TWLO - Earnings call transcript Q2 2024

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Operator

Good day, and thank you for standing by. Welcome to Twilio Inc.

Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Bryan Vaniman, SVP, Investor Relations. sir. ahead, go Please

Bryan Vaniman

and XXXX for Earnings everyone, Twilio's us Second Quarter Conference thank afternoon joining you for Good Call.

Officer. Joining Chief me Financial Executive Shipchandler, Officer; and today Aidan Viggiano, are Khozema Chief

financial a posted IR measures reconciliations As on our non-GAAP our our found and website can GAAP will our earnings we disclose release, between on call. and Definitions reminder, this and be in investors.twilio.com. results at non-GAAP earnings presentation

goals. actual our Such statements Form forward-looking on call, recent future make risks known outlook in are XX-K about unknown XX-Q. those that and differ our and are also and will We most described those Form in from our and statements including this Many to results subject uncertainties statements filings, of SEC materially forthcoming our uncertainties described. risks could to cause including

that, Forward-looking made. we'll any statements statements statements, required such only represent open to assumptions who and to update for will obligation the law. With our and hand our the as QX forward-looking then Q&A. discuss as date of results, Khozema and beliefs I'll We except it Aidan, any call over disclaim are by

Khozema Shipchandler

a you, for joining delivered thank Bryan. and quarter. good you second Good Twilio today. Thank us afternoon, everyone,

with in as growth exceeded We durable from levels. are non-GAAP driving profitable operations, revenue million income our $X.X QX in we $XXX guidance billion and both record

flow, quarter of strong free cash another delivered also cash million $XXX We of nearly generation.

are improved on our commitments. business confident in performing We're rates on drive we're well. is rigor, The additional we business, focused will over very running the Segment time. operating business our communications with which increased and growth executing leverage And

State on power is Communications of and disciplined Twilio's data international unlock the interactions are found AI, they is excellent improvement because communications I'm that agree. is more in of businesses we or According that combining trends. contextual including unlocking true to rich them good help brands innovate we contextual enable While the more saw reducing and QX, to smarter, quarter-over-quarter the future losses, capabilities, Report, in non-GAAP data AI, lower continued customer data That the Customer power paramount. Twilio a Engagement positioned the and stabilizing, our engagement, is revenue to XX% of our reimagine of that the only to signs provide of engagement that critical encouraged more our we teams leading yet Annual across of And said that approach board consumers to disconnect areas contextualizing operating is will growth customer world have. By in uniquely brands XX% enable they for personalized at and drive cost. need customer engagement. What's

highlights. Let's turn to our business

business an year-over-year Communications and contributions. strong billion, the performance of Twilio basis had messaging, solid in with of back a organic X% ISV revenue $X.XX strong Our on in up quarter, acceleration on e-mail growth

of partners During our growth we term, self-service that our be opportunities. expanded a the cross-sell and growth number over improved and near ISVs, will to fueled rates network believe of time. we the quarter, also we on In expect deliver by focused enhancements initiatives

made have areas, with these new ISVs. and securing progress meaningful we While success our in I'm in particularly pleased partners all

provider service software who quarter, customer customer an the with achieved their embed within leading renewal Twilio During we a continue X-figure experience Voice will solution. to

retail expand Omnisend, Twilio will with omnichannel an market, the help its platform geographies. signed we Additionally, a SMB footprint into new who marketing targeting new partnership

to new We geographical Insider and co-sell also territories Clavo partnerships into end-to-end BloomReach, our Airship, marketing experience. data-enriched a with power Brase, extended

of simplify the to and experience XXXX, business make in we the self-service During to continue growth enhancements for quarter, delivered our strongest onboarding QX the revenue customers. we since

their products a term, new using deliverability can machine process become growth all the gaining customer, cross-sell Twilio introduced greater response customer and and vision For a deploying embed to they quarter interactions log-in important drivers the use console engagement messaging as meaningful expanded their better desired VERIFI and customers learning, for VERIFY an to the bankers AI as are see with have voice products. traffic won for our platform single their These connect the and SMS as which having suite for recommendations, is cases streamlines in voice usage. a we rates such to as lender, it that to better engine are adopted be more daily to make a natively by will a that of increase innovations as customers. X the our platform sign-up started engagement. over already mortgage on based and both increase products growth to log-in personalized of that a products. In on new XX% success productivity. accounts our on leading well XX% AI the enabled optimization basis banker helps a competitive customer who smarter, our drive guiding with messaging newer deal lever company products medium unlock and the rapidly Voice thousands and deliver Since brands. as and in we customer And and X access adoption are this outcomes. quarter, time. One Twilio, using both and seeing in experience console we should example, be innovation These higher-margin such with software and product to intelligence, In leverage Twilio

Segment can integrating capabilities it millions the at importantly, our fraudulent natively because only growing our AI, deliver certain simple are is and promise to the and issue enabled dollars to More leveraging better a during Communications deliver customers our growing our GA went pumping into of protection in business. for international source outcomes automatically fraud SMS intelligent. Verify markets. We're one products our with trusted quickly detects click blocks example. use, it product customers Not messages, they quarter, by adoption be gaining great saving on continuing and continue and of which to mitigating these to is are is a

