Company Overview - Twilio (NYSE: TWLO) is a leader in the communications platform as a service (CPaaS) sector, specializing in text and voice messaging, user authentication, identity verification, and email services [1] Market Position - Over the years, Twilio has established a dominant position in its market, becoming a reliable choice for marketers [1] Analyst Background - The analysis is provided by Ian Bezek, a former hedge fund analyst with extensive experience in Latin American markets and a focus on high-quality compounders and growth stocks [1]

Core Viewpoint - 2026 is projected to be a challenging year for software stocks as investors assess the impact of AI and vibe coding on enterprise software [1] Group 1: Industry Insights - The software industry is facing significant scrutiny as investors question the ability of emerging technologies like AI to disrupt traditional enterprise software [1] - The experience of analysts covering technology companies and working in Silicon Valley highlights the evolving themes within the software sector [1] Group 2: Analyst Background - Gary Alexander has extensive experience in both Wall Street and Silicon Valley, contributing to his insights on the technology industry [1] - He has been a contributor to Seeking Alpha since 2017 and has been featured in various web publications, indicating a strong presence in the investment community [1]

Core Insights - 2026 is projected to be a challenging year for software stocks, with investors questioning the impact of AI and vibe coding on enterprise software [1] Group 1: Industry Trends - The software industry is facing significant scrutiny as investors assess the potential of AI and vibe coding to disrupt traditional enterprise software [1] - The combined experience of industry experts highlights the ongoing themes shaping the technology sector, particularly in relation to startups and established companies [1] Group 2: Analyst Background - Gary Alexander has extensive experience in both Wall Street and Silicon Valley, providing insights into the technology landscape [1] - He has been a contributor to Seeking Alpha since 2017 and has been featured in various web publications, indicating a strong presence in the investment community [1]

Core Insights - Twilio reported a record fourth quarter with $1.4 billion in revenue and achieved its first full-year of GAAP profitability, generating $5.1 billion in revenue for the year [3][4][7] Financial Performance - Q4 revenue rose 14% year-over-year on a reported basis and 12% organically, while full-year revenue grew 14% reported and 13% organically [2] - Twilio generated $158 million in GAAP income from operations for the full year, including $57 million in Q4 [2] - Non-GAAP gross profit for Q4 was $682 million, with a non-GAAP gross margin of 49.9%, down 200 basis points year-over-year [13] - Non-GAAP operating margin in Q4 was 18.7%, up 220 basis points year-over-year, attributed to cost discipline [14] Voice and Product Momentum - Voice revenue growth accelerated to the high teens in Q4, with voice AI revenue growing above 60% year-over-year [1][6] - Branded Calling revenue surged roughly 6x year-over-year in Q4, while RCS volume grew approximately 5x quarter-over-quarter [8] - Software add-on revenue, led by Verify, grew over 20% year-over-year [8] Customer Engagement and Sales Channels - Twilio's self-serve revenue grew 28% year-over-year in Q4, and ISV revenue grew 26% [9][10] - The number of large deals of $500,000 or more increased 36% year-over-year in Q4 [11] - Multi-product customer count grew 26% year-over-year in Q4, indicating a shift from product selling to solution selling [12] Guidance and Future Outlook - For Q1, Twilio guided revenue of $1.335 billion to $1.345 billion, representing 14% to 15% reported growth [16] - For 2026, Twilio guided to 11.5% to 12.5% reported revenue growth and 8% to 9% organic growth, with an expected non-GAAP operating income of $1.04 billion to $1.06 billion [17][18] - Looking beyond 2026, Twilio set a target of at least $1.23 billion in non-GAAP operating income for 2027 [19]

RT zerohedge (@zerohedge)After Hours:AMAT +10%...big revs guide above on March qtr and “expect to grow our semiconductor equipment business over 20 percent this calendar year”ABNB +1%...Solid beat and C26 " year-over-year revenue growth to accelerate to at least low double digits”ANET +8%...Solid 1Q guide (4Q Revs +29% y/y, GMs 63.4%)CART +13%...1Q EBITDA and GTV guide ahead of consTWLO -8%...beat/guide aboveROKU +12%...4Q Revs inline, 1Q/FY26 EBITDA guided aboveEXPE -3%...4Q GBs/EBITDA beat but 1Q GBs guid ...

