Twilio (TWLO) 15 Feb 232022 Q4 Earnings call transcript

Company Profile

Participants

Bryan Vaniman	Senior Vice President-Investor Relations and Corporate Development
Jeff Lawson	Co-Founder and Chief Executive Officer
Elena Donio	President-Revenue
Khozema Shipchandler	Chief Operating Officer
Meta Marshall	Morgan Stanley
Mark Murphy	JPMorgan
Michael Turrin	Wells Fargo Securities
Paramveer Singh	Oppenheimer
Taylor McGinnis	UBS
Nick Altmann	Scotiabank
Frederick Havemeyer	Macquarie Research
Siti Panigrahi	Mizuho
Alex Zukin	Wolfe Research
Derrick Wood	Cowen
Rishi Jaluria	RBC
William Power	Baird
Patrick Walravens	JMP

Call transcript

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Operator

Good afternoon. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the Twilio Fourth Quarter 2022 Earnings Call. [Operator Instructions]. Thank you.

Relations, begin Investor conference. SVP, Vaniman, you your may Bryan

Bryan Vaniman

you everyone, us earnings Thanks, afternoon, thank conference for XXXX Emma. Good quarter and joining fourth for call. Twilio's

a investor prepared on found website SEC Our press IR today's release, investors.twilio.com. earnings filings can remarks, our and replay at be of call presentation,

Jeff for Aidan CEO; Viggiano, of Co-Founder FP&A. Elena Shipchandler, Donio, me today Lawson, Khozema and Joining President COO; Q&A are and of Revenue; SVP

their Aidan our in release, earnings Twilio will X. be March QX into and announced As Elena, transitioning press new effective roles Khozema

press As on a related include our of and key our between reminder, and in found some commentary both release remarks, information can today prepared earnings be can GAAP guidance, to of IR metrics. and which non-GAAP will our metrics the non-GAAP our further found key and appendix financial and website. of definitions results measures be Reconciliations our

subsequent recent Form on and most filed SEC, and forward-looking future more statements the our The will and also our information statements Form include uncertainties, recent on in our risks, of available reports are that to report These amendments XX-Q Form XX-K sec.gov. with other most forward-looking including or in and to goals. assumptions factors any our are discussed XX-Q provided are and unknown and described statements, on detail about known subject foregoing today and including outlook any periodic reports the at website

forward-looking vary as statements no and by our assume statement made. represent we assumptions Forward-looking statements any may to required date as beliefs and significantly, except update law. obligation are the only Actual results of such expressly

opening over we'll to that, call up then With remarks, for open Q&A. hand Jeff for the it some I'll

Jeff Lawson

you us Thanks, all for joining Bryan, and today. thank

term. we we've As long made of that short, changes have perform you seen, to opt medium to in our and the business a believe both significant may number

create path hop right the of As prepared that actions this And I let's the confident right shareholders. remarks, right that forward our customers, have will you teams value for sure it. my into are our for us is for set and mentioned more to in so I'm questions, our and we enable

Operator

[Operator Your Morgan Marshall from with first the Instructions] question line Meta Stanley. of comes

now open. Your line is

Meta Marshall

Great. Thanks. for questions me. couple it. Maybe a appreciate I of

Just know the have talked a Day, force maybe making you kind that Analyst of to driver of the start, application and the you and I at changes data guys to about lot just were the you where to initiatives? splitting the growth gone future? are in think through that, of that you some do would process you of on just as units, business be have those just And sales the

I guess, there kind customers the segments synergies feel communications to and kind from where And like data question as you applications kind are second of of a from kind of do dissynergies to go customers? of that, as customers or those getting splitting to far as Thanks.

Elena Donio

Elena hit can for bit to Thanks turn here. that the couple I'll then over question. Meta, A add things it's Jeff in them of extra on Donio there, and it who little take a commentary. pass of you

we're data about, the me that hit terms and of let been that kind business and about first. was state applications growth talking of at we've question First where and one that transformation current of in

about couple spoken I've across the growth quarters -- there. and We've last of investment there about

separating accelerate this lot that beginning going the forces movement these actually that we of We business to And more our in believe and way. We made further along of missteps about that business now. units relates and of couple actually better trajectory year we as sort discretely growth. of sales into a trajectory is amplify that also addressed a little a the and it last bit feel to the

also we're to reps. that our across done bookings. that revenue talked of So a where business, about hiring lags about data We enablement needed our landed good and couple the those the QX reacceleration. over quarters be little bit in new the last growth confident there, and I feel of the obviously, applications onboarding,

built set capabilities, having doing about of from of teams those good the really transfers as the right the with and right the out skills with some well skills. as feel bespoke right outside set We hiring internal

I'm confident how in So, really that's turning.

trajectory But some about sales of really decisions good like from continue of about and couple headwinds. to things with of different we we investments business shouldn't We've things the this still we Those talked a ahead. can anything also don't that in -- units And the control. macro that about have mind, good made pushing time lengthening also movement -- we've out think some in two say we cycles should across of feel time. that we feel different. the and we really and all We really areas, believe that

story better There together here. is a

having unique really another. products one focus a one. And separate focus. of is move this really buyers moved that unit the found that And is amplify direction our and Our having think needs Flex sales into each business last momentum more started of one year teams we building. now we But of across that is very segment these in specific important spaces what step

bit I'm little think for Jeff the it commentary. to I a both hand going hit but that more of questions, to

Jeff Lawson

Yes. Thanks, Elena.

