Good day, and thank you for standing by. Welcome to Twilio's third quarter 2026 earnings conference call. At this time, we are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today, Rodney Nelson. Please go ahead.
Good afternoon, everyone, and thank you for joining us for Twilio's third quarter 2026 earnings conference call. Joining me today are Khozema Shipchandler, Chief Executive Officer, Aidan Viggiano, Chief Financial Officer, and Thomas Wyatt, Chief Operating Officer. As a reminder, we will disclose non-GAAP financial measures on this call. Definitions and reconciliations between our GAAP and non-GAAP results can be found in our earnings presentation posted on our IR website at investors.twilio.com. We will also make forward-looking statements on this call, including statements about our future outlook and goals. Such statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those described. Many of those risks and uncertainties are described in our SEC filings, including our most recent Form 10-K and our forthcoming Form 10-Q. Forward-looking statements represent our beliefs and assumptions only as of the date such statements are made.
We disclaim any obligation to update any forward-looking statements except as required by law. With that, I'll hand it over to Khozema and Aidan, who will discuss our Q3 results, and then we'll open the call for Q&A.
Thanks, Rodney. Good afternoon, everyone, and thank you for joining us today. Twilio had a great third quarter. Revenue grew 16% organically while non-GAAP gross profit grew 18% year- over- year. We generated $326 million in non-GAAP income from operations and $370 million in free cash flow, record quarters for both. We are in the very early stages of an AI super cycle. Voice and consumer AI have gained early traction, but penetration is still extremely low. This bodes very well for Twilio. Developers and enterprises alike choose Twilio because of our fast, trusted, and reliable infrastructure that works seamlessly with their existing technology stacks. Customers grow with Twilio because we provide global scale and rich context and integrate to virtually any technology as companies continue experimenting with which AI environments are optimally tuned for their purposes.
In short, we provide fast ROI so our customers can take advantage of the incredible innovation spurred by AI today and the inevitable innovations to come tomorrow. The leading voice in consumer AI companies are using our platform to power the first wave of agentic experiences. While the growth rates of these companies are incredible and the technology is awesome, as consumers, most of us have limited interactions with both voice and consumer AI in daily life. Part of this is just the natural adoption cycle, which should create enormous tailwinds for the company. Part of this has to do with trust, knowing who or what an agent represents, and always understanding what it is doing, why, and for how long. Finally, ROI has been hard to come by. This is a good setup for Twilio. We are building a company to accelerate AI adoption.
We have long provided a context layer that allows every customer to utilize personalized data to enrich every interaction with the consumer, yielding increased revenue and lower cost, plus a better consumer outcome. We have also provided tools such as Branded Calling and verification capabilities, which lead to higher conversion rates plus reinforced trust. At our SIGNAL conference, we included all of these capabilities in a massively simplified console that is easier than ever for developers to utilize and purpose-built for agents as tools like frontier models and vibe coding applications take off. In addition, we wrapped all of these offerings together so customers can utilize what they need, basic infrastructure, data-hydrated channels, or a complete solution such as Conversation Relay, which remains technology agnostic at the application layer, allowing customers to make their own technology decisions while ensuring easy integration to our technology partners.
We launched these capabilities as part of a broader Conversations layer, which is gaining real momentum in the marketplace. More recently, we launched an identity offering into private beta, so businesses are able to safely validate who an agent is representing, irrespective of the AI modality they utilize, application, channel, or technology protocol. While it is extremely early, we have been encouraged by customer feedback and intend to launch an offering into general availability next year. The breadth of the AI opportunity was particularly evident at our annual Exec Connect customer event that we hosted a few weeks ago for top executives from Twilio's largest customers. The input from customers was encouraging relative to our recent releases and product roadmap. Businesses need trusted channels. They need global scale. They need context. They need higher conversion rates. Increasingly, they need secure identity, governance, and observability.
They want Twilio to help them innovate at AI speed. Our results reflect this demand. In Q3, we saw continued strong growth in self-serve and ISVs, as well as ongoing strength in voice and messaging. Our go-to-market team landed notable wins, including our first eight-figure conversations deal with a health insurance provider. This company's voice AI agent is powered by Conversation Relay and Conversation Intelligence's real-time transcription to enhance call tracking and reduce agent wrap-up time. We also signed deals with Chapter, Eltropy, ElevenLabs, Gong, HUGO BOSS , Meera AI, Rivian, and Ushur. Our customers continue to expand their usage of the platform across multiple products as their customer needs become more complex, and revenue growth from multi-product customers continues to outpace our corporate average.
For example, Meera AI, an AI reachability platform connecting humans and AI agents with hard-to-reach consumers, expanded their messaging use case to include voice and our Conversations layer. They are using both to coordinate multi-channel outreach, preserve conversation context, and support consultative sales Conversations with proper lead qualification. Or Ushur, the AI-native platform for agentic customer experiences in healthcare, insurance, and the public sector, signed a seven-figure expansion with Twilio. Ushur uses Twilio voice, messaging, and WhatsApp for multi-channel engagement and is expanding its voice AI capabilities with Conversation Relay. Major health plans use Ushur to engage millions of members through multilingual, two-way conversations and have achieved 3x higher Medicaid re-enrollment completion rates compared with human-led outreach. Beyond Medicaid, Ushur's AI agents resolve inquiries and complete complex customer journeys end to end, with customers automating 20% or more of inbound call volume.