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分组1 - Twilio reported quarterly earnings of $1.33 per share, exceeding the Zacks Consensus Estimate of $1.24 per share, and showing an increase from $1 per share a year ago, resulting in an earnings surprise of +7.26% [1] - The company achieved revenues of $1.37 billion for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 3.72%, and up from $1.19 billion year-over-year [2] - Twilio has consistently surpassed consensus EPS estimates over the last four quarters, indicating strong performance [2] 分组2 - Despite the positive earnings report, Twilio shares have declined approximately 22.4% since the beginning of the year, contrasting with the S&P 500's gain of 1.4% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is $1.22 on revenues of $1.27 billion, and for the current fiscal year, it is $5.43 on revenues of $5.41 billion [7] 分组3 - The Zacks Industry Rank indicates that the Internet - Software sector is currently in the bottom 44% of over 250 Zacks industries, which may negatively impact Twilio's stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - Twilio currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6]

Financial Data and Key Metrics Changes - Twilio reported record revenue of $1.4 billion in Q4 2025, representing a 14% year-over-year increase on a reported basis and 12% on an organic basis [5][13] - For the full year, revenue reached $5.1 billion, reflecting a 14% reported growth and 13% organic growth [13] - Non-GAAP income from operations for Q4 was $256 million, up 30% year-over-year, while full-year non-GAAP income from operations was $924 million, a 29% increase [16][17] - Free cash flow for Q4 was $256 million, and for the full year, it was $945 million, up 44% year-over-year [5][14] Business Line Data and Key Metrics Changes - Voice revenue growth accelerated to the high teens in Q4, driven by strong adoption of voice AI, which saw revenue growth above 60% year-over-year [14][16] - Messaging revenue growth was solid, particularly during Cyber Week, contributing to an overall growth of 18% for the year [15][16] - Software add-on revenue grew over 20% year-over-year, with Verify leading the growth at more than 25% for two consecutive quarters [15][16] Market Data and Key Metrics Changes - The number of large deals closed (over $500,000) increased by 36% year-over-year in Q4 [7] - Twilio's multi-product customer count grew by 26% year-over-year, indicating a shift towards selling solutions rather than just products [8] - During Cyber Week, Twilio sent 6.99 billion messages, a 34.5% year-over-year increase, and handled 1.07 billion calls, up 58% year-over-year [9] Company Strategy and Development Direction - Twilio aims to become a foundational infrastructure layer in the age of AI, focusing on delivering essential infrastructure for communications powered by contextual data and automation [6][12] - The company is transitioning from selling features to selling solutions, as evidenced by the growth in multi-product adoption and strategic partnerships [8][12] - Twilio's innovation strategy is centered around AI, with plans to launch new products that enhance customer engagement and trust [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining momentum into 2026, with a robust innovation roadmap and a focus on creating amazing experiences for brands [12][24] - The company anticipates reported revenue growth of 11.5%-12.5% and organic growth of 8%-9% for the full year 2026, reflecting broad-based trends [21][23] - Management acknowledged the impact of increased carrier fees on margins but emphasized that these fees do not affect the ability to generate profit dollars [22][24] Other Important Information - Twilio completed $198 million in share repurchases in Q4 and $855 million for the full year, representing 90% of 2025 free cash flow [18][19] - The company achieved its first full year of GAAP profitability, with GAAP income from operations of $158 million [14][17] Q&A Session Summary Question: What drove the voice strength in Q4? - Management noted broad adoption of voice across customer cohorts, with significant contributions from self-service and ISV channels [27][28] Question: Can you provide visibility on Q1 guidance? - Management expressed confidence in Q1 guidance, citing strong growth across products and sales channels [30][31] Question: What is driving messaging growth excluding A2Ps? - Management indicated broad-based strength across products, with messaging performing well [41][42] Question: What is the outlook for RCS adoption? - Management highlighted rapid growth in RCS, emphasizing its potential for marketing-oriented use cases [46][48] Question: How does Twilio differentiate from competitors? - Management attributed success to differentiated technology, strong developer experience, and continuous innovation [51][52] Question: Where is the stronger growth coming from in voice AI? - Management indicated that both enterprise and voice AI companies are contributing to growth, with enterprise expected to drive more durable volume [59][60]

