Twilio (TWLO) 8 Aug 232023 Q2 Earnings call transcript

Good day, everyone, and welcome to the Twilio Second Quarter Earnings Conference Call. At this time, I would like to hand the call over to Mr. Bryan Vaniman, for opening remarks. Please go ahead, sir.

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

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

were with Lawson, the Chief for President recently Elena call. Thus, to Financial only and Khozema Officer. Jeff Data prepared Communications; Twilio issue and Shipchandler, CEO; Due at Joining me be President, our are our and the to Co-Founder vendor, IR today the team Applications; Q&A of the remarks external reading Donio, website Twilio live Aidan these posted an outset Viggiano, website. will

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

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

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

profit beginning will our to business results highlight Data in reorganization Twilio quarter, and segments, gross revenue Twilio that and be we I'd this field communications and two recent non-GAAP Applications. our also two like following into reporting units,

that, over the prepared I'll open to it to remarks. With hand Jeff

million. both on year over in from over potential and We the by profit the a energized of our We non-GAAP progress business begin targets, strong optimistic Twilio’s growth closed $XXX delivering you, laid second we’ve generating out Bryan. half that record time, of revenue second about Thank Applications income quarter, we’ve in quarterly to foundation be reaccelerate and Data vision. operations and our made an & accelerant AI’s the to to Communications, for confident the date

We deliver to also against profitability to financial remain continuing in environment. targets our any committed

path from we operating drove in of to We’ve increased million compensation, cash our operations and delivered loss the $XX reduction the quarter. profile GAAP have in made over reduced margin GAAP XX% by substantial and QX, stock-based flow of In free business. strides substantially continued year-over-year, on profitability our a

commitments, as raising the half We’re operations full-year income a we're executing from the million. well non-GAAP and against year, our result for million of first performance to guidance $XXX strong our $XXX of our to

a as what the takes Act been success what’s Twilio of as efficiency. short on in It term a for the A transformation long requires tactical possible business big Communications, X, in and time. focus vision in scale Twilio’s and term. bold terms is has taking

deliver coming the Our set, years. while we’ve operating against Communications business to we leverage target continues efficient the ongoing in driving growth, objectives

AI, our that Twilio’s data positioned two we for combined power Communications now can to belief of uniquely we're And value on building our based combination are of our and and businesses product the unlock platform Act through that reach with deliver offerings. asset, by innovative when accelerated

customer to embarked transform be linear, ahead massive engagement. status don’t opportunity, that I we’ve expect on the one market the a to for has the While road ability quo

and proven quarter In customer Communications, have is stabilization right to by base. The actions delivering a profile. across delivered Now, streamlined a operating and ones we encouraged strong efficiency more to our of and with business where are continued the be today: we the are signs

an QX, for largest messaging in email our the largest QX, in deal our ever deal Twilio signed milestone at exciting team Following this scale.

a our things The gross further the half our also business team we to so of part continues and it on the the will and second completed opportunities beyond. usage-based capitalizing driving the focused IoT to ValueFirst manage leverage. divestitures on of businesses. of on focus better, nature Khozema Twilio's year is towards to conditions, and growth Communications growth profit recently while As where through team doing our fewer sensitive driving macro share efforts of the efficiencies, makes

We ramped of executing efforts. the we In Data will XXXX. our against about our & revenue optimistic now year towards reps will Applications, are critical progress we here. to go-to-market sales improve end most that that and during on and accelerate Elena bookings our in growth focus rebuild the our more share have will continuing are areas

customer we we which designed generative platform every CustomerAI, June, In our for previewed touch AI predictive our point. have vision at to capabilities across layer and

value where asset quarter, real for be most differentiated As party pairing the segment with is language We . Twilio our unlock will this last shared believe intelligence through believe is I sets large I first models artificial data data

data potential for even AI customer accelerating peers. differentiated Twilio the rich value drive will that level Twilio's large that with race lives customer AI, Segment’s become training By a ahead business. more our be models of customers language our communications multiple the flywheel. for data has proposition with help inside will data their profiles significant and their enter ability segment, to of steps customers to tailwind

as several few capabilities August SIGNAL predictive of AI be wait products the can’t CustomerAI’s to integrations showcase to weeks advance including as a partners away. within some CustomerAI I excited an our and will well XXrd of Google, that ecosystem OpenAI cases Segment. and I at power just use also We’re to FrameAI, of Databricks, power AWS vision building generative to on

first financial targets million executed remain the evidenced adapted over up speed to team goals to which we deliver new against for to I’m proud the of I is XXXX, the value our greater a has well the our $XXX that achieve last income sets they the building navigating and today. look business, two to through and and change sharing having plans, to This team we tremendous structure non-GAAP a foundation and on have of capitalize that to opportunity reoriented as the the forward right the quarters company exceeding solutions operating lot through our ahead. continue quarters. have us in as and confident of plan of of the our the our driving over several a right efficiency team, meaningful progress by customers delivered

to I Now hand am over going to it Elena.

in with a Applications & XX% $XXX of year-over-year, gross XX.X%. margin in revenue QX, Thanks, up million delivered Data non-GAAP Twilio