like the synergies, really about -- et of part second think question cetera. I was your dissynergies, your

or center. a we a right? these for use of for, case, think tell of need mind the they're for us cases need how how marketing for a e-mail like They to about are There customers, two for They going the vast with of They have engage actually contact I'll cluster for communications, it. So, right? verification use identity it's use Every people kind majority they maybe customer who use to to need for case use voice, way. us their these need they you contact comes cases together. finite things messaging customer and because

that our what hey, cases. you ask you platform? looked at are by better, customers, you may our to achieve accomplish? other this And that platform even you have faster opportunity the way, with this trying in or to some cheaper have What part actually of are do to we So, help trying

Our applications by communications a those execute value need that then of the channels use direct in the create we delivery their customers to messages. entering over way just for more

so, these I this messages is how these with in this And to think time. powering customers, to to space and our going customers over the it themselves. sending addition is communications doing getting It's won are be why messages

say, it might like you structure, together. unit Jeff, harder these worlds makes two it two-business seems So, bring that to actually the well,

let didn't work -- have the the we've I have what the what sales me back for us first it, be that everything we've to in past a learned hit you, just that And And may talked tell right? reason into let's rep. about way on one But lumped experience. today, of

But at intelligence cross-team the So, opportunities our to uncover these and of utilizing of various therefore, specialization which this focus. which unique what to needs and to understand customers need with really our stage, stack. we're of on our and also to is buyers go data applications partner use incentivize collaborate of there focusing good data customers collaboration and would be and going we're the and own our cases,

clear in I term and work make term, between part and medium our take business think short that short is the on it's we've it's -- to distinguish to sales the -- the data term. important the medium to the to and execute and But do here medium more communications important Because got and this to long applications model. profitable and

to conversations. stage these product build for drive setting conversations we over the see but in sales foundational, both time, the also current that marketing between these then us our at things as but products. is do, environment I in these and But our our various better like we're and more data things getting And connectivity more using to automation, cross-sell

power in how And more it's and smarter, data drives customer segment, with obvious, better, of of that effective usage platform. terms communications, can more better our we

I how term, term. at short you But synergies to to so, it out. think medium have And medium look that's the long to do play

Meta Marshall

Great. Thank you.

Operator

question JPMorgan. next Your Instructions] from Murphy with Mark of [Operator line the comes

Your now line is open.

Mark Murphy

million of all to XXX% the folks of business? first the is congratulations expect all unprofitable this if promoted. to have been and year? you $XXX this year. perhaps that, much new we assume the operating that so regarding you to non-GAAP than who Should thank business question were million $XXX Hi, Communications by the My more being that that Or is assume we generated is data that and applications profit

Khozema Shipchandler

Khozema. they're and that's can is I'll more of intentional be that in this on while time, of Mark, in a at cycle, think to market and We latter way that the the and that. bring our and kind Hi, very can we do what XXX%, middle applications the part. efficient It's said. data early really business, the of stages in business an we lot of you throw part that than same we're the take profitability, It's question. investment that communications the off it

And so, themselves term, to the it we're margin will some work gross term. do judicious which be line think long is the it's we is to going so important able making It's in think grow also over appropriate that to out longer investments accretive, which of business. losses short as top take we But time.

Mark Murphy

follow-up, macro it And and you looked had at headwinds that the I Understood. a some that the then persist. remarks of still Okay. as says prepared mentioned

the better clarify behavior degrade I just out could would any in buyer mean somehow? to of recent continuing say you if bookings still cadence wondering that is in I'm that, So, whether Or months? the you terms there. feels

Elena Donio

say wouldn't think navigating all that I out one. take I'll Elena. It's I flushed also I getting been persist. say system. factors better it's of at But the it. we're those would

landed we we a with bookings think did -- where economic products times. and role comfortable And tough in we play our data -- actually QX application our we're So, vital space. our are in

important. sort yet. out we more this And I'll sure of hand But in we're and updated definitely, is budget making is of very field we're We're allocating we're headwind for woods to it we kinds that think about the these that don't time, landing. as I to at navigating so, And vital our best think in can. that why products, the messaging. economically, particular, message commentary. Kho clear of We've

Khozema Shipchandler

dynamic, be conditions, but one light in macro other cycle operating intend up is We wanted drive to provided add we relatively do through current through range are pretty that cycle can on whatever ends non-GAAP profit thing to whatever being. profitable we we the is, do I and to we just the profitability the Mark, importantly, large the which think be. of a intend

Mark Murphy

Thank you, very much.

Operator

the question next Turrin Wells from comes Your line Fargo. with Michael of

Your now line open. is

Michael Turrin

taking $XXX Can guiding to potentially? relative in the -- conversation I how just to versus you're but my you anything get would drive income, operating about the what just question. Thanks for of we know income I outcomes $XXX a out expected. context guess because stands guide million? just think million it operating potential afternoon. just gross Good certainly follow-on And growth for on the delta just you on was to the margin can add what would to that that relative specifically

Khozema Shipchandler

Yes, a lot Michael. there,

a So, to let bit. me try unpack little just it

think for of that way margin So, outcomes, we going range. the I deliver of in profitability the terms be planned gross to that kind able is that irrespective to of, it, operating within we're

will end revenue basically the of difference be the of our expectations, higher a kind range within think of in I or performs range. then if line that we'll of the kind be at

kind of doesn't, the the end it lower at we'll of then if range. And be

plan kind We we'll we bit the wanted color that lot a seen. cushion. Given conservatively of irrespective, is, things light run did behind provide reported the of and to how similar. want place of a range. in more a companies of profitable, we've have be macro the that's a But that bit Certainly, little why to but kind dynamic of

margins, the have orient terms trying gross In that this during I business more We really gross plays they'll on our of that as out. little about don't the towards much think bit an impact profit said, generation. We're Day. I way that really a talked to Investor

seeking keep good, I very that the the business, So incremental gross then being strong profit and going think business, profit they're op especially in Communications already forward on the data drive going long are unit gross we're as difference dollars a dollars profit dollars. key will those economics to applications

