TWLO - Earnings call transcript Q3 2024

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Operator

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

Third 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 today, Bryan Vaniman, SVP of Investor Relations. ahead. go Please

Bryan Vaniman

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

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

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

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

Forward-looking made. any statements statements statements, required such only represent to assumptions update obligation law. and our the as forward-looking as date of beliefs We except any disclaim are by

it Khozema we'll hand for open I'll then that, Q&A. over the and who with and will our results, to And call QX discuss Aidan,

Khozema Shipchandler

and year-over-year, Bryan. million non-GAAP exceeded you delivering you, income billion guidance operations. our everyone, up quarter. Twilio thank strong $XXX afternoon, Good today. QX for joining We revenue, in $X.XXX and delivered a generated Thank XX% us third from in

leverage of operating We acceleration strong to the see generation also growth free with quarter, another I'm strong alongside encouraged to cash product cash double-digit delivered continued quarter $XXX flow. innovation. million of this and revenue

the rigor innovation Our proud team, QX. accomplished commitment remain we for and what key to I'm financial guideposts of and discipline, operating in

plus nearly my the be data they're with plus with the I've In customers, many hundreds communications greater start can AI. contextual the at every Since conversations becoming CEO year, the encountering by vis-a-vis globe. met of across in personalization industry solved of problems customers of

unmatched as we focus complexity capture customer Twilio strength that leverage offering has opportunity concerted to us a leading platforms, in data outcomes. strategically by the to positions tools, and the and machine throughout CPaaS of platform including our embedding learning better a massive on AI segment supported create Our resulted differentiated the and minimize

turning reduce their Twilio By ROI, that costs. we're stronger a with integrating results and suite, personalization increase revenue capabilities, help drive core AI More because scale. to we to their at customers driving able productivity, product boost customers are deliver automate and demonstrable our

which per a to customer automatically a that to global a example, an using purchase. business an likely been As has brand is product, supplies company is longtime specific most leverages The campaign recently a category, learning determine customer our AI or ran retailer, product, machine recommendations e-mail products one customers brands of the XXX% likely deliver create customer and engagement, this targeting of trusted increase unique a experiences. Twilio just Apple in offers, most to the many sales e-mail, value better build saw that greater purchase more helping examples and value is

a truly improve to presents solutions and impact customer expand opportunity the CPaaS huge enhance AI the experience. of to

uniquely CPaaS combines value brands win We engagement. deeper in the integration Twilio customer comes help with communications our to age positioned of AI from players, drive communications other to because unlike are well true data. of and data the customer

warehouse What by at record sets triggered stored with interactions on prevention customer fraud platform, real-time and interactions Flex ability to unified engagement With it. our IVR brands we're security is powering products. valuable of via scale, personalized whether activate profiles contextual a it's whether in help already to these data, intelligent unify and Twilio our or apart this our data or a it's or system

events conversational OpenAI's per announced second. customers to developers easier powering ingesting powerful making for our X thousands trillion API, We're e-mails and with real-time recently Twilio's billions integration and build hundreds of of it over and messages new annually We virtual of agents.

rapidly, build evolves multimodal this agents solutions all AI take and world It the accessible X.X for create for making multilingual advantage GPT flagship exciting is and to customers conversational milestone. of virtual more sizes. businesses of model an advanced tools As to IVRs OpenAI's enables of feel these human that

to Now turn our let's business highlights.

revenue had business communications a Twilio strong third year-over-year. Our quarter XX% billion, $X.XXX of with up

and Our acceleration growth strength in both was predominantly by quarter-over-quarter driven messaging e-mail.

As opportunities. on we've by growth ISV previous referenced customers, and enhancements, near-term fueled our our calls, will be self-service cross-sell

each AI capabilities which is performance like bright deliver real our and seeing things engagement and and in We're these protection, continued time. software top spot drive include increased Twilio's SMS to learning value pumping core of machine data fraud suite providing better ability outcomes better analytics voice intelligence, channels. built areas good leverage to a on in of Verify, through and combating

data, deliver better and designed understand to to customers. and smarter profiles integrating virtual is contextual to customer experience trusted and our value more we These changes improve products every focused products unlocking as incremental excited I've more key interaction. on communications been help Furthermore, Twilio's which to brands communications see customers, to their like through products agent are with products unified our how segments make personalized the for leverage

feature remediate agent Another with can customers messaging errors. from immediately transparency give now deliverability a our improved communications our greater they actionable messaging that volumes area receive AI messaging to so into driving action deliverability personalized customers deliverability and that Within score console, is updates our platform take engagement. now instructions

they radically engagement the send we're free. are better messaging error ensuring message By the delivered and analytics experience for developers, providing intend to that to simplifying leading

released to In in products, branded addition support innovations enhancing our new communications. to QX, current we