Another example is Gong, the leading revenue AI company, which signed a seven-figure deal to continue using voice and other software add-ons for Gong Engage, its AI-powered sales engagement solution. Or Eltropy, an agentic AI platform for credit unions and community banks, which has invested in Twilio's Conversations layer, and its voice agents now resolve up to 70% of routine member calls on their own. In Q3, the company signed an expansion deal to use both RCS and Branded Calling to improve its trusted customer interactions across multiple channels. Finally, Chapter, a consumer services company, signed a seven-figure deal to migrate its contact center onto Flex, standing up a fully live deployment in a matter of weeks as part of a broader move to make Twilio the backbone of its customer service operations.
In addition, they will leverage messaging, voice, and software add-ons like Branded Calling to power a multi-channel experience for their customers. With these customer examples, you can see the power of Twilio. Consumers dictate the terms of how they want businesses to engage with them, in their preferred channels and at their preferred time. They want the ability to seamlessly escalate an interaction to a human agent whenever they want. This richness and flexibility requires significant breadth in technology capabilities. Our innovative platform continues earning validation from analysts as we were named a major player in IDC's 2026 Conversational Intelligence and Analytics MarketScape during the quarter. Over the past three years, we have accelerated revenue and gross profit growth, increased operating leverage, generated substantial free cash flow, and reduced dilution. We operate from a position of strength.
We are committed to creating great financial outcomes for investors and also have the capacity to invest organically and move nimbly on capital allocation, whether additional share repurchases or M&A. We will continue to innovate with focus, discipline, and rigor, anticipating our customers' needs so they can focus on building their companies. We have been building Twilio for this moment. Since inception, we provided essential technology infrastructure that accelerated customers through a variety of technology cycles. Today, our newest generation of technology allows another wave of companies in the AI era to move faster than ever. We continue to see an incredibly meaningful set of problems to solve on behalf of our customers in a landscape that is moving fast. We have the financial strength, trusted infrastructure, and innovation wherewithal to win through any cycle. With that, I will turn it over to Aidan.
Thank you, Khozema, and good afternoon, everyone. Twilio had a great Q3, delivering record revenue of $1.56 billion, up 20% year-over-year on a reported basis, and 16% year-over-year on an organic basis, which excludes incremental U.S. carrier passthrough fees. Non-GAAP gross profit grew 18% year-over-year. We also generated record non-GAAP income from operations of $326 million and record free cash flow of $370 million. Top-line performance was driven by broad-based strength across our product portfolio and key go-to-market focus areas. Our self-serve channel delivered 30%+ revenue growth, while ISV revenue grew 20%+ . Messaging revenue growth was 24%, driven primarily by strong volumes and aided by growth in WhatsApp and RCS. Incremental carrier fees contributed roughly 7 points to messaging's growth. Voice revenue grew 20%+ , once again, driven by a balance of volume growth and software add-ons.
We continue to see strong growth from AI natives and adoption of software add-ons such as Branded Calling, Conversation Intelligence, Conversation Relay, and Verify. Finally, total software add-on revenue growth was 25%+ , and support and services grew 30%+ . Our Q3 dollar-based net expansion rate was 114%, reflecting the improved growth trends we've seen in our business over the last several quarters. Incremental carrier fees contributed roughly 4 points to DBNE. We delivered record non-GAAP gross profit of $768 million, growing 18% year-over-year, our third consecutive quarter of 15%+ non-GAAP gross profit growth. This was driven by continued momentum in our higher-margin products, in addition to our proactive efforts to deliver meaningful cost efficiencies across our platform. Non-GAAP gross margin was 49.2%, down 90 basis points year-over-year and up 20 basis points quarter-over-quarter.
We incurred incremental U.S. carrier passthrough fees of $53 million, which drove the year-over-year decline. Without these incremental fees, non-GAAP gross margin would have been up 80 basis points year-over-year and up 30 basis points quarter-over-quarter. Q3 non-GAAP income from operations came in ahead of expectations at $326 million, up 39% year-over-year and our fastest growth rate in over two years, driven by strong gross profit growth and continued cost leverage. Non-GAAP income from operations benefited from roughly $11 million in platform credits, which was higher than we anticipated. Non-GAAP operating margin was 21%, up 290 basis points year-over-year and up 190 basis points quarter-over-quarter. Our Q3 non-GAAP operating margin includes a roughly 70 basis point headwind from incremental U.S. carrier fees. We generated $149 million in GAAP income from operations, up 263% year-over-year.