Michael Turrin

question. substantial Very a helpful. It's to a substantial answer

Just may. a quick if follow-up, I

through Can expansion a you're that of informs the Thank currently seeing XQ how driving compression software. rates, we're and headwinds what's just different across seeing expansion On the walk in guide? you. the rate vendors you number

Khozema Shipchandler

Yes.

basically rate of that revenue expansion I the think rate the follows some decel seen. kind you've of growth

to nature macroeconomic feel the the those we usage-based business that and of about of One take things given down, the bit of our is other more businesses factors business, as a our tend acutely. economy kind little

bit up, very, factors we in COVID, most a back acutely turn macro the If go different quickly like of that the couple or a very kind Kind same cycles we markets on of to recent pulled even them of the you right? way kind more up. of cycle way as felt up

come And so, see to I down think a little that we're starting bit.

In mean, a quite a just about revenue terms and I we good of year-on-year on guide, basis, spite ability our generate of growth environment we'll monitor macroeconomic in difficult still QX the feel to continue it. to very

Michael Turrin

you. Thank

Operator

Your next Oppenheimer. line the comes with question from Ittai Kidron of

Your line is now open.

Paramveer Singh

Param on Singh is This Ittai for Kidron.

international, margin of has gross to much want communications it Was on overhead? that within able are, firstly, you profile? some 'XX? significantly understand which what how of hiring to So would And areas cut lower the are I a because cutback were say, back you excessive in

Jeff Lawson

we think heard don't question. I your entirely

to second. able is communications being what areas of the going play what business? in that to other I'm markets? a relative And for the I cut back was Is it question right? were we international So, to just back proportion understood that try in What to that

Paramveer Singh

more there Yes. previously dynamics to because to 'XX just like are understand I over-hired to in is wanted the communications were we since a of that you're in understand not pole, past September? So, other business the -- also you this the streamlining That identified? general in of wanted but behind I some that that restructuring the getting announced of it, areas communications was crux was back normalized

Khozema Shipchandler

what is that it. parts say I to a guess would there's Yes. I of I couple mean

of it and So, fall if I restructuring the unfortunate impact time, that Obviously, the you had like us at feel And that part call that we go to at we of kind time. the back cost did that to the of that having of obviously that about but would with kind more cost-cutting cutting. workforce about, was is ways vein. in something the XX% bad our more

say would our better businesses customers for the that this different was And well more drive our of owners can that two I time businesses. buying different share have just two the restructuring both cycles around economic given it aspects we think a different as around, outcomes, as

once would way In necessarily point say of pretty wouldn't terms the costs where I that heavier across international I relative was came to necessarily kind that our are was lot it Like especially board. domestically. out rules from, the the A global global of you go-to-market, it G&A. of out played get of facing, very the out in are roles and facing. Certainly, engineering much it

more any So, out pulled I that of kind in say wouldn't of international other we region. than

the out we is and about the unit business are Day, international, quite that this of in One -- in last things that at actually of Investor particular, strong. to point our talked economics

terms way. going bit the we in try of take as growing so, are long in And to in markets business hopefully want we pursuing economics this time. so that color continue to a that And those good. we're international unit little you out of But continue gives to that costs

Paramveer Singh

really past for you could understand in XXX Thank investments the to And if of like. then is only and I software, making quick. quarter that. XX% million the considering you're X [ph] Absolutely. of or want level growth this I

billion-plus business. So, hopefully this term want of understand headwind have bring in business your I that you you're $X just impact near going while to the to to operating the

Khozema Shipchandler

non-GAAP did million to to do mean, we're $XXX I the prepared Yes. that $XXX What number operating profit. is that of year we're our current guiding out million about remarks specifically. break not going in to in we say

the dimensions an million in there's increase included years or out. that employee’s OpEx. some $XXX we're number otherwise continue. the vis-a-vis that compensation we've to two bonuses specifically few compensate incremental us of that to going was broke is over that, would headwinds help that of that One way we And in that Offsetting about stock-based offset last seen

smart not think but investments there's then as growth that those out in And stuff predominantly And those of a the well, be think specifically. of the break accelerate those we're going are products. balance Flex. in that We and there Segment of bit really other little number will to because can then we investments

Paramveer Singh

much. so you, Thank

Operator

Your of McGinnis next the Taylor with from line question comes UBS.

now is open. line Your

Taylor McGinnis

Thanks, question. Hi. taking so my much for

on of discuss I any Day. the XX% would to call. a was how great changes you're provide Analyst now? outlook the you But one the thinking revenue some that color the that, on outlook could revenue color area about didn't lots stale. you incremental But at little So, you given that bit imagine be here, potential XX% the of provided might

maybe embedded looking bit you guide? changes you of second just the And little particularly what's relate part a might of could question, that guide, that And a then more disruption? the talk to any as rev it risk XQ how at to made in in some about

Khozema Shipchandler

Khozema. that I'll Taylor, is question. this take

XX% So, a overall years plus business to those aren't the XX% guide. business. the our provided software in as Investor medium-term to as really five as which XX% a on is term, during of three we to XX% the We both labeled Day changed. And medium the XX% revenue in well guide

that, to we the on the have we the the said line that what guiding in a going given up. now until kind see macroeconomic macro of dynamicism now that for few Beyond top clear times quarter-to-quarter picture just continue environment, we're is

We haven't seen that play out really.

last seen it kind of bit get we've In couple more little of rocky fact, a months. over the

want way smart guide And to we that the so, about just we be things.