XX% custom branded text trust in deliver brands who survey, RCS who Business to went we a found their public received a communication. into Messaging of set to recent key beta, In is consumers that Twilio increase which more the a personalized experience. for want

including and rich and CS high-quality branded messaging sharing. Our media, content features, the improves cards carousels, business experience through interactive location messaging content

leverage RCS deployed greater driving their the and open fan to will events build Hive, trust rates sale enhance brand for conversion to in Fresia live boosting and increase marketing ISV like have engagement our campaigns Customers of industry, RCS partners, ticket and rates. one capabilities customers message

calls Twilio help future, and branded accelerate contextual incremental calling, continue just will they've type call saw the With call patient and data reason in way cost-effective also of a brands company exciting when to patient branded been improve expect rates name, Care monitoring calling, needed remote by to use able process. X% the unlock to this we their to achieve their experiences. logo which and more light outcomes health value months. display as to pickup placing to brands in deviceless We Signal personalized improve X% wins In smarter customers. beams with rates allows to pickup X we

business. operational million $XX on as the we a quarter-over-quarter year-over-year Twilio and and reduction ended continue earlier Turning year. We segment delivered against an in contraction. Segment churn win in in year-over-year the and rate we both and to progress of revenue quarter with outlined this review priorities our make our the flat focus to increase

we're there our segment differentiate strategy, while more communications buyers. infusing part for innovate to While long-term be CDP data enabling stand-alone done, contextual of progress to us by is making work we the to and we're by remains continue that encouraged our products

to innovation, warehouse value interoperability we With data continue time and our enhance customer improve capabilities respect GA. features to to by to graduating many product

and trying segment Linked Graph removing with points to data we pain such customer silos like addressing as disjointed products are customers and solve Audiences, that key Data profiles. For are example, our

offering unified warehouse to Google our This and Databricks, personalized as that we're making integrations in important and to can it customers mobile in data our centers leverage their it ways apps combining an step with points data deliver CRM, in easier contact advanced data with have and systems warehouse We Snowflake, communications. consumers. Amazon data record more personalized existing from through e-mails to BigQuery and activate ERP customers is for profiles of websites touch so or their Redshift meaningful from drive with like

add additional seeing forward. promising warehouses We major with integrations data excited results, moving we're other and are to

Our and features promising integrations advertisers began delivering to new results. create targeted campaigns for

First, uses required and reducing with audiences that significantly language the is targeted for audiences our customer to generative audiences create prompts generative natural campaigns. time engagement AI build to resources feature

available. already taking capability customers the segment advantage CDP this our globally of of weeks XX% few have made Over in it's been started new

Google, the data campaigns costs. and marketers in and Second, with acquisition customer Amazon, Meta, their we've and expanded platforms reduce created to their giving activate LinkedIn these across ability integrations new

example, With Segment, and with Fool and audiences. and the needed value. automating premium Motley the experience processes, Motley ad help the for build, make its an per an retention activate to helping was acquisition, As manage out-of-the-box increase accurately paid its more able campaigns integration efficiencies cost Fool to by lifetime members, to decrease relevant target operational its

work against is and significant our The am incredibly solid quarter a that to the of testament energized hard we opportunities the team. we progress our ahead. goals financial made about focus delivered and I

between As businesses every create world amazing. in a which interaction and is consumers we to look digital

platform and turn over full that I firmly that, Twilio innovative communications AI. plus to to leaders I'll believe right unleash has the potential with Aidan. the data it And plus contextual of strategy,

Aidan Viggiano

million, in of year-over-year, We're non-GAAP and income delivering record and up our third with performance Thank gross the you, Khozema, performance flat XX% growth volume acceleration $X.XX business in $XX saw communications messaging and revenue trends and in billion, e-mail. our Revenue non-GAAP afternoon, year-over-year. good profit operations. was quarter, strong everyone. was was revenue, XX% year-over-year. revenue Communications and . We segment pleased $X.XXX from billion up with encouraging

results. self-serve initiatives continue on Our efforts and with and yield good ISVs to cross-sell

features, new that the including in dashboard several mentioned helped messaging implemented deliverability the Khozema volume also drive quarter. We revenue and that

and VERIFI and to drive protection addition, are AI-enabled faster such features products our growth. new helping as pumping In SMS

and software XX basis This our basis by in had a the immaterial our we offset the headwind component with associated point were growth political contributions revenue revenue roughly higher XX points contributed of was business. sunsetting Zipwhip quarter, While fairly to those rate. reported

Our of in QX communications our seen business the we've representing quarters. and performance dollar-based QX reflecting XXXX and last several rate was best improved since over growth XXX% our the trends net expansion

for was rate for was segment net the rate Our dollar-based net XXX% dollar-based XX%. expansion and communications expansion

As metric. our migration represented quarter-over-quarter, and down margin be up expansion encouraged of XX of more segment trailing time we've given basis year-over-year, to by we're the XX $XXX Khozema points points record X% take March, profit mentioned, with non-GAAP it's the We a done, efforts. it to and is million, review basis that XX.X%, driven This dollar-based in gross non-GAAP infrastructure there progress segment both early will a operational by delivered since year-over-year. gross net improve made while work