AI. And embeds product released interactive into positioned virtual the a as setup. in as next to history, the CPaaS and release a receives that This caller quarter, inquiries voice, Twilio's marks company, Marketscape response. Communications. row, interactions Magic Segment to this for is the of world into in With how to others. of with our voice and personalized Center the ability a recent products leader Each ranked personalized continue recognition the natively lastly, custom with into Twilio's Google were X combines highest IDC's profiles Communications named private recent marketing on is Gartner second receive beta, the Twilio for options we virtual agent truly with personalized of customers responses menu as marking excited this agent a purchase a X execute that is use based for cases product chapter in agent, IVR studio virtual support with in also simple we year receive report. e-mails, it for #X one Dialogflow evolving among agent, The We're Capabilities in in and Quadrant Worldwide Critical guided wizard named the a Service. product second Gartner unified Contact leader

priorities $XX progress up in against delivered March. and operational revenue data on Segment that year-over-year time outlined Segment made continue of solid focus customer in on review warehouse we our to as to executing interoperability. X% we to We Turning our million, the improving business. in folio value delivering

our We XX% also cost and quarter-over-quarter. made QX significant by in operating losses lowered in and improvements profile our non-GAAP

of our of Segment with largest XX% the efficiencies go-to-market, driving We multiyear in to and a new productivity, our X-figure in period. sales versus win our for which key over focus the quarter, A also XX% deal on QX, in continue were an increase prior deals included deal IBM. year bookings yielded in

to the In Snowflake. data realize centralized and data graph and and to and public on front, benefits and integrate Databricks delivered unified On linked warehouses, with the With efficiencies. marketers with with audiences warehouse We've which customers personalized like QX, AI in data audience and deploy it targeted, have to profiles excited activate customer cohorts Zoom traits into generate released interoperability response, linked experiences. data great our audiences, a and new can platforms and gotten data and enhance to real-time product deliver we events now TradeMe we're warehouses. beta, combine seamlessly including Legal and we the further capabilities predictive

We are customers. improving time also for value to

customers their During quarter, focused guiding the our goal. use in-product went through onboarding live, experience, a onboarding specific business case customized on

free we and development Customers early co-pilot strong number time. instrumentation deploy year. faster, initiatives deliver while progress now cash Xx value we're I'm believe platform can energized growth deliver are business become Additionally, we've have data engagement and wins seeing intelligent and our for customers. Overall, we from durable, it to will our profitable and accelerate that pleased in customer ability with the I'll over deliver cash improvements communications, coming revenue over time. over flow I'm outcomes AI engagement outsized to our and customers. reaccelerate And quarters. And profile our opportunity combining and about turn I We're continuing of get made able our to to remain this leading growth driving we the Aidan. very growth to contextual very signs segment continued the for that, and far in flow, organic confident free that underway accelerated is to with CDP a reducing our so incredibly

Aidan Viggiano

was everyone. Jumping afternoon, our up Total billion, year-over-year. was was up into Communications and billion, X% and $X.XXX QX you, $X.XXX Segment year-over-year. revenue organically revenue X% and results. Thank up good reported year-over-year. X% organically X% Khozema, revenue reported And million, $XX X%

driven acceleration solid in as our business. as Our strength by was QX e-mail performance messaging, well revenue continued growth growth IFC in in

sequential growth sunsetting and as we due continue of to the international basis improvements both component organic revenue to growth our see revenue points Zipwhip communications growth signs saw modest We lower the Communications business, our were in and in business. stabilization roughly well. Company organic software XXX of of

from for continue and the the full decision, be this to roughly expect we QX headwinds in points year. modest basis points over basis will balance estimate which XXXX XX XX of We

net Our QX dollar-based expansion was XXX%. rate

was Zipwhip XXX% excluding when expansion net rate dollar-based customers. Communications Our software for and XXX%

progress net was churning contraction. segment segment, remains dollar-based by QX. contraction rate in for the XX%, for Our by we're elevated made we a and Mitigating and driven expansion encouraged churn focus

are we faster customers to result. discussed, are deploying a value Khozema As cases use Xx time as and improving

deals points This record basis profit of versus multiyear gross XX% XXX non-GAAP And X% gross deals for quarter-over-quarter. year-over-year year-over-year. XX.X%, year of ago. We with new are XX down pushing more in XX% We and of basis up $XXX Segment's multiyear a a up over million, QX, bookings points represented customers. were non-GAAP also delivered margin

and in basis points, Segment XX business in that credits XX.X% credits elevated Communications QX. Non-GAAP we noted respectively. QX not margins we recognized margins benefited roughly were and our cloud by XX.X%, recur units gross hosting for As those and call, gross QX our did

we and our migrating to noted provider segments vendor incur migrating we providers of recognize to in data As are this We during new QX, overlapping in greater QX, to part year architecture began new transition, some this we will expenses. efficiencies. infrastructure

