendous progress against our goals, exceeded our targets for the year, and are well-positioned to sustain this momentum into 2026 with our robust innovation roadmap. We remain focused on our vision of creating amazing experiences for brands and are furiously building new and exciting capabilities that capitalize on all that AI has to offer. These innovations will allow Twilio to deliver memory-driven orchestration and agentic interactions that inspire engagement and trust. This is why Twilio is an essential infrastructure layer for every company’s tech stack, and our ongoing investments in our platform capabilities will continue to position us to be the foundational layer customers rely on to win in the AI era. With that, I’ll turn it over to Aidan.

Aidan Viggiano, Chief Financial Officer, Twilio: Thank you, Khozema, and good afternoon, everyone. Twilio finished the year strong with a record-breaking fourth quarter. We generated record revenue of $1.4 billion, up 14% year-over-year on a reported basis, and 12% year-over-year on an organic basis. We also generated record non-GAAP income from operations of $256 million. Free Cash Flow was $256 million as well. We came into 2025 with a focus on execution, and we delivered across the board. For the full year, we generated revenue of $5.1 billion, representing 14% reported growth and 13% organic growth. We also delivered strong profitability, with non-GAAP income from operations increasing 29% year-over-year to $924 million.

Free cash flow was up 44% year-over-year to $945 million. And finally, we generated $158 million in GAAP income from operations, marking our first full year of GAAP profitability. We’re continuing to drive top-line performance through solid execution across our go-to-market initiatives, while delivering product innovations that are seeing encouraging uptake. Voice finished the year strong as revenue growth accelerated to the high teens in Q4, its best growth rate since 2022. This was aided by strong growth from voice AI customers, as voice AI revenue growth accelerated above 60% year-over-year. Messaging revenue growth was also solid, driven in part by strong volumes during cyber week and the holiday season.

Software add-on revenue growth exceeded 20% year-over-year in the quarter, led by Verify, which grew more than 25% for the second consecutive quarter. Finally, from a sales channel perspective, we saw continued strength with both self-service and ISV customers, with revenue from each channel growing 25%+ in the quarter. For the full year, self-serve revenue grew 21%, ISV revenue grew 24%, and software add-on revenue grew 21%, led by Verify and Voice add-ons. By product for the year, growth was led by Messaging at 18% and Voice at 13%. Email grew 7%, Segment, 2%, while other revenue grew 8%, led by user identity and authentication offerings such as Verify. Our Q4 dollar-based net expansion rate was 109%, reflecting the improving growth trends we’ve seen in our business over the last several quarters.

We delivered non-GAAP gross profit of $682 million for the quarter, with growth accelerating to 10% year-over-year. This represented a non-GAAP gross margin of 49.9%, down 200 basis points year-over-year and 20 basis points quarter-over-quarter. We incurred carrier passthrough fees of $23 million associated with increased Verizon A2P fees, which primarily drove the sequential decline in gross margin. For the full year, non-GAAP gross profit was $2.6 billion, up 8% year-over-year, and non-GAAP gross margin was 50.5%. Q4 non-GAAP income from operations came in ahead of expectations at a record $256 million, up 30% year-over-year, driven by strong revenue growth and continued cost discipline.

Non-GAAP operating margin was 18.7%, up 220 basis points year-over-year and 70 basis points quarter-over-quarter. The sequential increase was driven by improved gross profit growth and ongoing cost discipline. In addition, we generated $57 million in GAAP income from operations. For the full year, non-GAAP income from operations was $924 million, up 29% year-over-year. Non-GAAP operating margin was 18.2%, up 220 basis points year-over-year. This margin expansion reflects our sustained financial discipline, evidenced by a 1% year-over-year decline in non-GAAP operating expenses. Q4 stock-based compensation as a percentage of revenue was 11.3%, down 180 basis points year-over-year and down 90 basis points quarter-over-quarter.

For the full year, stock-based compensation as a percentage of revenue was 11.8%, down 200 basis points year-over-year, and down 10 percentage points since 2021, when we initiated our efforts to reduce stock-based compensation. In addition, our net burn rate was just 1.5% in 2025, well below the 3% target we set out at our 2025 Investor Day. Our ending share count was 152 million, down slightly year-over-year and down 18% since we initiated our share repurchase efforts in 2023. We generated free cash flow of $256 million in the quarter. Additionally, we completed $198 million in share repurchases in Q4.

For the full year, we completed $855 million in share repurchases, representing 90% of 2025 free cash flow, well above the 50% target established at our 2025 Investor Day. Turning to guidance. For Q1, we’re initiating a revenue target of $1.335 billion-$1.345 billion, representing 14%-15% reported growth and 10%-11% organic growth. This includes an assumed $44 million in incremental passthrough revenue from US carrier fees, a $21 million increase from Q4, driven by increased T-Mobile fees that took effect in January. As a reminder, our organic revenue excludes the contribution from incremental increases to US carrier fees. Moving to the full year, we’re encouraged by the broad-based trends we’ve seen throughout 2025 and into 2026-...