During products mature our execute against our to the invest capabilities, date, our organization, new pleased an more quarter scrutiny. AI-powered but progress plan we in work pipeline I’m to environment expand in budget buyers we ahead. with and and have sales are where increased continued to facing our

that data. integration unlock unique with market. share by we’ve July, that last in partnership a Since Segment their will announced Segment In IDC develop quarter XXXXX. the the product as number ranked several reflect recently announced exciting a market Databricks value bi-directional worldwide customers to new from We our CDP and more even in position help capabilities partnerships one

to partnering with generative we interactions. Flex Google into Additionally, customer how transform and AI brands their bring are personalize

Flex, Communications. and and into Segment, infusing CustomerAI, unveiled Engage, AI we capabilities predictive generative Finally,

Signal plan built showcase an vision. exciting innovation is around weeks CustomerAI and Our to we our away new conference and two roadmap

wellness deliver health Our by provides and customer Communications experiences, resonating software in increase evidenced deal wins and QX are to outcomes. improved that customer customer the software as personalized quarter. solutions products to a trial-to-paid with in this providers rates, drive CDP market notable subscription multiple A Segment patient long-standing signed

our wants provider leading future won of Journeys, products, of Protocols, in additional this and the Unify. of leverage a customer tools deal ease of faster to technology, entire Segment time-to-value Connections, Audiences, will including their use Follett, of connect throughout future customers Segment’s the competitive because when APIs ours. to suite to the as and education Segment’s leverage We

due a the engagement our the allowing Profile a to competitive experience. Segment power of media company, Media API, and was improve Connections Media, to Fortune the of single a the furthering users, flexibility end multinational Fortune personalize and of their overall win ability view to obtain

X

large services to and a allowing AI leveraging them scale to for committed improving in a our experience. company agent comprehensive Israel Flex Conversations custom-built contact based while center customer solution API A the chatbot handoff, financial with seamless

agents new a XXX capabilities for to Fortune launched XX,XXX in and scale property concurrently that leveraging up allows allowing deal signed account. the to initiative, scaled February, in an eight-figure A casualty was we QX’XX Flex insurance This with to support limited single by which scaling quarter in availability Flex agents Flex in customers scale. enterprise during XX,XXX provider over in

and year, team a least of been have and board. we at overall the Training increased enablement Segment with majority in-person for in good over progress across made model we’ve mentioned sales rebuilt excited sessions a to has I motion for specialized for delivered dedicated and the improved Segment I’m a our last area and sales reps. sales capacity first for skilled and a As quarter, the training QX focus nine time our with sales that key transition Flex, in-seat was highly months.

traction in QX. generation conversion Segment these increase in significant We’ve efforts, improvement Flex with seen including of strong early within signs pipeline and a pipeline from

has we led continue these to our some to instances progress renewal by and of While which navigate early a contraction I’m encouraged lower of macro, and expansion. higher challenging signals, some

are customers, but has more seeing and this, customers. leverage of as we small of give sensitivity their to quickly, instances capabilities our deploy greater particularly implementing start business expand To churn and Segment we small, price and Competitive grows. more low designed mid-sized to initiatives to SMB businesses, remained some flexibility are stable, address with

it steps Data the to still work where execution, Applications We feel get ahead good & there to is be. more we to should our about made believe improve performance we’ve but back

marketing on continue top-of-funnel ramping our we’ll campaigns, more optimizing forward, and Going activity. teams, to driving our onboarding focus and

more foundation lead confident this we’re and customers improved bookings back-end We’ll for long-term delivering also will entry faster our products of laying believe business, solid growth giving We year. a the value. focus and to to towards for to points accessible time on our I’m that the the

am that, turn over to it going With I to Khozema.

Twilio XX% non-GAAP margin gross of you, Communications a $XXX year-over-year, up million QX, revenue XX.X%. with Thank in Elena, delivered in

meaningful in ability profits. which team, to our made evidenced a pleased we more on delivered focus As earlier quickly the I’m we with and a organizational is the team’s results changes structure, generating driving adapt this to streamlined continue by QX. to with cost growth year, we

our position, traction. Once we’re named again, team in leadership CPaaS of driving XXXX report. has MarketScape a this and cross-sell portfolio meaningful go-to-market on across opportunities seeing Leveraging our been proactively focused Communications leader broad Twilio was recent IDC’s products,

deal messaging ever last and example, the their marketing this largest an bringing we we our million. to same our more quarter leading As with history, company, commitment highlighted $XXX Twilio total in Twilio quarter largest automation to deal than signed email

Additionally, exclusively XXX messaging, ongoing recently voice APIs, a and Twilio Twilio messaging million our a critical increasing entertainment account customer $X customer month. power been Fortune onboarding their by with has that initiative, spend chose security a to using

efficient against in the coming exciting our and see help accelerate an we our market can billion AI to $XX+ Communications continue years. runway in We TAM, a for growth innovations gains business in believe share

capabilities We Verify AI/ML are of products, release core to life Communications Fraud in for including our bringing Guard the

we via Guard voice, enhance their high-touch QX was relationship employment with to component deal a Fraud signed In an model and APIs. email customer instrumental company an this leading expansion messaging, of deal. our multi-channel,

pilot, leverages Protection in moved as a inflated losses AI it block product pilot customers Pumping and the via second API. our beta. SMS of piloted to result our This which messaging \ we’ve traffic and of artificially on automatically quarter, meaningful prevented behalf also SMS recently successful detect private into the We

their continually adopt institution robust customers our and Voice making the and Voice also decision customer customer of this allowing ensure has and financial of beta, their call data at proven Leveraging major A Programmable automation longstanding an quality recordings, first insights Intelligence released extract We unlocking customers Twilio global scale. into capability increase AI-powered Intelligence to service compliance. services product. public is process a one to from our to data-driven Voice

on growth We’re in product-led our strides assisted we made our to sales in and returning focus QX great also continuing to self-service motion, roots.