is As including which of until end by program. a came result, the migration from gross employee expected million, bonus well with segment expenses XXXX. Non-GAAP XX% complete, reduced expectations to after is income $XXX our operations occur expect new at even cash incremental in ahead associated $XX margins million we of up of year-over-year the

discipline. the As expenses expense a in our profile by time. The cost reminder, over year this of and ongoing driven start program the improvements compensation was stock-based Segment's to initiated beat, reduce revenue outperformance we at

up cash as basis operating making solid ongoing good And million $X was a XXX more sequentially. Non-GAAP cash restructuring business and the margin operations strength. make over loss million flow non-GAAP revenue operating year-over-year $XXX million. We're opportunities continue basis was on of from points [ our down improvement Communications and million, a path basis business cash generated of efficiency operations points generated costs, quarter-over-quarter. GAAP XXX $XXX million This free was of for $XX profitability. $XXX million XX.X% months, flow, progress to from and loss up collection are was time. XXX for we towards to compensation XX there progress non-GAAP as operations GAAP significant ] last million, excluding Segment on driven and Our of points free $XX our and continued Stock-based from year-over-year. We flow over quarter-over-quarter our was XXX we believe free percentage we was year-over-year. XX.X% leverage income $XXX points drive by basis

million next billion of brings to share the meaningfully We since have Finally, we're continuing $XXX $X.X intend remaining to our million over $X execute which our quarters. earnings billion. and on repurchased share authorized count our $XXX year-end, complete the to program our in X repurchases date last should call May. repurchase outstanding repurchases total over to reduce over This by

$XXX XX% of year-to-date. XX shares outstanding million, was as Our June total down

to Moving guidance.

billion, X% For QX, and and so a a year-over-year basis. of lapped reported billion representing revenue be X on revenue of target QX, $X.XXX we're reported last both year, We've growth starting from to $X.XXX our quarterly initiating organic will organic now X% equivalent. to divestitures in

we're performance, guidance range to revenue growth our X% year year-to-date X%. organic Given narrowing full to

our profit to outlook. Turning

income expect to $XXX we QX, of For non-GAAP operations $XXX million million. from

Given our to outperformance $XXX year QX, full to guidance $XXX from we're our income in non-GAAP million million. raising operations

stabilized delivered non-GAAP in improving generation free growth cash and we half will profitability operations. We're in and be cash from that revenue free continue strong the full our flow. first with to Finally, we profile, expect flow income free we remain cash delivered by as flow full the focused encouraged our we line year and on performance year

investing to we to reaccelerate guide initiatives prudently. continue but look growth, plan As we're we and ahead, in

now We significant over to the deliver questions. and expansion improved up improve profitability, to that, for are on free coming made for the to quarters. And progressing and shareholders it customers we've build and excited we to with our progress outcomes towards time. opportunities continue I'm continue we'll our GAAP both flow see to over margin cash open

Operator

first [Operator Sandler. of is from the to James our Fish line Piper question with And Instructions] come going

Quinton Gabrielli

side. This on the on is Maybe Jim first Quinton for Fish. margin

in guide You've better managing operational the automation inning contract for spend? amount incremental And as that talked of just improvements we business? leverage activation. about much to from the far those or back-office of upside this coming opportunity across so year, rigor What think activities is a like about shown relative coming from are the product of these you've savings management how improvements we cost around versus process fair

Aidan Viggiano

lot and margins. then Listen, I jump think on we've don't I a start can Why in. Khozema done

last back this take you and and operating initial year, just coming very If assumes a got about then expansion the leverage. into think our little step guide margin that we year,

at about our If basis the year midpoint, -- at look margin you current of expansion. the points XXX-ish for guide I'd say it's

compensation we're the get find continue the So to we on expansion well stock-based line. line as think to we OpEx as opportunities done. And both don't

the lost of million So the about year. we've to $XX that even That next quarter. the break get million the quarter, talked second in Segment to going fact business we're the business quarter by $XX second first in

to So see the around, addition, functions, get say doing leverage in G&A that then you work can business, automation. of there. And the in a opportunity an you we're there's I'd broader and that in mentioned lot communications there's

We are geographies leverage get to a so way to the continue lower-cost opportunity company, efficiencies. have we a to do remote-first as

as as do doing non-GAAP GAAP stock-based to compensation. the have continue we're so to exact lot margins an to -- these of and of the them. both going say including all well would opportunity you to I I on we continue inning, give And things I'm side expand would but not say a side,

in terms It's bit coming profit, though. it's discipline versus of improvements the in largely of I cost from process a little both. of cost think discipline, In what's terms

having We company run costs. of continue to incremental believe can this to a add that we without lot

seen for X in do row. us You've now a that quarters

And the drives really in much how and with that's team. terms so we're regularly running we're disciplined Khozema the pretty just something company, of more

Quinton Gabrielli

quarter? embedded into that we What it kind prudence stabilization which to incorporated here? little sounds and a talk the also got or assumptions great. like front, year last Can quarter-over-quarter last revenue on here the full is things tightened you sound slightly. actually relative of revenue targets the guide kind you've That's helpful. about that better, we of for then down what's And the we the But guide found bit incremental