Financial Data and Key Metrics Changes - Twilio reported record revenue of $1.4 billion in Q4 2025, representing a 14% year-over-year increase on a reported basis and 12% on an organic basis [5][13] - For the full year, revenue reached $5.1 billion, reflecting a 14% reported growth and 13% organic growth [13] - Non-GAAP income from operations for Q4 was $256 million, up 30% year-over-year, while for the full year, it was $924 million, a 29% increase [14][17] - Free cash flow in Q4 was $256 million, and for the full year, it was $945 million, up 44% year-over-year [5][14] - The company achieved its first full year of GAAP profitability with $158 million in GAAP income from operations [14] Business Line Data and Key Metrics Changes - Voice revenue growth accelerated to the high teens in Q4, driven by strong growth from voice AI customers, which saw revenue growth above 60% year-over-year [14][16] - Messaging revenue growth was solid, aided by high volumes during Cyber Week and the holiday season [14] - Software add-on revenue grew over 20% year-over-year, with Verify growing more than 25% for the second consecutive quarter [15] - Self-serve revenue grew 21% for the full year, while ISV revenue grew 24% [15] Market Data and Key Metrics Changes - The number of large deals closed (over $500,000) increased by 36% year-over-year in Q4 [7] - During Cyber Week, Twilio sent 6.99 billion messages, a 34.5% year-over-year increase, handled 1.07 billion calls (up 58% year-over-year), and processed 75.1 billion emails, a 14.6% increase year-over-year [9] Company Strategy and Development Direction - Twilio aims to be a foundational infrastructure layer in the age of AI, moving beyond just providing communication channels [6][12] - The company is focused on delivering essential infrastructure powered by contextual data and evolving automation, such as Voice AI, to help customers build personalized relationships [7][12] - A strategic partnership with AEG was signed to enhance real-time, personalized communications for live events [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to sustain momentum into 2026, supported by a robust innovation roadmap [12][23] - The company anticipates reported revenue growth of 11.5%-12.5% and organic revenue growth of 8%-9% for the full year 2026 [21] - Management noted that while pass-through fees from U.S. carriers will impact margin rates, they will not affect the ability to generate profit dollars [22] Other Important Information - Twilio's stock-based compensation as a percentage of revenue decreased to 11.3% in Q4, down 180 basis points year-over-year [18] - The company completed $198 million in share repurchases in Q4 and $855 million for the full year, representing 90% of 2025 free cash flow [18][19] Q&A Session Summary Question: What drove the voice strength in Q4? - Management noted broad adoption of voice across customer cohorts, with significant strength in self-service and ISV communities [27][28] Question: Can you provide visibility on the Q1 guidance? - Management expressed confidence in the Q1 guidance, citing broad-based strength across products and sales channels [30][31] Question: What is driving the growth in messaging? - Management indicated broad-based strength across multiple products, contributing to messaging growth [42] Question: How is Twilio positioned regarding RCS adoption? - Management acknowledged rapid growth in RCS, emphasizing its potential for marketing-oriented use cases and high open rates [46][48] Question: What differentiates Twilio from competitors? - Management highlighted Twilio's differentiated technology, strong developer experience, and continuous innovation as key competitive advantages [51][52]

Financial Data and Key Metrics Changes - Twilio reported record revenue of $1.4 billion in Q4 2025, representing a 14% year-over-year increase on a reported basis and 12% on an organic basis [4][13] - For the full year, revenue reached $5.1 billion, reflecting a 14% reported growth and 13% organic growth [13] - Non-GAAP income from operations for Q4 was $256 million, up 30% year-over-year, while for the full year, it was $924 million, a 29% increase [17][18] - Free cash flow for Q4 was also $256 million, and for the full year, it increased by 44% year-over-year to $945 million [14][19] - The company achieved its first full year of GAAP profitability with a GAAP income from operations of $158 million [14] Business Line Data and Key Metrics Changes - Voice revenue growth accelerated to the high teens in Q4, driven by strong adoption of voice AI, which saw over 60% year-over-year growth [15][14] - Messaging revenue growth was solid, particularly during Cyber Week, contributing to overall strong performance [15] - Software add-on revenue grew over 20% year-over-year, with Verify growing more than 25% for two consecutive quarters [16] - The number of large deals closed (over $500,000) increased by 36% year-over-year, indicating strong demand across business lines [6] Market Data and Key Metrics Changes - Twilio's dollar-based net expansion rate was 109% in Q4, reflecting improving growth trends [16] - The company saw a 34.5% year-over-year increase in messages sent during Cyber Week, with 6.99 billion messages sent [9] - RCS volume grew roughly 5x quarter-over-quarter, indicating strong traction in this area [10] Company Strategy and Development Direction - Twilio aims to be a foundational infrastructure layer in the age of AI, moving beyond just providing communication channels [5] - The company is focused on delivering essential infrastructure powered by contextual data and evolving automation, such as Voice AI, to help customers build personalized relationships [6][12] - A strategic partnership with AEG was established to enhance real-time, personalized communications at live events [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining momentum into 2026, supported by a robust innovation roadmap and strong execution [12][24] - The company anticipates reported revenue growth of 11.5%-12.5% and organic growth of 8%-9% for the full year 2026 [21] - Management acknowledged the impact of increased A2P fees on margins but emphasized that these fees do not affect the ability to generate profit dollars [22][40] Other Important Information - Twilio completed $198 million in share repurchases in Q4 and $855 million for the full year, representing 90% of 2025 free cash flow [19][20] - The company is focused on cost discipline, with a net burn rate of just 1.5% in 2025, well below the target [19] Q&A Session Summary Question: What drove the voice strength in Q4? - Management noted broad adoption across customer cohorts, with strong performance in self-service and ISV channels, as well as direct enterprise use cases [27][28] Question: Can you provide visibility on Q1 guidance? - Management expressed confidence in Q1 guidance, citing broad-based strength in voice and messaging, with both channels growing in the high teens [31] Question: What is driving the growth in messaging? - Management indicated broad-based strength across multiple products, with no specific driver identified, but overall positive trends in messaging [42] Question: How is Twilio positioned against competitors? - Management highlighted differentiated technology and a strong developer experience as key advantages, allowing Twilio to capture market share [52][55] Question: What is the outlook for Voice AI growth? - Management sees strong growth potential in both enterprise and voice AI companies, with enterprise expected to drive long-term growth [59][60]