Customer engagement platform Twilio (NYSE: TWLO) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 14.7% year on year to $1.3 billion. Guidance for next quarter’s revenue was optimistic at $1.32 billion at the midpoint, 2.3% above analysts’ estimates. Its non-GAAP profit of $1.25 per share was 17% above analysts’ consensus estimates.

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StockStory’s Take

Twilio’s third quarter results were driven by a strong uptick in both new and existing customer engagement, propelled by broader adoption of its messaging, voice, and software add-on products. Management credited the company’s operational discipline and focus on cross-selling as key contributors to the quarter’s momentum. CEO Khozema Shipchandler highlighted, “The team’s operational rigor and discipline is paying off as we executed across the board.” Standout wins included a record renewal with a leading cloud provider and notable growth from ISV and self-serve channels, reflecting Twilio’s ability to address diverse enterprise needs.

Looking forward, Twilio’s guidance is anchored in continued expansion of AI-powered offerings, broader adoption of multiproduct solutions, and the integration of new authentication capabilities through recent acquisitions. Management emphasized the importance of scaling high-margin products and leveraging its self-serve and ISV channels to drive future performance. CFO Aidan Viggiano stated, “We remain focused on executing against our product and go-to-market initiatives as we close out 2025 and build on our momentum into 2026.” The company is also preparing for potential changes in carrier fees and evolving customer behaviors during the holiday season, which could impact usage trends.

Key Insights from Management’s Remarks

Twilio’s leadership pointed to broad-based product adoption, increased cross-sell activity, and accelerating traction in AI-powered solutions as primary drivers behind the latest results and raised outlook.

• Self-serve and ISV momentum: Management described exceptional growth in both self-serve and independent software vendor (ISV) channels, each up over 20% year-over-year, enabling Twilio to efficiently attract and scale new customers across diverse industries.
• AI-powered voice solutions accelerating: The company saw rapid adoption of its voice AI offerings, with revenue from voice AI start-ups up nearly 60% year-over-year and top customers increasing their usage tenfold. This trend reflects growing demand for automated, context-aware customer engagement tools.
• Cross-sell and bundled solutions: Twilio’s new agent productivity solution, which bundles voice, SMS, email, and chat, gained early traction, particularly among enterprise and ISV customers seeking to improve both human and virtual agent efficiency. This approach is increasing multiproduct adoption and customer retention.
• Product innovation and RCS rollout: The launch of Rich Communication Services (RCS) messaging globally led to a doubling of RCS message volumes, while software add-on products like Twilio Verify (for authentication and fraud prevention) grew over 25%, signaling heightened demand for secure, branded communications.
• Acquisition expands platform capabilities: The acquisition of Stytch, a developer-focused identity platform, was framed as a “tech and talent tuck-in” to enhance authentication for AI-driven customer interactions. Management expects the deal to accelerate product differentiation without materially impacting financials.

Drivers of Future Performance

Twilio’s outlook centers on further scaling AI-driven products, expanding bundled solutions, and managing carrier fee impacts while maintaining profitability discipline.

• AI and automation as growth levers: Management sees sustained revenue growth potential from increased adoption of AI-powered voice, conversation management, and authentication tools, fueled by both new customer acquisition and deeper relationships with existing enterprise clients.
• Holiday season and usage volatility: The company acknowledged that the upcoming holiday period introduces some uncertainty, as Twilio’s usage-based model depends on customer engagement activity, which may fluctuate given mixed macroeconomic signals and a tougher year-over-year comparison.
• Carrier fee headwinds: CFO Aidan Viggiano noted incremental U.S. carrier fees could pressure gross margins, particularly if other telecom operators follow Verizon’s lead. The company is taking steps to offset these impacts through pricing actions and a focus on higher-margin product mix.

Catalysts in Upcoming Quarters

In future quarters, we will be closely monitoring (1) the pace of enterprise adoption for Twilio’s AI-powered voice and bundled productivity solutions, (2) the impact of carrier fee changes on gross margin stability, and (3) continued strength in self-serve and ISV channels driving customer expansion. Additionally, successful integration of Stytch’s identity platform and effective execution during the holiday season will be important indicators of ongoing momentum.

Twilio currently trades at $124.50, up from $112.90 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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