updates several to transparency. During we out the pricing rolled greater drive quarter

teams, team, also a to go-to-market solutions decentralized our managed. specialist implemented centrally layers international arranged of team and We engineering leadership be and removed

and resources to deploying on prospective larges go-to-market greater We are our efficiencies to our spend in and thoughtfully existing customers wins time drive customer

the coming quarters.

in We encouraged QX, less are trajectory choppy growth also means in by this macro, but see still our we which environment. a visibility have

believe a few drive we setup growth good balance, and to much but a and about across QX experiencing volume weakness have our and and verticals, including a continue model. Social We’re go-to-market seeing more On remain volume Messaging with verticals moving beyond, growth number Crypto. are of a in operating leverage we still hopeful forward we & to efficient

that as of worth a made commitment to noting to traffic August and XXXX. our carrier block It’s MMS U.S.-bound XXDLC unregistered have we partners SMS XX,

a it headwind to will to growth potential on could We have QX expect and of revenue modest QX. on points negative XXX this up in points, of growth XXX XXX basis a in basis yield impact

the majority customers traffic deadline. advance is of to our compliant get already who While actively yet their are registered with are we traffic not of registered, in working the

a with we external successfully first the the operational navigated excited I’m and made of the team environment. progress we the organizational during by together as changes half year challenging implemented, the

we to products and set efficiencies, a stabilization our of revenue will win to in are continue and large to reaccelerate scale, believe we we executing further continues, we’re can, while everywhere leverage customer and We’re over base as position confident new business time Communications well, driving strong volume leading growth

With it to Aidan, turn our financials. that, will to over disucss I

Thank Khozema. you,

establish plans on on QX delivering profitability. business our drive income from efficiencies our path made We’ve solid path continuing and to continue progress against in profitability. operations greater accelerated to targets, non-GAAP GAAP our an to We our execute quarterly towards and record across

achieved the delivered While results we to have the I’m more date traction team the pleased and quarter. accomplish, with we’ve in our to

XX% total was and IoT year-over-year million, organic adjusting $X.XXX have million reported Applications and revenue QX; XX% revenue both included up up QX is XX% revenue been year-over-year; was was $X.XXX and $XX ValueFirst $XXX our a divestitures, would and revenue up million, these Communications was revenue XX% Second quarter for year-over-year; in Communications recent & revenue for year-over-year. basis. $XXX million, Data up billion, on

remains volumes dynamic, we usage-based saw beat. our the the throughout across of revenue quarter, stabilization helped While our market which continued products drive

revenue call, our growth year-over-year. during rate negatively industry. As organic was the referenced earnings excluding customers in impacted crypto growth our crypto from XX% we by headwinds QX QX was QX revenue customers Total

We impact in the QX, headwinds will to anticipate which moderate. similar start after

Rate growth business. & to XXX%. trends XX%, and expansion were Dollar-Based the overall respectively. directly This experiencing QX Our Expansion the XXX% Net and net is Applications Data the we’re rates correlated Dollar-based units Communications was for across business

is XX.X% grew and This margin quarter-over-quarter, points profit & XX% points a down business predominantly QX product representing XX non-GAAP for XX.X% basis and gross respectively. non-GAAP gross mix. gross by Data driven basis XX.X%. year-over-year, year-over-year were of margins up and XXX Non-GAAP Communications our Applications

and from QX operating XX.X%. This significantly ongoing of maintain cost representing revenue across non-GAAP income due business. beat expectations, margin to was of to primarily ahead was discipline $XXX million, our the the efforts operations a non-GAAP

estate associated was associated $XXX restructuring includes expenses and QX divestiture, GAAP all-in loss operations ValueFirst February million, from million. real a with action, loss which the $XX impairment our with totaling charges,

approximately down XXX of points in percentage $XXXX quarter-over-quarter. Stock-based was restructuring of a basis excluding QX XX.X% compensation as revenue costs,

and cash is focus business. in an in of QX drive for generated free the million we profitability this we as flow, for $XX area us greater Lastly,

that We’re the delivering February, plans in yielding against changes business in shows demonstrated the that in results. the made gains and intended profitability we that efficiency outlined and we the the QX we’ve progress are

our ahead first share commenced of continue repurchases to we progress authorization our month $X target. also against $XXX of early intend in moving February. make balance repurchase forward. billion We in the six to against execute continued We’ve repurchase share new of completed We program the that our original million to July,

continuing external opportunity, prudently environment. run given our to we and of plan the and dynamic about positioning competitive confident feel the While we’re business the market strength

we’re X% year-over-year million, revenue of organic recently guidance, to QX target of X% basis. businesses, excludes IoT representing revenue an $XXX rate divested. and growth $XXX on X% ValueFirst initiating our both of million reported For growth which X% organic a to and to The were

point a with highlighted. as basis hundred as point headwind headwind potential XX changes few hundred rates as above, Also, these one reflect Khozema basis crypto customers, registration growth DLC from the that mentioned associated well

into $XX $XX take This this approximately SIGNAL will to We from $XX for expect our Conference, takes place million. million non-GAAP of million which expenses of income operations QX account month.

