Twilio: Becoming A Free Cash Flow Behemoth

Twilio has surged over 80% YTD, driven by a robust Q2 beat-and-raise and accelerating growth amid a broader software sector rebound. TWLO raised FY26 guidance to 13%–13.5% organic and 18%–18.5% total revenue growth, with FCF margin guidance up to 19.1%. Guidance boost is largely organic, with only ~$15 million of the ~$177 million increase attributable to carrier fee pass-throughs. At ~$250/share, TWLO trades at a $36.17 billion enterprise value, reflecting a swift re-rating from value to AI premium. Over the past month, one trend is becoming quite clear in the market: investors are getting ready for a market rotation. AI chip stocks have taken a bit of a breather, while laggard stocks in the software sector have enjoyed huge rebound rallies.