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Twilio Q2 2026 earnings: Growth Accelerates and Margins Expand, But Don't Be Fooled by the EPS Headline

So What? Now What! — Signal


Confidence: Watch — next quarter's organic revenue growth (guided down to 11–12% from this quarter's 17%) will show whether Q2's acceleration holds or was a one-off.


P&L Exposure: margin

Summary


Twilio had a strong second quarter in 2026, with sales picking up pace compared to the start of the year. Total revenue went up 22%, or 17% if you leave out recent additions to the business. Profitability improved too. Adjusted operating margins reached 19%, up from 18% last year, bringing adjusted operating income to $284.6 million.


Twilio logo

The net expansion rate climbed to 116%, up from 108% last year, showing existing customers are spending a bit more. Official earnings per share jumped to $6.68 from just 14 cents, but do not let that fool you, it is mostly down to a single tax break rather than how the core business is running. Looking ahead, Twilio has bumped up its targets for annual sales, operating profit, and cash flow, while continuing to buy back its own shares along the way.


Twilio Q2 2026 earnings: What Happened


  • Revenue growth accelerated on both measures: Twilio brought in $1.50 billion in total sales this quarter, which is a 22% jump on last year. If you leave out recent additions to the business, organic growth was sitting at 17%. Both of those figures show the company is moving faster than it was at the start of the year.

  • Non-GAAP profitability improved: Adjusted operating margins crept up to 19%, compared to 18% last year. That helped push adjusted operating profit up by 29% to hit $284.6 million. Standard operating income saw a much bigger jump, more than doubling to reach $84.5 million.

  • The EPS headline is mostly a tax accounting event: On paper, official earnings per share look huge at $6.68, up from 14 cents last year. But almost all of that—$5.91 per share—comes from a one-off tax adjustment rather than how the actual business performed this quarter. Once you strip that tax break away, the underlying operating results look much more normal.

  • Customer expansion and cash generation both improved: Existing customers spent more with the company this quarter, with net expansion hitting 116% compared to 108% last year. Cash generation was strong too. Free cash flow came in at $352.6 million, working out to a 24% margin, up from $263.5 million or 21% this time last year.

  • Guidance moved up across the board: Twilio bumped up its targets for the full year across the board. Management now expects total revenue growth to land between 18% and 18.5%, up from the previous 14% to 15% range. Organic sales targets got a similar nudge, now sitting at 13% to 13.5%. On the profit side, expected adjusted operating income has been raised to between $1.135 billion and $1.155 billion. The company also spent another $66 million buying back its own shares this quarter. That brings their total buybacks to $1.2 billion out of the $2 billion its board approved.

Why The Real Story Is Operating Leverage, Not The EPS Number


That jump in official earnings per share from 14 cents to $6.68 looks huge if you only glance at the top line, but it is misleading. Almost $6 of that comes from a one-off tax break. If you take that away, the real earnings per share are much closer to the adjusted figure of $1.47. That is still a solid 24% rise from the $1.19 they managed last year, just without the massive drama of the main headline. If you see any reports or rival marketing teams boasting about that headline EPS figure without mentioning the tax break, they're either being lazy or purposely ignoring the facts.


The main thing to take away form the Twilio Q2 2026 earnings here, is that Twilio managed to grow its sales faster while actually making bigger profits. That is the exact opposite of what we saw from competitors like NiCE and Five9 this quarter, who both had to sacrifice margins to get growth. Twilio pulled in 22% more revenue while pushing its adjusted profit margin up from 18% to 19%. On top of that, its underlying sales growth picked up speed to hit 17%, compared to a much slower start at the beginning of the year.


Pulling off faster sales alongside bigger margins is no easy trick. What makes this look even better is that their net expansion rate went from 108% to 116%. That shows current clients are actually spending more money with them, rather than the company just relying on a wave of new sign-ups to mask a quiet core business.


Raising their targets like this shows the bosses think these good results are here to stay, rather than just a lucky single quarter. They bumped up their expectations for full-year organic sales growth by almost four percentage points at the middle mark, and they pushed up their profit targets right alongside it.


The main thing to keep an eye on is the target they've set for next quarter. Management expects organic growth to slow down to between 11% and 12%, which is quite a step down from the 17% they just pulled off. That might just be the team playing it safe with their forecasts, or it could mean some of the extra boost they got this quarter won't happen again.

Get the deeper read.



About the analyst: Tim Banting, 20 years in UC/CX market intelligence (Microsoft, Cisco, Omdia, GlobalData).

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