our first $XXX million raising performance, half non-GAAP we're income our Given $XXX to million. guidance from to full-year strong operations

to half and the work meaningful more that there still our the value come. made deliver to is of We’ve right to to the progress done. quarters increased will over drive execution to but first set I’m actions us confident are shareholders of taking year, in the continue be enable that focused we

some hand for it Jeff Q&A. that, we to to I'll With transition final before remarks back

I'm to platform sharing you behind and to AI and our is will June, customer be leading enough the if at Aidan Signal, to just platform customer our AI, annual on up and team. be indeed, which it together wanted you, I going Conference our communications by folks presume the prepared leading it's close brings stage, taking we remarks, bring center And help heard our that capabilities in of August CustomerAI, and really data already Thank haven't coming that customer XXrd. set excited middle. reminding AI the to product with details SIGNAL

So on ind I customer bill AI. customer's of top can't

why that, to we it questions. with don't over your turn And

Instructions] Meta to Marshall, go sir. first We'll Morgan Stanley. you, Thank [Operator

more Or a sense Jeff, is Twilio? for AI may approach and And where of in an want to has Thanks. actually And it they know increase these visibility the of the implement? point alluded still of kind Are the to map changed they kind are just Thanks. just education some they customers the they where Great. But hear phase? how how to to knowledge projects? wanted want of you what at AI to I just capability of have road but this, or Signal. we'll get

talked for what not a of the I mode, most. deploying to is in but much in mode customers future that learning Yes. question, necessarily Meta. customers. lot I Thanks planning for a still find are the And and actively things very

I And think it's so really constructive a conversation.

I quite that and When at intelligence, engagement one, talking customer Twilio about while. platform I for been is that brings customer we've this into artificial this the look glue do segments can what with we AI think and together a communications

some We're benefit our think terms think benefits here. on than able to like But whether already compliance of thought with AI is products. be of lot in seeing broadband is AI, arriving a of in isn't a the the to AI generative the we game doing those sooner product, AI this I bunch of is And new inning. table. even the still authentication - of This in it's bring of a Verify like terms warm-up pitches I this first even to

at And really signal, as between but products the a and our deliver ability company. can accelerator really customer for data in and bring to though, new speak as communications massive think is talent a more and great to some become this excited, so well detail the I to AI market much about to we're to value vision

Thanks. Great.

is Taylor [UBS] question Next McGinnis

taking so Yes. question. for and data apps just the on the my story. Hi. Maybe much Thanks of part

bridge NRR XX% So basis down year-over-year, points if reported trying of an I'm in that to you then gross segment. XXX margins were the and

contraction gross some segment? margins But to the as know you I we some So renewal see, price ahead, can in I talked that greater more you risk just guess, sensitivities. like look about and

reported, well above when in line, just that's like XX% top growth NRR. you still of And the terms then XX% about think just we the the

the Thanks of So of we a be in progressing can throughout much. see. see level in that And business trough growth any the if so could terms you just you direction color give there could or that year? how

and about Aidan. it start, I'll over Why hand through Aidan go talk growth. is revenue I gross I'll margins, DB&E don't to and Taylor, then to this

that right particular, actually in margins That by capitalized down accounting TD&A you're for primarily year-over-year. software. So driven were and accounting

boosted of the off. initial acquisition. typical XXXX So gross the margins capitalized segment the in and post And balance written the That software acquisition following XXXX period. that's an was

post-acquisition, been as level. ongoing back balance building innovation a normalized has product And to and up more development that is

gross be the normalize, or pretty the decline. is margins years that will three year-over-year that period-to-period, post kind of three still we're don't future. good XX%. acquisition, but obviously but and driving that's see start we years rate. anything there what's about to minuses feel always approaching really high materially margin And pluses We that business The very Now in should at

So why to it I with that. hand Elena don't over

on couple I'll Sure. of hit a growth. comments

of performance, to of this Our up booking expect bookings year. inflect deceleration over bookings current have quarters. is which quarters and a we've as revenue growth couple really now reflective back happened prior And that is coming line, talked turn in in the the we bear to improve which see about last we in

doing enabling I from win that that go we've through economic out, and working think and market the that the So to also preparing that we're a breaking lot, everything bookings historically in to work out talked about improve we're and tough make team hiring, to trajectory, sure climate. building a during

near A are numbers. other the term. lag to trending been than growth a They've things little in more couple impacting traction of us we impacting

We rightsizing of businesses contracted have Mostly, segment time, some the space own some those see at had in instances particularly customers viability that over where their as times we some customers levels. spend sensitivity, have have issues. SMB are their

performance and happening sort that the churn, some though signal of our of not all taken contraction good of and bookings so traction in what's customer a so but market. increased it's in And together, competitive,

improve Our growth expect that we to to performance year. will into been macro. in the through tough revenue here to want and team term. near that comes next moderated as has bookings of do continue we I online sort the And that follow break reiterate

the so Thanks congrats quarter. on and much Thanks. Great.

