Key Takeaways
- Twilio shares fell 17% after a third-quarter beat and a raised 2026 outlook, as its fourth-quarter guide called for organic growth of 11%-12%, down from 16%.
- The guide and an early 2027 floor of 10% organic growth suggest this year’s pickup is fading.
- Salesforce and RingCentral are chasing the same AI customer-engagement spending, and neither is growing faster than Twilio.
- At about 38x forward earnings going into the report, Twilio’s stock had little room for slower growth.
Twilio (TWLO) beat Wall Street’s estimates for the third quarter and raised its outlook for the year. Shares are down 17% today anyway.
The problem is the fourth quarter. Twilio guided to organic revenue growth of 11%-12%, down from 16%, and non-GAAP operating income of $300 million to $310 million, below the $326 million it just earned. That matters for Salesforce (CRM) and RingCentral (RNG) too, since they’re chasing the same AI customer-engagement budgets.
The beat got smaller
Third-quarter revenue rose 20% to a record $1.56 billion, ahead of the $1.51 billion analysts expected. It was the sixth straight quarterly increase:
But on the call, analyst Elizabeth Elliott noted that Twilio beat its own guidance by more than usual in the first half, while this quarter’s beat was “a little bit more modest and more normalized.” Management said the smaller beat came mainly from a modest slowdown in messaging, its biggest product.
Growth is coming back to earth
Management’s early look at 2027 calls for at least 10% organic growth, with $1.35 billion each of non-GAAP operating income and free cash flow. Analysts already expect growth to settle in the low teens:
That’s about 12% growth in 2027, and Twilio’s 10% floor gives analysts no reason to raise it.
That’s a problem for a stock that traded at about 38x forward earnings at Thursday’s close, and still trades around 30x after today’s drop.
TIKR tracks 31 analysts on Twilio. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Twilio, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Twilio’s Analyst Ratings
Rivals aren’t running away with it
Salesforce’s Agentforce and Data 360 annual recurring revenue reached nearly $3.9 billion in its quarter to July 31, up over 210%. But without its Informatica acquisition, revenue grew 6%, and its October-quarter guide implies about 7%-8%. Its early-December report shows whether its promised organic pickup arrives.
RingCentral says customers using its paid AI products now make up nearly 15% of its annual recurring revenue, double a year ago. Yet its third-quarter revenue grew 5.9%: AI is an add-on to a mature core, and Twilio’s guide raises the same question for its own.
Wait for the fourth quarter
Twilio is still growing faster than both. But the market was paying for faster growth, and the guide says it’s slowing. At about 30x forward earnings, I’d want to see Twilio beat its fourth-quarter guide before buying.
Of course, Twilio has beaten its own guidance every quarter this year, so 11%-12% may prove conservative. Its fourth-quarter report early next year is the test.
So what is Twilio stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