XX% is that. we XX% kind of to called that I QX reflective in that of the out think

is It a tougher environment. macroeconomic

that different we're spite up of we're us its to just basis. I prudent out, seeing able growth making to the put But kind light light in conservatively year-on-year a that on basically plan and are about of signals of that things run and be business to kind in a seems think going that, pretty could in think numbers good to I play think of macro number of that. the us of business it

Taylor McGinnis

follow-up about last and appreciate the guide, term about EBIT the basis. But my I think and gross guide that's dollars we just talking is there. a medium-term focus quick then is dollars percentage putting near margin -- on profit And that you're the operating as

in gives you to talk outlook XXX what provided? you that comfort just can medium-term that you So, about XXX

Khozema Shipchandler

guess I the is, the say of that I that is mean, I got you mix. a factors it Yes. couple would in way

million you of gave $XXX we that anchoring base some in give current you is of to first we're XXXX us grow. how of year. to gives $XXX sense kind million which off to So, That a the

As we taking look software, we're medium-term called our into revenue given some that that appreciation out obviously years, over the we've next at XX% plus. several in guide account with

And assume profit several different of will the gives that a gross a and out margins those around out, business next kind profitable dollars a of how you kind if sense so, math can of things years the run us the that and two each this over gross businesses of that kick few become.

GAAP some think give and the couple drive the actions, and last op out, we've kind I on accretion, over margin just the recent efficient look to think most ultimately we yield profitability sense we really that certainly which additional the I can us us of say, gives as then of can confidence discipline the business, a run in shown OpEx XXXX. which And simplified side, will of periods we how

Taylor McGinnis

much. so you, Thank

Operator

Scotiabank. Altmann from comes question Nick next line of with Your the

is line Your open. now

Nick Altmann

guys. Great. Thanks

on follow-up prior a question. Just the

and having shift done of you is factors Just to from a guide, and you restructuring the of focus at sort much less versus coming quota-carrying headwind have look the the guys level the of XQ given some growth the applications? these of restructuring reps how to and and of how data macro significant of

Khozema Shipchandler

much, year zero. the days large, undertook is reality I took informed in don't the just be restructuring be of Nick, take either Not that last may we to short to is actions, that to Yes. the QX the ones nor that But by in we and impact, mean, I that ago. I'll that half one. is, think, some honest. is not a guide term, few by the there of the be Khozema. last some suggest I this want they're going so

kind revenue said, The bit not as it way model play catch going I a to it's account. of the bookings the things little to guided that up. put be have may QX. whatever we of I'm planning that going Again, as took in that impacts we out, there good time felt we and zero. to into say together, been And our about takes way assumptions pretty for But the

Jeff Lawson

I'm that, context of going you to if one will. bit add to

you're earlier is underscore model. think we our see So, want Jeff. accelerated to have think said macro headwind this guidance. And a in a in like pricing recent usage-based is results pricing usage-based that something a we seeing model, in and an environment repeating, our bears was I And that this. which I that that's I in what

What I the of real for you're seeing this seeing, muted in, is though, we're example, our what being think period of activity general just economic during right? competitive a consumer activity not time. change situation, representation a and is slightly

of can people also we you an for many can of cases. think days we early were occur for the pricing play earlier, as that that's this as nature because as to in see us economic recovery our saw product the also when mentioned new pandemic model. usage-based And tailwind the a using well. I And be like strength accelerated use But our

are we into view usage-based think I on accelerated the model. macro economy so, And the based an

in see do a we more because really as move think the are economic towards good And is company we recovery, a that you'll position I streamlined.

got great to enable more to model. focused. recovery, business the And are from including see a that We tailwind the us we've base customer

the to benefit worth think I right of bit still it's feels think in during pointing is, it's us. little just the I which model. like speaking, out model, usage a a a long headwind again generally term, nature times, us for these of the And great the But

Nick Altmann

operating you managing the can embed that us sort of now separate expansion the communications just follow-up. implications Earlier, does business $XXX in of the million profit any had walk business. on you units, for outlook two side then But margin through margin side? to maybe just the a you're And Great. said the as communications that gross not million $XXX the

ever sort maybe a bit on disclose be I more plans attention a margin little the bit more profile have discounting disciplined on unit the that reporting? Do in a of mean, separate that you would gross to to little business and pay entity as guys of business? part there you

Khozema Shipchandler

I there's things of said a there. mean, Yes. so that couple in you

just So, part in and latter terms to let then first the -- back of the me come the take first, I'll part question.

So, we actually are pretty disciplined we product. already in price the way the that

feel I pricing so, work. the the that And mechanisms way quite good about

or The share. unit strong, to said a other economics domestic and priced we're are as moment very tend losing they're Jeff than be ago, whether international, higher And we guys. not the

And very, about importantly, that our the product. about way more so, product good the we is get customers the value priced feel that the very and from

then additional what of is transparency other we're terms terms we I which is the in and to provide communications now in aspect that Investor data In question, as of that our of disclosures, the committed during Day applications going doing kind we're and think have what continue our And we quarter. of your we businesses. current calling

I And that, additional the to just reporting develop next over And little to few operationalize we're robust will one the over business expect through we bit of that quarters as disclosure units. work is to going the lead that probably a more we think time. things

Operator

Macquarie with Capital. next Your of Fred from comes question line Havemeyer the

now is open. line Your

Frederick Havemeyer

Jeff you. for A perhaps thank and Khozema. question for Hi,

north of in see it's I you segment in we've quarterly communications seen of of that of the to emphasis what the story that we back and should there. Firstly, product-led motion a anticipate within towards star sort to say, are the that returning to revenue Communications prior in in, product-led wanted the hear sales-led shift to cadence any ask, with more with growth change -- great years? relative growth,

the outlook? operating thinking that context, suppose metric point key a on less operating your profitability, of revenue something be should 'XX of you're kind of and at for this will margin that since guiding driving or also ultimately I outlook revenue just as And operating in rather non-GAAP a company we be profitability fiscal