next question JPMorgan. Mark Your is Murphy,

Yes. Thank much. you very

sensitive, you you to $XXX June all Can just you then XX% should Or the trending macro that in quarterly around and that So year-over-year And just you're comment that July? or growth seeing on do it read stabilizing in there? revenue? comment whether you stabilizing I'm improve Khozema, we as can around wondering, continued stability And mean that something noted. Specifically, at million on there? else just is just business given as therefore, usage-based. is messaging the

question. good Mark, Yeah,

maybe off So of the kind start first to with part.

things volumes see revenue really you we is quarters going growth not have either turn of that And trying business we're that what the we're kind of nor that that either to stabilized. So we're going XX% overall see regular said to to imply in the I'd kind it's to the haven't probably seen we're middle being that inflect stabilize, -- just in them we put by seen say, of line. up. flat in the encouraged closer that obviously, of while up quarter somewhere necessarily we've we of kind But volumes QX.

I'd most board, growth. have seen we we we've say meeting have and sectors pretty social out in in contracting activity messaging seen the in and across social messaging. revenue generally have downs, seen we that operate been of of prepared which the There remarks. couple the Notably, some good which volume called a

like think in landing. it those been beyond for where obviously up some pretty that ended seen had we would we a I items the And not have of decent growth quarter

that's way is how would about on into that against We're results. inflect of of quite some kind sales the it coming DLC we're dynamics we good I very yet. in volumes targets, QX, the characterize of We industry that's seeing based for not the thing, our stabilized. kind execution out But them the are that over long think But term. up up that called think a that financial XX QX. also I obviously, translates encouraged

just seems then of to from unregistered blocking points widens it kind presumably Just a super at XXXX. in basis XXXX? that continue moderate it does I'm it like into understand, to XXX because mentioned traffic little QX bit quick from QX? follow-up trying headwind And does a you it,

Yes.

Another good question, Mark.

is we the basically, way is with carriers made agreement to X/XX the that So the the think that it deadline. way the about is that have

see just to discrepancy quarter. quarter you're versus between QX that not XXX bps same XXX the bps XXX to the the in going kind would way impact in in That's you the of so QX. And in in next

that dynamic registered traffic want you other majority is of vast already to compliant. and that the is think think I about the this

normalized. not like, we talking impacts, as or think I kind the think really so XXXX, into we about of we're less it And more but will get

Thank you.

Turrin, The next question Wells Michael comes SecuritiesX from Fargo

ahead at thanks. just if useful commentary that more tied question. is at can usage we changed on trends results the what's making most you at to pronounced a think great, meaning, than holding we here. potentially around did the If stabilization parse you what in you add And back you're usage seen are it's lower any color coming Hey just upside taking in we've of and of revenue just expecting? wondering, quarters. QX, the that the Appreciate just number in the of a I'm point commentary we look that you're somewhat delivered that there's just ahead to progressed, the Or all stabilization if through is start build I consistent, as then is up? quarter and as all try side Thanks.

Michael. Thanks,

about That midpoint is, in X% guidance larger so we beats, of the of that a range. of the the you it's noted. say, question largely first terms as result head your answer a to we’re stabilization continuing volume of So as the

We that. very still of what mean, that drove dynamic. that's we is called rest pretty the outperformance. through we're So continued usage-based still majority we business quarter, really And for encouraged I market by volume May. saw saw in business. it our stabilization the the and out the It's the of vast that

susceptible and plan to changes prudently as a we'll are we So, result. continue to

what trends, of and I but of coming a we XXXX of so say the saw terms the different early is the of the relatively stages kind second out would QX. in volume quarter, throughout In trend than constant

we the pretty relatively it encouraged was And across by constant so fact the second quarter. felt that months the in

you. Thank helpful. That’s

Company. Koontz, Ryan question next & Needham The from comes

I one question. Khozema for side. on have for Thanks communications the

you deal screening, more into be, where expect kind onboarding, journey the that give from us in Thank Just of in idea now think a would terms helpful. color kind to year any automation, automation, of of of about be are As execution? you. you and where you more can delivery today on terms you say, an journey

we I Do the your our back gave description of automation mean roots? want vis-à-vis of growth just to that you clarify one kind self-serve kind of Ryan. part line question. kind product Hey Yes. to of

Yes.

Yes.

of So then most we I obviously XXXX right, number and part of for the the like say, beginning took part, would significant headcount a really actions, latter the in XXXX. of like part

lot to And to that that And is so think see we kind like of be we with of of a we could through lot the to and automation. of perspective. we going the growth things continue about of I terms well way could a future, to of those potential to in as customer our Jeff that forward talked the do automation. lot things that going company that costs. in the of about do way largely internal the think business of a for do that stabilize want AI a the the and eating we think from the I some business also is promise basically there's

that to There I areas interesting. in are and be could currently, starting we're think of really explore that a number

part, most of would seen say really the in terms I business. the For we've profit that good generation

largely some cost hold to just come the profit I as line cost part, large efforts. move and will combination through through automotive some that's we able the that being of to growth I the automation think and to of And continue forward. bulk in and generation we probably think generate then productivity see in additional -- line going additional come

Sure. That's helpful.

what there? Just a or maybe to halfway say in part, most see for you're terms the you're want clarification. operationally you you there of Would quick

qualifying see we're in bit I where are a I'd leverage. mean say for Personally, to journey. I little volume the us mean, exactly a we there. wouldn't do about careful I opportunity drive lot more I be

play I think kind so year. of And go into we next and we'll where through see just