XX.X%, both sequentially Non-GAAP year-over-year. unit for our gross business margin flat Communications was and

expect gross the unit QX. years, was margin holiday gross modest As for XX.X%, expect in margins in would communications costs quarter in higher the with we And we as associated consolidated down sequential a business points sequentially. and Non-GAAP XXX segment previous season. hosting result, a fourth in our decline shopping basis

infrastructure new to noted As recognize this QX, providers migrating part in of architecture we are efficiencies. year we to segment greater

We to margins migration after to and progress we expect segment make on complete will are to which this improve. fourth we begin quarter, project, continuing the gross the during expect

expectations from operations cost million, year-over-year, strong income a driven came in discipline. ahead of at up revenue record XX% Non-GAAP growth ongoing and by $XXX

XX operating margin XX.X% year-over-year was and of basis points XXX up Our sequentially. points non-GAAP down basis

Our outperformance of of the first for an roughly on company-wide QX cash year. of payout reflect result operating increase anticipated higher representing million additional This expense a and $X income our in million X program, outlook as the quarters year-to-date our year. expenses each $XX bonus the for of reflects results non-GAAP a bonus performance-based increased for

additional continue segment margin several of to our million the business we We Non-GAAP our operating for from leverage improvement over from over and operating achieved are operations we've the for next income years. and non-GAAP operations was communications loss business the million. $XXX for X was last see $XX opportunities proud years,

the on QX committed sequentially, as of flat result We achieving primarily XXXX. referenced. a remain were non-GAAP income losses segment of basis expenses operating breakeven incremental operating a I Segment bonus to by

million. from loss $X was GAAP operations

XXX path make a reduce as to XX.X%, profitability, to was our efforts Stock-based basis are GAAP equity percentage which our restructuring flat operating and continue costs, GAAP quarter-over-quarter year-over-year We by revenue excluding compensation QX operating and profitability our we of points on tracking towards of as solid to continue down ahead achieve we previous target was progress compensation. XXXX. of

free We cash margins cash the quarter free flow forward. driving million over We of strong generated the focused of last $XXX on and free cash million. XX going we generated flow $XXX flow remain in months

intend Since continuing program. to our we've of billion the initiating more remaining execute billion authorized we're by we Finally, the of programs, repurchased $X.X and repurchases repurchase the on than share complete $X year-end. shares to balance

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

revenue continuing we're business, Moving seeing our by to model trends backdrop. prudently guidance. usage-based We're given and encouraged and the we're to market across the plan the dynamic

to revenue reported year-over-year growth billion X% and QX, $X.XX X% both a For representing $X.XX billion, organic of initiating basis. we're target on of a to

and performance growth guidance increasing we're year-to-date our X.X% X%. organic to year on range Based our outlook, QX full to

Turning our outlook. profit to

expect we to of we're $XXX non-GAAP $XXX QX, $XXX $XXX million from For income operations raising non-GAAP our and million, full to million. to income operations million year from guidance

flow, As from it we've cash our $XXX year-to-date, non-GAAP relates has to which million, free income operations. outpaced generated

the prepayments in sequential will decline However, fourth quarter, we cash we drive are higher a flow. expect in anticipating free which

previously, we said vendors secure and we pricing. terms As pay early favorable periodically certain to

As the range free $XXX expect of to a we million. million flow full the result, for year XXXX, $XXX in cash

more outlook that past a tailwinds how up Before the several call fiscal given we business we to to a out. would the want preliminary and we influenced various headwinds quarters, for normalized expect also play open the over XXXX questions, on have the provide

encouraged communications X% business operational full make in progress on to would stabilization the several XXXX segment. year goals in the neutral continue and assuming by and the range expect and growth a volume have our last trends a we are X%. growth macro We of in revenue business we on and environment, Based over quarters, seen we to the the

We over the generate margin also meaningful year. expansion expect to course non-GAAP operating the full of

would profitability year. operating we for full GAAP achieve Finally, the to expect

well on outlook free our third we currently provide very for is January. revenue both ongoing and driving our cash XXXX as profitability as and the more discipline strong quarter with longer-term pleased Day, upcoming cost will which commentary growth late Investor in at fiscal accelerated We I'm that the flow. delivered we're targeting our

our our are revenue and and I'm innovation we the for also customers new features encouraged growth. impact the by delivering and having on products are both

cash are drive we our to operating and are GAAP growth plans tracking several We confident years. margin ahead next continued well free over target growth, expansion in of the flow our profitability to durable reach and

seeing in I'm our that, at up all looking we'll you forward Day to finishing it open XXXX now with strong And Investor questions. and to QX.

