TWLO · Twilio
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $253.31
Note written ·
Price against the kill line
16.6% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $253.31, on record since 11 November 2026. The shares are down 7.6% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $253.31, the 50-day average of closes as of 11 November 2026, which would show the shares leading the S&P 500 again; Q4 2026 organic growth of 15% or more with a FY2027 organic outlook of 13% or more would also prove the call wrong.
Research onlyNot in the portfolio.
Key figures from the filings · Technology
Quarter to 30 September 2026, filed 30 October 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 1,560
- Revenue, change on a year (%)
- +19.9
- Gross margin (%)
- 48.8
- Operating margin (%)
- 9.5
- Net cash, cash less debt ($M)
- 1,898
- Price to earnings (×)
- 25.7
- Enterprise value to sales (×)
- 5.3
- Enterprise value to operating income (×)
- 77.4
All filed numbers
What Twilio reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 1,560 | +19.9 | 48.8 | 9.5 |
| first filed | 1,499 | +22.0 | 48.4 | 5.6 |
| first filed | 1,407 | +20.0 | 48.6 | 7.7 |
| first filed | 1,366 | +14.3 | 48.5 | 4.2 |
| first filed | 1,300 | +14.7 | 48.6 | 3.1 |
| first filed | 1,228 | +13.5 | 49.1 | 3.0 |
| Pre-tax income ($M) | 139 |
| Net income ($M) four quarters: 1,273 | 161 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +1.6 |
| Operating cash flow ($M) | 1,186 |
| Capital spending ($M) | Not reported |
| Free cash flow ($M) | Not available |
| Cash and short-term investments ($M) | 2,892 |
| Debt ($M) long-term debt | 994 |
| Net cash, cash less debt ($M) | 1,898 |
| Deferred revenue ($M) −1.4% on a year | 157 |
| Backlog, orders not yet delivered ($M) −28.3% on a year | 121 |
| Receivables ($M) | 755 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 9,171 |
| Market value ($M) | 32,681 |
| Enterprise value, market value plus net debt ($M) | 30,784 |
| Enterprise value to sales (×) | 5.3 |
| Enterprise value to operating income (×) | 77.4 |
| Price to earnings (×) | 25.7 |
| Price to book value (×) | 3.6 |
| Free-cash-flow yield (%) | Not available |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 3.9% of shares outstanding sold short, 1.1 days of average trading to cover, −4.7% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $11.0M |
| 12 monthsfrom | $0 | $619.0M |
The thesis
Twilio's fourth-quarter guide of 11–12% organic revenue growth, down from 16% in the third quarter, reset the shares, and brokers have mostly cut targets since. The rating is Low: until the Q4 2026 report, estimated for about 11 February 2027, shows whether that guide is conservative, the shares are more likely to lag the S&P 500 than lead it.
The quarter itself was strong. Twilio reported Q3 2026 revenue of $1.56 billion on 29 October 2026, up 20% reported and 16% organic, against its own guide of 11–12% organic (Form 8-K exhibit 99.1). It raised its FY2026 organic growth outlook to 15% from 13–13.5%. The market reacted to the outlook. TIKR reported the shares fell 17% on 30 October 2026, and management attributed the smaller beat mainly to a "modest slowdown" in messaging, its largest product.
The price now reflects a reset AI premium. HSBC said on 3 November 2026 that the shares had fallen about 32% since 24 September 2026 while the S&P 500 fell about 1.6%, leaving them at 30.9 times expected 12-month earnings, below the 33 times multiple HSBC applies.
Bullish and bearish views on Twilio Inc.
The bull case on Twilio Inc. (TWLO), in brief: Q3 beat its own guide by four points. The bear case: the Q4 guide implies a sharp slowdown.
Bull case
- Q3 beat its own guide by four points. Organic growth of 16% compared with the 11–12% guide set on 6 August 2026 (Form 8-K exhibit 99.1). The Q4 guide uses the same 11–12% range.
- Full-year profit guidance rose again. On 29 October 2026 Twilio lifted FY2026 non-GAAP operating income and free cash flow guidance to $1.19–1.20 billion each (Form 8-K exhibit 99.1).
- Voice is growing faster than the company. HSBC's 3 November 2026 note put Q3 voice growth above 20%, which it tied to rising AI-driven call traffic.
- The valuation premium has shrunk. TIKR put the forward earnings multiple at about 38 times before the report and about 30 times after the 30 October 2026 drop. HSBC moved to Hold from Reduce on 3 November 2026 for that reason, raising its target to $215 from $211.
- Some brokers still see upside. Tigress Financial raised its target to $320 from $255 on 4 November 2026 and kept Buy. JPMorgan kept Overweight with a $300 target on 31 October 2026.
Bear case
- The Q4 guide implies a sharp slowdown. Q4 organic growth is guided at 11–12%, and non-GAAP operating income at $300–310 million, below the roughly $326 million earned in Q3 (Form 8-K exhibit 99.1; TIKR, 30 October 2026).
- Messaging, the largest business, is cooling. HSBC reported messaging organic growth of 17% in Q3, down from 18% in Q2, in its 3 November 2026 note.
- AI volume has not reached gross profit yet. HSBC said on 3 November 2026 that AI usage lifted voice traffic but not gross profit, which grew 18% against 20% revenue growth. It noted that regulated customers in finance, healthcare and insurance are still in pilots.