Q3 stock-based compensation as a percentage of revenue was 9.9%, down 230 basis points year-over-year and up 40 basis points quarter-over-quarter. We generated record free cash flow of $370 million in the quarter. Additionally, we completed $127 million in share repurchases in Q3 and have roughly $700 million remaining on our current buyback authorization. Turning to guidance. For Q4, we're initiating a revenue target of $1.595 billion-$1.605 billion, representing 17%-17.5% reported growth and 11%-12% organic growth. Our Q4 reported revenue guidance assumes approximately $75 million in incremental U.S. carrier fees. As a reminder, our organic revenue excludes the contribution from incremental increases to U.S. carrier fees and acquisition-related revenue.
In addition, we expect non-GAAP gross profit growth to be similar to organic revenue growth in Q4 due to higher hosting costs for the holiday shopping season and with our email cloud migration now behind us. Based on our year-to-date performance and our Q4 guidance, we are raising our full year 2026 organic revenue growth outlook to 15%, up from 13%-13.5% previously. We are raising our reported revenue growth outlook to 20%, up from 18%-18.5% previously. In addition, we continue to expect full year non-GAAP gross profit growth to be similar to our organic revenue growth rate. Our full year revenue guidance assumes approximately $245 million in incremental passthrough revenue from U.S. carrier fees. As a reminder, while the passthrough fees have no impact on our gross profit, income from operations, or free cash flow dollars, they do impact our margin rates.
For modeling purposes, we would expect the incremental fees to reduce our full year 2026 non-GAAP gross margin by roughly 200 basis points when compared with our full year 2025 non-GAAP gross margin, all else equal. Turning to our profit outlook. For Q4, we expect non-GAAP income from operations of $300 million-$310 million. We are raising our full year 2026 non-GAAP income from operations range to $1.19 billion-$1.2 billion, up from $1.135 billion-$1.155 billion previously. Similarly, we are raising our full year free cash flow guidance to $1.19 billion-$1.2 billion. Before we open the call for questions, we also wanted to provide a preliminary outlook for 2027. We have delivered nine consecutive quarters of double-digit organic revenue growth alongside consistent operating leverage and are in a strong position heading into the year end.
Based on the trends we see in the business, we expect full year 2027 organic revenue growth of at least 10%, well above our 2025 Investor Day framework of 7%-8% annual organic revenue growth. We expect 2027 non-GAAP gross profit growth to be similar to organic revenue growth. Turning to profitability, we expect 2027 non-GAAP income from operations of at least $1.35 billion, above our most recent guidance of at least $1.23 billion, which we provided on our Q4 2025 earnings call. We also expect free cash flow of at least $1.35 billion. We will provide more commentary on our fiscal 2027 outlook on our Q4 2026 earnings call. Finally, Twilio will host an Investor Day in conjunction with our upcoming SIGNAL conference taking place in San Francisco on April 13th and 14th, 2027.
I am very pleased with the strong revenue and gross profit growth we delivered in the third quarter, as well as our ongoing financial discipline that is driving strong profitability and free cash flow. We remain focused on our key go-to-market initiatives and on delivering the essential infrastructure that will help our customers win in the AI era. With that, we will now open it up for questions.
Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please wait while we compile the Q&A roster. Our first question comes from the line of Elizabeth Porter from Morgan Stanley. Elizabeth, your line is open.
Hi. Thank you so much for the question. I just had a first question, just in the first half of the year, you saw organic revenue growth outperform guidance by a bit of a larger than normal magnitude in the first two quarters, whereas the magnitude of beat now is just a little bit more modest and more normalized in Q3. Could you help us unpack what drove the upside relative to your expectations this quarter? Were there any tailwinds that particularly benefited growth in the first half of the year that began to change in Q3, and how that trends through Q4? Thank you.
Yeah. Thanks, Elizabeth. I want to make a couple points on that. First, as we have said kind of consistently, since the last earnings call, we didn't and still don't expect 5%+ beats, that we saw in both the first and second quarter to be the new normal. We beat the Q3 guidance, high end of our guidance, by roughly 4 points. Over the last three or so years, if you look at our quarterly beats, they kind of range from 2%-4%, so kind of just in the mix there. When you look at this quarter, I'd say the smaller revenue beat in the quarter was primarily driven by messaging, which decelerated modestly from 18% growth in Q2 to 17% organic growth in Q3.
The rest of the business, if you look at voice, the software add-ons, the self-serve business, they kind of grew consistently quarter to quarter. A modest deceleration in messaging, and that is our biggest product at about 60% of our revenue, and that's really what the primary driver was.
Thank you. Our next question comes from the line of Alex Zukin of Wolfe Research. Alex, your line is open.
Yeah. Hey, guys. Thanks for taking the question. I guess maybe on the point about messaging decelerating slightly, we're seeing all of the personal agent kind of stuff going on between multiple vendors. What is the tailwind there, if any, for Twilio? When would you start to see that show up? And then maybe, what is Twilio's right to win in this kind of compliance, identity, space, and maybe any reason that, given some of the incremental products that you're putting out there and the success of the initiatives, with Conversation, any reason why gross profit growth shouldn't outpace organic revenue growth next year?