So we’re continuing to plan prudently, given our usage-based revenue model. For the full year, we expect reported revenue growth of 11.5%-12.5% and organic revenue growth of 8%-9%, above our 2025 Investor Day framework, that we continue to orient the business to double-digit organic revenue growth. In addition, we expect full-year non-GAAP gross profit dollar growth to be similar to our organic revenue growth rate. Since the middle of 2025, all major U.S. carriers have announced A2P fee increases, including AT&T, whose rate increases will go into effect on April 1st. Our full-year revenue guidance assumes approximately $190 million in incremental pass-through revenue from these fees. The year-over-year impact from these fees will be slightly higher in the first half of 2026, due to the timing of Verizon’s increase in June of last year.

While the pass-through fees have no impact on our ability to generate gross profit, income from operations, or free cash flow dollars, they do impact our margin rates. For modeling purposes, we would expect the incremental fees to reduce our full year 2026 non-GAAP gross margin by roughly 170 basis points, all else equal. Turning to our profit outlook. For Q1, we expect non-GAAP income from operations of $240 million-$250 million. We are initiating our full year 2026 non-GAAP income from operations range of $1.04 billion-$1.06 billion, reflecting our continued focus on cost discipline and operating leverage across the business.

Consistent with 2025, free cash flow in Q1 will be impacted by a $140 million payment related to our company-wide cash bonus program that we implemented in 2024 as part of our efforts to reduce stock-based compensation. This will limit free cash flow generation in the first quarter to roughly $100 million as planned. That said, we continue to expect to generate strong quarterly free cash flow over the balance of the year, and for the full year 2026, we expect free cash flow in the range of $1.04 billion-$1.06 billion. We are confident in our outlook for 2026 and have made substantial progress against the financial framework established last January. Our cost savings and efficiency initiatives are tracking ahead of plan, and our 2027 outlook looks strong.

While our 2027 non-GAAP operating margin target did not account for the recent fee increases initiated by all major U.S. carriers, absent fees, we are on track to meet or exceed the financial framework we provided last year. Given these incremental fees are passed through at cost, they are a headwind to our margin rate, but it’s important to note that they have no impact on our ability to generate profit dollars. As an alternative, we are providing a 2027 non-GAAP operating income target of at least $1.23 billion, which is unaffected by carrier fees and aligns with the high end of our Investor Day framework. We will provide complete full year 2027 guidance during our Q4 2026 earnings call next year. I’m proud of the execution we delivered in 2025, resulting in accelerating organic revenue growth and strong profitability.

I’m excited by our opportunity to be the foundational infrastructure layer that powers seamless, intelligent interactions for our customers. I’m confident that our go-to-market execution and product innovation will help us drive durable, profitable, organic growth in 2026 and beyond. With that, we’ll now open it up for questions.

Conference Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment for questions. Our first question comes from Alex Zukin with Wolfe Research. You may proceed.

Speaker 1: Hey, guys. Thanks for taking the question, and really congrats on a solid end to the year. Maybe just the first one for me is can you break out what drove some of the voice strength in Q4? How much were voice AI-driven use cases versus traditional voice, and maybe the outlook for 2026 on that front?

Thomas Wyatt, Chief Revenue Officer, Twilio: Hey, Alex, this is Thomas here. So we saw a broad adoption of voice across all of our different customer cohorts, so there was definitely really good strength in our self-service channel. Some of that’s the voice AI startups, some of that’s just the existing self-service customers. We also saw a lot of interest and momentum in the ISV community as well. Talked about the growth we’re seeing in the ISV business in the mid-20s, and that’s a lot of voice adding accelerating to that as the ISV community builds more voice AI agents into their core platforms. And we’re also seeing it in the direct enterprise space as well, where there’s a lot of use cases, specifically around customer care and sales automation, that’s voice is being a big part of internal AI assistants that are being built there.

So it’s been pretty broad, and whether it’s on the infrastructure or on the voice add-ons, software, we’ve seen great penetration there as well.

Speaker 1: ... Perfect. Then Aidan, maybe just a follow-up for you first. Really appreciate a lot more detail, a lot of the detail that you put into the guidance, both for the gross profit commentary in the letter, and the operating income dollar amount that you provided for 2027. But maybe just frame it for us a little bit. If you look at the Q1 guide organically, it’s actually a little bit more aggressive than this time last year. So maybe what gives you the visibility there? And then contrast that to the full year and the level of conservatism that you’re providing. And then finally, apologize for the 3-parter. Yeah, the gross profit dollar growth commentary for fiscal 2026, similar to revenue growth, just maybe a finer point on that.