Excellent. Thanks much. so

question. has Sachs the Goldman Rangan, next Kash

very the that bookings might get revenue for characterize how much. how Curious accelerating potentially the you on thank growth Hi, you take your growth forward. rate to or going outlook translate better

internally, If realignment of you can so and encourage internal make and pipeline talk the from you you growth signals ahead. you're the back that years that an see improvements about from in course, feel Difficulty] in footing end the better seeing the things half demand you perspective, bookings some about the a of seeing made the of better at you're better even with signals that the of [Technical that of second conjunction to operational outside external perspective front Thank the an with the much. organization potentially some you've the with internal demand

the that for clear. in Was business particular? one just a so Kash, of question units Hey, we're

take or could in both units Appreciate for Elena. You you, Thank aggregate. it it.

Okay. Great. I units. respective hand to business their they cover don't Aidan, Why Yes, Khozema sure. it can and

communications lot, answered in Yes. part the I kind like efficient done the obviously a question, sales of would motion least some that say, Kash, way like in some of particularly the seen, business. we've actions. to at think we're the to And make we've that we're material by I a I like And I the committed profitability, investors. took really, seeing the We balance, lot headcount encouraged is on really QX. think which more growth obviously, prior we what strong of

are your targets is hitting I to question signal time we're more that that the some into up obviously sales our precisely kind we answer in Sales particular think the to show take revenue. inside of targets. watching company

what pretty seen, on sales and think continue XXXX, good results we've on ability up more a setup. financial translates that certainly being into hitting I'm based that, ends Based encouraged I to into targets, and our

good Aidan based the As that. on add environment. team, prudently side the that we're this in With about a I like kind plan forward. it's to Elena a up going over tough of why going TDA. setup going cost back targets, we've being obviously way turn external kind pretty good the to, pretty way business, But profit of the a the generated not hit any the into through choppy business. we alluded And I'd that, it way a to usage that terms to the environment. like Certainly set of don't feel And we pretty to about that say that's the of sales we've have stabilized talk

Sure.

a had Let then couple a points. to me And there's lot hit of it. if high of your -- question dimension

focused methodology right good implant our free that got really feel But to there. data the sure do on And things back. really focused right side We're application progress please anything, enablement. we about control. circle can the right I the making folks and business process, right seat feel in on we've the the and we're to the on missed we if the the So, of

to [ph] in really are Top We of strong. continues pipeline starting be the to see improvement some tunnel as well.

robust a there's think there. we out environment demand So,

the see in We conversion some are starting through like to improvement things pipe.

And It's So, translate And progress year, a to like bookings rebuild. again, our next which we'd a about bit in revenue do. node. XXXX. that against we lots into exactly of year work continue rebuild where this not talked in historical see what again, we'll in good improve this to I've it. of But quarters being feel will about

reason as work new managing through that there's we've reasons continue business think stay but and and good here, working also the time. ahead road contraction be that optimistic churn customers long quickly we're time, At there's acquisition. and toward in a that I on net to for it to got same lot improvement So, to making we of a embrace a long sure play to

on down our efforts doubling well. we're so And there as

what would And -- environment improving meet to as be to demand you it. consider you XXXX. could Got hiring go the

in about about Khozema a he let how I'll TDA, question from comps feels Firstly, perspective. that talk

just next markets have we'd up teams I the want productivity new gotten and those metrics on of that. before we largely things see them really where ad reps onboarded to our ramped. layer expand to where getting degree are headcount the to like like into We point and

a the as team, the there. the accelerated a not we're the If it it's not off out spot in I really volume basically earlier, we've of efficiencies Yes. gained plan. to And the alluded opportunity. I we sized gotten we've market saw to where we It's with on there's leverage agree like the that side think way table, light Communications I that think don't the additional be but

Thank you so much.

Nick is Scotiabank. question next Altmann, Your

for or Jeff Awesome. Maybe one Thanks guys. Elena.

You And vendors. CPaaS your guys a had big multi-source larger year vendor had And of maybe called theme of a some customer, this out notion which monumental sort is around of historically, this is customers consolidation. $XXX this deal. million pretty

ask I to two in was so relationships the where went sort wanted Twilio? and a And deal One, consolidated this all parts of around customer CPaaS on this kind sort deal. of of specific

customer this consolidation you just provide sort that And of really part, a what's deals? appetite strategy And year? any could of that level then this as maybe sort you're of for think leaning the be I would these of is sort a color maybe second into around interesting. Thanks.

communications Yes. Hey actually was this is a Nick, Khozema. customer. It

So, I'll question. your answer

I customers help Twilio the consolidate of think all onto their our answer to really first to a us across the was channels. of question for number is, yes, short important spend one an opportunity it

aspect way what right up think to deal kind a was optimize a make particularly sophisticated right important want traffic reaching of we're some process that to kind really like our I that to a at signals being the of at. patterns. -- I ability customers differentiating prioritization do their that's times, these this really feature the of business, the good Like and was want of effectively and that of sure customers like they queuing are that think really ends

spend opportunity have consolidate and ability where in forward, share. the going constantly think to we're strategy of we I any at take looking terms certainly

even have it's a with frankly, or lot of different customer I internationally. across think board, we the those opportunities do whether segments

of think from you'll going the to I us that strategy forward. a part so be that is going see And

actually, don't not down, sure show we we're that thing And so think I take is in good discipline of price. always of one let op a so we hurdling we at that's but profit that generate the point, we've terms making profit. job price other me pretty Like that done that firm gross making add sure one that risk of holding