Jeff Lawson

is half to question, I'll the of second this your Fred, your it I'll first part hand question. for take of then and the Jeff. Kho

the will growth given the to For how asking first if revenue that of affect we're think strategy. question, moving it part, you're like more a I I understand product-led

they're the the And something -- a from say, that win in prototype the beta customer customer to it lot the entire built and and base. a they of comes market a from growth when testing out in the customer, their look, business to rolling idea their test account the of growth taking out I they would of then growth the goal we to their once base

of And so life in really, some communications of of where products. kind cycle it's these about influential often design are win. that's adopting And developers getting that very the

make those that and going investing in the And that stages adopting back to developers what so, by we're is companies the really Twilio the successful moving towards more growth, product-led are early things onboarding. I of think in seeing you're in be

And recent I customers to help lot find on roots products and Twilio, make actually to a people easier product our streamline it is with the line our you're to can easily to customers and return the we've I product, go more enable running, quickly over we customers think relied periods. is a product. see product lifting this the the powerful make of lot of areas in right, which a the really And success globally. a think to do these scale to but also heavy in up scale And as opportunities get to where

And on. what we're focused so that's

So, for so. going it's new easier a to in that our enable because existing I think us help do scale to be way customers will customers them to customers will on bringing actually it as continuing well as and appreciate faster

second it the question, to of for part I'll Kho. So, your hand

Khozema Shipchandler

a about also one the the think really I become and we take maybe to in profitable drill second, want question, is, but team the that a is I'll and way then a things step second really management that as terms would back we part a lot company the Fred, a for big down of it is about that I of of that a guess business. we've thought become a just as business, is

And that, a of wanted that revenue also so, paired threw lot with generator, becoming a off profit. revenue to large make we sure

And so growth tremendous two fueling amount that's why focus to way that example, in have Applications We lot and a done business. opportunity business the you've better that be the business generate the think and believe units. seen a future these some communications can of an for of in more while we've into we we what do Data profitability, restructuring in

we given the up get. very, What's operating rapid certainly communications we're to said, for business. rates. in are haven't a us go that We still markets very growth still ton at for fortunate growing there's on With that us end more is think in growth that

Our the is pie And if is share growing. maintaining. anything,

And lot I going see kind would the setup a We say, limit. that and bodes so on of that's there. We're sky's more of in us, business, a great terms think a a growth forward. well real still then internationally, I opportunity. Data opportunity for really, and so growth And underpenetrated, Applications the

with our think both said during that well course As capabilities our this data Jeff communications and of the capabilities, too. Elena pair have really conversation, we

additional we growth, think some will And that too. so, yield

sense key any that as part line So, growth of the but of a profitability, calls. with we see profit don't feature these side. will want focus of a folks of GAAP please lack that to to We give certainly confidence on confuse be sight do

Frederick Havemeyer

for quickly just then Elena. And

you're thinking investments services of the you where in on into you're prioritizing the your and as Twilio, really about thinking software are the platform? at As portfolio apps looking

Elena Donio

will detail. I break stage out our a play you think of than not that that going obviously a different at product is product. But Segment I in of is just our Flex we're to tell what lot

behind behind there it's But So, We got fewer both of resources solutions. it, green are reps fewer sales cetera. it, across see a both great a -- see we ton had those opportunity build of et build.

Flex utilize our fuel Segment Flex. power product. well product is will creating through we our to through ultimately actually better that Engage We as think engagement data our platform connectivity to comms as capabilities

as well them -- fuel actually bring to we our see communications and some together versa. together and better business be so, vice opportunity And as them to them for real

but different all of our play. in we at Segment business So, sort think equally is just the of portfolio, they're stage a important

more it well. the Flex business is than clip a it's growing but does, to half little a got healthy the So, girth Flex and as business in

Frederick Havemeyer

you. Thank

Operator

Panigrahi the question next Siti of from Your with line Mizuho. comes

is line now Your open.

Unidentified Analyst

last on Phil I want Siti. on the is This to touch just for question.

on So, for Engage CCaaS what your environment? of what one Flex, guys also, And in this increase guys it seeing platform? share make I in is of know strategic it's can priorities. you kind performing changes are the market? of key sort the traction to And you How

Elena Donio

that, it take order. I'll I'll do reverse in and

availability So just in a reminder, engage general as QX. went

So couple of part just a we're a throwing of and we're new couple new new that as on deploying about e-mails trajectory And cases interesting use dozen We've customers of of a got all that. excited months seeing there. really new ago. and and Engage the lot SMS through messages

prepared the comments. Segment, the part from back Engage -- so news and others customer in excited about terms of next couple able both wins of well a been as our of about couple bring of couple to in we And of over renewal’s perspective but we've that of are live utilization haven't as There share talked directly, we're of a a chunk to those excited net also we're months. and pretty good that their a

we there real going forward. opportunity performance Engage. And with strong think So

beating as had onboarding. amount of see space. just these well. our these in as -- coming online, product that the competition will I our Flex getting deals, the of performance And sales calls, the forces reps and perform out is hiring a in how fair mentioned we in process in optimism we head specialized into good prior QX enablement growing head we're for to building market, doing in as sales And the out

we've Just seeing right to got and kind there greenfield and fleet cap that any campaigns, to the marketing matter a a messages, making sure the off are of we're not competition, then embracing sort of loss of This into We're word those getting necessarily not seeing bringing deals it rates through on bothersome the generation programs, close. opportunity, competition. it, way. out in is new with

to coming in plays that momentum kick these of forward in we how as out XXXX. see new and good sort online, to looking So here beginning AEs

