Shares of Twilio Inc. (TWLO) retreated in extended trading on Thursday, February 12, 2026, declining approximately 2.2% to $107.95. The move followed the release of the company's quarterly financial results and its forward-looking projections for the full year 2026. The stock had closed the regular session at $110.41.
Financial Performance and Guidance
The cloud communications platform reported a 14% year-over-year increase in fourth-quarter revenue, reaching $1.37 billion. Adjusted earnings per share came in at $1.33, surpassing the Zacks Consensus Estimate of $1.24. Despite these beats, investor sentiment turned cautious as the company provided its outlook. For the first quarter, Twilio anticipates revenue between $1.335 billion and $1.345 billion, with adjusted EPS projected in the range of $1.21 to $1.26.
Looking further ahead, management set a 2026 revenue growth target of 11.5% to 12.5%. On an organic basis, excluding acquisitions and pass-through carrier fees, growth is expected to be 8% to 9%. The company also forecast non-GAAP operating income and free cash flow for 2026 to land between $1.04 billion and $1.06 billion.
Key Metrics and Market Context
Twilio ended the period with over 402,000 active customer accounts and noted it has approximately $1.1 billion remaining under its existing $2 billion share repurchase authorization. However, the guidance highlighted a significant headwind: rising carrier pass-through fees. Chief Financial Officer Aidan Viggiano indicated these fees are projected to add about $190 million in pass-through revenue in 2026 but will concurrently reduce the company's non-GAAP gross margin by roughly 170 basis points, or 1.7 percentage points.
The after-hours decline contributed to a challenging year for Twilio shareholders, with the stock down roughly 22.4% year-to-date, starkly underperforming the broader S&P 500, which has gained 1.4% over the same period. The sell-off occurred amidst a broader downturn in technology shares, with the Nasdaq Composite sliding more than 2% during Thursday's regular session. Portfolio strategists cited ongoing investor nervousness, labeling the activity as an "anti-AI trade" and highlighting caution ahead of upcoming U.S. inflation data.
Twilio's core business provides application programming interfaces (APIs) that enable developers to integrate messaging, voice, video, and email functionalities into applications. The company has been expanding its offerings to include tools for customer data segmentation and marketing automation. Notably, its Voice AI revenue surged more than 60% year-over-year in the fourth quarter.
For investors, the company's usage-based revenue model presents a double-edged sword. While it can drive rapid growth during periods of strong customer adoption, it also exposes the firm to volatility should pricing pressure emerge or usage growth decelerate. The projected margin compression from carrier fees puts a spotlight on the company's ability to manage costs and maintain profitability.
The broader market's reaction to Twilio's guidance and any additional commentary on carrier costs, product mix, and underlying demand will be tested in Friday's trading session. Furthermore, macroeconomic conditions remain a pivotal factor; another stronger-than-expected inflation reading could exacerbate interest rate concerns, which typically weigh most heavily on high-valuation software stocks.