Aidan Viggiano, Chief Financial Officer, Twilio: Yeah, I’ll start with Q1. I mean, we feel really good about our guidance coming into Q1. The 10%-11%, as you noted, is higher than where we’ve been. It’s our highest quarterly guidance in over three years, and it really just, you know, kind of speaks to the broad-based strength that we’re talking about here. We look at it by product, both voice and messaging, growing in the high teens in the quarter. You look at it by sales channel, ISVs, you know, self-serve, both growing very strongly above 25%. You look at our multi-product adoption, and it’s really accelerating. So we feel really good about how the sales team is executing. We feel really good about our product innovation, and we’ve seen these trends kind of consistently over several quarters.

So we have the confidence kind of coming into the quarter to guide at 10%-11%. Now, when you think about the year, we’re guiding 8%-9% organically. As you know, Alex, you know, our revenues are primarily usage-based, and with that comes a certain level of prudent planning. You know, but as we said, we feel really good about the guidance for Q1. Our full year guidance is 100 basis points higher than our initial 2025 organic revenue growth. And again, we’re encouraged by the broad-based trends. I’d just say we’re seeing a lot of opportunity, our teams are executing well, and we feel optimistic about the setup for the year.

As it relates to the 2026 gross profit growth, we did say we expect it to be similar to the organic growth. You know, I think if you look at the trends over 2025, you started to see the gross profit growth accelerate over the year. And importantly, you saw the gap between gross profit growth and organic growth narrow as we moved throughout the year. That’s driven by a lot of proactive actions that we’ve taken. Now, as we head into 2026, you know, there are a couple of factors at play. First, I’d say, and most exciting, is the accelerated growth for many of our higher-margin products. I just talked about a lot of them, but voice in particular, a lot of the software add-ons that Thomas just talked about, you know, Verify, Lookup, SMS Pumping Protection.

We’re getting a lot of traction on these products, so we’re seeing that really take hold. In addition to that, as we’ve kind of mentioned over the past few quarters, we’re taking a more critical eye towards supply chain costs. That has resulted in certain cost optimizations on the carrier side in the form of more direct connections or more optimization across our kind of carrier supply chain. We’re also leveraging our balance sheet to secure discounts in some cases. So we’re starting to see some of those things materialize. And then the last thing I’ll talk about is on the hosting cost side. As we talked about in 2025, we completed a migration for our email business. They went from on-prem to the cloud. We experienced a double bubble of cost in 2025.

That doesn’t repeat in 2026, so that’s kind of now behind us. So it’s really all of those things that give us the confidence to say that we expect gross profits to grow in line with organic revenue.

Speaker 1: We love it. Thank you, guys.

Conference Operator: Thank you. Our next question comes from Taylor McGinnis with UBS. You may proceed.

Speaker 13: Yeah, hi. Thanks so much for taking my questions. Aidan, first one, just if, if you were to adjust for all the incremental A2P fees, can you offer us what the operating income margin guide would have been relative to the 8.5% reported number? And as a second, you know, part to this question, if we look at the 1Q operating margin guide, it actually looks pretty solid relative to the full year. So can you comment, are you guys, anticipating any uptick in expenses or investments as, you know, you move throughout the year and anything that might have been different or new relative to when you first gave this guide at the Analyst Day?

Aidan Viggiano, Chief Financial Officer, Twilio: Yeah, great. So I’m not sure I connected the dots on the 8.5% that you mentioned, Taylor, but let me just talk about how fees impact our guides for 2026. So I called it out in the prepared remarks, but we expect about $190 million in incremental pass-through fees, passing through our revenue. That’s year over year. Remember, Verizon went into effect in June of last year, and then AT&T and T-Mobile are coming into effect in 2026. That’s roughly a 170 basis point headwind on gross margin, and on operating margin, the equivalent is about 60-70 basis points. So I think the important thing is we are seeing leverage in the business from our cost savings and our efficiency initiatives.

It’s just masked by the impact of these carrier fees on a margin basis, though, again, as we’ve said many times, they have no impact on our ability to generate gross profit dollars or income from operations or free cash flow. And then on your next question on just the operating expenditures for Q1, we do have a little bit of kind of front loading of some expenses. First, we have a full quarter of our Stitch acquisition in Q1, and then we are making some product investments, we’re making really around the platform, as well as some systems to support our efforts to cross-sell and to move more towards solution selling. So we expect the pace to kind of moderate as we move throughout the year, but a little heavier in Q1.

Speaker 13: ... Perfect. Thanks. And then, Khozema, one for you. If we look at the messaging growth, excluding A2Ps, I think the growth in the quarter was around 14%, despite, you know, some of the tougher compares that you guys are coming against. So maybe you could just talk through, like, what’s driving, you know, the strength of that business as then you guys look into 2026, how are you thinking about, you know, the durability of double-digit growth potentially?

Khozema Shipchandler, Chief Executive Officer, Twilio: Yeah, Taylor, I wouldn’t point to, like, anything specific as it relates to any one of our products, actually. Like, most of our products are performing pretty well. I think we’re seeing broad-based strength across the business. You know, we parse it by channel, we parse it by industry, we look at it by use case, and I think across the board, we’re just seeing a lot of strength across a number of different products, which includes messaging.