Operator

Instructions] [Operator

the Blair. William Our comes from Bhatia from first question Arjun line of

Arjun Bhatia

that just your quarter on a and just Congrats Can are you start the exactly base? agents little the entails bit going on Like how with And the might to out that might be to front then long here. to nice just largely these this touch messaging your OpenAI play across voice Do base? expanding about the how side? as this be on play take customer built what across maybe I'd into customer partnership. I wanted you curious see well. hear to timing out of

Khozema Shipchandler

Arjun. Thanks, Yes. question. Good

in want probably expect you. way is more of should not to to across ultimately So that that it's you multichannel we time. channels surprise it off That's whether things, anticipate a I to with, there would side say one OpenAI all maybe have of a the other with it's we or Like built see voice over the would out but I the approach partners of that way. would it start of to

vis-a-vis that's customers serve. optimal end . way we most consumers that I up to reaching the think the

to to our very you compare with have that in remarks, really data the between consumer. up of our with as it and OpenAI's earlier As of really for and of implement large that vis-a-vis the interaction the voice where customers easy using about like based, And gets I partnership, some Twilio as contextual relates basically, what I then it API a to interesting as them one a our personalized specifically to we is think allows consumers, it for would kind language end and apply and it it their voice alluded if capabilities to lively customers' is use our said, models capabilities. us relates you we

I AI. in And AI AI excited I We're it when for data very communications while on time contextual would up with combination. happening all partnership. to really paired very revenues that we about really, and terms around valuable materially very point a like shows Like wouldn't rapidly. about obviously, frame In what's the of revenue, mean, I a is That is really said, combination particular, still. anticipate our with are going little the of in excited

Arjun Bhatia

in helpful. Perfect. we'll is be sure ask since guidance initial I on X% to improvement? and neutral XXXX, in Investor implying That's thinking can XXXX? Day. the the a we're mentioned . at fiscal slight X% Or now 'XX, target. in But headwind a it one, assuming about about initial would you then growth if neutral goes you this right compared very Is outlook I neutral curious on Just that. that to for Aidan, you And now think the to more right that how what 'XX I'm you're gave like in hear were macro

Aidan Viggiano

I'd it's of Yes. kind line Arjun, right say, we're seeing now. what in with

to what I'd neutral experiencing today. kind of So we're say

Operator

comes Our . Fish the Sandler. Jim line from of next question from Piper

James Fish

Great quarter.

Just as color business? any for what overall can in there is relative is terms channel this is the and that of to at Twilio big point the the go-to-market ISV how growing you side, guys to provide

Khozema Shipchandler

We haven't provide I can Aidan start and is additional can -- commentary. then Jim, this some Khozema.

So contributor we've I with how is consolidated revenue it will that the it than you it's is which the of us. very also gross doing base, quantum meaningful consolidated business faster out does . And ISVs. we're data broken X never that revenue the give than exciting obviously base. grow margins kind carries points. But for much to One higher us. Obviously, the a of

important well. will help And we to end grow, able a the get want and partnership, these given serving important I that it's And just think these ability our that to to very and and so up guys fees, very just that's encouraging us grow. ultimately, in actually way pretty help be as distribution a channel we leverage

James Fish

side it there understand like point? airline is on for versus of looks gross sort that customer, way of that And win, SMS for the be a will and RCS this what potentially it. the at on SMS to change volumes side RCS how this RCS major Got relative that profile margin to

Khozema Shipchandler

broadly or difficult and messaging, it's channel particular happening think unique basis really channel being bunch a activities. more to inside where in imagine end I you'll this obviously, expectation Like a of consistent usage customer something like on a think that our with of the what's I are RCS necessarily extrapolate really supplanting other is now. would relatively will that I probably see a fundamentally we not with up

works for airline an really well it think case. really, use I

I with a would that given so would And respect imagine to where we category that to airlines, each tend expectation apps to my of more think basis, I repeat ends something that's use broadly RCS. using we sort that in something that, be it's that have tend where up it's a

certainly dynamics here features our of dynamics anticipating margins not business. we're and impact avail would underlying don't either the it's of of on in to an But hope capabilities the some of I there. that in least expect broadly, the at has revenues today really And more RCS then they that business. I necessarily our or going terms change themselves sitting

Operator

Our Co. comes Ryan next from question & from the Needham line of Koontz .

Ryan Koontz

a your perspective are from marketing nice kind you where expansion sure sounds But you of might margin quarter future? and explain kind be an in of you where sales outline with I'm the Khozema milestone journey? certainly. you it's really expense. -- a growth driver. lower of it kind maybe are and Great self-service you in can headed like your I operating can that's there, where

Khozema Shipchandler

it's take approach not like level, say I we're always I X self-serve. of it. day I a style mean to about to kind I look, to of mean, trying cliche us, the at sort capabilities has platform, a of you like that would some Yes. know, as like been like being to and the always of hallmark tools a of sort developer's to company. offer that we of long-term attraction the follower the think, sort be

purpose trust over sign-up on able be nature of of And friction compliance think several to on certain that additional like ensure new customers. introduce had to that to and levels and onboard years, process We've last things in the the the I almost platform. to there's

what started, landscape, to for fundamentally we developer, with it to that make a possible to company of be able developer case. possibly to themselves use do for a attach as just that easy getting as a is every to able that's be every get want for the sort platform we new to running in want so be startup, super And new for can up to as and established

then start to consumer of inside their promulgating And that base.

done. actually to still think experience of never for say I And we so with milestone our I we date. developers. And will We're happy ways improve made the in long. that would look quite list day very progress to constantly say I very, for I continue spirit, we've But it's the like we're mean, X. kind would in which can is that

Ryan Koontz

about malicious Or When that want reason the about to want to you're sure you you that make is you folks? talking Do friction, qualify use. talk these it? for

Khozema Shipchandler

Yes. definitely that's one I mean, reason.

