Should Twilio Stock Holders Look At Fortinet Instead?
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Investors buy both Twilio (TWLO) and Fortinet (FTNT) for artificial intelligence growth. Twilio routes the calls and messages businesses send their customers, while Fortinet sells the security guarding AI traffic. As of November 4, 2026, Fortinet shares trade at 11.9 times sales, more than double Twilio’s 5.6 times. A Twilio holder who switches and pays that premium is betting Fortinet grows as fast and keeps its far wider margin. So has Fortinet’s growth held up next to Twilio’s after both companies reported in late October?
Fortinet Is Growing As Fast As Twilio, For Now
In the latest quarter, it has. Fortinet’s revenue grew 20.5% in fiscal Q3 2026, compared with 19.9% at Twilio. Twilio’s management put its own growth at 16% once incremental U.S. carrier fees are excluded. Twilio bills those fees to customers at cost, so they add to revenue but not to profit.
Twilio raised all three of its core forecasts on October 29. The company now expects revenue to grow 20% in 2026, up from 18.3% in its August forecast. The annual free cash flow forecast rose to $1.2 billion at the midpoint, up from $1.15 billion. The forecast for growth without those carrier fees increased to 15%, from 13.3%. Twilio’s fourth-quarter forecast is softer: organic growth of 11% to 12%, down from 16% in the third quarter.
Fortinet delivered mixed news a day earlier. The company raised its 2026 revenue forecast to $8.17 billion at the midpoint, from $8.1 billion. The service revenue forecast, however, fell to $5.16 billion. That is down from $5.2 billion in July, a cut of under 1%. The full-year billings forecast increased to $9.64 billion, up from $9.45 billion. Fortinet also expects fourth-quarter revenue growth of 15% at the midpoint. Management said first-half product margins had benefited from lower-cost inventory, an advantage that is starting to fade. Fortinet is keeping pace for now, but Twilio delivered the cleaner report of the two.
Fortinet Keeps Far More Of Each Sales Dollar
Over the twelve months ended September 30, 2026, Fortinet recorded an operating margin of 33.0%, compared with 7.7% at Twilio. This gap opens before operating costs factor in: Fortinet had a gross margin of 79.7%, against Twilio’s 48.6%.
Twilio’s management explained part of that difference on its October 29 call. The company earns low gross profit on each dollar of messaging revenue, and messaging accounts for 60% of its business. Even so, Twilio’s operating margin has widened each year, climbing from a loss of 2.7% of sales in the twelve months to September 2024.
Fortinet aims to hold its margin through pricing: management said it raises or lowers product prices as its costs move, to keep product gross margin the same. Product costs are creeping up in the second half and hurting product gross margin, management added. Service gross margin is picking up and offsetting some of that.
What You Get For Twilio’s Lower Price
At Twilio’s lower price, investors get a business that keeps less of each sale. Twilio also looks cheaper on earnings, but its net margin of 21.8% sits far above its operating margin because of a one-time tax benefit. Twilio trades at 25.7 times earnings, against 41.2 for Fortinet. Without the $937 million tax benefit it booked in the June quarter, Twilio would trade at about 98 times earnings. Most of Twilio’s twelve-month profit came in the June quarter, which recorded $1.07 billion of net income on $0.085 billion of operating income. If Fortinet’s growth fades, a holder who switches would be paying more than twice Twilio’s price on sales mostly for Fortinet’s wider operating margin.
Fortinet also leads on growth over a longer timeline. Revenue growth averaged 15.1% across the last three twelve-month periods, against 12.6% for Twilio. Debt barely separates the two companies: each holds more cash than debt, and Twilio’s debt equals 3.2% of its market value, compared with about 0.5% for Fortinet.
Fortinet comes out ahead on growth and margin, while Twilio leads on price and full-year forecasts that all moved up. Fortinet’s margin lead has held in each of the last three twelve-month periods. Fortinet’s growth remains less settled: the company cut its service revenue forecast. In the report it is expected to deliver in February 2027, Fortinet’s service revenue growth is the number to watch.
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