We gave the guidance in terms of, you know, the year, and Aidan commented on the fact that for Q1, which obviously encompasses messaging, given that that’s our largest product, but Q1 is the highest it’s been for us in three years in terms of the guide, and, you know, we stepped up the full year guide 100 basis points relative to last year, and, you know, hopefully you can take from some of our commentary, like, we feel pretty good about the outlook for 2026.

Speaker 13: Thank you guys so much.

Conference Operator: Thank you. Our next question comes from Mark Murphy with JP Morgan. You may proceed.

Speaker 7: Okay, thank you so much. I’ll add my congrats. Khozema, a lot of us are probably starting to feel the presence of RCS, you know, more tangibly in the last several months. When we look at our own SMS text inboxes, I see them from Verizon and United Airlines and banks and hospitals. I think you mentioned a 5x sequential increase, which is hard to fathom. Could you just explain that? What is driving it, the shape of that adoption curve, and then remind us, you know, any real economics to Twilio. We’re hearing about 70%+ open rates on the messages, and then, you know, and presumably some of them are gonna be rich messages. So I’m just wondering what you’re seeing there.

Khozema Shipchandler, Chief Executive Officer, Twilio: Yeah, let me just answer a couple of your questions, and I’ll take a step back and give you just our views on it generally. I think in terms of the 5x, I mean, it is important to kinda characterize that as off of a relatively smaller base, right? So yes, it’s growing incredibly quickly. Yes, we’re very excited about the prospect of what RCS can do for customers, but it is growing off of a relatively small base. That said, given that kind of momentum, we are very excited about where it goes going forward. I think in terms of, like, what’s driving the shape of the adoption curve is, it’s sort of embedded in your question in a way. Like, these rich experiences, I think they really are great for many of our customers.

I think that you’ll start to see more of it shift towards, I think, increasingly marketing-oriented use cases, where RCS is particularly strong. You haven’t really seen that breakout just yet. The open rates are very high for all the reasons that, that I just alluded to a second ago. I think what’s really interesting actually right now is you’ve got, like, two, corners of it that I think can be really interesting. So one, like, for if you’re a small business that probably will not get real estate on somebody’s phone, it is an awesome way for you to be able to engage your customer, and it is a lot different and differentiated therefore, relative to just kind of standard, messaging. So I think that’s an awesome use case.

You’ll start to see that, I think, from a lot of small businesses, which will include a lot of startups. On the flip side, I think it’s also an excellent use case for things that perhaps a certain cohort of the population will have real estate on their phone, but infrequent users will not. So you know, things like providing a ticket, you referenced United a moment ago. Like, I think that’s a great vehicle to offer the capability to send someone information in a rich way that’s better than, you know, kind of conventional SMS. So very, very excited about where it is today, very excited about the growth that we’ve experienced recently, and I think just given the nature of it, you know, we’ve said many times that we’re sort of cautiously optimistic about it. I think we’re gaining optimism as we go.

Speaker 7: And then thank you. That’s a great answer, Khozema. The other question for you, and maybe Aidan, is, you know, we look back at the last year or two, it actually did not feel like a rising tide, you know, for the space that you operate in, because, all I mean is several of your competitors just have not grown at all in a while. And I’m wondering, when you reflect back on that, where do you think the Achilles heels have been for your peers who are struggling in this kind of environment, and you know, how you’ve... The ways that you’ve outflanked them, does that feel like it’s gonna be structurally durable here this year and then into 2027, where you’re given really strong operating income guidance?

Khozema Shipchandler, Chief Executive Officer, Twilio: I mean, I can’t speak for those guys. I don’t frankly, pay a lot of attention to them. But I think with respect to Twilio, I mean, it’s differentiated technology, right? I mean, we, we’ve always had a phenomenal developer experience. Like, we work really, really hard to cultivate that. Many of our customers that start as developers, they grow into some of the largest enterprise customers in the world. Thomas alluded to the growth that we’ve seen in ISVs, Aidan did too. You know, so you have kind of two ends of the spectrum that are experiencing really rapid growth, and that is almost entirely, I would say, a technology story. Like, customers would not buy the higher priced product, which we are in almost all cases, unless they were getting superior ROI.

Credit to our R&D team, they are constantly innovating, whether it’s in the channels, whether it’s on, in terms of some of this add-on technology, whether it’s in many of the exciting things, which I’m not gonna get into today, that we’re gonna talk about in Signal in a few months. Like, that level of velocity in terms of innovation and being able to continuously offer new and improved features and products to our customers, that’s what sets this company apart.

And then I think our ability to leverage data on top of that, which adds a level of context that I think is missing, not just from maybe our classic competitive set, but really from any company that’s trying to provide this kind of essential infrastructure, and then being able to, you know, going forward, build your own AI agents on top of our platform, be able to integrate into anybody agnostic of who the players are, like, that’s pretty differentiated. And so we feel good about our business. Can’t speak to the others, but I think we’re doing a pretty good job right now.