XX that, to you're it don't the I other receiving business. familiar think want if the through where DLC side through any last stuff, without ultimately, a it right? Like was of be stuff. the through we you we obviously I process me with kind think correctly, to right? put to like impact where We consumer got you're real like onboarding the But of memory summer, of customers had also serves went like

stuff You shouldn't be certainly your be. that receiving want to they don't children

there's has creating trust trust one of which always a that sell kind has been Twilio. platform I ease we as here. at well And around both a of #X in of things the as think, always hallmark been use And

Operator

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

Unknown Analyst

expansion quantify margin question sort help in Rich flow prepayments Alex. year that for margin can XQ? cash Should A Magnus affecting headwind of to flow cash free free free in . outpace fourth the on expansion the cash next quarter, given we on flow. operating expect you

Aidan Viggiano

question. the for thanks Rich,

non-GAAP might tracks they an quarters, the like or it So over general, be fairly way think fairly time. operating some income variability, our within free flow guidance commentary something to we're annual time, closely. explicit but with not cash yet that, track for cycle or there in it XXXX. Like is over about closely providing say, I'd

we've And as to it time. to said we said of from prepayments these we have as relates previously, do in our QX, episodic prepared kind remarks, as time

free think in about our but we'll we generally think We And more will XXXX Day. them QX I'd cash relates in going experience specifically line. them flow as of forward, talk Investor then of some as kind it to at about about

Unknown Analyst

And these in more you compare there political think final about from how then one prior on, anything XQ is pushes? should And election regarding of to traffic does the cycles? that sort

Aidan Viggiano

Yes.

called we So about remarks, It in by the contributed the prepared in some have points political product business. Zipwhip sunsetting third It growth to did was basis quarter, a the software as we out that traffic. on we offset are our XX rate.

revenue So didn't it to growth. really contribute the

immaterial. don't to political expect will it be similar expect There but some much. we I'd to be QX contribute traffic,

of back policy to years If use but a more platform, based you on couple several we go just acceptable willing . that years, a on we political ago we're made platform. carry the and have limit on did decision what our to the traffic

Operator

Our McGinnis UBS. of next the line Taylor comes question from from

Taylor McGinnis

look saw the is And particularly in The like as into raised we Anything revenue I only guys flag XQ, quarter one that? it you just messaging first as seems driving business. and like in really guess, like the the it that then would you given acceleration sounded guide we modestly. the particular, in

the XQ? we seasonality XQ into anything in to we should business? with . specific Or look that as anything was messaging keep So mind maybe

Aidan Viggiano

little bit I don't the guide. a on then about cover little bit Yes. talk QX, Why a

acceleration So we're with we that really saw. pleased the

clear, So acquisitions. are reported the all equal, and organic just maybe to just first, be we now lapped

strength our saw is organic So business. XX% And a the growth we combination really of number. both and the reported across

accelerated highlighted, Messaging, be strong to from it in the quarter growth a continued growth e-mail perspective. perspective, as you a from

softer when We one by in then on about care, revenue Khozema kind but our tech, of largest we say, services, portion platform as I our also volumes, to social nowadays. in the a kind e-commerce, relatively health of questions self-serve, financial as that's of you kind think ISV talked good growth industry, say, of it previous pretty retail, us, I'd saw of well industry, our saw smaller about be and that's continued would messaging healthy strength that and revenue for

And we strong. say straight quarter. then geographic the see to improve the volumes did for I'd continued perspective, revenue And trends U.S. and a from be international second

So of we it different a in And X%. I pulling one as it the actually number kind the things in relates drove of strength X points guided guide, not That's the guess, then what X% to than QX. up, that guided quarter. to thing, higher we

are seeing is last then And a flow that dynamic forecast. to through favorability our some we we you guess, deal So of thing I with. usage-based. that that are That is

given just revenue continue we model. just So to guide prudently our that's

Taylor McGinnis

would just then And one on margin for Perfect. the me be last outlook.

expansion think on but have that it pace bit. a to that to basis, I guys we're a come you So quarters, looks several down year-over-year like the had pretty amazing of upside margins over see last starting the

breakeven high anything that we can a as to into expect think think a made share one So I of and comment is But you about I to about efficiency potential drivers. level, reaching segment you how continuing other any think expansion, areas are that you we maybe as guys model, like look next across looking at? seen? . we've year, what the know the at of versus

Aidan Viggiano

want I to do of I'm for call Yes. give a not but out next specific things. year, a to number couple going

now was million. forecast the It the we was QX, we is did for for quarter much year. accrual the that have just QX, is a profit $XX QX bonus didn't you QX, in quarter-over-quarter where So see additional did for leverage in our catch-up as reason based on

expenses. had accrue additional some So higher, to that with forecast being we

the impact that did underlying that about So of factor thinking in, the operating you margin in expansion. quarter, and should terms