I find that generally in our price higher you competition. kind And margins. a think can than of gross the we're you'd that I think see

- Q Nick Altmann Great.

guys. Thanks,

Nick. Thanks,

TD Derrick now will We hear Cowen. from Wood,

other last on just of of made restructuring efforts, whether improvements margins. gross And there not within can your near of stay in you medium have around gross are if sales around you business with leaders to to on drive you've help I'll Khozema, or levers incentives in Thanks. And notable margins? kind for to on or Great. topic wondering teams changes term? or the and lean maybe that margins you focus driving kind any gross I kind guess, more --

is comp on our that pay gross reoriented Yeah. we've way Hey, sales to basis. Derrick, basically profit the a

going Now take we that if there's gross to profit. a and see that. one it hurdles generates caveat op We're deal to only profit can

loss. that bottom clearly take we're ultimately not going line So ends up to in resulting a margin

the communication compensation margin. higher gross necessarily plan on And especially the is that an reps important business, to the made in wouldn't for necessarily generate our change so that biasing I we we're side say that

think for of in we We'll e-mail I do, lot example, just strategy. think there's of do as divesting I in we opportunities Like I continue or selling as terms for cross-sell, voice customers. can that of part mean, that as have in a terms examples the with example, more

of idea, efficiently we incremental the that we'll profit these solid. go the unit though, get I as gross are long in those and is ensuring the of do future. of think the really can customers economics that one that solid, dollars, overall is And every as business

you. Thank Great.

Derrick. A>: Thanks,

William Blair. Stotler, Up next Matt is

This strategy. guys. international on One Hey, Alex me is [ph] on for the Matt. for

And a first revenue going international international do any, revenue for there percentage business? the implications to SaaS if total forward? strategy, new expect the what, how trend as With are you of

SaaS you first. What mean by

of strategy. software the split focused business - Yeah, software the the just and the

speak crack a and to in, count take wants international line if then anyone business. I'll data We and to So a else the at they applications markets. in our at operate of late first I'll number this jump and

our TAM balance here change near we very into the looking We're market bookings seen We between markets growth, term. committed in right core think haven't We in And example. an necessarily the up US in not international markets serve. for open new we're there's versus to the markets. enormous to that

news good our improvement international markets. in of performance theaters. those is We demand there's see And of across that across all the of each sort

of markets everything terms anyone things we're and as functionality standards to those to that. else of perspective how well and from privacy like add? and a on know software and in able I protection so sort to anything have or service data don't else our to And -- from capability

we've markets a of just a been I'll lot I internationally. of historically been perspective. see on communication from that side. under-penetrated mean, I set in to the communications we add that's mean, continue opportunity a

of And are additional of serviced actually customers anybody. so that markets I think the those found not And lot is a lot we with there's growth. in by a being

running of I And a open there. field so think there's lot

as addition from good quite our to Investor well that, economics you internationally. may last are remember actually the as year, In unit Day

so of and gross there go think to consume. And there's we a profit dollars out lot

that continue more lot And so We markets. the out of do We're cost it. efficient be not I it. open way there. think do it's necessarily similar like to Elena, to have opportunity up going XX we winning we like we in want a to about to and very see But

more thing. just add This one is Aidan. I'll Maybe

come you're of the dynamics slightly a you've quarter-over-quarter, that's largely percent crypto function internationally. revenue talking really down international seen volumes that because a about, lot concentrated of we've the just If asking that of been

And so where were much if too you I that's read into it going. wouldn't

it. Thanks That's helpful guys. Got Perfect.

Operator

Alex question Wolfe Next Zukin, is Research.

guys, or maybe Jeff Elena Hey, the thanks for taking I question. guess you. for

kind like aspirational? is data year. you business -- the to Is that next do attributable QX quick on of do contribute much, the a is that I see called you see given next that from you bookings reacceleration have to part at year? products see a a revenue You Is would next that And and apps if And for happening to expect to commentary that year? look that the going of particular comment in kind out or follow-up. early driven initiatives before? in we quarter if of next And in that First, that you reaccelerating business, or year? revenue grow how any,

the a that out And can a well. on then side, here. thing as me let So as Jeff take o point wants AI

So

XXXX, looking lines is happens. are specific will to what definitely growth say terms and on time committing not happening. when it I reacceleration forward We in in always to But the of that aspirational. we're

see seed. curve with that -- and -- is we've say round improvements been a coming individuals it that undergoing going be And addition a the and those our year. function up are of of big rebuild that it's the reps this reflective I'll that it's bookings newly that in the to the But will we're of

of back will translate the And happening happening XXXX. that now so the towards bookings half well, this are in year as

but clear, that's doing a hope we're view. So quarter-by-quarter not

individualized the unlock forte the of value that the Look, where it much And question. to part they more customer they're of to segment that therefore, their And AI, so our live, AI touch how tremendous their you personalize an can more the customers. it going basis then data with to new customers of and in with the is much it what proprietary go data AI is sum sets now generative our like efficiently customer, centerpiece is every do because know strategy, I in and of opens so speak can opportunities. that about your up

market, to are because one's brand have the really say. hearing Now utility is in but really companies in hitting generative months, obviously, right? product we're that no I in speak AI And to products like interested stages right? of are out products its most new, started think in to I buyers last They bringing so company, what those got as what set AI it of. a seeing there, you're stride we vector now, mature the are earliest in said, a think is monetization AI think interested probably for that the follows, which I that's six

vision, that has and value And data going from part what future so be turn that of And customers, of get in forward. that are sales them. companies our will proposition is as their this coming my they can start the journey. the selling AI our ready But that speaks for a to of for conversations segments whole sort to think market and into our liking I I key

