Shares of Twilio (TWLO) jumped about 10% premarket on Friday after the communications software provider’s third-quarter results and guidance beat estimates, which drew positive reactions from analysts.
“We maintain our Market Outperform rating and $165 price target on Twilio after the company reported better-than-expected 3Q25 results, with nonGAAP EPS of $1.25 (consensus $1.08) on revenue of $1.30B (consensus $1.25B), up 15% y/y, up from 13% last quarter,” said Citizens’ analysts led by Patrick Walravens.
The analysts noted that Dollar-Based Net Retention Rate, or DNBR, was 109% (consensus 108%) up from 108% last quarter. Non-GAAP gross margin of 50.1% (consensus 50.1%) was down from 50.7% in the second quarter.
KeyBanc Capital raised the price target on Twilio’s stock to $156 from $146 while maintaining its Overweight rating.
“When we launched on Twilio earlier in the year, aspects of our research kept coming back to the potential for AI to drive increased voice minutes on Twilio’s platform and it was echoed back to us after the launch from bullish investors of a similar mind,” said analysts led by Jackson Ader. “It’s only been a few quarters, but Voice growth expanding from the MSD [mid-single-digit] at the end of 2024 to now in the mid-teens on the back of Voice AI customer revenue growth of 60% points to what may be a growing wave that is just beginning to build.”
Piper Sandler kept its Overweight rating but increased the price target to $145 from $144.
“Twilio showed why it has been our top Communication Software pick, which while it was helped by a full-quarter’s impact of the recently announced price increase, showed an acceleration against much more challenging compares,” said analysts James Fish and his team.
The analysts noted that messaging-only ex-fees grew about 15%, net-new customer additions remained strong even when normalizing out the email transition from free to paid, Net Revenue Retention, or NRR, moved higher, Gross Profit Margin, or GPM, held above 50%, and Twilio saw this all flow into free cash flow, or FCF.
“This was all around a good quarter even when trying to parse out the price increase. The demand drivers are still in Twilio’s favor, including as the infrastructure layer for Voice AI and with ISVs, and FCF estimates are moving higher again. We continue to recommend owning Twilio here,” said Fish and his team.