01—Abstract
Summary
Summary of the 10-Q filed August 7, 2026. Cited figures are marked; the original filing is the authoritative source.
Twilio Inc. reported second-quarter 2026 revenue of $1,499.1 milliona, up 22% from $1,228.4 million in the prior-year quarter, with the filing attributing the increase to higher usage from existing customers (DBNE of 116%, versus 108% a year earlier), $75.7 million from newer customer accounts, and $71.1 million from incremental A2P fees introduced by major U.S. carriers.
Gross profit rose to $725.9 millionb from $602.7 million, though gross margin declined to 48% from 49%. Income from operations was $84.5 million, compared with $37.0 million, after a $32.8 million impairment loss on prepaid network services tied to two network service providers' operational and financial challenges. Net income attributable to common stockholders was $1,067.2 million for the quarter, or $6.68 per diluted share, versus $22.4 million ($0.14 per diluted share) a year earlier.
The result was driven primarily by a $944.1 millionc income tax benefit from releasing a significant portion of the U.S. deferred tax asset valuation allowance, which the company concluded is more likely than not realizable based on three years of cumulative U.S. profitability. Excluding this one-time benefit, the filing's income before taxes was $75.5 million for the quarter. Balance sheet and cash flow remained steady.
As of June 30, 2026, the company held $823.3 milliond in cash and cash equivalents and $1.8 billion in short-term marketable securities against $993.2 million of long-term debt (2029 and 2031 Senior Notes). Net cash from operating activities for the six months was $525.6 million, and the company repurchased $319.4 million of stock in the six months, leaving approximately $826.0 million under its January 2025 authorization.
02—Key points
Key Highlights
- Q2 2026 revenue of $1,499.1 million, up 22% year over year; DBNE of 116% versus 108% in Q2 2025
- Net income of $1,067.2 million ($6.68 diluted EPS) included a $944.1 million income tax benefit from releasing U.S. deferred tax asset valuation allowance
- Income from operations of $84.5 million, up from $37.0 million, after a $32.8 million impairment loss on prepaid network services
- Gross margin of 48% versus 49% a year earlier, with $71.1 million of quarterly revenue from incremental A2P fees passed through to customers at cost
- Six-month operating cash flow of $525.6 million; free cash flow for Q2 of $352.6 million (free cash flow margin 24%)
- Cash and cash equivalents of $823.3 million and short-term marketable securities of $1.8 billion against $1.0 billion of senior notes
- Repurchased $66.0 million of stock in Q2 and $319.4 million year to date; approximately $826.0 million remains under the $2.0 billion program expiring December 31, 2027
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Twilio kept $0.71.
- Revenue$1.50B100.0%
- Cost of revenue−$773.2M51.6%
- Gross profit$725.9M48.4%
- Operating costs−$641.3M42.8%
- Operating income$84.5M5.6%
- Interest, other & tax$982.7M65.6%
- Net income$1.07B71.2%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed August 7, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $1.50B$1.23B | +22.0% |
| Cost of Revenue | $773.22M$625.68M | +23.6% |
| Gross Profit | $725.87M$602.74M | +20.4% |
| R&D Expenses | $273.32M$243.50M | +12.2% |
| Operating Expenses | $641.32M$565.75M | +13.4% |
| Operating Income | $84.55M$36.99M | +128.6% |
| Net Income | $1.07B$22.42M | +4659.4% |
| EPS (Basic) | $6.99$0.15 | +4560.0% |
| EPS (Diluted) | $6.68$0.14 | +4671.4% |
| Shares Outstanding (Basic) | 152.79M153.23M | −0.3% |
| Shares Outstanding (Diluted) | 159.71M159.69M | 0.0% |
05—Questions
Frequently Asked Questions
Why was net income so much higher than operating income this quarter?
Net income of $1,067.2 million was driven mainly by a $944.1 million income tax benefit from releasing a significant portion of the valuation allowance on U.S. deferred tax assets. The company concluded that it is more likely than not that most of these assets will be realized, based on sustained U.S. profitability over three cumulative years. Income before taxes was $75.5 million for the quarter.
What drove the revenue growth in the second quarter?
Revenue increased $270.7 million, or 22%, primarily due to increased usage by existing customers (DBNE of 116%), an increase of $75.7 million from customer accounts not captured in DBNE calculations, and $71.1 million from incremental A2P fees introduced by major U.S. carriers, which the company passes through to customers at cost.
What was the $32.8 million impairment loss?
The company determined it would be unable to consume certain network services it had prepaid in earlier periods, due to operational and financial challenges experienced by two network service providers. The loss is recorded in operating expenses and the filing states it has no impact on free cash flow and will not affect future periods' results.
How is the company's debt and liquidity position?
Long-term debt, net, was $993.2 million as of June 30, 2026, consisting of 3.625% Senior Notes due 2029 and 3.875% Senior Notes due 2031, each with $500.0 million principal. Cash and cash equivalents totaled $823.3 million plus $1.8 billion in short-term marketable securities. The company stated it was in compliance with all debt covenants and expects its cash and cash flows to be sufficient for the next 12 months and beyond.
How much has the company returned to shareholders through buybacks?
In the six months ended June 30, 2026, Twilio repurchased 2.6 million shares for an aggregate purchase price of $319.4 million. Approximately $826.0 million remained available under the $2.0 billion program authorized in January 2025, which expires December 31, 2027.
06—Continue