Aidan Viggiano

Thanks take the Yes. I'll for question. again. it

biggest QX. half we that, a we're guiding you in a say So to to for of business. what trends in year particular, very encouraging grew We the I did X% we second year-to-date strength X% today. X%. we that's saw X% as we quarter, In on in our that think the seeing business. will We're range reasonable through know, in the first gave messaging, based to number see the X% the is

which majority of trends in we U.S., both but performance, also, we've year, internationally. saw Solid the improving for this the modestly seen

e-mail growth in and of both it really We about businesses. in talked and -- saw really his and our also remarks accelerate in kind as well, business performance Khozema prepared ISV our strong self-serve

mean to to to X%. third the think how So that quarter. you X% we about I was if of saw guided We and we in encouraging in a guided X% trends. QX number QX, X%

guidance. a flow of But of you still we through the seeing kind So are to trends some business. these usage-based are

inherent along with that. comes there that So variability is

continue And plan, and guide so dynamic we'll we'll operating that given given that to continue we're the in. to prudently market just

Khozema Shipchandler

which whether I'll kind bad. not just maybe, planning for is, it's we're macroeconomic one or like of add any really like thing environment good

we're just company to think I the planning run well.

a to geo a global alluded it's times, of number different better lot better a discipline, going with things obviously running we've with things on. macro and of As rigor, market dynamic on, it of going kind

way that of Aidan I the we prudent really we've irrespective as that however that think the said, continue plays, given. of be about feel good And we to any we'll guide. guidance about

Operator

Our JPMorgan. of line come Mark with from going Instructions] the next question Murphy [Operator to is

Mark Murphy

quarters what you activities I companies there transactional anything is e-mails, Khozema, in mentioned might e-mails, that, think whether And more curious e-mail. you makes there acceleration e-mails, an notification attribute I'm on maybe that a quick starting to it's marketing you of in back to a follow-up. to engagement or weren't customer initiatives in finally couple then outbound have that lean to they marketing And are ago? way a

Khozema Shipchandler

question. breaks it. exactly say Mark, you down it way the that thanks said necessarily Yes. wouldn't for that I the

elevated business. the kind of product, trends general, in that part we are that think, I seeing in in of just

to I sort Twilio the think a more. on little lens through build your maybe just bit question of

that continue e-mail about, what I where a channel. the and especially think to comm. become consumers And leverage to an other. more kind will communication. I much think I other And more to think through the a quarter, because Segment, thing necessarily I of on is grow as elevated of talked I trends opportunity But much much lot a kind we data specified, contextual of product. and channels of the as And richer see be really e-mail kind we of bit the targeted, and say more I beneficiaries to the be in there of more we're they opportunity, as to wouldn't start I will seeing more receive little Communications targeted, or the one as that. you is on lot I'd think just is, vis-a-vis point think

Mark Murphy

then maybe Is I'm just got you're did Starbucks, there's range, lot thinking been in midpoint. And share trying want there relating ask arguably positive factoring it to wanted And cash of quick generated, -- the think, the there combine of Tesla, we're the Aidan, try a had you trying a wondering, of Okay. to you and holiday question But So I in to right? that QX, consumer I flow X to just thoughts. how free I season? of slowdown. $X.XX comments Nike, to is a a reconcile run on flow And then per share the lot Or -- that margin lot. is I I cash -- hair nature? you about McDonald's, we're anything XXXX? And could that a to puts in just we $X into we've onetime of of back free then just narrowed narrowing kind rate, think below -- a anything there's roll a which

Khozema Shipchandler

Yes.

end flow I'll on me of Mark, Aidan question, up on the pick So start then let cash side. and the back let the

I I of know the mean, for the really Twilio from well. So industry think an I kind good news is, perspective, you company mean,

So You've spread XXX,XXX a have -- us customer Like distributed customers, we're of over wide industries. variety been following consumer across we base, for very long a or very, right? time. a

of looking it all an again, e-commerce. for seasonal frankly, Thanksgiving necessarily like areas. I of would guide was I like let's season. planning us. we're that that always, want in categorize for we're period say area that trend. point down company you at good that. of some of particularly was as would relates not to, run different areas to whatever forecasting is. quite so kind like to or just that, holiday We variety necessarily up, like pointed to some well, and maybe these say I'm a like or a strong those And a the through wouldn't kind just Christmas the Like retail, the as prudently some I

of you thinking So and that's foremost, kind way cash, want that ends into some then guidance. And running then and that? that the on about company, of translating up how take the Aidan, we're we're how revenue to first do our

Aidan Viggiano

Yes.

function of that margin OpEx, flow Mark. largely And about quarter, cash there at second getting at of see that see So leverage improvement profit. the It was through in a we about least cash by if XX% half outpacing on of our is we quarter. and can first you the or generation second continued you quarter kind the days. thanks, non-GAAP in did What profit kind X the performance we're the look collections saw our but the is cash free in

of kind AP side, flip the on went way. the other Now

a really wasn't help. capital working net-net, So

expect cash you profit. I flow generation with specifically. wouldn't for to the line said So non-GAAP call year we should in out What anything is be free

time. think think that's framework good how a I of the it to about in for terms

Operator

is our of Blair. question And come Instructions] to next the line with from Bhatia [Operator going William Arjun

Unknown Analyst

you that was in found forward. Chris how of stabilize think kind and I should starting color bottom the the a trends hoping there. to quarter. the wondering see This about And we're think was and I great going to NRR It was is on get to segment for the on little if improvement we extra Arjun.