Operator

Research. Your next from Alex question the Wolfe of with comes Zukin line

now is open. Your line

Alex Zukin

far, Thanks honestly, say, the seen buyback. thus we've fronts, that taking from And on in including the I congrats multiple on would for my best, question. presentations, one the many company of quarters

maybe quarter of and in this I on into business the side well a and the linearity QX deeper point little on also the both the headwinds question you're the first go how missed the you are be the letter, well the to commenting but tailwinds side of seeing that that in it growth guess headwinds, the markets I saw communications both also the on is, I down? the in or I Maybe QX? missed and both application you but bit just what guess, up can can -- you into in how maybe

Khozema Shipchandler

the other is like, color chime well. this if Khozema. And question. have you'd certainly Alex, can then I'll Elena in take you as

say echo which is earlier, guess that I'll is that one, what not of number Jeff would losing that, I something So, I just share. we're kind said

so business of a the that us confidence gives that headed in right the And direction. is lot

the well we're sooner a two, side, on because our a is large of just as And both in part, effects many some the to feel macro indicator based, start on business communication do in environment. as the dynamism as down up. ways, those we're seeing of certainly than the others much usage way in we way kind on Number lot leading

well QX rate you're QX. as guiding of bit And a little little our seeing we're in of saw our you and results so, as that, as in obviously, the way that a bit in reported well expansion that

the I a terms I things of to very of nothing -- is it's the really mean, previously. general called In that would of category. kind which we some there's macro beyond out point headwinds, broad

But called and out some e-com, and social of that the retail. is stuff crypto we previously

see various those pretty industries, of you know, And as been in you that reports. earnings significantly. impacted have All

in cycle. that the news see You

environment And up we're caught for the that importantly, in important spite think continue in of the whatever I play just whatever so, is, of through macroeconomic to is. grow through profitability same. we what's we and And that kind that generate us we environment is that

there's really Elena, that I way So you if it. the anything that's else characterize would add. know, that don't I would

Elena Donio

anything I don't think add. have to that's I good.

Alex Zukin

that. from And I guess just following maybe up

So, we the Jeff's be way Is effects, the if I back earlier think the ask about about about progression linearity I guiding, to the on net look negative I some categorize good, about a should you're number What's of when anniversary But those know how Or we retention. progression? here, point, think up usage start model can the always it be that through year, year, can the and forward think about normalization if that something you really thinking to think I or to consumption the question internally? from about retention model that way are XX shifts stabilization of you how rate? it? and the that it -- if not of you the net right understanding half more new? Is that to one, it

Khozema Shipchandler

don't. I wish know, did I Alex, I

we're planning conservatively the basically, that I macro. think given

a really dynamic environment. I think it's just

uptick And per better? be necessarily se. Maybe. so, Could it an we're not forecasting

plan it's we for hoping sort to that. but I going of be, can't we're all think

grow like can. it that that out to few the they of in going we try base. They're been kind off hope better. it our gets share And has so, existing it going business quarters field that are of way Obviously, the whatever playing teams our going few and every last can to kind way to to of maybe win for we're plan months, the last

going historically it's know. that something of the forecasted keep plays And have. as I know, that growing you We're how we've to accounts just But with out terms DB&E, in don't we that like not to.

up, looking the economy up, By will definitely comments your way, that Thank time as forward picks start is you. happens. pick All back of we're question. certainly I appreciate and also to that back I'd business that, the at our the say the your

Alex Zukin

guys. you, again. Thank Congrats

Operator

Your of Wood next question Derrick comes from Cowen. with line the

now is open. line Your

Derrick Wood

Great. Thanks guys.

efficiency talk strategy? in in look at role drive light you two-business more driving and leverage, are maybe play to a can to you unit of As about a how partner shifting to partners doing what going more you're especially business, the

Elena Donio

partners take I'll that helpful in Elena. of vital it's in We bringing think play customers. one. some They Derrick, flagship role. a the are

heard this the You over about quarters. of and us last couple talk quarter both

in different We couple of put them a camps.

more a also then just might that piece have referral of could straight technology that together with partners there's implementation products. also be works up our partners. And well of or or referral reseller There's one that partners

will of We partner of acquisition, opportunity are more lot focus And business partner that in bespoke creating structure. sort across of so, our partner create sort enablement process new teams and unit co-selling the a we the there. think on actually

and comms new the to But believe going that not exactly we're as what as in like. across sort data out growing growth our well that trajectory importantly And and role business. an partnership the looks business break across we and will do bookings, of both play important applications

Derrick Wood

for as Segment. Maybe Elena, it. Got follow-up on you, well Great. a

wondering growth of Just trended year. the the progression how over

You change. organizational a had lot guys obviously of

a looks this market investments get ended into what comment condition? QX on demand to how kind and was at Just in end like of going that. macro for you hoping CDP And then as look QX,

