Twilio Inc. Q3 FY2025 earnings call

• Twilio had a record Q3 with $1.3 billion in revenue and $235 million in non-GAAP income from operations. - Broad-based strength across customer segments from start-ups to global enterprises. - Growth in products like messaging, voice, and software add-ons. - Success with solution selling, including signing first agent productivity solution deals like with Inhabit. - Revenue from ISV customers grew over 20% year-over-year. - Hosted Exec Connect event, showcasing platform and roadmap to strategic accounts. - Announced acquisition of Stytch, an identity platform for AI agents.

Twilio achieved $1.3 billion in revenue for Q3 2025. Messaging revenue grew in the high teens for the second consecutive quarter. Voice revenue growth accelerated to the mid-teens, its fastest growth rate in over three years, aided by strong growth from voice AI customers, which accelerated to nearly 60% year-over-year. Revenue from software add-on products, including Verify, grew more than 25% year-over-year. ISV and self-serve customers both saw revenue growth of over 20% year-over-year. Revenue contribution across segments showed broad-based strength from various customer types, with messaging, voice, and software add-ons all contributing to the overall growth.

• For Q4, revenue target is $1.31 billion to $1.32 billion, representing 9.5%-10.5% reported growth and 8%-9% organic growth. - Raised full-year 2025 organic revenue growth guidance to 11.3%-11.5% from 9%-10% previously, and reported revenue growth to 12.4%-12.6% from 10%-11% previously. - For Q4, non-GAAP income from operations expected to be $230 million to $240 million. - Raised full-year non-GAAP income from operations range to $900 million to $910 million from $850 million to $875 million previously. - Raised full-year free cash flow guidance to $920 million to $930 million from $875 million to $900 million previously.

• Potential carrier fee increases from other providers (e.g., AT&T, T-Mobile) which could impact gross margins. These increases would gross up revenue and cost of goods sold but have no impact on gross profit, profit, or free cash flow dollars, but could affect overall financial performance.

Q: How should we think about what functions or features Stytch complements Verify with and the financial impact?

A: Stytch helps expand capabilities to ensure trust between businesses and consumers, critical in customer journey. Revenue and P&L impact is immaterial, a small tech and talent tuck-in for less than $100 million.

Q: Any sense to what's causing strong net customer addition number and churn related to price increase?

A: Big part of net customer adds was small accounts converting to active after ending free tiers for e-mail and marketing campaign APIs. No churn seen associated with price increase over last quarter.

Q: Thoughts on voice AI adoption trends and trajectory vs messaging?

A: Voice grew mid-teens, fastest growth in over three years; cohort of voice AI customers grew nearly 60% year-over-year, top 10 voice AI start-ups up 10x. Messaging grew high teens for second consecutive quarter. Both growing but voice AI showing accelerated growth.

Q: What drove the large cloud service provider nine-figure deal and ISV relationships?

A: ISV relationships grow as customers start in self-serve and grow to large accounts. Large cloud service provider deal is a material renewal with an existing relationship. Self-service business growth, especially voice AI capabilities, also drives growth.

Q: Early signs on holiday season impact and what surprised in Q3?

A: Q3 was broad-based with ISVs, self-serve, software add-ons, messaging, and voice all growing. Holiday season has mixed macro and usage-based nature, challenging comparison but guidance provided for Q4. No specific surprises, just broad-based strength across segments, customers, products, and industries.