Aidan Viggiano

Yes.

business be is business X%. this for to think muted. you quarter business growth relates -- to that that grew was net expansion The segments expect we it XX% I What to dollar-based year XX% was in this the quarter. should as said last

we're say DBNE there, with think our operational expecting. number expectation were continues readout. I'd the for review at experience. customers' a March took laid long initiatives was team line focused onboarding implemented that for kind way be a to number of and to first too a on we the historically use customers to now that of that our matter Historically, improving of #X, I we're focused in in we out to segment kind get year. months. it weeks on And different per things customers value. case what we're in our versus value couple of get have And their things. XX% of different And Thomas a matter on in of of a really

one should I our not warehouse customer allows what which customers. with for for on And of are other does segment thing we again, is we combine QX, an customers thing, their data progress at the sign our important to that, thing to introduced of data that we're interoperability, net or to making And that a expansion will audiences. as then to say, help were churn dollar-based help our it's in will their Investor of the more is in the And that we last them important the XX% And deals, In only warehouses. effort signed, quarter CDP multiyear base. committed it and that's, And a this bookings contraction. Day making we and just result. with multiyear with addition That XX% year deals ago. the versus linked things a data concerted

we be metric. XX-month those things DBNE is combined, over help trailing immediate. of won't think, all DBNE. time, So a It

So kind it these that it's time. metric to not But traction, start things immediately. right will as of in send to think the going get that direction reflect we over

Unknown Analyst

me into helpful kind Segment. very I color. getting Great. agent kind curious way for what was of an sounds what personalized on of products Communications was, second to the so Segment incorporate are interesting the like other from with reception kinds question And customers that is road platform combine Communications? the map far? That's the And of

Khozema Shipchandler

ahead too get far to the want don't road map. I of Yes.

I'll So report. upcoming an period maybe when park for that we

think just think just launch it's terms I few a in the we ago. weeks that launched I early. we mean of thing I the did, pretty

people really I've I think conversations that based the are really, about had, it. on customer excited

a a has I whole creating able of to think a the I notion context is the like leverage profile customer a important. feedback of And benefit loop. about incredibly in of detailed also the think being conversation it like

very, So later. excited the and with financials, I that well. report it's as based are terms kind back on they've very I've days, in team that is excited. to the early know very we'll our of spoken on But with have customers just of customers spoken

Operator

the next come Our UBS. Taylor question Instructions] to [Operator is going from line of McGinnis with

Taylor McGinnis

Segment So maybe trends improvement going e-mail. And improved international revenue the opportunities. slightly, year the with back then growth to an ISC talked talked outlook you and of of and some assumptions, the full and about co-sell in you about some

additive place to half. second could a you macro initiatives accelerate know growth I in be the in to that the stabilization have So in some

of trends like upside assume think revenue in be and have initiatives guide, you it like that what assumes might guide when out about embedded the these doesn't place. some and you from into remain So quo the maybe looks much status those playing just

provide could So opportunities look more a you like? little just and what bit could those there color

Aidan Viggiano

Yes.

think we I I'll -- start.

business that QX in I seeing of think today. on math to we believe reasonable the we're a kind based outcomes you the what implied of range gets kind of

said, number we the them X that over you we're different last been of trends kind call of As months. encouraging seeing have that out, a

are and is usage-based. remember thing very we dynamic, Twilio to is the think I

in to plan we prudently light. continue And so just that

just and the months, And that's in dynamic of much the reading we're X into market want that to so thing not to just terms how what too We're sure we're not given we just make seeing do, getting ahead is. ourselves. of over right

Khozema Shipchandler

Yes, I thing mean, made, to the like we is, the provided I maybe a about think good again, signs Aidan I'd feel few add we that guidance points just encouraging that see only we reinforce today.

like I business inside environment. think they it's could growth going things about given certainly of guiding are optimistic to a we'll we're and but for to number better, dynamic start But feel are materialize, as there a feel the today that things the obviously, it. juice we're down happening these just be continue that road, like that prudently

Taylor McGinnis

follow-up. Perfect. maybe a just And as then

So lot quarter. linearity you some about XQ, about XQ, talk remained of And or you similar in in those maybe that trends when you could flag? in a talked would bit changes have you the say to a the that as any we trends improvement start notable like just little of saw

Khozema Shipchandler

obviously, dynamics sort not the to linearity Yes. companies. that, you maybe Taylor. get other of of some ahead mean don't going I in of have see orders we're I what Like think

