Twilio's Biggest Business Is Slowing, and That's a Problem for Its Growth Story

Twilio Inc. (NYSE:TWLO) stock plunged in premarket trading Friday as slowing growth in its largest business and a softer fourth-quarter outlook overshadowed better-than-expected earnings, record revenue and a higher full-year sales forecast.

Messaging, which accounts for roughly 60% of Twilio’s revenue, saw organic growth slow to 17% from 18% in the previous quarter, raising concerns about the company’s ability to sustain its broader growth momentum despite strength in Voice and AI-related products.

Chief Financial Officer Aidan Viggiano attributed the slowdown in Messaging to tougher year-over-year comparisons during Thursday’s earnings call.

Viggiano said Messaging accounts for roughly 60% of revenue, making the slowdown the primary reason Twilio’s revenue beat was smaller than those recorded in the first half.

Twilio also forecast fourth-quarter organic revenue growth of 11% to 12%, down from 16% in the third quarter, adding to investor concerns about slowing growth.

Earnings Snapshot

The company reported adjusted earnings of $1.65 per share, beating analysts’ consensus estimate of $1.47.

Revenue rose 20% year over year to $1.56 billion, topping Wall Street’s estimate of $1.51 billion.

Twilio also raised its 2026 revenue growth forecast to 20% from its previous range of 18% to 18.5%.

The company forecasts fourth-quarter organic revenue growth of 11% to 12%, below the 16% recorded in the third quarter. Management said the outlook reflects its cautious forecasting approach and seasonal volatility in its usage-based business.

Major Enterprise Deal Highlights Growth Opportunities

CEO Khozema Shipchandler highlighted Twilio’s first eight-figure Conversations deal with a health insurance provider.

The deployment uses Twilio’s Conversation Relay and real-time transcription capabilities.

Twilio is also testing an identity verification product designed to help businesses confirm whom AI agents represent, with general availability planned for 2027.

AI Adoption Faces Hurdles

Shipchandler said AI adoption remains in its early stages, with Twilio still developing monetization models for certain products undergoing private beta testing.

He identified trust, transparency and difficulty demonstrating measurable returns on investment as major obstacles to broader adoption.

Shipchandler said businesses need greater visibility into whom AI agents represent, what actions they perform and how long those activities continue.

Responding to a Wolfe Research analyst’s question, Shipchandler said consumer AI agents represent a longer-term opportunity that will take time to develop.

Voice AI currently accounts for about 1% of voice interactions, while consumer AI represents an even smaller share, he said.

Twilio continues working with leading AI agent platform providers as adoption expands.

Fourth-Quarter Outlook Raises Concerns

Twilio expects fourth-quarter revenue of $1.595 billion to $1.605 billion, above analysts’ consensus estimate of $1.582 billion.

However, the company forecasts organic revenue growth of 11% to 12%, down from 16% in the third quarter.

Twilio expects non-GAAP operating income of $300 million to $310 million, below the $325.7 million reported in the third quarter.

The company forecasts adjusted earnings of $1.48 to $1.53 per share, compared with analysts’ consensus estimate of $1.49.

TWLO Price Action: Twilio shares were down 19.39% at $195.00 during premarket trading on Friday, according to Benzinga Pro data.

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