As it to pretty proved our it the segment. quarter year, some forward, are, out we're ability continue levers now the confident next in We've leverage of We to million going lost consistently. you as get in say on leverage. $XX I'd right? relates called to segment,

is, kind focused X $XX geographic that, annualize just well second, continue you I'd optimizing what if teams. calling automation, the underway the are structures intently to our we're other and have the of then as we're each X, drive first, million planning the workforce we locations those big So and efforts areas org say, of that's and of then to as where expansion. And margin

Operator

comes Ryan Our MacWilliams line from the Barclays. next from of question

Ryan MacWilliams

I own to color year are given more any at this feeling provide revenue the trends better appreciate on to about hear your guidance XXXX messaging numbers. your that that's more build detail Are point? XXXX in their guidance. out the up volumes. this to customers there business Like love your just visibility on I you

Khozema Shipchandler

don't you I couple of things. give I'll -- a Yes.

would in the of is, has we're making on all, those buckets, inside disciplined, as kind is That in slightly financial over of last kind that trends that business. kind reaccelerate what rigor, started I started of of quarters say I ranges to number innovation We've investments albeit transpired been side. several we've as to efforts right, I the number of a first that used of different working into QX. the modestly, kind from . And in X the characterized and mean, focus. series of on stabilization obviously, better we're think, a growth, a well things of that's doing now what of to be really kind

QX kind You of several color quarters. of moment consistently to a guide over heard Aidan's terms raise the in ability ago our and

of all good. pretty that So feels

a our an just a self-serve particularly conversations with that into kind obviously. it's we also strong, of of extrapolation neutral spot. that's of would a in been Again, as not a as having we're is bright been macro, well. I of say what trends, out customers kind and It's lot And XXXX, has look

from seen volumes then a the that performing products kind quite seems that of then well. on down channel our by you basis, been I like of it's ISV certainly we've sustainable. that's the generally partners And break think product, if it have kind

earlier. of dynamics as couple Obviously, products amount e-mail, new and over like have even hold a beyond some last out innovations a seen we called we about kind from kind the which strength messaging messaging take of quarters. that well, of of of seen number deliverability certain we We've talked the

have and also add that about. a it of said, there's especially number everything relates around guess, excited that kind that some contextual I've to then innovations AI, on. things pretty to data we're I obviously planning would like as communications We finally, I of we're also And

on today our was in those One of referenced call of terms the partnership.

working extraordinarily clearly which a we deliver number to we're personalization at that in of We're believe scale. areas other on positioned well on

solid so visibility a I setup yes, that up, It's are like business. that of guidance that -- all we in I provided totality we level But guidance usage-based when terms Ryan, a we add of given preliminary always you have And some XXXX. of that things . that the pretty feels tough. mean, guess, for

Ryan MacWilliams

realistic Excellent, just does X X that's more seem it kind catalyst this it away on being now RCS, years like away. from the on has of with rolling for been Apple always iPhones. Twilio, years But out

early, needle super it's to of thousands And adoption know I over sophisticated with AI? at possible AI of for easier was So like the the are hard service at think become line think Like do a RCS adoption RCS scale use you messaging RCS with point? how move just hundreds messages for bot carriers but more about as cases or it's do like X-way does this for the U.S.? but very time could in the Generative you ready here

Khozema Shipchandler

all are great Those questions.

happens excited I mean term. honestly, I with think support near to obviously it's in what exactly RCS we're the technology. really the unclear

out the been cases, used say that that use certain companies for I rich cases. of and term. it's content really I you've promised. I think suited think really sure is, if yourself going to kind that's the longer with and really, does is how it's not it's it cool, reason that really certain of always And it really use kind certain I'm well deliver play

and in do example, with for airline for the are be in message purchases. to you have it able cited, repeat These So perfect in because interact an want that's are the these I way, we that you a frequent probably example the industry which fashion. displayed think that certain to that's content want buys to

but certainly not just kind it's think traditional obvious example that notification, would or I it's not of in right? so obvious which another when X-factor be example necessary, one simple necessary. think And authentication would a it's I maybe be

of or an of you through that, versus even like when do have application gets side, onetime have confirm it. other into the you things more inside itself then channel. it a want necessarily beyond But of the purchases on kind to when to But SMS of the lot course, and e-mail

I confusing. think all like of that makes the picture, fairly to be honest,

ultimately to all and it's on of then voice Twilio. accretive from to all of how lastly, AI. AI I it's matter Gen bullish that in talked it's it, that, out, we're you be relating no about, think the RCS, And the we whether that posed think quite it kind way I X-way, perspective, some of that whether things will our plays whether scenarios, Generative

when what paired with really hat, contextual we're think and on. really data, and we is to with as can which communications well do especially I it bullish segment where very . hanging relates of we're that combination our works it the

Operator

Meta from Our Marshall the line next from of comes question Morgan Stanley.

