stockrowWhat it does
Twilio provides software that businesses use to communicate with their customers. Its tools let developers add messaging, phone calls, email and video to applications rather than build those communications systems themselves. Customers range from small businesses to large enterprises across many industries.
The company’s application programming interfaces, or APIs, are connections that let other software use Twilio’s services. A retailer, for example, can use Messaging to send order confirmations, while a business can use Voice to handle calls through an application or contact center. Twilio also sells software for marketing campaigns, user verification and customer service.
Segment, its customer data platform, combines information from different points in a customer’s journey into a profile. Businesses can use that data to create audiences and coordinate communications across channels. Twilio’s Super Network connects communications networks and inbox providers around the world to help deliver those interactions.
Twilio is adding AI-related capabilities to its platform, including tools for voice conversations and an identity offering intended to help businesses validate whom an AI agent represents. The identity product is in private beta, and Twilio has not yet settled on its monetization model.
Founded in 2008, Twilio is headquartered in San Francisco. Khozema Shipchandler is chief executive officer.
How it makes money
Twilio generates revenue through usage-based and subscription fees. Messaging, Voice and user authentication are primarily usage-based: customers pay as they use the services. Messaging charges are generally tied to the number of texts sent or received, while Voice charges are generally based on call duration. Email and Segment are primarily subscription products, with revenue recognized over the contract term.
Many usage-based customers sign up through self-service, prepay by credit card and draw down their balance as they use the platform. Pricing generally follows a published schedule with discounts at higher usage levels. Larger customers can negotiate contracts, often with minimum revenue commitments, and are typically invoiced monthly after use. Subscription contracts generally run for one to three years and are usually invoiced in advance.
In 2025, usage-based fees generated 74% of revenue and non-usage-based fees generated 26%. Messaging was the largest product category, with $2.9 billion in FY2025 revenue, or 56.8% of the total. Voice generated $615.7 million and Segment generated $303.3 million. Segment is a product category; Twilio operates as one reportable segment.
In 2025, revenue grew 14% year over year; in Q3 2026, revenue was $1.56 billion, up 20% year over year.
Usage can change with customer activity and economic conditions. Twilio also experiences seasonal demand from increased consumer activity in the fourth quarter. Carrier fees passed through at cost add equal amounts to revenue and cost of revenue, without adding gross profit.
| Product or service | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Messaging | $2.9 billion | 56.8% | 18.2% |
| Other | $746.5 million | 14.7% | 7.65% |
| Voice | $615.7 million | 12.1% | 13.4% |
| $523.5 million | 10.3% | 7.21% | |
| Segment | $303.3 million | 5.98% | 1.87% |
Customers and how it sells
Twilio serves organizations ranging from small and medium-sized businesses to large enterprises. As of December 31, 2025, it had over 402,000 active customer accounts. An organization can have multiple accounts, and Twilio notes that many accounts have relatively low individual spending. Its ten largest active customer accounts generated 9% of total revenue in 2025.
Customers can adopt Twilio through self-service, a direct sales team or partners. Developers can use documentation and APIs to build communications into applications themselves. Larger organizations can work with sales and technical teams, while software vendors can build services on Twilio’s APIs and resell them. Consulting partners and systems integrators can help customers that lack development resources.
In FY2025, United States revenue was $3.2 billion, or 64.1% of revenue. International revenue was $1.8 billion, or 35.9%. Twilio assigns geography based on the customer’s IP address or mailing address at registration.
In Q3 2026, Mira AI expanded from messaging into voice and Twilio’s conversations layer. Chapter signed a deal to move its contact center onto Flex, and Gong signed a deal to continue using voice and software add-ons.
| Region | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| United States | $3.2 billion | 64.1% | 12.0% |
| International | $1.8 billion | 35.9% | 16.7% |
Suppliers and costs
Twilio’s cost of revenue consists primarily of fees paid to network service providers. Those arrangements include fees based on call and message volumes and the telephone numbers Twilio acquires for customers. The company also pays cloud infrastructure providers based on server capacity consumption. Neither individual suppliers nor sole-source suppliers are identified here.
