Twilio's $1.07 billion profit was a one-time tax entry; four banks still raised price targets
Twilio's $1.07 billion second-quarter net profit rests on a one-time, non-cash tax entry, not on the $285 million its operations earned. Four banks raised price targets anyway, and the October 29 print will compare against the same distorted quarter.
Richard Tang · 3 min read
Twilio's+4.23% — Twilio, up 4.23 percent today second quarter produced a headline net profit of $1.07 billion, but $944.1 million of that was a one-time, non-cash release of the valuation allowance against Twilio's US deferred tax assets, worth $5.91 of the $6.68 diluted earnings per share 8.
The total benefit from income taxes on the income statement was $991.7 million; the rest is the accounting release, not cash earned 8. Strip the tax entries out and the quarter that four banks just raised price targets on earned $285 million of non-GAAP operating income and $353 million of free cash flow 18.
The operating line Twilio actually earns: a steady climb, not a $1.07 billion spike
Data
| GAAP operating income | |
|---|---|
| Q1 '24 | -$0.04B |
| Q2 '24 | -$0.02B |
| Q3 '24 | -$0.01B |
| Q4 '24 | $0.01B |
| Q1 '25 | $0.02B |
| Q2 '25 | $0.04B |
| Q3 '25 | $0.04B |
| Q4 '25 | $0.06B |
| Q1 '26 | $0.11B |
| Q2 '26 | $0.09B |
On October 29 the company reports again, and the year-ago comparison carries the same distortion 1. Any model built on the June quarter's GAAP earnings is wrong before the print lands.
The street raised targets on a profit line that will not repeat
The week after the August release, JPMorgan lifted its target to $335 on October 12, Bank of America+0.58% — Bank of America, up 0.58 percent today to $320 and Stifel−0.64% — Stifel, down 0.64 percent today to $325 on October 15, and BTIG to $315 on October 16, all Buy ratings 1234. RBC's Rishi Jaluria is the lone Sell, at $165 4.
The street's average target sat at $267.52 on October 15 while the stock closed at $273.40 24, and Twilio fell 7.3% on October 16, the day BTIG raised its number, though the report itself disclaims any link between the two 5. The market is already paying above consensus for a quarter whose profit came mostly from below the operating line.
Four banks raised Twilio targets above a street average the price already beats
Data
| Value | |
|---|---|
| RBC (Sell) | $165 |
| Street avg (15 Oct) | $267.52 |
| 16 Oct close | $273.4 |
| BTIG | $315 |
| BofA | $320 |
| Stifel | $325 |
| JPMorgan | $335 |
What was real, and what was not
The real part is worth having. Revenue of $1.5 billion grew 22% reported and 17% organic, and guidance for full-year reported growth went up to 18% to 18.5% 18.
Messaging, voice and software add-ons all grew in double digits. The Traffic Optimization Engine, a tool that cuts messaging costs, went generally available for Programmable SMS/MMS customers on October 6 5. At SIGNAL Mexico on October 19 Twilio launched four agent products: Conversation Memory, Conversation Orchestrator, Conversation Intelligence and Agent Connect 67. The Mexican used-car platform Kavak says more than 90% of its voice and text conversations this year ran through AI agents on Twilio's APIs 7.
Read the October 29 print from the operating line
The agent business is real revenue at the operating level, which is exactly why the operating line is the one to judge. That makes the underlying business real. It does not make the $1.07 billion real 18. The quarter's profit was an accounting entry; the growth is what deserves the premium.
Judge the print on operating income, not net income
When results land after the close on October 29, judge them on operating income, free cash flow and organic growth, not on a net income line compared against a quarter that contained the same one-time benefit 18.
Sources: 1. ad-hoc-news.de, BTIG raised Twilio target to USD 315 for Twilio stock, October 20, 2026 — https://www.ad-hoc-news.de/boerse/news/nebenwerte/btig-raised-twilio-target-to-usd-315-for-twilio-stock/70373521 2. TipRanks via The Globe and Mail, Bank of America Securities Reaffirms Their Buy Rating on Twilio (TWLO), October 15, 2026 — https://www.theglobeandmail.com/investing/markets/stocks/TWLO-N/pressreleases/7809620/bank-of-america-securities-reaffirms-their-buy-rating-on-twilio-twlo/ 3. TipRanks via The Globe and Mail, Stifel Nicolaus Remains a Buy on Twilio (TWLO), October 15, 2026 — https://www.theglobeandmail.com/investing/markets/stocks/TWLO-N/pressreleases/7850076/stifel-nicolaus-remains-a-buy-on-twilio-twlo/ 4. TipRanks via The Globe and Mail, Twilio (TWLO): New Sell Recommendation for This Technology Giant, October 17, 2026 — https://www.theglobeandmail.com/investing/markets/stocks/TWLO/pressreleases/8153149/twilio-twlo-new-sell-recommendation-for-this-technology-giant/ 5. ad-hoc-news.de, Twilio Aktie: BTIG hebt Kursziel an, October 21, 2026 — https://www.ad-hoc-news.de/boerse/news/unternehmensnachrichten/twilio-aktie-btig-hebt-kursziel-an/70341461 6. Global IT Media, Twilio impulsa nueva era de agentes en SIGNAL México, October 19, 2026 — https://global-it-media.com/twilio-impulsa-nueva-era-de-agentes-en-signal-mexico/ 7. Portal ERP, Twilio actualiza su plataforma para adaptarse a la era de los agentes, October 15, 2026 — https://portalerp.com/mx/articulo/twilio-actualiza-su-plataforma-para-adaptarse-a-la-era-de-los-agentes 8. Twilio Inc. via Business Wire, Twilio Announces Second Quarter 2026 Results, August 6, 2026 — https://markets.financialcontent.com/prnews.pressre/article/bizwire-2026-8-6-twilio-announces-second-quarter-2026-results
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