Meta Marshall

more that communications Echoing pickup the share understanding the of made is lot improvement part kind other But the to do to think the a customers or wondering share or messaging customers. Verify volumes? just of wallet with portfolio kind have in DB&E enhancements just you the ISV's budgets of of helped of business, of that better gotten within of kind marketing your you've the just and by gaining of of Maybe overall DB&E led of their bring some side on gains new and products congrats. of some the the part on

And then, just as a question. second

months within the business being kind X segment Just where improvements of some changes? you kind now of go-to-market those are of guys do into on think you

Khozema Shipchandler

Aidan then is she can. some this I'll start, if Meta, additional and wants Yes. color, add to certainly Khozema.

me of question segment the I terms first think, let in with actually second start go-to-market. and

to So I been. we We kind better on would go-to-market do side. where number of we've made we've feel are say where a the about relative of actually improvements

and time get faster to and customers think improvements our ability contract in I life in cycle improvements improvements contraction, churn to value.

That in reported net left right? here, and up said, quite it you weighing I it's see certainly not mean, there's a shown the rates. numbers on obviously, lot still work And retention our of

it's to exceeding for out for set time, some that if milestones some going we're to that do feel take to revenue, But into but ourselves the it's time. I we going not some just take of And I meeting those. think bleed like so those,

will the I to well communications say I to just of with get one that question, one quite is other your of think part segment. has other the segment gone is the thing I pairing thing related before

cases is those a Generative amount as that voice. both So have contemplate traction rolled year, of deliver us talked profile where of there certain extent serve about to we in out products the the earlier right present, well as were we gain use customer to we of which one now, on AI especially now in every as unified be some a And with it's a with that those serves Flex actually doesn't the to future to to kind products that that as proven referring products really what our going single box. X just of out we're

that's followed capabilities can obviously, So offers. avail you've inherent for a themselves sort customer and I And long us, as the running, segment time, gets data that the always up they of think starting And Generative a world, make AI of been to having with we're think having is Twilio. And data a going segment really that the of matter. promise contextual to in I reality.

think we well And there. positioned so we're

for second. DB&E a to Back

in that's macro new necessarily are we But wouldn't there I seeing. You're the some related, picking right. areas like we're Like se trend that customers. not it's which these say up of per are

think that business that the Aidan what is for next a planning in year terms of of the seen of for of the we've really alluded kind I neutral and kind to macro balance the we're way year.

or within saying a different seeing share the we're way I business that. of don't maybe cannibalization loss think

seeing I they additional is instead, period were we're already conjunction from to ones made customers period. using. improvement I with to implement a starting we in modest mean what that products DB&E think in

So we're a going we're not effort I with it continue so encouraged good, in much probably don't by But always into of obviously as want necessarily to self-serve. guide concentrated necessarily. It's our to and we a to. far, a metric so But areas that number what do too on we these we're like read seeing. efforts

Operator

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

Unknown Analyst

This is on for Poland Michael. Rich

So just one ISV of on the things. side

would I directly think played So helped to further? could Engage had away that that ISV point that one that how walked you some helpful. insight on, kind context partners. some seeing? with out avoid guess, at be the that get look are competing there you're do Or I you ISV from I wanted Premier to, kind into and just is of there mentioned strength any of Any those you of areas where

Khozema Shipchandler

Yes.

start decide wanted maybe assertion to correcting -- the did with of to there. You're sunset We kind that Engage we your Premier.

that we've things. focusing rigor decision, was part the of with say, discipline. think just is I and right think ongoing about that kind the right on things. paired was X talked operating I'd of I that And

it sense so made lens. that through And

Premier at grow to partnerships us competition on together. us side versus with thrive But ending them, really least think other automation companies particular, way those allowed partnerships, allowing kind it was up a of to relates I it focus different with in leading the to as it of that marketing in instead in the we other and have

customers' whether say these many Ridge we great of And I'd been number be currently. companies to a platform companies together, together We've integrations for kind we're long of with Brakes, excited so technology lined Bloom not up or have but Airship those solve ability needs. And Clavio.like time of engaging strong the of ours. with or of each or or we're and our our Insider got really business a partner to across grow it's to able board, have there's those customers that the just to to them, link that's about

Unknown Analyst

to the meaningful a side traction you're there. API see think of really about of That's guess, or hear the things integration follow-up side other areas kind I that any we kind guess or about, interesting and pick there API from very comms aside partner AI feature When real-time where as there block. as partnership to of cases the on building core like the helpful. just then of serve can It's really of in there? that. out that I that up Are And Twilio starting see kind being use

Khozema Shipchandler

AI, about I position it's of I it's for Like and would ones AI. it really it don't incredibly, when think really think that's activates that the combination because have scale, that we customers' contextual aspire of communications, interactions, of talk contextual it we that relates most I consumers. combination segment, differently slightly the we like happens that the incredibly data we that it's to form with the important I an and I think communications. Yes. And about just a reason companies serve, interesting about our but IP. think about it's And to at lot serve just data as don't being actually personalization the like

that want travel that into a be doing. -- but stored want be we're combined secure to an things our not with instead, be to over They into the in to other but data to customers warehouse then data LLM warehouse,

interesting us behalf it and a our it on we that unified against. of what about hear forward, us can really go so see And way through the is I Rich, going to you'll that's is the then consumer activate of think customers exactly allows that about this profile which like lens talk most

like products. I to think combined products, communications to of it's I with going talk the through interaction about like in Flex, really think And of it's it's done, and that every whether whether it's just the I them ultimately, security of whether start then really prevention in of in voice we'll we've contact virtual gamut a fraud a data. the our it's whether even lens with it's one think IVR, a in e-mail, this product, but run agent, things And less in single contextual whether an probably