Got on maybe just it. Tim, for free you, flow. then And cash

You great income guys are front. on the job operating a doing

next realizing year. this helpful. op both income number raised issues, for That onetime be this You cash think super that year. more we about flow free would so could the but some conversion, How has to even maybe that year, year

Yeah. Thanks, Aidan. It's Alex.

in little the bit relates to performance maybe talk free flow, as quarter. so So a the it about just cash

the payments. million actually $XX So number restructuring quarter. $XX That of generated included we million in

payments, record that's a flow million, nonrecurring quarter those us. for adjusting So we cash and free generated for $XXX about

posting really at the really of as you function results. it's line, a it's when profitability, look restructuring really non-GAAP both drivers, well those So the the of lower like really as higher costs. proud And

As will new any think some variability you cash how to going out put of going it. I always of think in level about so there's we're and say flow. to terms about just not in framework forward, timing

for business cost free to us. wouldn't perspective, But profile expect linear. look is avenues a flow as necessarily over focus well both as I cash We'll So growth for the efficiency to from drive time. huge it's of a that performance continue

you. Thank Perfect.

Leytes, The next question is Phillip Mizuho.

is, catered you data is from LOEs. Mizuho. look Siti different Elena, products Panigrahi you at This Hi. when question and actually to My application, have

go-to-market, you all rebuilding how any flex engage Any color more support guys particular sales And your your Are seeing be optimistic helpful. have and one demand on in customer are are Are particular you same You specifically segment? would building executing -- sales Is these on about more segment? folks? targeting verticals? any it more products? more you marketing. Or as you you're any different

Sure.

manner. four, bit a So we I -- to little when rebuild I specialized We in ago me need team of quarters start the started five -- just think, talking, the sales with a about history. let

buy. how that they they the what need offerings, having familiar meant very, in that expect customer each And are, they and were so individuals they from think, very what how with who us, they software

CDP oftentimes of about of the excited a is have operate information and two That specific which space part product agent to But customer buyer, umbrella organization we segment the a really Flex to buyer. talking really the who on how flex. in the data context team for the within more, is so come sort part segment We're the as the an and that's and well doing buyer marketer. together jobs. in where positioned has about contact so we're access And to and a their greatest of how in experience world these example, and more a customer focuses consumer segment center provide, themes is latest they're And of to organization predominantly a space. parcel through in

everything teams we underneath hard in that those are the we end specific they're user, have together focused both while comes think front really where that So on of really, useful. buyers,

quarters, that last that pay interest off so in spent they're couple and we're to capability. And making terms of that time interoperable over see of sure customer And we demand in and connected. the starting

little I think with looked what started has you like. a rebuild bit off that

a ramp we And sales out so at the rehiring of for where ago, full of this example, we sort that and operate and number quota going now beginning the of equivalent again, organizations the started across to we full quota are sales these reps in just, those specialized quarters market to what essentially are consider for majority threshold potential. segment

will this the into And again, the sure half bookings back key that translate we'll making next the is really as reaccelerate in see we to revenue that of year. So year. here again,

for color. Thanks the

Operator

today Jaluria, Our comes from Final Rishi question Markets. Capital RBC

broader a can Maybe opportunity I drill squeezing you go topic Wonderful. there. Thanks. back when you're it Thanks me capitalize to really on your CDP you bit to so as the as to pure into the well to comes much segment. landscape both of kind AI in. to of more for play opportunity, others the wanted differentiated little the comes providers AI peers it your kind feel of within when communications versus and how

killer want not just more think do want data the and more I communication. communications alone, think to customers get of the right? Most up When combination, to the is our of combination to send of CDP about communications right, needs workloads spend just I the communications They asset smarter. effective communications.

from of sense those sends personalization that effective of recipient company communications, communications messages move company that all and we data requires more understanding of as one so requires the the are. that And who a the to

for profile the segment the really is in Now It ETL CDP, segment It every that part is has of right it technical segment ETL, and has capabilities. IDC composable there composability you go in leading at real-time CDP product. the is the market look amazing reverse capabilities.

their up great that so to going market building many we can AI. that address power while of are parts data are a assets customers And

extraordinarily communications with bringing we're together of to mean in a don't the the the side way to I company CDP, forward parts I data, have the a any these company, as have And company is so that CDP. I see think most communications. it communications, other better two build value a And differentiated. has not on unlocking more to go and to of market. bank we and CDP communications flip has just be the And

and both capability. And think very product, we and nobody so together them sides, I bring you has then a on have differentiated that

Wonderful. much. Thank you, so

conclude for Twilio And your call. earnings to today's everyone, all We would that participation. does you like thank

now disconnect.+ may You