Alex, let me start a little bit on messaging. It wasn't your direct question, but as we look at the quarter and the deceleration that we saw, the primary driver of that was the ISVs. They did moderate a bit as we started to lap tougher comparisons. Back in the third quarter of 2025, that's when we saw that sales segment kind of accelerate above 20%. So the messaging deceleration was really just a tougher comparison relative to the first half of the year. I'll hand it over to Khozema to talk about consumer agents.
Yeah. Alex, I would say on the consumer agent side, we definitely have a right to win. It's been a few weeks, obviously, since all of these different agent platforms have launched. We're working with all the leading companies. I'm not going to get into specific names, but you can take some signal from that. From our perspective, it's very much on the come, but it's going to take some time. The way that we characterized Voice AI in our prepared remarks is that it's about a percent of what the voice interactions are so far. That's very under-penetrated, which means that there's a lot of tailwind on the come. As it relates to consumer AI, it's a fraction of that. So again, I think there's a lot of activity that's on the come, and I think we'll be a beneficiary of that.
We are very excited about what is coming and what is still developing, and I think honestly, fragmentation is actually relatively useful for us here as well. That kind of goes to identity. In the identity space, I think it is just a natural add-on for many of the things that we are already doing. We are already in the transactional flow. As I said a moment ago, there is a lot of fragmentation. I think the idea of having every one of these agents, if you are the consumer, being validated on the way in and having a neutral party be able to adjudicate that is kind of the idea behind it, and the customers that we have spoken to are very excited about the prospect of that.
Similarly, business adoption has been slow so far, but as it starts to pick up, they are going to require the same technology, and so that kind of works both ways, which is why we are excited about it. Then I think over time, you are right that Conversations or some of the other products, they will help with respect to gross margins and gross profits.
But I think as Aidan has said very consistently over the last many years, messaging is really the weight of the business, and the growth characteristics of messaging, just given that it is structurally lower, they tend to drive the overall margin rate of the business. But on balance, when you start to exclude fees and some stuff like that, we have been doing pretty well from a margin perspective, and I would attribute it to some of our more software-like products, if you will.
Thank you very much. Our next question comes from the line of Taylor McGinnis. Taylor, your line is open.
Yeah. Hi. Thanks so much for taking my question. Maybe Aidan, one for you, and then Khozema, one for you. Aidan, just on despite the decel in messaging, if I look at the 4Q organic growth guide, it is very similar to how you guided 3Q. So could you just maybe walk through some of the drivers of that? I know there is the holiday season. There tends to be a seasonal uptick in the messaging business. So could you just walk us through the guide there? Then secondly, Khozema, for you guys mentioned a bunch of big voice wins, and it sounds like momentum up the pipeline is going really well, but you made the comments about it still being early and some of the stuff taking time.
So just in comparison to the over 20% growth, when could we reach that inflection point, and where are we with customers in that? Thank you.
Thanks, Taylor. I'd say on the guide, we're really encouraged by the revenue trends, the performance that we've seen in the business, both in terms of volumes, but as well as our go-to-market execution. And importantly, it's been really broad-based. Messaging did decel a point. But when you look at the guidance trends, we're guiding to 11%-12%, that's consistent with Q3, but that's our strongest quarterly revenue guidance in several years. So we feel pretty good about that. Now, that said, consistent with how we've guided for the last few years, and as you know, we continue to plan prudently. We are a usage-based business. Q4 is a more volatile quarter for us, just given holiday seasons and things like that. And as I said earlier, we've historically kind of delivered organic revenue beats of 2%-4%.
We view that range as more the norm than kind of what we saw in the first half of the year. Beyond that, I wouldn't really call out anything unusual for Q4.
Taylor, with respect to the voice wins and kind of the overall momentum, it's definitely progressing well from our perspective. It's definitely driven some of the elevated growth that you see on the voice channel. That's been very exciting, obviously, for us, and it's great to see that channel doing so well. I think in terms of broader, more mainstream adoption, I think a lot of that is still on the come. The customers that tend to drive the biggest volumes tend to be in regulated industries. Traditionally, financial services, healthcare, and insurance, those three in particular drive a lot of volume. I think they're still experimenting a lot, heavily with AI, but I think once they adopt some of these Voice AI use cases, then you'll start to see it really pick up.
For now, it's predominantly been retail, e-commerce, food service, stuff like that, and obviously you've seen some pickup in customer service as well. As I mentioned in my answer to the prior question, it's still 1% penetration in terms of the total available voice minutes out there. From our perspective, this is a great setup, right? We have 99% of it to go in a market that's probably growing, and so there's just a lot of tailwind here and a lot of growth available for Twilio.
Thank you very much. One moment. Our next question comes from Samad Samana of Jefferies. Samad, your line is open.
Great. Thank you. Good evening, and appreciate you taking my questions. I will also give one for Khozema and one for Aidan. Kho, for you, just on the identity product, can you help us think about how monetization there looks? I know you said it's early in the release, but if you could just give us some examples of what the price uplift looks like when that's attached, and is that the use case there for agent to human to agent, or agent to agent? So maybe just digging deeper into identity, and then Aidan, for you on the 2027 preliminary outlook, thanks for giving that. I think it's very helpful to look ahead. Can you just help us unpack what you're assuming around messaging and the non-messaging products, and whether we should think about messaging as stable versus accelerating like we saw this year?