Elena Donio

right. the way execute Yes. the of worked phrased And that had last was came Thanks, And Derrick. beginning of some time. of huge a we priority began of when then through the sort is I talent question think hard That online lost mine we've you key fair amount Into May. and a when stumbling, even to to year is in rebuild. I

multiple a the win couple from us, And Box Chase I with wins. really our of again you think customer across finally, units business great under QX listed in in They're started and couple documents of Engage JPMorgan others. really, and legs Segment, a fantastic was but get to and us a with

bringing we We to forward had look some great well brand live. that wins new figure as seven consumer

to do. So excited about lot work the more trajectory. A

or AEs, and but under still execs, are coming these account we're excited online them, trajectory. own the mentioned, legs I about As getting their

space thing CDP early is the think also note it think to the here. important but we is in I take innings, sort I from of where still

with create of of customers set amazing capabilities the building Engage, also we platform incredibly really but applications. in powerful terms communications of power to the to can And our terms competitive an think orchestration also such what our Flex in we're our as in differentiation. think connectivity data as just So, well then for across also CDP we create

to dollars. about how feel budgets in we there. of every like We when matter right part important particularly like this really really marketing it's they super getting brands, a feel great people a to their create message one it's got surgical lift of a with So, for precious now. be like do spend time single We we've

spend to want. marketing time cycle, of making spend when want we time little are ad spend we they the know proof and win. a But when strained, bit and more But that it's sure what exactly bit sales we just a little also more are to in concept, tend to impacted people get

we're on making deals that's the those is really get focused so game get sure what we time. closed and And over into

that I I and had wish we the ball crystal a play through, in environment, context. we So, we on macro do well but think

Jeff Lawson

point out I'll thing. Jeff. is add thing. just This other one other I'll one

and of messaging then this lifetime your a of more customers revenue increasing tweaked acquiring we about value, our noticed, look, for said, SIGNAL those customers. you at buyers We your the right? If is lot with this market, year last efficiently

so relevant really on our based targeted this how that is a in are message period of products time. And

in both customer I out, their in adopted moving e-commerce us that about leading ad Segment on see a really from our Box, in market. exactly we terms spend. could in what they a but company improve And customers put of remarks who to into of are think some prepared the you these talk Engage see order is I mean our going examples long-time that the Engage, we good JPMorgan that adopting also we of results

Operator

the next from Jaluria with Your RBC. of line Rishi comes question

now is open. Your line

Rishi Jaluria

end. taking Thanks from Wonderful. Two for my my question.

to continue Elena. want one I for Maybe talking is Segment. this about First,

we how of evolution is returning greenfield. should As bit little it we the little the more think about side the evangelical, a segment considering go-to-market, routes, about market is kind kind its a thinking more of core CDP communications be of PLG bit to especially

with about we its get leadership I've as this think got the own software companies Adobe, space space? potential larger a try follow-up. it then Salesforce offering or larger big the the And to what's market a maybe be into of And into maintain trying alongside Segment's to to that, in get kind vendors as way, plan in T&E

Elena Donio

the Thanks, it that. product using of getting sales getting like concept a in, Rishi. customers getting in introduced, things motion, This is strategic proof and

the customers. really with so, their have the into and putting in into focused product of turn dreams And getting in paying building attention as our action we customers there and fantastic capabilities them just capability our on our market blanketing enterprise sort we message helping happy sales through show and and them

while and that investing the obviously we so, in as accommodates definitely message, do sales there's And more developer motion, can sort of well. enterprise the really and an demos of we price tag accordingly. we're this in the is terms that think And

of connectivity real So across the opportunity our -- is our lift. for rest that a products the said,

can Communications through our examples everything engage, be I business, becomes within where think back the communications finding data push and so, and of the better orchestration turn together. out, And we then where around ultimately useful can

get those we a sort to opens as communications And Engage I Segment the for from communications the And then back think in and channels developer as side. of go that us of discoverer on the door side well.

product. have certainly moves the Second talked you was the love part of and big of chances big we the aware our what of about our we're that competition, we But competitors. better

product the we of just we in do for do a one have we're continue those going XXX% space be to things space. the sure very ahead. we're the We we think the specific focus from ahead is continue to single The time us in we'll to that. perspective that made, engagement bespoke to competing invest to and and orienting and work customer we every platform sure is capabilities stay stay that And decisions of to ourselves and make make sort just CDP in on

Rishi Jaluria

commitment alone and out really to the That's I about of If quick and Khozema. bringing looking helpful. about GAAP as it. revenue. of let's out, just financial out, XX% then quarters sort to maybe XXXX in two GAAP five appreciate profitability. talk your as a to kind Look, think one years guidance of try predict I down SBC just let for well longer-term but And Got it's to or profitability hard XX%

your reach pivot be that profitable more that though margins mean, XXXX, range. I XX% non-GAAP toward presumably and scale, implies just growth to your that larger operating substantially non-GAAP that a would you as in in margins XX%

process me like a given thinking the it's And kind be low focus, maybe in you maybe a walk that all you. on And the areas my Thank the wrong reach where as just for. may of of little I long-term target maybe of here? Can through kind of framework? thought to maybe bit seems

Khozema Shipchandler

for thanks question. Rishi, the

I just I not to the don't end misspoke towards said, case. you the think XX% op what I edit framework if and that you to long-term think you or what but So, XX% actually said our not, was one margins, and know was that's

to that, the So, I what implied the the now, might given XXX the the guess, guiding way you we're to it we right we're it run XXX that, bps of in on the be is kind can dynamic for thinking to Obviously, based QX year, We're there's about that how quarter-to-quarter see not quarter. are or current on XXX year. guide. math guiding getting XXX year just not our per is quarter post we

to can about, on talked it just we you stock-based probably two, it over the is get guess well if remarks from given more SBC feel made disclosed year we've out terms looks about way end, stretch and that that the plus, we XX% and good upper those we I five moving is, one; to period side, that to think if like we something in I that the can get that of that, the one, about to XX% that that the And compensation pretty is -- number the which cash-based. that changes of XX% we at execute some in if we

think net GAAP profitability the I three, that some obviously, then as of yields And well. those overall two,

lower out we but year, XXXX. better? would the execute, on we higher So if want something that years the in that. will -- to in the same I we not that's Certainly, setup. at certainly doing. But about tough, I that be the current be revenue all that's commit we'll Perhaps. five feel be mean, the we're We kind end to. be very profitable could math If of good can end, of the is it

a And how name obviously. SBC GAAP which accretion, to the see And think the margin then signal. really is that. really lever then to we do over of multiple out, we good we strong to the game, years be is know ability being op and And is principal profitable going our control

Operator

Your question with the comes Will line Power Baird. of from next

now line Your open. is

William Power

A of couple Great. questions. Okay.