Thomas Wyatt, Chief Revenue Officer, Twilio: One more thing I’d like to add, just to add, Khozema, is just what we’re seeing is a lot of the point product competitors just don’t have the multi-channel capabilities that we have. And what we’ve seen is our ability to add, whether it’s an existing messaging customer, add another channel, whether it’s voice or email or something, and then adding AI add-ons on top of it has been pretty compelling. And so one of the things in particular in the enterprise we’re seeing is our large enterprise customers, you know, the companies that spend at least $500,000 with us, they’re up 36% year-over-year. So this is just a matter of winning market share based on having a platform play, and I think it’s playing out.

Conference Operator: Thank you. Our next question comes from Samad Samana with Jefferies. You may proceed.

Speaker 11: Hi, good evening, and it’s great to see the strong quarter. I wanted to maybe go back to the Voice AI side. Just as I think about enterprise versus serving as infrastructure inside of next gen companies, where are you seeing stronger growth today? And as you think about 2026, which of those do you think is the earlier opportunity that will ramp? And I have a follow-up question as well. Thank you so much.

Khozema Shipchandler, Chief Executive Officer, Twilio: Can I just, Samad, can I just parse your question and make sure that we have got it? You’re asking whether or not we see more growth from kind of pure play voice AI companies or whether we see it on the enterprise side. Is that right?

Speaker 11: Correct. Right. Like, are large enterprises directly leveraging it more, or are we seeing more growth there versus, like, the Sierras and Polys of the world? And how are you thinking about that trend line maybe through 2026?

Khozema Shipchandler, Chief Executive Officer, Twilio: Yeah, I think, I mean, we’re not going to guide it based on, like, specific cohorts of the customer segment at that level of detail, Samad. But what I will say is... And we’re kind of seeing it on both sides, but I think ultimately, like, it’ll be the enterprise that ends up carrying the day here. Like, I think, yes, we’re seeing an incredible velocity with the voice AI side of it. I mean, you have literally, like, hundreds of voice AI companies. We have partnerships with a lot of these guys. We count most of them as our customers. They’re definitely helping influence the growth characteristics that we’re seeing in the voice channel. But as Thomas said earlier, I mean, the voice business is growing great anyway, and that kind of tends to be the icing on top.

I think the reality of it, though, is, like, the big spenders are on the enterprise side, right? And I think, as Thomas again alluded to, like, in a lot of these, like, sales use cases, support use cases, you are seeing a lot of adoption there. I think you’ve got this stage right now where there are a lot of early adopters, you’ve got a lot of heavy experimenters, and I think the heavy experiments, based on the ROI that we’re delivering for customers right now, is going to start to translate into more durable volume.

And then, if you layer on top of that, what, what Thomas said in answer to the last question, like, our ability to offer this multi-channel orchestration, because customers are telling us directly, like, based on their own consumers’ usage patterns, they want the ability to go in and out of session, they want to be able to do it async, sync, and having multi-channel capabilities is really important based on the lifestyles of the customers that we deal with, based on connectivity issues, based on the complexity of the workloads. And so my bet would be probably enterprise is what drives it and carries the day ultimately, but not at the expense of what we’re seeing in Voice AI. I don’t know if, Thomas, anything different than that.

Thomas Wyatt, Chief Revenue Officer, Twilio: The only thing I’d add to that is just the other cohort that’s really leaning into voice is the larger, more established ISV community. So it’s not necessarily AI natives, but it’s the larger players that are software players that are embedding voice capabilities as part of their core platform, and they’re a big consumer of our voice business as well.

Conference Operator: Thank you. Our next question comes from Siddhi Panigrahi with Mizuho. You may proceed.

Speaker 12: Great. Thanks for taking my question, and congrats on a great quarter. I just want to extend Samad’s question and also your comment about Twilio becoming this AI infrastructure layer. So it’s not just the voice AI. Is there a way to quantify in terms of revenue contribution coming from all the AI-related use cases, not just voice AI, maybe even the messaging side? Are you seeing where agentic AI adoption, where a customer trying to use? And what kind of a jump zone you have backed into next couple of years, like when you guide even 2027, where do you, when do you think this agentic AI tech software, you know, you’ll see both your messaging and voice adoption?

Thomas Wyatt, Chief Revenue Officer, Twilio: Yeah, thanks for the question. So the way we think about it really is Twilio is the platform where AI agents can get infrastructure services, whether it’s the ability to communicate across any channel, whether it’s the ability to create customer memory or understanding and personalization from the data substrate that we have, largely powered by our CDP and Segment capabilities, and the ability to validate somebody and make sure that the person is who they say they are with our identification and identity and security products.

... So really think about Twilio as a platform where you come as a critical ingredient to build the next generation agents. Now, that being said, each of our channels does have AI capabilities embedded on top of it, and we talk a little bit about voice, you know, voice orchestration, Conversation Relay, as an example. If you talk about the area of account security, we do a lot of AI in the way we do fraud detection and identity, you know, verification. So just to give you an example of some of that, and of course, around personalization, we use a lot of AI to be able to determine anonymous people and make them known people based on synthesizing data and applying AI to it. So really, it’s more of a platform play for us than any individual channel.

