Direct answer
Twilio's Q2 2026 results: revenue $1.499 billion (22% reported growth, 17% organic), GAAP gross profit $726 million (~48% GAAP gross margin), non-GAAP gross margin ~49%, non-GAAP operating income $285 million (~19% non-GAAP operating margin), operating cash flow ~$372 million, free cash flow ~$353 million (~24% FCF margin), dollar-based net expansion rate 116%. The DBNER improvement from 108% a year earlier is the most significant signal that customers are expanding their use of the platform.
Q2 2026 detailed results
| Metric | Q2 2026 | Notes |
|---|---|---|
| Total revenue | $1.499 billion | Includes all product lines |
| Reported revenue growth (YoY) | 22% | Includes inorganic contributions |
| Organic revenue growth (YoY) | 17% | Excludes inorganic effects |
| GAAP gross profit | $726 million | After carrier and network costs |
| GAAP gross margin | ~48% | Includes stock-based compensation in COGS |
| Non-GAAP gross margin | ~49% | Excludes SBC from cost of revenue |
| Non-GAAP operating income | ~$285 million | Excludes SBC and certain other items |
| Non-GAAP operating margin | ~19% | $285M / $1,499M |
| Operating cash flow | ~$372 million | Cash from operations before capex |
| Free cash flow | ~$353 million | Operating cash flow minus capex |
| Free cash flow margin | ~24% | $353M / $1,499M |
| Dollar-based net expansion rate (DBNER) | 116% | Up from 108% in Q2 2025 |
Why these metrics matter
Dollar-based net expansion rate (DBNER)
DBNER is Twilio's most watched operating metric. It measures what the cohort of customers active 12 months ago is spending today relative to 12 months ago. A DBNER of 116% means the installed base grew 16% through expansion alone, before counting any new customer additions. The improvement from 108% to 116% signals that existing customers are deepening their use of more channels and higher-level platform products rather than simply optimizing their existing usage. A falling DBNER is the most important early warning sign that the platform thesis is under pressure.
Organic vs. reported growth
Reported revenue growth includes acquisitions and divestitures; organic growth strips those out to show the performance of the comparable business. In Q2 2026, organic growth of 17% against reported growth of 22% implies approximately 5 points of inorganic contribution. Investors tracking platform health should focus on organic because it is not inflated by acquisition timing.
Gross margin
Twilio's blended gross margin reflects the mix between low-margin carrier pass-through revenue (where Twilio pays network operators to deliver messages and calls) and higher-margin software products (Segment, orchestration). Rising non-GAAP gross margin over time is the primary financial signal that the platform mix shift is real. Flat or falling gross margin despite revenue growth would suggest that communications usage is growing faster than software, which is the less desirable outcome.
Free cash flow and SBC
Free cash flow is the cash available to reinvest or return to shareholders. Investors should always compare FCF to stock-based compensation because SBC is a real economic cost even though it does not appear in non-GAAP income or FCF. If SBC is consuming a large share of FCF, reported FCF is less meaningful as a measure of shareholder value creation. Twilio's FCF margin of 24% in Q2 2026 represents a major improvement from earlier periods, but investors should verify that FCF growth is outpacing SBC.
How to read Twilio's financials
Primary source: quarterly earnings releases and 10-Q/10-K filings
Twilio publishes a detailed earnings press release on the day of its quarterly results, typically available on the investor relations website at investors.twilio.com. The press release includes GAAP and non-GAAP income statement summaries, a reconciliation between the two, and operating metrics including DBNER.
The quarterly Form 10-Q and annual Form 10-K filed with the SEC contain full financial statements and management's discussion of results, including disaggregated revenue by product category. EDGAR search at sec.gov provides the filed versions.
What to look for in each filing
Revenue disaggregation: Twilio reports revenue by geography and sometimes by product line. Watch for any commentary on the contribution of platform software vs. communications API usage. Gross margin reconciliation: the GAAP to non-GAAP gross margin bridge shows how much of the difference comes from SBC allocated to cost of revenue. Operating cash flow to free cash flow: capital expenditures are typically modest for a software-first business; large capex increases would warrant scrutiny. Share count: diluted share count trends show whether SBC is causing meaningful dilution.
Guidance
Twilio provides quarterly revenue and non-GAAP operating income guidance. Beat-and-raise patterns (actual results above guidance, followed by guidance upgrades) have historically been positive catalysts for the stock. Watch whether organic growth guidance implies acceleration or deceleration from the current quarter.
Five key financial watchpoints
- DBNER direction. Any two consecutive quarters of DBNER decline would be a material warning sign and would require investigation of customer behavior.
- Non-GAAP gross margin trend. Improvement should be gradual and persistent if the platform mix shift thesis is playing out; reversal would undercut the long-term margin story.
- Organic growth consistency. Tracking organic growth over 4-6 quarters provides a cleaner picture than any single quarter; look for stable or improving trends.
- FCF margin vs. SBC ratio. Calculate SBC as a percentage of revenue and compare it to FCF margin. Meaningful improvement in FCF margin with declining SBC as a percentage of revenue is the most credible path to value creation.
- Segment and platform revenue commentary. Direct commentary on Segment ARR growth, engagement product adoption and AI workflow usage is the primary qualitative signal for whether the platform expansion is real and not just a DBNER calculation artifact.
Frequently asked questions
What was Twilio's Q2 2026 revenue?
Twilio reported Q2 2026 revenue of $1.499 billion, up 22% year over year in total and 17% on an organic basis. The 5-point gap between reported and organic growth reflects inorganic contributions from acquisitions or portfolio decisions. Organic growth is the more useful signal for evaluating the health of the core franchise.
What is Twilio's dollar-based net expansion rate?
Twilio's dollar-based net expansion rate (DBNER) was 116% in Q2 2026, up from 108% in Q2 2025. DBNER measures how much the cohort of customers active 12 months ago is spending today. A rate above 100% means the installed base is growing through expansion alone, before counting any new customer additions. The improvement from 108% to 116% signals customers are deepening their use of more channels and higher-level platform products.
What is Twilio's free cash flow margin?
Twilio's free cash flow was approximately $353 million in Q2 2026, a free cash flow margin of approximately 24%. Operating cash flow was approximately $372 million; the difference from FCF reflects capital expenditures. A 24% FCF margin represents a significant improvement from earlier periods of heavy investment. Investors should track FCF alongside stock-based compensation to assess real shareholder value creation.
What is Twilio's non-GAAP operating margin?
Twilio's non-GAAP operating margin was approximately 19% in Q2 2026, with non-GAAP operating income of approximately $285 million on revenue of $1.499 billion. Non-GAAP operating income excludes stock-based compensation and certain other items. Investors should monitor both GAAP and non-GAAP margins together because the gap between them reflects the SBC burden that dilutes shareholders even if it does not appear in non-GAAP operating income.
How does organic growth differ from reported growth at Twilio?
Reported revenue growth includes contributions from acquisitions or divestitures that affect the comparison period. Organic revenue growth strips out these inorganic effects to show the growth rate of the continuing, comparable business. In Q2 2026, Twilio's reported growth was 22% and organic growth was 17%. The 5-point difference reflects acquired revenue that has not yet anniversaried in the comparison period. Organic growth is the cleaner signal for evaluating whether the core platform is gaining traction.