I we as result pretty into certainly encouraged, period talking anything want think, through and positive or play X-month we've QX. trends that saw but to don't on I we're get what a we'll the we're based that, today. like about of seen, again, July

Operator

from line Stanley. [Operator next come is Instructions] question going Our Morgan Meta to with the of Marshall

Meta Marshall

is something guys to into as to still we to more season, to message head of that traffic in. on political kind wanted kind that limited weren't just invest kind we the contribution of political kind kind just about you political that's I area or traffic. thinking confirm be e-mail an a of should text of either just going going you be know But have I that, past, to in said of Twilio. was

Aidan Viggiano

Yes.

think election. rolling the it of through expect we revenue as outsized relates as our impact of some a I wouldn't kind traffic have business. upcoming But always I to result political, political

policy. requirements meet an won't if don't you before take registration we policies, talked in those about And customers we have traffic. use acceptable We the with

think thing level quality a ensures our and it our consumers. platform, it networks of We to right that's protects on and on the do. So

be as of elections. we won't anything outsized a to the U.S. but closer So there it be a might bump, little get bit

Meta Marshall

some said I Great. Or And do then you kind just you you or end the guys growing? that improvement. noted Is ISV that improvement? traction? international kind that about of -- that attribute of do how seeing ISV some improvement you're Just think of some market to of relationships

Aidan Viggiano

Yes.

It broad-based. say clear, other. with international. a group be was So say we when internationally X this see I And did or the It's traffic. trend wasn't improving kind just we international, -- customers to would of of it's terminating bit it messaging the international

bit traffic wasn't a to of in But So market terminating that, It that It a I call way jumped out to industry. group or encouraging where us. broader. was group certain anything wouldn't that out just ISV an was specific. beyond that see wasn't versus another it was spiked certain a or was broader It a customers.

Operator

of [Operator Koontz Instructions] line with question Our come the Ryan next to from & going Needham Co. is

Ryan Koontz

progress in the wanted driving that you're ask had the changes business? able these Comm go-to-market about changes I on you've the of costs? any you're in And that side of of strength automation and the reduce to making any sort to are

Khozema Shipchandler

I maybe in little year. last mean number just resulted a whole Yes. to go layoffs a like series obviously, of part that unfortunately a made earlier of bit, of changes, towards back we the

into to back of those our kind we're especially profile, see business. XXXX. lot we're rippled in now So starting a changes, cost frankly, And -- well, through of some of those the

it have money of what want kind we and kind to forward, many towards at amounts like and we pointed did think customers. did our we going of In rationale self-serve of orient time things decently one terms of set a of up a I of of of couple And expecting spending to the of the self-serve. in segment of cohort behind around more of very, very for were kind customers quarter of kind the like broad you amounts sized to large It's that like customer money. better we some what the quarters was definitely small can

it's fairly a perspective way that of they to as activate kind seen in make onboard, technology a that has customers number we Twilio category that so There's onramp we a to from that of could sure kind And well with were well. quickly did able strength. things of broad a as

say I'd progress, communications. the call So cost think there, which done broadly, the just work there I well, the more customers I to a terms talked quite that is but work ability some self-serve, of se value wouldn't also terms a that. frankly, drive just as it with segment leverage very per also from we'll thing other just increase still didn't good then in progress, on relates doing value. to that -- of her you is as automation. velocity that of of as perspective continue on our Aidan ask, forward, and good about we're to accelerating kind here self-serve there touch it just that think kind customers to lot is like technology lot too, but Maybe in But on of comments, And of doing in have opportunity to we a to of we going with get side

Operator

Our Wolf. is from Zukin line Alex to of next come Instructions] question [Operator with the going

Unknown Analyst

to on the This segment drive can again produce just process onboarding and know year faster friction Zukin. you've is that us help next year? that about. But through for double-click wanted think Alex drive any of speaking there on process growth Rich I impacts AI TTV the that through past, and sort segment that to you process. leveraging been mentioned in Magnus might you self-serve in this I

Khozema Shipchandler

to that and answered just think I'll the encouraging of there Like things a in been think the have for just Segment technology, on given growth. improvements a just nature been will muted that to of kind I'd foreseeable I saying be growth touch that We've handful to I Maybe while. of business. business, That there's dynamics it, for in of the say reiterate are us continue think I kind the of time Yes. of for up take the like last future. little Aidan bit the show growth really said, And point, will in that earlier. kind while a

wizard AI onboarding kind through work. There's to that's concerted one a think a customers lot It's effort is also get our customers get case to I'd help then also done time also really customer that to of a team. the their work combination that we've specified allowed value say use by success use process I of faster. And case to faster.

really past, improvement been what Xx things, Aidan I were. a months was in characterized And so where as quantified think, kind from the what combination what we've frankly, has accelerating the those in pretty powerful, of of down we to as and weeks,

Operator

Walravens [Operator line next to Instructions] JMP. question the come is Our Citizens with from going of

Unknown Analyst

Call for on Pat. is Right. Austin This

of the AI a you renewal a on your just part in view at this touched with that. the to You and you Can opportunity quarter talk about being products? X-figure voice Twilio respect these with point how during opportunity