Khozema Shipchandler, Chief Executive Officer, Twilio: Yeah, I would just add one thing to what Thomas said. Like, I think what you’re seeing today is a tremendous amount of investment and excitement in the Voice AI space. To just maybe underscore part of what he said, is we view this as, like, ultimately, like, multi-channel orchestration. I think it’s, like, Conversation Relay, the product that we launched a little while ago, like, that’s also experiencing really great growth, again, off of relatively small base, but we’re very excited about it. But the promise of that product is be able-- to be able to handle these very complex workloads across multiple channels without ever losing the customer, and in fact, not just not losing them, but engaging them better than one of our customers ever has before. And so, like, that’s kind of the promise going forward.

I think what’s going to happen most likely is that a lot of the activity that you’re seeing in voice is going to end up transitioning or also start happening in some of the other channels. But again, as Thomas rightly pointed out, like, it’s across the platform, right? So the point is not to, per se, necessarily focus on any one channel, but rather meet the customer where they are, serve as the control plane across whatever, whether it’s an agent-to-agent interaction, whether it’s a human-to-agent interaction or a human-to-human interaction. Like, we want to make sure that we’re the infrastructure that allows for all of it to happen in the most seamless way possible.

Conference Operator: Thank you. Our next question comes from Ryan McWilliams with Wells Fargo. You may proceed.

Speaker 10: Hey, thanks for the question. Good to see Twilio Verify growth. And look, I’m going to try to take a deep, big, deep breath before asking this, but I know how kind of crazy this sounds, but let’s just say that there is an increase in spam communications traffic due to AI agents, and I know there’s a lot of legal reasons why that’d be difficult to occur, but, you know, in that kind of environment, how do you think this would help Twilio Verify and maybe RCS, as I think things would be important, as would help, you know, authorize the appropriate messages that people actually want?

Khozema Shipchandler, Chief Executive Officer, Twilio: You said spam, right? That was, that was the nut of your question.

Speaker 10: Right. Yeah. Yeah.

Khozema Shipchandler, Chief Executive Officer, Twilio: Yeah. Yeah, I mean, I think this is actually a place where Twilio is ideally positioned, and, you know, the whole notion of being branded is key here, right? So we’ve done a lot of work around branded calling, for example, to make sure that not only are you getting a number or getting a call from a number that you recognize that’s specifically identified, but it’s also logoed so that you really understand what’s going to happen on the other side of that interaction. Very, very difficult to replicate otherwise. And so there’s a technology lift that you get there, and the data kind of validates that that’s a great solution because the pickup rates on those kind of calls are much, much more significant. So you get kind of a twofer. One is that you get better authentication and identity.

Two is that you get better pickup rates because the other side isn’t just looking at some random number, they’re getting a known, identified number on the other side. I think what... You know, this is already technology that we have, and I think you’ll start to see it more broadly adopted, is you’ll have the exact same thing end up happening over SMS. And I think that, again, kind of reinforces, like, what we’re trying to accomplish. The products that you reference, like Verify, certainly RCS already has kind of branding, innate in the nature of the product. Like, you’ll start to see pickups in those products because, you know, the channels only work if you know that everything’s authenticated, especially in an agent-to-agent interaction.

Like, that’s one where we’ve got to make sure that we know who the originator is, who the receiver is, so that we’re conducting a proper transaction. By the way, that’s also one of the reasons that we picked up this identity company a quarter or so ago. Like, we think they can be really important to validating and reconciling these different kinds of interactions, especially agent to agent, and we think all of that is ultimately an uplift for every one of our products.

Conference Operator: Thank you. Our next question comes from Nick Altman with BTIG. You may proceed.

Thomas Wyatt, Chief Revenue Officer, Twilio: Awesome. Thanks for taking the question. It’s great to hear there’s another quarter of acceleration in voice and the continued traction with voice AI. But Khozema and Thomas, I know it’s early, but what can you share with investors, whether it’s how use cases are scaling in production, longer term commitments from customers around voice and voice AI, or just anything else that can get us help, get us, you know, kind of more comfortable with the durability over the next couple of years in the voice side of the business? Thanks.

Khozema Shipchandler, Chief Executive Officer, Twilio: Yeah. Hey, Nick, it’s Thomas. So a couple of thoughts. The first thing I’d say is the voice growth and strength has been broad-based. It’s not just the startups, it is the enterprise, it is the ISVs, and it’s been a global phenomenon for us as well. So that’s part of it. We’re also seeing it in the context of not just the self-service channel, which is usually where most customers onboard into Twilio, but also our direct sales team and the way they go after new logos and new business. Voice has been a big driver of that team’s success this past quarter. In fact, it was the best new business quarter we’ve had in years across the globe.