Just dig deeper into both those, and thank you both so much.
Yeah. Let me start, Samad. On monetization, we haven't quite worked out the model yet. Again, it's a private beta. It's very early. I think what you can probably anticipate is it'll be usage-based in conformance with the rest of our revenue model. I think that puts us on the right side of customers. You can imagine having identity resolution happen based on different times that an agent, human, et cetera, is interacting with a different business. The product is meant to suit all of the use cases that you referenced, so agent to human to agent to agent. In that way, it'll be quite versatile. Finally, I would expect that it does provide a gross margin uplift that will have more software margin-like characteristics. That's another reason that we're pretty encouraged by it, but again, quite early days. It's in private beta.
We'll talk about it in a more fulsome way, including pricing, packaging, and margin characteristics when we get into GA next year.
On your 2027 question, we were intending to give some directional guidance here. We feel really good about the trends in the business. Messaging is performing quite well. Voice, the software add-ons, some of our largest products. All of those kind of factor into the outlook. We're not going to get much more specific than that right now. We will dive deeper into 2027 at our Q4 earnings call.
Thank you. Our next call comes from the line of Samik Chatterjee of JP Morgan. Samik, your line is open.
Hi. Thanks for taking my question. On the voice side, you've had this 20%+ growth consistently in the recent past, and you highlighted that comes both from volume and software add-ons. Is there any way you can sort of break that down a bit more granularly for us in terms of how does the balance of volume versus software add-ons sort of contribute to that 20%+ growth right now? Particularly as you think about next year, I know you said that overall for voice, it's still early days, but how are you thinking as you sort of think about next year or maybe the next couple of years, where does the greater sort of growth opportunity lie? Is it volumes, or do you see a bigger opportunity around software add-ons? Thank you.
Yeah. I'll start with just the split of the voice growth. It's actually pretty balanced. We're seeing a lot of strength in the software add-ons. We see triple-digit growth in some of them, Branded Calling, Conversation Intelligence, to name a couple. Really, we are seeing minutes grow, so volumes grow, and we're seeing the attach rate with the software add-ons grow quit e quickly as well.
Yeah. Just to add to that a little more around some of the use cases that we're seeing, particularly with Voice AI. A couple of quarters ago, it was a lot of proof of concepts. Those concepts have now rolled into production. We're starting to see real realization of our customers, whether it's AI natives or some of the traditional ISVs that are embedding voice into their platforms, really start to reach some significant scale with their voice usage. We talked about a few of those customers already in terms of the return that they're getting on it. We're really encouraged with the overall mix that we're seeing. Branded Calling, the Conversations suite in general, is really helping us accelerate the software add-on part of our business, which grew well over 25% this quarter.
Thank you. Our next call comes from the line of Ittai Kidron of Oppenheimer & Company. Ittai, your line is open.
Thanks. Hey, guys. Maybe a couple for me. First, Khozema, as you think about the business going forward, help us think from your perspective, what is the right KPI to follow here? Because revenue is going to swing back and forth with messaging. Clearly that is a very important part of your business, but a lot of the focus and a lot of the value that investors put on your business is really tied into your non-messaging business longer term, right? I guess the question is, if those businesses are small and even though they are ramping, it is going to be hard to move the dial from a revenue standpoint. Is gross profit the right way to look at it or any other KPI? In that context, and I understand, Aidan, this is a preliminary 2027 guide, why should gross profit grow in line with revenue?
Why should it not grow faster? I would appreciate that.
Yeah. I can start. Look, I think, Ittai, we are in general trying to drive a balanced P&L. If you look at just what we have accomplished over the last several years, we have accelerated revenue pretty substantially. We are up very significantly from the preliminary guidance that we gave at our Investor Day two, three years ago. We have driven significant operating leverage. We have driven a ton of cash. We have reduced dilution. So I think when you look at the totality of the P&L, that has generally been a pretty good payoff for investors. As we look forward, clearly the goal is to be able to continue driving growth at elevated levels.
I think that this quarter, and certainly the last couple, have provided evidence that we are able to do that, both as a result of significant effort and investment on the self-serve side, as well as great go-to-market execution in terms of both our enterprise as well as our ISV customers. We are just seeing really good balanced growth across the board. Now, more specifically to some of the line items in the P&L, the thing that we focus on day-to-day is predominantly gross profit growth. Now, we get asked this question a lot of different ways from you all and from other investors. We do not do it necessarily at the expense of revenue growth, and we do not work it the other way. It is a balance. We are trying to drive whatever the best long-term outcomes are overall for the business.
Given the usage-based nature of it, given that the mix can tilt a little bit from quarter to quarter, you do have a little bit of these up and down dynamics. We certainly understand that as the people that are running the business day-to-day. I think you guys understand it as folks that have followed the business for a long time, and we just have to roll with that. But over a long period of time, we think that there's a great balanced P&L outcome for investors. The last three years, I think, have provided very compelling evidence that we're going to continue driving that.