Other costs of revenue include customer-support personnel, data center and hosting equipment, and amortization of software development costs and acquired intangible assets. Personnel costs—including salaries, benefits, commissions, bonuses and stock-based compensation—are the most significant components of operating expenses.
A major U.S. mobile carrier increased application-to-person messaging fees in June 2025, and other major carriers followed with increases effective in January and April 2026. Twilio passes those fees through to customers at cost. The additional fees leave gross profit unchanged but reduce the gross margin percentage; product mix and the balance between U.S. and international messaging also affect margins.
- Revenue$5.1B
- Cost of revenue−$2.6B
- Research and development−$1.0B
- Selling, general and administrative−$1.3B
- Other operating costs−$16.9M
- Operating income$157.8M
Competitive position
Twilio competes with communications platform providers, regional network service providers, customer relationship and customer experience vendors, standalone customer data platforms and other software companies. The company identifies no individual competitors in its competitive-market description. Twilio expects competition to intensify as new products and market entrants appear.
Customers compare offerings on factors including reach, ease of integration, features, reliability, security, support and cost. Twilio says none of its competitors currently competes directly with it across all its product offerings. Its platform combines communications APIs, customer data and software, and its Super Network connects communications networks and inbox providers around the world.
Our reading: The breadth of those connections and the ability to embed Twilio’s APIs in customer applications provide a meaningful competitive position, although the evidence does not establish how difficult it is for every customer to switch. Our reading: The combination of communications and customer data can support cross-selling, but competition across separate product categories limits the protection that breadth alone provides.
Twilio also has developer documentation, self-service tools and partner-led distribution. Its products can be used individually or together, and existing customers can extend a product to new applications or adopt additional products.
Growth opportunities
Twilio’s growth has come predominantly from acquiring customers and from existing customers increasing usage, extending products to new applications or adopting additional products. In 2025, revenue grew 14%, primarily because existing customers used more of its products and new accounts contributed revenue. The dollar-based net expansion rate was 108% for the year.
The company is investing in a unified platform that brings communications, customer data and AI together. Its plans include product innovation, cross-selling, stronger software-vendor and reseller relationships, improved self-service and international expansion. It is also investing in AI-enabled features and internal automation.
In Q3 2026, revenue grew 16% organically year over year, excluding incremental U.S. carrier pass-through fees. Messaging revenue grew 24%, with incremental carrier fees contributing roughly seven points of that growth. Twilio’s dollar-based net expansion rate was 114% in the quarter, including roughly four points from incremental carrier fees.
Twilio is developing a conversations layer and has launched its agent identity offering in private beta. It intends to make the identity offering generally available next year. For full-year 2026, Twilio raised its organic revenue growth outlook to 15% and its reported revenue growth outlook to 20%. For 2027, it expects organic revenue growth of at least 10%.
- $2.8BFY2021
- $3.8BFY2022
- $4.2BFY2023
- $4.5BFY2024
- $5.1BFY2025
Structural risks
- Usage and demand: Most revenue comes from usage-based fees, so changes in customer activity can quickly affect results. Consumer spending and macroeconomic conditions can affect usage, while seasonal demand can make revenue vary between quarters.
- Carrier costs and margins: Network service provider fees are a major cost. Carrier fee increases passed through at cost add revenue but reduce the gross margin percentage. International messaging also has lower gross margins than U.S. messaging.
- Competition and technology: Twilio operates in rapidly evolving markets and expects competition to intensify. It must develop products that gain acceptance and adapt to changing technology, regulations and industry standards.
- Security and regulation: Breaches affecting Twilio or its service providers, and failure to comply with privacy, data protection, cybersecurity or telecommunications rules, could harm the business. Changes in enforcement or interpretation can increase compliance costs.
- Network dependence and misuse: Twilio relies on network and internet service providers for connectivity. Fraudulent or illegal use of its products and standards imposed by inbox providers can also interfere with its operations.
Bottom line
Our reading
Twilio is a communications infrastructure business with recurring subscriptions alongside a larger usage-based revenue stream. Its network connections, developer tools and customer data products give it several ways to serve and expand within accounts, but usage can fluctuate and carrier fees affect reported margins. The company’s AI products offer another avenue for expansion, although the agent identity offering remains in private beta and its pricing model is unresolved.