Thomas Wyatt, Chief Revenue Officer, Twilio: ... So I think just fundamentally, there’s the voice is having its, its renaissance. It is a key part of the next generation user experience of AI-powered applications and agents. And so we feel it’s pretty durable, and we’re doing everything we can to accelerate our product capabilities and our go-to-market partnerships to scale it even faster.

Conference Operator: Thank you. Our next question comes from Jamie Reynolds with Morgan Stanley. You may proceed.

Speaker 3: Great. Thank you so much. This is, Jamie on for Elizabeth Porter. It’s just, the question from our side is, you know, really impressive list of customer wins that, that you guys had flagged. So just trying to get a better sense, are you guys getting better at just sort of, you know, that upfront portion of the selling motion as opposed to, you know, landing and expanding with more functionality later?

Thomas Wyatt, Chief Revenue Officer, Twilio: Yeah. So the way to think about it is we have really two different ways of acquiring customers. The first way is the self-service channel, which is largely product-led growth. It’s marketing, it’s more efficient marketing. It’s using AI to help us make onboarding and activating customers more seamless than ever. There’s a lot of product capabilities that we’ve implemented in the last year that reduce the friction of customers getting started with Twilio. And then there’s the direct sales team that is focused primarily on going after named new accounts, logos that we want to take in. Generally, they’re larger ISVs or enterprise-type customers, and that business has been really strong for us in the last six months. And that motion is largely about the AEs are hunting these logos.

They get customers started on the Twilio capabilities, and then once the customers are starting to see some value, we shift that logo over to strategic AEs that will help grow that account over time. And so this motion has been working for us for some time, and we’re just continuing to fuel it.

Conference Operator: Thank you. Our next question comes from James Fish with Piper Sandler. You may proceed.

Speaker 2: Hey, guys. Thanks for the question. Just quickly, are you guys planning any change in comp plans for 2026? Is there gonna be an idea to drive more cross-sell to drive that multi-product adoption, including incentivizing maybe the ISVs through their customer base to kind of adopt more of your APIs? Thanks, guys.

Thomas Wyatt, Chief Revenue Officer, Twilio: Yeah, great question, Jim. So yes, we did make some changes in our comp plan in 2026 to drive more cross-sell and upsell incentives into the sales plan. And again, just to remind people that we did bring the total global sales team together this past year in 2026, and then we created a specialist function as well to support the global sales team with our more advanced technologies. And so the combination is that the AEs are very incented to land a customer and then show them the value of the platform and get expansions through that. And I think in Q4, we had 26% growth in new product customer count. And so this is the beginning of a journey that we’re on, but we’re feeling pretty good about the multi-product customer count acceleration.

Conference Operator: Thank you. Our next question comes from Joshua Riley with Needham. You may proceed.

Speaker 4: Yeah, thanks for taking my question. As you look at the strength in the international messaging business, can you speak to the margin dynamics you’re seeing around these deals as customers may be adding more higher margin add-on products now than they would have a few years ago, with these deals that kind of offsets the inherent lower gross margin on international, international messaging, and can this accelerate further in the next couple of years? Thank you.

Aidan Viggiano, Chief Financial Officer, Twilio: Yeah, from an international messaging perspective, I’ll just say we, we focus on unit economics, and that’s always been our approach. So we continue to do the same. We’ve seen a lot of success in international messaging over the course of 2025, very strong growth. And then in terms of, you know, multi-product adoption, like in general, we’re seeing it pretty broad-based, so it with our international messaging customers and others. So, that tends to mix us up on, on margins, as you know, but I’ll let Thomas, Thomas talk about some of the upsells and other things that he’s, he’s noting in the market.

Thomas Wyatt, Chief Revenue Officer, Twilio: Yeah, I think, I think the other thing that we’re seeing is that, SI partners, system integrators, have been really helpful for us to scale internationally in bringing some of these multi-product capabilities to the international markets and helping our customers, have success with more integrations with other systems that they use. So the combination of, of the platform itself plus the partnerships is helping us accelerate in international markets.

Conference Operator: Thank you. Our next question comes from Will Power with Baird. You may proceed.

Speaker 15: Oh, great. Thank you. Maybe first, just a quick follow-up, but nice to see, you know, the improving trends in gross profit growth. I know, Aidan, you laid out, you know, some of the visibility drivers that, you know, help with the 2026 guidance. I guess, anything else you call out on the Q4 improvements? Is it all those same factors or anything else to note? And then my other question, just to come back to, you know, the voice strength. I know it was still earlier, and I guess, you know, in the software add-on bucket, but, you know, anything you could share just on the trends with Conversation Relay and Conversational Intelligence would be great. Thanks.

