Layer 8 · Software · TWLO
Twilio in the AI stack
The messaging and voice APIs AI agents talk to customers through.
- revenue, the latest four quarters
- $5.6B
- revenue, the latest four quarters
- on the year before
- +18%
- on the year before
- gross margin
- 49%
- gross margin
- operating margin
- 5%
- operating margin
The business and what the filings show
Twilio sells the APIs developers use to send text messages, make and receive calls, send email and verify users, priced mostly on usage. Over its latest four quarters it reported $5.6B of revenue, +18% on the year before, at a 49% gross margin, the fourth-lowest in the software layer because carrier fees for messages and calls run through its cost of revenue, and a 5% operating margin.
AI shows up as a new kind of traffic. AI agents that talk to customers by voice or text need the plumbing Twilio provides, and in November 2025 it bought Stytch, which its 10-K describes as an identity platform for AI agents, for $104.1 million. If businesses put AI agents on their phone lines and messaging channels, more of the conversation volume running through Twilio comes from AI.
The risk is that Twilio is a utility in that chain: valuable, but easy to price against. Its gross margin shows how much of each dollar it keeps after carriers, and its growth shows whether AI traffic adds volume faster than prices fall. Twilio does not tag its capital spending in the standard XBRL field this map reads, so free cash flow is not shown here.
Twilio: quarterly revenue
Per fiscal quarter, labelled by the nearest calendar quarter
Source: Twilio 10-K and 10-Q filings (SEC XBRL).
Show the numbers
| Quarter | Revenue | Gross margin | Operating margin | Capex | Operating cash flow |
|---|---|---|---|---|---|
| Q1 2023 | $1.0B | 49% | −26% | — | −$0.1B |
| Q2 2023 | $1.0B | 49% | −14% | — | $0.1B |
| Q3 2023 | $1.0B | 50% | −11% | — | $0.2B |
| Q4 2023 | $1.1B | 49% | −34% | — | $0.2B |
| Q1 2024 | $1.0B | 52% | −4% | — | $0.2B |
| Q2 2024 | $1.1B | 51% | −2% | — | $0.2B |
| Q3 2024 | $1.1B | 51% | 0% | — | $0.2B |
| Q4 2024 | $1.2B | 50% | 1% | — | $0.1B |
| Q1 2025 | $1.2B | 50% | 2% | — | $0.2B |
| Q2 2025 | $1.2B | 49% | 3% | — | $0.3B |
| Q3 2025 | $1.3B | 49% | 3% | — | $0.3B |
| Q4 2025 | $1.4B | 48% | 4% | — | $0.3B |
| Q1 2026 | $1.4B | 49% | 8% | — | $0.2B |
| Q2 2026 | $1.5B | 48% | 6% | — | $0.4B |
How AI shows up in the numbers
AI shows up at Twilio as usage: calls and messages generated or handled by AI agents, and the identity and verification those agents need. Its filings do not separate AI traffic, so the read is revenue growth against the layer and how specific its earnings releases are about AI-driven volume.
For scale, Twilio’s revenue over the latest four quarters equals 1% of the $566B the five largest buyers spent on capital projects over their latest four quarters. Their capex rose +81% on the year before, while Twilio’s revenue grew +18%: slower than the spending, so it is capturing a smaller share of each new capex dollar, or more of its business sits outside the build-out.
How it talks about AI
In its latest earnings release, furnished to the SEC on October 29, 2026, Twilio mentioned AI 4 times in 683 words of narrative text, about 5.9 mentions per 1,000 words. Of its 2 sentences about AI, 1 included a number: a revenue figure, a growth rate, a customer count or another measurable result. Across the 8 releases we read, back to February 13, 2025, AI mentions per 1,000 words went from 0.0 to 5.9.
Specific claims are easier to check against the numbers than general enthusiasm, which is why the share of AI sentences that carry a figure is worth watching alongside how often AI is mentioned. The sentences below are quoted from the release as published, after removing safe-harbor text and company boilerplate.
- “Consumer AI has accelerated AI development, and its adoption demands fast, reliable infrastructure built for AI speed.”
Source: earnings release (Form 8-K, Exhibit 99.1), October 29, 2026.
The trend in the numbers
Since the start of 2023, Twilio’s largest quarter by revenue was Q2 2026 at $1.5B, and its highest gross margin was 52% in Q1 2024. The latest quarter set the revenue record for the period.
Quarter by quarter, Twilio’s revenue grew +15% in Q3 2025, +14% in Q4 2025, +20% in Q1 2026, +22% in Q2 2026 on the same quarter a year earlier. Growth has been accelerating.
Gross margin in the latest quarter was 48%, against 49% a year earlier, little changed. Operating margin moved from 3% to 6% over the same span. Over the latest four quarters it turned 19% of its revenue into operating cash flow.
Where it sits in the stack
Twilio sits in the software and applications layer of the AI stack. It sits at the top of the stack, where revenue from end customers has to come from; its own spending flows to AI clouds.