- The early 2027 view is low double digits. TIKR reported on 30 October 2026 that management's early 2027 view calls for at least 10% organic growth, with about $1.35 billion each of non-GAAP operating income and free cash flow.
- Targets are coming down after the report. Wells Fargo cut its target to $275 on 30 October 2026, three days after raising it to $300. Daiwa Securities cut to $230 from $277 on 10 November 2026.
- Part of revenue carries no profit. The Motley Fool reported on 29 October 2026 that about $53 million of Q3 revenue came from new carrier fees passed through at cost.
Price setup
The shares closed at $219.48 on 11 November 2026, 28.8% below the 52-week intraday high of $308.40 set on 6 October 2026, the day Twilio joined the S&P 500. The 3-month change is −12.0%, against a close of $249.42 on 13 August 2026.
After the report, the shares fell to a close of $200.96 on 5 November 2026. They then rose in each of the next four sessions to the 11 November 2026 close. That close sits below the 50-day moving average and above the 200-day moving average of $192.14, both from adjusted daily closes as of 11 November 2026. A return above the 50-day average would recover most of the post-report drop. The 52-week closing low is $108.49, set on 17 February 2026.
Broker targets set since the report bracket the price: HSBC at $215 and Daiwa at $230 sit near the last close, while Tigress sits at $320. Insiders sold near the top of the range. SEC Form 4 filings show the chief executive selling 13,898 shares at an average of $294.08 on 30 September 2026 and 14,442 shares at an average of $291.03 on 5 October 2026 under a Rule 10b5-1 plan. The chief financial officer sold 9,084 shares at an average of $294.65 on 30 September 2026.
Catalysts ahead
- ~11 February 2027 (est.): Q4 2026 results and FY2027 outlook. Shows whether organic growth beats the 11–12% Q4 guide as Q3 did, whether operating income resumes growth after Q3, and whether the FY2027 outlook moves above the early view of at least 10% organic growth.
- ~April 2027 (est.): Twilio investor day. HSBC named it the next checkpoint; it is where management could put numbers on AI-driven volume and longer-term growth targets.
What would change the view
A daily close above $253.31, the 50-day average of closes as of 11 November 2026, which would show the shares leading the S&P 500 again; Q4 2026 organic growth of 15% or more with a FY2027 organic outlook of 13% or more would also prove the call wrong.
What it trades with
Twilio has traded with highly valued software shares since its 6 October 2026 S&P 500 entry. Benzinga reported the 10-year Treasury yield near 5.1% on 16 October 2026, and rising yields weigh on the group. Company-specific news has driven most of the recent move. HSBC's 3 November 2026 comparison shows the shares down about 32% from 24 September 2026 while the index fell about 1.6%. The September rally tied the shares to news about consumer AI agents, starting with Meta's Muse launch on 8 September 2026. Headlines from Meta and other agent platforms still move the shares, alongside Twilio's own results.
The evidence, claim by claim (8)
- Q3 2026 revenue was $1.56 billion, up 20% reported and 16% organic year over year, against guidance of 11–12% organic growth. Twilio Q3 2026 results, Form 8-K exhibit 99.1 · as of
- Q4 2026 guidance: revenue $1.595–1.605 billion, organic growth 11–12%, non-GAAP operating income $300–310 million, non-GAAP EPS $1.48–1.53. Twilio Q3 2026 results, Form 8-K exhibit 99.1 · as of
- FY2026 organic growth outlook raised to 15% from 13–13.5%; non-GAAP operating income and free cash flow guidance raised to $1.19–1.20 billion each. Twilio Q3 2026 results, Form 8-K exhibit 99.1 · as of
- Shares fell 17% after the Q3 report; management cited a modest slowdown in messaging and gave an early 2027 view of at least 10% organic growth. TIKR, 'Twilio Sinks 17% on Slowing Q4 Growth Guide' · as of
- HSBC upgraded Twilio to Hold from Reduce and raised its target to $215 from $211, citing a valuation of 30.9 times expected 12-month earnings. HSBC note, reported by goldesel.de · as of
- HSBC put Q3 messaging organic growth at 17% (18% in Q2), voice growth above 20% and gross profit growth at 18%. HSBC note, reported by goldesel.de · as of
- Daiwa Securities cut its Twilio target to $230 from $277; Tigress Financial raised its target to $320 from $255 on 4 November 2026. Daiwa and Tigress target changes, company news headlines · as of
- CEO Khozema Shipchandler sold 14,442 shares at an average of $291.03 on 5 October 2026 under a Rule 10b5-1 plan. SEC Form 4 filed 7 October 2026 · as of
Sources
Related · shared themes
EPAM
EPAM Systems
EPAM Systems is modestly more likely than not to beat the S&P 500 as its $1.8 billion buyback, including a $500 million UBS repurchase…
GDYN
Grid Dynamics Holdings
Grid Dynamics' AI work is lifting the IT-services firm back toward double-digit growth at margins near 20%, which favors the shares beating…
INTU
Intuit
Intuit's shares hold a modest edge over the S&P 500 as AI agents, Credit Karma Tax and the Sequence deal target price-driven customer…
MANH
Manhattan Associates
Manhattan Associates' cloud revenue grew 28% and its backlog 25% in the 27 October 2026 report, making the shares modestly more likely than…
See also · stocks to watch