I through start, trying me potential Communications to to growth and Let on think I'm the just go-to-market segment. impacts guess, there.

you I'm you trying you I a comfort provide think bit maybe of couple understand, but just you of growth the limited a earlier expect in didn't how impact around there, what whether meaningful years? growth? not you expect the revenue impact. given more suggested could there's magnitude for any that framework this growth, an that taking to segment, little year next just of to And get changes place or Communications

Elena Donio

Elena in covering of I'll the take got here, my to add. go-to-market, else prior and that. it's you've my can capacity large, then role, -- very in In anything jump just Khozema if

the I substantive did the important a things couple think important there's -- point. cut I a And understand to think about. of obviously So, here. We cost

of quarters. we've of was really to of model of as that more process to our sort the about of started us couple go-to-market It the more right think last and important And communications. to begin our talk tooling about products, more for over we to demand our

believe in to we be and capabilities across growth progress in against all make three and of there. a more by in efficiency like going product of increasing even making so, plan those to team self-service. our efficiency dimensions we lot now how the improvement And We're there's gained forward create

process any get great our experience. think those that involved efficiency where we of kind we And customers any were that usage and and of every of our bit of of sort our we at layers having I human reserving were had number wasn't, in we the for historically, when in our a really over when you the actually truly from when Twilio And -- we underneath peel believe was where benefit customer experiences it really a people back we really servicing involved you how the of can without us. kind sort provide people customers customer and of there. really levered and times customers' fantastic stage capital think need in

right they're a when making a they with decision cases that's they're they're something or with problem. deciding when use And when with left their struggling and whether turn solving

And so And capability. to that's really with let that. where to we apply human capacity and that not we're want going go

our We will still they be there customers need when for us.

loads customers as have over new where a numbers well. of But intensive of there for When also at talented as of to more But we'll degrading was individuals it on times. customer Twilio, large efficiency relates -- as number see we our acquisition, sort last big years. space the making lot that's those begun it's customers to of was there human-capital be that big we added running

continue us customers and trajectory tooling satisfied. have keeping along that's our our growth human coming So, don't the are our necessary believe for space, the around given that could do with to how we given we we the penetration like in we just feel and products capital what given

William Power

mean, go-to-market? the by new might products? probably how differences with different on through -- be you remind the with got maybe, two folks Can hiring Elena, as -- and about segments. software. up balance there about thinking then us, know kind the are of synergies to specialized and to maybe each on I congratulations you're But way shifting just of synergies you think to you've what for And focus that, follow that think Okay. those trying just Segment, applications those I some your and you and primary just I guess over and Flex you.

Elena Donio

digital they're running for actually not where really just selling contact of sort cases customers in Flex environment. being We using a uses the where got of key. great service center or is see We've where environment, customer Flex a Yes, sure. use of best support is some engagement

incremental there's efficacy happening the And in data a with so, beginning interesting track create in where Flex, we to interactions lay that are really in synergy believe that actually Segment, and those we're now. will tie

XXXX. capability of some see to expect actually here that We in

But use different They pretty I begin want us set sort of to one today. or about think are lay cases. as that first of this product one track we before to

organizations on of buying keep customers, some what sales of And be see so, we're of will those benefits working specifically from this unique focused to we those those year. But going and customers expect that into adding we Segment to Flex, on really unique us. patterns, those some need the

William Power

you. Thank

Operator

next JMP. Your Walravens comes of Pat line question from the with

open. now is line Your

Patrick Walravens

this all to the And after a situation Great. progress. on where years the unusual picture. Jeff, of stock collapses IPO. class is very class congratulations you big this you. has But have that Thank seven a Twilio dual a single

June. in So,

structured sort And thoughts the hear you be now it might and and milestone, way. we've as why on love going guys would how do forward? feel And decision that of the just things the to history I founder, hit the about originally your you how that

Jeff Lawson

Yes. whole for and all owners time over growth, I look, shareholders the mean, with been profitability. last driving shareholders. over And we're along, business the OpEx, Pat. benefit we and we've public. all extensively of several increasing this on months run of Thanks, attractive as our And engaged we've the focused our lowering

goal needs, I we're prior perspective take that of a our we the about public just the create idea balancing young actions think executing to customers' And is shareholders' employees' IPO, from believe I our newly balancing to when to the in for as place in it our going is this the management inform is shareholders, needs, strategy Help And company of value we its put public growth, terms and that we for needs. a our that. company, get to do when think our company. feet a our as

future. seven was of that's that with an the in expiration thought we And it years why

a Now ways we long here at off. time, that felt are. that like And

it as footing get public on company. us its to think I a that job so, did And our

the that time, really those seven which make will any we're come our in we've able of our public listen the to benefit having shareholders. decisions able to a of any expiration company. whole public doesn't market, that During years the company. that to We're young change of class as now And off. scheduled -- of in dual And the ways run

so a the how founder, CEO I And think company. about that's a and as as of fiduciary it as a

Patrick Walravens

helpful. you. Very Got it. Thank

Operator

for back Q&A today. any concludes I to for This call closing our of turn this the speakers the remarks. portion

Bryan Vaniman

today, soon. us Thank you all speak we for joining and again will

Operator

for you Thank attending.

You disconnect. may now

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