$TWLO · TWILIO INC
Twilio filed its 10-Q for the quarter ended September 30, 2026, reporting Q3 revenue of $1.56B (+19.9% YoY), GAAP diluted EPS of $1.00, and net income of $161.2M. Operating income hit $148.6M (9.5% margin), up from $40.9M a year ago. The nine-month period includes a $937M tax valuation allowance release that drove net income to $1.32B.
- Revenue grew 19.9% YoY to $1.56B in Q3 FY2026, up from $1.30B in Q3 FY2025.
- GAAP diluted EPS hit $1.00 vs $0.23 a year ago; net income reached $161.2M vs $37.2M.
- Operating income surged to $148.6M from $40.9M, a 263% YoY increase, with operating margin at 9.5%.
- Nine-month net income reached $1.32B, boosted by a $937M tax valuation allowance release.
- Gross margin improved to 48.8% from 48.6% a year ago; stock-based comp fell to $153.9M from $158.2M.
Markets closed — no regular-session reaction yet; extended-hours move not captured here. The stock closed at $205.29, down 15.13% on the day before the filing, suggesting pre-existing pressure unrelated to this 10-Q.
Twilio's Q3 shows the CPaaS leader accelerating revenue growth to nearly 20% while delivering GAAP profitability at scale — a combination that has eluded the company for years.
Twilio's 19.9% revenue growth and swing to GAAP profitability place it among the stronger performers in cloud infrastructure/CPaaS, where many peers are still optimizing for profitable growth. The $1.06B deferred tax asset recognition signals confidence in sustained earnings.
The 10-Q notes $32.8M in impairment loss on prepaid assets during the nine-month period and ongoing losses from the equity method investment ($77.1M over nine months). The deferred tax asset of $1.06B depends on sustained profitability; any reversal of the valuation allowance release could materially impact future earnings.