Aidan Viggiano, Chief Financial Officer, Twilio: Yeah, I’ll start with gross margins, Will. Yeah, it’s more of the same, really. So when you look at Q4, on a reported basis, we were down 200 basis points year-over-year. That was really driven by two things. About 80 basis points was the fees. So we had them in Q4 of this year. They didn’t exist in Q4. They, they were increased, you know, after Q4 of last year. So that was about an 80 basis point headwind, and the remainder was really messaging mix. And we provide some information in our presentation, but when you look at it, you know, messaging as a percentage of a revenue is up about 200 basis points year-over-year.

As you know, that’s, you know, our lowest margin product, and so as that business grows faster than the average, obviously it mixes us down in gross margin. Again, we really look at it from a unit economic perspective, and, you know, we take on business that we think hurdles a certain rate. So those are the two dynamics that we saw in the quarter, messaging mix and, the US carrier fee increase.

Conference Operator: Thank you.

Aidan Viggiano, Chief Financial Officer, Twilio: And then I’ll hand it to Thomas, or because I’m going to talk about the voice question.

Thomas Wyatt, Chief Revenue Officer, Twilio: Yeah, so just in terms of voice, I mean, there’s the three components I’d say. The voice infrastructure connectivity layer has been very strong across all the key use cases, whether it’s marketing, customer care, et cetera. Then there’s the software application sit on top, more of the AI orchestration, conversational insights, conferencing, recording, transcribing, all of those features are growing very fast on top of the existing voice infrastructure, including Conversation Relay. So this is just, again, the beginning. It’s early on this voice acceleration, but we feel good about where we’re at.

Conference Operator: Thank you. Our next question comes from Jackson Nader with KeyBank Capital Markets. You may proceed.

Speaker 16: Hey, thanks, guys, for taking the question. This is Jack on for Jackson Nader. I was wondering if you could talk about kind of the biggest levers for the NRR acceleration year-over-year, and then also if these levers are gonna continue into 2026. And then as a follow-up question on multiproduct customers, how are you thinking about the pipeline of single product customers adopting, you know, the incremental one or two throughout 2026, driving that growth higher?

Aidan Viggiano, Chief Financial Officer, Twilio: Yeah, on the DBNE side, so we saw it at 109%, this quarter, roughly flat quarter-over-quarter. It was a couple of things. In terms of where we’ve seen the acceleration over the course of the year, it kind of talks, ties back to what Thomas has been saying about multiproduct adoption. It’s really expansion, is where we’re seeing the acceleration, and it’s pretty broad-based. Like, we see it across our ISVs as well as our other kind of direct enterprise customers. And then, in particular, I’d say voice and messaging tend to be the drivers of where we’re seeing it. And given our guide of 10%-11% for the quarter in Q1 and 8%-9% for the year, yes, we would expect that level of strength to continue.

Thomas Wyatt, Chief Revenue Officer, Twilio: Yeah, I’ll just comment on the multiproduct customers. So, there’s really two different ways that we see this scaling. The first is the self-service channel itself, and we’ve got some really awesome new product capabilities that are coming to market shortly that’s gonna make it even easier for customers to take advantage of more products on the Twilio platform. So, and that’s the lion’s share of the customers that are single product, are actually self-service customers, and so our goal is to get them using more and more channels and more and more software on top of that.

When it comes to the direct selling motion, going back to the earlier question around compensation plans and account planning and how we’re doing that, the global AEs this year are really focused on helping customers see the value of multiple channels and multiple services across the Twilio platform, and their compensation is tied to that as well. And so what we find, though, is that customers see a lot more ROI with Twilio when they use 2, 3, and 4 channels. Their spend goes up, and their ROI goes up significantly. And so we know if we can get them to that second and third channel, they’re gonna have a lot of benefits.

Our goal is to use the specialist organization, combined with the new comp plan, to help our AEs be even more effective in doing that this year than ever before.

Conference Operator: Thank you. And our last question comes from Koji Akita with Bank of America. You may proceed.

Speaker 6: Yeah. Hey, guys. Thanks so much for taking the question. I wanted to go back to an earlier question about the gross profit tracking to organic revenue growth. And I totally get that, you know, that’s in reference to the guidance, but how should we think about it if there’s upside to organic revenue? I mean, it sounds like it should at least flow directly to gross profit, and it sounds like there’s a few ways that gross profit could grow even faster than organic revenue. And so is that the right way to think about this? And if that is not the case, then why would it be that way?

Aidan Viggiano, Chief Financial Officer, Twilio: Well, I’d say for the year, you know, we said it should grow similar too, and, and so that’s kind of the, the guidance that we’ve given. I think a big factor in how to think about it is product mix. Now, we’ve seen some of our higher margin products really accelerate, voice being the big one. Really, over the back half of the year, we saw voice tick up quite a bit. That’s very helpful in terms of, you know, expanding gross margins and also getting gross profit to grow more in line with organic revenue growth. But messaging is still a very big part of our business. It’s almost 58% of our revenue. So, you know, I’d say, you know, that could be a factor in, in, in how, much higher gross profit could grow relative to revenue for 2026.

For now, we’re saying we expect it to be similar to, which is better than what we’ve been tracking.

Conference Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.