Twilio Inc (NYSE:TWLO) , the customer communications platform, reported third-quarter revenue of $1.56 billion, up 20% and ahead of the $1.52 billion analysts expected, but its shares fell 18% as slowing growth caused concern for investors.
Adjusted earnings per share, which exclude certain items, were $1.65, beating the analyst estimate of $1.47 and up from $1.25 a year earlier.
Organic revenue, which excludes A2P messaging revenue and acquisition revenue, grew 16%, while earnings per share under generally accepted accounting principles (GAAP) were $1, up from $0.23.
Fourth-quarter revenue guidance of $1.595 billion to $1.605 billion implies organic growth of 11% to 12%, a slowdown from 16% in the third quarter.
Adjusted earnings per share guidance for the fourth quarter is $1.48 to $1.53, below the $1.65 reported for the third quarter.
Adjusted operating income rose 39% to $326 million, a 21% margin, while GAAP operating income was $149 million, up 263% from a year earlier.
Free cash flow, calculated after deducting capitalized software development costs and purchases of long-lived assets from operating cash flow, was $370 million, up from $248 million a year earlier, while operating cash flow reached $389 million.
The dollar-based net expansion rate, which measures how much existing customers increase spending, rose to 114% from 109% a year earlier.
Twilio raised its 2026 revenue growth outlook to 20% from 18% to 18.5%, and its organic growth outlook to 15% from 13% to 13.5%.
It also raised its adjusted operating income and free cash flow outlooks to $1.19 billion to $1.20 billion each, from $1.135 billion to $1.155 billion.
Twilio repurchased $127.2 million of shares in the quarter and has about $700 million left on its $2 billion buyback authorization.