Khozema Shipchandler

data I opportunity and think data business conviction AI think significant feel able communications use I think to that And it of drive that every plus I about have the do back Yes. relates that an to such contextual vis-a-vis are that unlock ingest really, business. But with going contextual And -- data, reason for to around profile broadly more and sitting our that we is that combination of to Like Segment like growth, be to deep of able overall part work be to that's proprietary we overall is the data. it as be particular, never personalization that mean their our a in with data, think AI as the consumer them to plus part is that I is, for excuse our more single me, of I an drive that turned well. drive data. customers everything as a mix them, sets it's to the experience all really business, unique on to will that LLM, right? over is ability and

process their that, of voice you a the think ability what's going lot all I think just that in interacting Now are natural is which it well. I of kind and feel interesting a is voice since Like is, now, not back same this contextual data, that with think heck as just in a but AI certainly to that go second an opportunity. language that And it's value like the started, I of to that the will is AI think capabilities where way. we are that way voice, that's voice be very most paired up right relates just that have of e-mail, optimistic becoming you natural about in I when a and I way end as to normal so accruing, conversation And to sophisticated right? to messaging in for to about, a in

Operator

Our with Altmann next Instructions] going [Operator Scotiabank. line of to come is question Nick the from

Nicholas Altmann

Awesome.

You reenergized sort guys focus ISVs. have on of a your

is partnerships left You of terms coming a there, of guess named sort you partnerships of part much look business new and at acquiring fast partners that runway in in prepared sense new there how potential other any of those And goalposts percentage what ISV the I how out of remarks. in the when from ISVs? then handful just is any of business the growing? is of terms the

Khozema Shipchandler

just our organic Yes. se, sizable of color there, and quite per ascertained the from break it's bit little remarks. about gross and faster today, it, it's well. very as rate, the We're not we probably kind question. of out based going I'll a of strong also revenue maybe your feel you but positive margins frankly, to compelling growth of growth It than portion and is our as revenue Obviously, got, total growing a there's provide on been percentage Communications

So that feels good. pretty all

of too. been payment have deals to, businesses and automation experience platforms wins pretty a ISV including the number growing i'd well, companies, say large sign with more. alluded customer in processors, you those As we did quarter, marketing

we'll think I growth. benefits result a of so as And their accrue some

two, it's where what's is of Braze, as of allows just lot real kind we also think, expanding relationships likes partners. these our to runway do I software just our within of ecosystem. footprint. a strong [indiscernible], to because speaks relationships is, terms also some I an the from here. APJ seeing we've these which growth And have there using like with domestic, to in is and that being to our think us in that channels deepen We're Ship are not like with well. And of these Insider, kind go-to-market of good we important beyond providers how evolving of much kind standpoint We're engaged cosell like I got get a of opportunity resell the own integrations leverage Bloomreach what and think kind in go-to-market EMEA

we're and We trajectory good pretty the good about excited. feel mean, pretty we about growth do where So yes, we I do feel are.

Operator

[Operator the William come Power next question Baird. is of Our line Instructions] to from going with

Unknown Analyst

But pretty the This that pretty was quarter, across for it stable inflection? and know of good are you e-commerce that retail in are call of seems this even the Will. and mentioned is out business. Yoni verticals Similas now signs on things I right I earlier and retail guess, like are out outside upward there or showing any standing maybe there overall other e-commerce, past

Aidan Viggiano

most and I'd right When say I'd relatively that's actually bit of we softer, growing. us, a though portion our continues say top messaging social at of industries, them to now. business up little look for it's our one and are smaller be a

that one is services has been strong. financial So

have called are a industries pretty I'd e-commerce strong as broadly, of the say that in, But been couple and growing. retail, top our industries others we of well. You out that most operate

Unknown Analyst

to or... And but clear, average above just be growing company the growing necessarily not

Aidan Viggiano

they some some more In cases, are, it's with cases, line in the average. in company

Operator

with [Operator TD Cowen. Instructions] come from going to Wood of Derrick And our is next question line the

James Wood

a Khozema, or whether from implications? would the AI, on I generative direct modernization indirect describe AI Just back just you how bit guess, strategy stepping a for Twilio, whether via level, monetization high

Khozema Shipchandler

Yes.

a there's there. angles of think couple I

a spend it. So on moment let me just -- I'll

consumer first we just cases and started was all kind of of some the want trust, at to the vitality to, all, So we given I protect think, the capabilities where the we embedded really earliest costs, with fraud that ecosystem. right? use protect of AI of around with So help AI

the that were of different there so these protect products course so. introduced Verify, to Guard, we've like things year number or last a basically over we of consumer, And announced Fraud the the are

good remarks we As seeing about activity today, talked in like we're there. the

really around as predominantly it's data. AI-centered maybe be think I we to going go, contextual