Yeah. I mean Khozema covered a lot there. Maybe just a couple of other things I'll hit on gross profit. I do want to talk about Q4 a minute because I said Q4 gross profit growth would be in line with revenue. Remember, in Q4, we have the big holiday season. We tend to provision more from a hosting perspective in that period, so that does come with additional cost. In addition to that, we have started to lap some of the cost tailwinds that we've seen in the business. So we moved email, for example, from on-prem to the cloud. That provided a gross margin tailwind for the better part of this year. That's fully in our run right now. So those kind of GM tailwinds go away.
Now, that said, when you look at what really drives gross profit outpacing revenue, it is the higher margin products growing quite well, as well as continued cost actions. We're going to continue to do both of those things. But as Khozema said, messaging has lower gross margin, carries less gross profit for every dollar of revenue, and it's 60% of our business, so that can obviously influence outcomes.
Thank you. Our next question comes from the line of Callie Valenti of Goldman Sachs. Callie, your line is open.
Hey, team. Thank you for taking the question. Wanted to ask on the voice part of the business, realizing we get the numbers quarterly, they're not exactly the growth numbers that you guys see in front of you. But voice has been roughly 20%+ over the last couple of quarters now, after accelerating more in the quarters prior to that. What are some of the pieces that could bring that up further over the next couple of quarters? Have you continued to see this demand step up on a quarterly basis, or do you think we have reached a more stable environment as companies roll out AI in a more measured way?
Hey, Callie, it's Thomas here. Just to think about voice by the particular cohorts of customers that we have, starting with self-service, growth in voice has been over 50%, and that's a good leading indicator of the adoption of the channel itself. Of course, adding voice software add-ons on top of that continues to accelerate that. So we're seeing that as a good leading indicator for momentum. The second is the AI natives, the ones that have been born with voice use cases. They're continuing to expand with us, and we're growing as they're growing, and we're also seeing them adopt second and third channels. So a number of our voice AI customers are now adding WhatsApp or messaging or other types of Branded Calling and other services. So we're seeing that as a nice accelerant as well.
Additionally, there's a lot of consolidation in the enterprise space where traditional contact centers, customers are looking for a more agentic way of doing voice services in enterprise motions. In that case, moving more to a headless type of voice interaction experience combined with the other messaging types that we offer, along with orchestration and memory. So that's been a nice catalyst for us as well. As I mentioned earlier, there's been a lot of proof of concepts that have gone into production recently. We're encouraged by the momentum and the results our customers are getting, and so we think that's a pretty good indicator of future success with voice.
Thank you. Our next call comes from the line of Siti Panigrahi of Mizuho. Siti, your line is open.
Thanks for taking my question. Just a follow-up to the prior question where the value accrues, if you see, I know you call it early stage now in AI super cycle, but frontier labs, even as a builders, they're all moving into voice. Voice is exciting. As you look forward to next, maybe over five years, where do you see the value accrues Twilio can bring? Is it on the connectivity context, identity side, or any other layer that you are pretty confident that you can keep? Also, what has to change for the Voice AI to move beyond these AI natives and non-regulated verticals? What are the leading indicators you are watching?
A lot there, Siti. Let me just start with our value proposition. You mentioned a number of players moving into the space. The one thing is that I think what really advantages us relative to other players is we're the neutral party. Virtually every player in the space who are predominantly participating at the application layer, they are running off of Twilio's rails. That is a really great spot to be in because ultimately we're providing underlying infrastructure on top of which we're able to add capabilities like intelligence, like m emory, like orchestration, as Thomas alluded to a second ago. We can also add things like Branded Calling to be able to improve conversion rates and things of that nature.
The ability to provide this full-service offering at the infrastructure level allows us to win with every single one of the providers, irrespective of what it is that they're trying to build and how they're going to market with their different customers. So I would say as a starting point, that's a major advantage in the broader ecosystem. Customers continue to come to us for that infrastructure, for that programmability, for those different aspects of the Conversations suite that I mentioned a second ago. I think it's just the technology adoption cycle. I don't think there's a number of KPIs that necessarily have to be unlocked here. It's just going to happen as time goes on. As consumers become more and more comfortable with the utilization of AI, it'll pick up more.
As businesses start pushing the technology out to their consumers additionally, we'll start to see the pickup more and more. The reality is, when we sell it, the ROI is very compelling. We're able to generate more revenue, reduce costs, create a better consumer experience, but it's going to take time. I'm not surprised that the regulated industries have taken more time. That's how every technology cycle has played out. So I'm very, very optimistic about the way that it's played out so far. I certainly feel great about the way that I would expect it to play out going forward. As Thomas alluded to a second ago, when you look at the top of the funnel, which is really vis-a-vis self-serve, growing at over 50% on voice there, that's a pretty encouraging signal.
I think we just have to continue executing, and there's a lot of demand on the comm.
Thank you. Our next call comes from the line of Arjun Bhatia of William Blair. Arjun, your line is open.
