Twilio generated record profitability and free cash flow during the second quarter of 2026, with quarterly free cash flow increasing to $352.6 million as the customer engagement platform substantially raised its full-year financial outlook.
Free cash flow increased from $263.5 million in the prior-year period, while free cash flow margin expanded to 24% from 21%. Net cash provided by operating activities reached $372.4 million, compared with $277.1 million a year earlier.
Following the stronger quarter, Twilio raised its 2026 free cash flow outlook to between $1.135 billion and $1.155 billion, compared with its previous forecast of $1.08 billion to $1.10 billion. The company raised its non-GAAP operating income guidance to the same $1.135 billion to $1.155 billion range.
The revised outlook accompanied a substantial increase in revenue expectations. Twilio now forecasts reported revenue growth of 18% to 18.5% for 2026, up from its prior range of 14% to 15%. Organic revenue growth is expected to reach 13% to 13.5%, compared with the previous 9.5% to 10.5% outlook.
Second-quarter revenue reached $1.499 billion, up 22% year-over-year, while organic revenue growth accelerated to 17%. GAAP gross profit increased 20% to $725.9 million, and non-GAAP gross profit increased 18% to $735.7 million.
Operating profitability also improved. GAAP income from operations increased 129% to $84.5 million, producing a 6% operating margin compared with 3% a year earlier. Non-GAAP operating income increased 29% to $284.6 million, with a 19% margin compared with 18% in the prior-year quarter.
Customer expansion accelerated as well. Twilio’s Dollar-Based Net Expansion Rate reached 116%, up from 108% a year earlier. The metric measures changes in revenue generated from existing customer cohorts and rises when customers expand usage, add new applications or adopt additional Twilio products.
The company is increasingly framing its communications infrastructure around artificial intelligence. Twilio describes its platform as combining global communications, memory and AI orchestration with identity, governance and observability to support conversations involving both humans and AI agents.
Twilio reported GAAP diluted EPS of $6.68 compared with $0.14 a year earlier, although that figure included a $5.91-per-share non-cash benefit associated with releasing a significant portion of the valuation allowance against its U.S. deferred tax assets. Non-GAAP diluted EPS was $1.47 compared with $1.19.
Capital returns are continuing alongside Twilio’s improving cash generation. The company repurchased $66 million of stock during Q2. Since launching its $2 billion repurchase authorization in January 2025, Twilio has completed approximately $1.2 billion of repurchases and had $826 million remaining under the program at the end of June.
For the third quarter, Twilio expects revenue of $1.505 billion to $1.515 billion, representing reported growth of 16% to 16.5% and organic growth of 11% to 12%. Non-GAAP operating income is expected to range from $285 million to $295 million.
KEY QUOTES:
“We are in a powerful new chapter at Twilio, marked by another quarter of organic growth acceleration as well as record profitability and free cash flow.”
“At SIGNAL, we unveiled a revamped Twilio platform giving customers the building blocks they need to power rich, lifelong conversations. In a world where humans and AI agents increasingly work side by side, Twilio is providing the infrastructure to power them both.”
Khozema Shipchandler, CEO of Twilio