I scale. others at our referred is certainly and to for we've engagement time as and long too, is to relates for see we think unlock like it big do, the customer a here, like the through real what personalization business unlock there where

that. there us some vis-a-vis to like a you data and using sort single this Being channel supercharge relay consumers get obviously having communication And through to way is that one that then able to of of rich back consumer the contextual comes about segment. every as really AI so that

feed will context we comes can of Segment think contextual that time how to I language. same that why I We'll get number Like think which deliver inside insights a we interacting that each a That that be bent So experience. of that one make they though, into product. but inside time, to organizations. today, to our do that those the We companies back able and we'll up profile do be seamlessly. you place able them that's taking is going both Communications it, that, with that about brand so that at is on where next of exactly think of have, is data too, to we interacting you'll think where They're might with personalized the it, that also of example specific that se in others like that voice process for thousands to talked Does of it extract we're a a in workload. probably moment and that of that's automated as deliver natural What place sauce it unique go can data, from result time don't so natively that, be call don't so ends use call, at intelligence ensuring all have a per and the consumer end I increasingly can I secret realizing that. of perhaps with up AI. reused sense, that's our taking is consumer. Similarly, although that agent the without Derrick? deliver disclose even like where the partner an entire There're we're strategic advantage

James Wood

Yes, color. that's great

Operator

Our question Samad Instructions] is come with next the [Operator Samana of going Jefferies. line from to

William Fitzsimmons

is Fitzsimmons This Billy Samad. actually for on

In percentage and terms in dollar comp is year-over-year short of terms stock-based both a one, down terms.

we're about to way that it has there Is done the more in think from -- you guys should kind we what kind work be Just decline highlighted more is of structure how bottom? here it where front? should there inning Obviously, changes kind been? have go bonus to of of that on -- to can the and what continue

Aidan Viggiano

opportunity leverage more Thanks the for in of question. ahead. here There's the Yes. terms

in we've equity mix employees been employee compensation shift base away terms from selective the was XX% quarter-over-quarter. that reduced, in it about. cash. down basis XXX the the back terms of company. the and size it towards things So was on were equity SBC of XX.X% the It's in made We've which more we've quarter, the down in also obviously, of we And talked year-over-year, a of points you've get

Those changes already made. have been

leverage. SBC terms opportunity ago, originally, by years here forward, committed XXXX. we a XX% revenue that as to We several percentage to for think In of XX% had looking there's still of

down range. the to that we're marching still get curve So way kind to cost our of

William Fitzsimmons

or some ask a And just how Can Any Communications' then negative, quarter? both we gross the the going then growth on gross new margins And domestically if and/or mix given we I of forward? should about Comm's changes of one. positive second products given internationally? of think the kind in double-click forward new there, can the margins in going and initiatives

Aidan Viggiano

you'll the first Yes. help the were In in quarter-over-quarter first about quarter. year-over-year by margins XX They in didn't we come a down That The were the of quarter. hosting credits repeat up quarter, quarter-over-quarter. that but really saw dynamic through the basis just points quarter-over-quarter. gross Comm's see that driven was

points was X that that's up mix. So by the driven things: were or of product so, basis kind headwind. XXX they Year-over-year, and

helps obviously because average. growing the that we when margin it's than margins Comm's So about accelerating talked higher or e-mail

dispositions the dilutive was The at that rate we margin year-over-year did year other growth a dynamic that the that to in They last July timeframe. the gross fact in we were that that was company. had

those having IoT -- and first not actually businesses the so value And helps margins.

Communications As we That mix. mix cetera, business. in be or termination really the et going driven to messaging by within margins product mix forward, e-mail, the or about messaging think voice or between tend business

terminating or different internationally you're domestically, that gross more if will drive So margins.

I at think about at of kind unit think is look the economics. the framework we and we look

the we'll as long do unit continue economics to business. the so And remain attractive,

So some gross you variability the should expect, margin. the in term, in near of I'd say, Communications' level

Operator

Mike next America. Bank of Our with comes the question of Instructions] [Operator line from Funk

Unknown Analyst

you us expect term? Can help guidance of medium new And revenue might additions from versus even second growth the out half then how the level, the expansion? uplift you about looking year shake on customer in across Funk. this a Matt Mike is the beyond to think for from in context high This

Aidan Viggiano

we're of into really second revenue done something of new get the the expansion. not part. how terms splitting not the terms the to missed I about guide think No, split and going ever in between customers That's to in we've guidance.

fact the range feel we X% we you missed X% second the we to prudently your that continue to those about market, fact Can X% repeat QX, just gave talked given and based for about good it. the think I dynamics. year. plan we're to will you the for dynamic the question? And the that just usage we X% I

Unknown Analyst

comment going the out level It over was growth about that's next of high shake seems couple the Yes. could it something how like just but years, algorithm not you're on. to

Aidan Viggiano

later Yes, a at Thank time. today, not you.

Operator

And I'm no further showing questions.

is Ladies gentlemen, to also this session. and question-and-answer today's conclude all may disconnect. today's conference have you Everyone, So for you day. great conclude Thank going this is participating, to going a Goodbye. call. and

Twilio (TWLO) 1 Aug 242024 Q2 Earnings call transcript