Yeah, perfect. Thank you. Two, if I can, one for Aidan. Maybe I want to ask the P&L question directed to a different metric, but this quarter I saw, obviously, the op income growth was very strong. I think even after I back out the $11 million in credits, it was very healthy, and it seems like that's sort of being given back next quarter. I'm just curious if there's additional investments, growth investments you're planning to make or if there's something else at play there. And then, Khozema, one for you. I'm just curious how you view sort of these emerging agent-to-agent protocols. I know it's super early, but is that a tailwind for Twilio given some opportunity around orchestration and governance and identity as you talked about, or does it potentially take some volume off of sort of traditional telephony and move it to other rails?
I'm curious how you think that might evolve over time. Thank you.
Yeah, maybe I'll start, and then Aidan can talk about op income here in a second. I think it's all tailwind. I think the reality is it's a very fragmented landscape right now. You've got a number of these different companies. As I said earlier, all of the leading companies are already working with us. It's not just the messaging and email content. There's the service operations that go with it as well. There'll be voice content. So we see what's been playing out so far as a lot of tailwind going forward for the overall business. In terms of the protocols themselves, I would call them probably policies over protocols. What they've stipulated is kind of a set of things that one should follow as these agent-to-agent interactions are transpiring. We certainly conform to the different policies that are being written. They're also quite varied.
Here again, I think fragmentation kind of plays to Twilio's strengths, like our ability to work across any policy framework, any protocol framework, any technology. That's a great setup, not just for our core business in channels. It also helps to sell a lot more context. Then I would say, going forward, it's a great setup for identity. So no matter how you kind of cut it, we look at the whole thing as a lot of tailwind for Twilio.
Hey, Arjun. On your profit question, yeah, we delivered very high profit in Q3, $326 million. It was up nearly 40% year-over-year, up 14% quarter-over-quarter. As you called out, and as I mentioned in the prepared remarks, we did benefit from roughly $11 million in platform credits, which were higher than we had anticipated. So that creates a slightly larger optical gap in our Q4 guidance. The other thing I'd say is we did make some investments in headcount in the quarter, both R&D and go-to-market. Those are incorporated into our guidance as well. Then lastly, of course, as you know, we continue to just plan prudently just given the usage-based nature of the business.
Thank you. Our next call comes from the line of Nick Altmann of U.S. Bancorp. Nick, your line is open.
Hey, awesome. Thank you so much. I wanted to ask a question about how some of the AI use cases and software add-ons have this pull-through dynamic which results in higher volumes. Khozema , you've talked about how Voice AI agent use cases actually result in longer duration calls, and then there's products like Branded Calling, which can actually drive higher answer rates and allow customers to do more outbound calling. My question is, how should we think about the overall uplift in terms of the volume of minutes or messages when it comes to customers that begin to embed Voice AI agents or when they have products like Branded Calling or Conversation Memory or other offerings? Thank you so much.
Yeah, I think broadly speaking, you should expect call duration to go up from where it is today. I think most calls in service environments today are measured on cycle time. I think going forward, the way that customer service operations will probably measure contact centers is based on the outcomes that are being created for the consumers on the other side. I'm certainly not suggesting that what used to be a 60-second call is going to go up to 10, 20 minutes. I'd say that's not a great outcome necessarily, but I do think there will be an uplift as a means to being able to, A, solve the consumer's problem. But B, there's also a big opportunity for real revenue uplift on the part of the business, right?
They can cross-sell, upsell their customers a lot better, and especially if they're using a context layer underneath, their ability to source details about the consumer that they're serving in real time, and then be able to create packages and prices of additional items, that's pretty compelling. Beyond all that stuff, the Branded Calling and other intelligence capabilities, as part of the Conversations suite, that's all uplift. And so those, as you know, provide price adders. But ultimately, ROI is, I think, what wins the game here, and I think Twilio has an offering when you combine our channels, combine it with context, and then add in things like Branded, makes for a really compelling offering, leads to better conversion, better revenue, lower cost, and ultimately better consumer outcomes. And I think that's why you've seen the growth characteristics that you have.
Thank you. Our next call comes from the line of Koji Ikeda of Bank of America. Koji, your line is open.
Yeah. Hey, thanks so much for taking the question. I wanted to follow up on an answer you gave earlier about self-service voice growing 50%. How predictive has self-service historically been around broader voice growth, and what sort of lags do we expect from self-service customers growing versus the revenue going up from it? Thank you.
I could talk a little bit about the use cases, and then Aidan, maybe if you want to get into more of some of the historicals on it. When you think about the use cases we're typically seeing with voice with self-service, a lot of it is the autonomous AI-powered customer engagement use case, and it often starts with an AI native that's beginning to unlock a new vertical application or agent. From there, they need to complete sort of a holistic customer journey. As they get some product market fit, they start to increase their volumes. Then we typically see that they'll add a second channel because most voice experiences are only just, one channel's not enough. You need to be able to communicate to customers through omni-channel experiences. Then we tend to see the messaging get added, the Conversations suite get added.