Operator

Nick line Our next comes of . the from Altmann from Scotiabank question

Nicholas Altmann

different consolidating remarks, Can Awesome. the Twilio for the guys unlock what And SMS for on much And or much whether are it is on volume opportunity a vendors customers that? is or particular In maybe ISVs SMS, noted base, focus just CPaaS of you side. an consolidate? customer at installed look large then prepared you ISV that you from on how basis? deal your X-figure your was when X about multisourcing how there them of talk some go-forward who it's that to an a

Khozema Shipchandler

question Let's maybe. second take the first

So consolidation of word multi-sourcing, relates think the it used. you or kind I to as that's

certainly from happens we think to But built it customers it reality that experiment partners time, and product to I and that in the time with way way time. is, of relative time -- kind a think the fundamentally that we've from always is the other that see I the superior is is is, to marketplace. platform prided the offer that we ourselves the

think, running, our that's documentation the getting I very, to availing it I think a getting delivered of terms also like platform particular, use of easy go. And of our using on quite deliver the tooling, activated, place, yourself able strong what customers is, like like in side are so ensure need that other in we're to be in on upfront that to very first of side. in strong getting the then we're using up the and terms started other our really, is our ability really And

And a for of our so lot mission-critical are these customers. workloads

wait others them, for don't us. specific important especially that that this one for do seconds which to in a moderate way just that that's have And to world be able messages like to a differentiator constrained at is a people a versus even supply to so in of between most ability in across really our realize that actually handful moment get can

that deliver engagement suite, and our that's through pretty We impactful.

that I ends to of So up a of part back that's the that us. and coming volume that think of lot question, kind

question that consolidation. asked vendor specifically, terms In the X of you the ISV

all Twilio and So deliverability, right? of have what a trust is we place think stronger first better quality, ago in we on up I Like and true, I attractive. have remains have very high moment getting we the said running

in was think that exciting more I struggling they customer I to very In addition scale things, exciting generally is found do very to as in a example, and what's to easy Twilio this means particular, internationally all this of think those what's that.

see what that large, this limited multiple through and addition of especially kind I customers customers, ISVs channels engage off to just powerful. not to a that if at And wouldn't using over with other side of able on is we really engage lot more be are and I'd think customers been then being to that, time. find of has and our I them in on surprised the say is their

Operator

Our Jefferies. the from comes Samad Samana line next question from of

William Fitzsimmons

IVRs an the This to you to an to layer like highlighted agents, intelligent in customers. for vendors the the kind Fitzsimmons AI for and high customers for is contact with comms more easier volumes, remarks, Khozema, and area opportunity Flex AI Samad. things potential broadly, Billy traditional of center there's for turnover, in of given highlighted focus create opportunity on the seems the make AI prepared

curious seems who didn't has kind whether Flex it traditionally are large market, address cap software targeting performed of other be center increasingly, But vendors, just contact maybe how the the vendors AI Flex like AI hyperscalers, in those features to then how recent and quarters, pricing and thinking early you customer feedback in the the and about integration solution? of you're solutions add as differentiation in

Khozema Shipchandler

question. Yes. good That's a

a it's about able be this is this way Billy, about not the in think in I kind outcome-oriented the of other it I and hand, a is going that guess, going that kind Flex that to that out is deliver very characterize it's of would such. like the channel mean, voice as case, I what play per terms customer I one to the in is, since whatever it's to we're way, se to So going on think on I of way the side. driven talking be for you're

I SaaS and think the of ends up that. like of seat some breaking and licenses probably terms that dynamics in stuff

that market, the through data. lot you're in think differentiated to be second of a your to I of terms entrants while happens the in I'm actually various having is, is contextual the talking ability about certainly what value think drive thing aware of I able --

really Like to for solving of it's down having knowing like happening understanding virtual to an difficult into problem. end as first stuff. about a or start or soon renewal an purchase like that the of basic that actual customer. So generic in you like But kind any to easy agent place, their a like care like actual a or bore a what's got happens use model that you've customer up without the something underlying it's as like promotion really, customer problem, with

something a that large proprietary up serve. data certainly, to to start that that in cannot is proprietary scenario And I the contextual we that, data which believe we over that them they the their helping customers turning highly LLMs imagine is models. and train

that capabilities so And use data that ability vis-a-vis channels And on a interfaces us problem crucial offer. also the as that's I then solve we with we I that pair happen contextual out. playing means Certainly obviously, offer simple could the is them, the communications that complex our Flex, which then customer more segments through use, includes happen really see could we think we well. we could it an any IVR, with and have, how with advantage Flex, of but quite happen AI -- since simple depending most problems, use positions is to one that through think deliver how that of already to to

Operator

conference today's Thank This for you participating. concludes call.

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Twilio (TWLO) 30 Oct 242024 Q3 Earnings call transcript