Twilio (TWLO) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue reached $1.41 billion, up 20% year-over-year, with 16% organic growth, driven by increased usage, AI adoption, and higher A2P messaging fees.

• Non-GAAP income from operations was $279 million, up 31% year-over-year; GAAP income from operations was $108 million, up 366%.

• Free cash flow was $132 million, with a 9% margin, and net income rose to $90.1 million.

• Dollar-Based Net Expansion Rate improved to 114%, reflecting strong customer expansion.

• Multi-year transformation and innovation in AI and software add-ons drove operational improvements and industry recognition.

Financial highlights

• Q1 revenue: $1.41 billion, up 20% year-over-year (16% organic); non-GAAP gross profit: $697 million, up 16%.

• Non-GAAP gross margin: 49.6%; GAAP gross margin: 49%; non-GAAP operating margin: 20%.

• GAAP net income per diluted share: $0.57; non-GAAP net income per diluted share: $1.50.

• Stock-based compensation expense was $137 million, representing 10% of revenue.

• Completed $253 million in share repurchases; $892–$900 million remains authorized.

Outlook and guidance

• Q2 2026 revenue guidance: $1.42–$1.43 billion (15.5%–16.5% reported, 10%–11% organic growth).

• Full-year 2026 revenue growth guidance raised to 14%–15%; organic growth to 9.5%–10.5%.

• Full-year non-GAAP income from operations and free cash flow guidance raised to $1.08–$1.1 billion.

• Carrier fee increases expected to reduce non-GAAP gross margin by ~200 basis points year-over-year.

• Potential release of U.S. deferred tax asset valuation allowance in 2026 could result in a material tax benefit.