Ultimately, I think as we said in previous conference calls that 60%+ of our enterprise customers started in self-service, and we see that natural expansion of our self-service customers continue. Even this quarter, if you look at our million-dollar customer cohort growth, it's growing as fast as this has in a long time. So we're really encouraged about the trends starting in self-service, how that translates into enterprise adoption over time, and how these companies become million-dollar-plus customers for us.
Yeah. From a self-serve perspective, and I'm not going to give any numbers specifically, but this is where we do our customer acquisition. This is where the AI natives kind of all get started on our platform. When you think about voice in context to our kind of voice self-serve, just for context. Our total self-serve is roughly 15% of our revenue. Voice is a relatively smaller portion of that, obviously, just given the size of messaging and some of the other businesses. So first of all, it's a relatively small part of our revenue. It's growing very quickly. As Thomas said earlier, it's growing about 55%. With a lot of these natives, we partnered very closely with them over the last couple of years. They've typically come in, started on voice rails from a kind of programmable voice perspective.
We've added software add-ons on top of that. In many of these cases, we've seen growth really accelerate, and they're meaningful customers today. Last quarter, we called out a horizontal conversational AI company that started building with Twilio in the voice channel. In Q1 of 2025, they were generating kind of low six figures quarterly spend on Twilio, and it was almost all voice connectivity. Since then, their quarterly connectivity spend has tripled. Their software add-ons has gone from essentially nothing to nearly $500,000 dollars in the most recent quarter. You can see they've gone from a relatively small customer. Now they're leveraging our Media Streams, our conferencing capabilities and Answering Machine Detection, a lot of our software add-ons, and they're over $6 million annual run rate, growing 65% with us. That's the kind of thing we're seeing. It's happening.
It's a relatively small part of our business today, but it's growing really quickly and it's exciting to think about what it could be.
Thank you. Our next call comes from the line of Ryan MacWilliams of Wells Fargo. Ryan, your line is open.
Hey, thanks for taking the question. I would love to hear about how the AI opportunity is evolving for the messaging business. Are your customers starting to see higher ROI on AI SMS use cases? Maybe they're trying more customer service SMS AI use cases or starting to get more interested in RCS. Then separately, how are trends for email in the quarter, and do you see any positive or negative impacts from AI within email? Thanks.
Yeah, email is pretty consistent. Business is growing pretty well. It's a little bit lower than our company average, but nothing to call out from a change in trend perspective. I'd say early days from an AI perspective on email.
In terms of the AI opportunity on messaging, I think you're certainly seeing it start. Based on just the take-off with some of the consumer stuff, you're definitely seeing some activity there. I think you asked a slightly different question in terms of RCS and the ROI there. The ROI in RCS has been very significant. It's been a very fast-growing product for us. It's a little bit more challenging adoption cycle, if you will, just based on some things that have to be done as part of the onboarding process. But the technology's fantastic. Customers who are using it are getting a ton out of it. It obviously comes with a lot of branding built into it as well. Customers who are on it are really enjoying it and getting superior ROI relative to traditional messaging, I would say.
Thank you. Our next call comes from the line of Derrick Wood of TD Cowen. Derrick, your line is open.
Great. Thank you, Khozema. When it comes to these new consumer AI agents, I know you're saying it's still early, but you did indicate you're working with leading product companies already. Can you just help us frame where you see the lowest hanging fruit when looking across your various communication channels? When it comes to the consumer brand side, do you see them starting to feel a need to stand up more agentic support systems to handle all the inbound agent volumes? How would you frame the opportunity for Twilio there?
Yeah. Hey, Derrick, it's Thomas here. A couple of points. We are working with all the major players, but this is an interesting area where the consumer agents also has a long tail of smaller, lesser-known consumer agent companies that we're also working with. It could be everything from outbound voice, helping these companies set up the telephony infrastructure to make calls on the consumer's behalf. There's the messaging and texting capability. There's the verification and OTP capability resulting in authenticating these agents properly. So we're participating in helping the consumer side of this with blueprints so that these companies can set up their communication infrastructure powered by Twilio to be able to have these agents transact on behalf of the consumers.
On the flip side, I'd say there's even more acceleration of businesses trying to get ready for these consumer agents, and that's accelerating the conversations and the demand for helping our business customers set up virtual agents to be able to field the consumer agents that are coming more inbound. So it's really an interesting flywheel effect that's early days, so it's very early, but a lot of proof of concepts, a lot of early experimenting going on, and we're excited about the long-term potential for it.
Thank you. Our next call comes from the line of Parker Lane of Stifel. Parker, your line is open.
Yeah. Thanks for taking the question. Aidan, earlier you talked about the impact of messaging you saw from ISVs moderating off of tough compares. Is that a comment or something that you saw across all the ISV relationships broadly, or were some of the long-tenured ISVs versus the AI natives more impacting that figure?
Yeah, I'd say it was not every ISV we sell in the quarter, obviously. Overall, they did tended to be focused on a few of them, but nothing specifically to call out there or give more on.
Thank you. At this time, this concludes our question and answer session. Thank you for your participation in today's conference. This now concludes our program, and you may now disconnect.