Among the 27 companies in this layer on our map, it ranks number 11 by revenue and number 16 of 27 by revenue growth. Its gross margin of 49% compares with 78% for the layer as a whole, so it keeps less of each dollar than the layer average. The full layer analysis is on the software page.
| Company | Revenue | Growth | Gross margin | Operating margin |
|---|---|---|---|---|
| Salesforce CRM | $43.9B | +11% | 77% | 20% |
| Adobe ADBE | $26.0B | +12% | 89% | 36% |
| Intuit INTU | $21.4B | +14% | — | 27% |
| ServiceNow NOW | $15.4B | +22% | 73% | 10% |
| Shopify SHOP | $13.3B | +33% | 48% | 14% |
| Palo Alto Networks PANW | $11.5B | +24% | 70% | 6% |
| Workday WDAY | $10.2B | +13% | — | 11% |
| AppLovin APP | $6.8B | +61% | 88% | 77% |
| Atlassian TEAM | $6.6B | +26% | 85% | 0% |
| Palantir PLTR | $6.2B | +79% | 85% | 43% |
| Twilio TWLO | $5.6B | +18% | 49% | 5% |
| Snowflake SNOW | $5.4B | +32% | 67% | −23% |
| CrowdStrike CRWD | $5.4B | +24% | 75% | −2% |
| Datadog DDOG | $4.0B | +32% | 80% | 0% |
| HubSpot HUBS | $3.4B | +21% | 83% | 4% |
| Zscaler ZS | $3.4B | +25% | 77% | −4% |
| Okta OKTA | $3.1B | +11% | 78% | 8% |
| MongoDB MDB | $2.8B | +25% | 73% | −1% |
| Dynatrace DT | $2.1B | +18% | 81% | 12% |
| Elastic ESTC | $1.8B | +16% | 76% | −3% |
| Pegasystems PEGA | $1.7B | +1% | 76% | 10% |
| UiPath PATH | $1.7B | +15% | 83% | 9% |
| Teradata TDC | $1.7B | +1% | 61% | 8% |
| CCC Intelligent Solutions CCC | $1.1B | +11% | 74% | 18% |
| GitLab GTLB | $1.1B | +23% | 86% | −9% |
| C3.ai AI | $232M | −38% | 29% | −203% |
| SoundHound AI SOUN | $203M | +55% | 42% | −69% |
Latest four quarters for 10-Q filers; latest fiscal year for 20-F filers. Companies under $100 million of revenue are left out.
Against the 27 US-listed companies in its layer, Twilio grew +18% over the latest year versus +19% for the layer combined. It is growing roughly in line with its layer.
What has to go right, and what could go wrong
What has to go right. Businesses have to deploy AI agents on phone and messaging channels at scale, and run that traffic through Twilio rather than through the AI platforms’ own connections.
What could go wrong. If AI platforms connect to carriers directly, or customers treat messaging as a commodity and switch on price, more AI traffic could come with thinner margins.
These describe the conditions the business depends on, as the filings show them. They are not a view on the stock.
Through the lens of Investing in AI
Rob May’s book offers six mental models for telling AI moats from traps. The one most useful for Twilio’s layer is “AI challenges traditional SaaS assumptions”: Per-seat pricing, zero marginal cost, smooth ARR curves, and automatic land-and-expand break down when software does work on your behalf. The mistake is not using SaaS instincts. It is using them automatically.
The question it asks of any company is: What work is this product actually doing, and how does pricing map to it? Applied to Twilio, the filings on this page are the place to start: the margin trend shows whether it holds scarce value or passes it through, the customer and financing disclosures show who it depends on, and the commitments show what it has promised before the revenue arrives.
Customers and concentration
US companies must disclose any customer that accounts for 10% or more of revenue, and foreign filers usually describe their largest customers. Concentration matters because a company’s growth is only as durable as the handful of buyers behind it, and in the AI stack those buyers are often the same few companies.
- “ended December 31, 2025, 2024 and 2023, no customer organization accounted for more than 10% of the Company’s total revenue.” 10-K, February 24, 2026
Commitments and backlog
- Backlog. Twilio reports $138M of remaining performance obligations, less than a tenth of its revenue over the latest four quarters: contracted revenue not yet earned.
- Purchase commitments. $349M of unconditional purchase obligations as of December 31, 2025 (10-K): what it has contracted to buy from its own suppliers.
What to watch
Twilio’s next quarterly report will cover the quarter ending around September 29, 2026. Large companies must file a 10-Q within 40 days of a quarter’s end and a 10-K within 60 days of the fiscal year’s end, so the new figures should arrive by about November 28, 2026 at the latest. This page, the layer pages and the next quarterly report all update from that filing.
- Revenue growth against the layer: AI agents on voice and messaging should show as usage.
- Gross margin, which shows its pricing power against carrier costs.
- Whether its releases quantify AI-driven volume or customers.
- Its place in the next quarterly AI Stack Report, which updates every company on the map from the new filings.
Figures from Twilio’s SEC filings, latest period ended June 30, 2026. Other companies: all company pages.
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Questions about Twilio
What was Twilio’s revenue?
Twilio reported $5.6B of revenue over the latest four quarters (to June 30, 2026), +18% on the year before, according to its SEC filings.
How profitable is Twilio?
Over the latest four quarters, Twilio’s gross margin was 49% and its operating margin was 5%. It generated $1.1B of operating cash flow.
Who are Twilio’s biggest customers?
Twilio reports that no single customer accounted for 10% or more of revenue in its latest annual report.
Where does Twilio sit in the AI stack?
In the software and applications layer: messaging and voice APIs that AI agents talk through. Salesforce, ServiceNow, Palantir, Adobe and the rest: the layer whose customers have to pay for AI if the spending below is to earn a return.
How much does Twilio spend on capital projects?
Twilio doesn’t tag its capital spending in the standard XBRL field we read, so we don’t show a figure; its cash-flow statement lists it. It generated $1.1B of operating cash flow over the latest four quarters.
Does Twilio have a backlog?
Yes. It reports $138M of remaining performance obligations, revenue under contract that it has not yet earned, equal to less than a tenth of its revenue over the latest four quarters.
Does Twilio have financing links with its customers or suppliers?
None of the filings we read discloses an investment, guarantee, warrant, capacity buy-back or long power contract between Twilio and another company on our map.
Research and education, not investment advice: nothing here is a recommendation to buy or sell any security. Figures come from companies’ SEC filings as reported; companies named were chosen because they show how the stack works, not as a view on their shares.