Twilio Inc.

Good afternoon and welcome to Twilio's Q1 2020 earnings conference call. My name is Michelle and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. I will now turn the call over to Andrew Zilli, Vice President of Investor Relations. Mr. Zilli, you may begin.

Thanks. Good afternoon, everyone, and thank you for joining us for Twilio's first quarter 2020 earnings conference call. This is our first time conducting our earnings call from separate locations, so we appreciate your understanding if we run into any technical glitches. Our earnings results press release, SEC filings, and a replay of today's call can be found on our IR website at investors.twilio.com. Joining me virtually today are Jeff Lawson, co-founder and CEO, George Hu, COO, and Khozema Shipchandler, CFO. As a reminder, some of our commentary today will be in non-GAAP terms. Reconciliations between our GAAP and non-GAAP results and guidance can be found in our earnings press release. Additionally, some of our discussion and responses may contain forward-looking statements, which are subject to risks, uncertainties, and assumptions. In particular, our expectations around the impact of the COVID-19 pandemic on our business, results of operations and financial conditions, and that of our customers and partners is subject to change. Should any of these risks materialize, or should our assumptions prove to be incorrect, actual company results could differ materially from our projections or those implied by these forward-looking statements. A description of these risks, uncertainties, and assumptions, and other factors that could affect our financial results are included in our SEC filings, including our most recent report on Form 10-K, and our remarks during today's discussion should be considered to incorporate this information by reference. Forward-looking statements represent our beliefs and assumptions only as of the date such statements are made. We undertake no obligation to update any forward-looking statements made during this call to reflect events or circumstances after today, or to reflect new information or the occurrence of unanticipated events, except as required by law. With that, I'll hand it over to you, Jeff.

Thanks, Lily, and thank you, everyone, for joining us today. Before I begin discussing the quarter, I want to express that safety has been top of mind for us these past couple months. Our decisions are driven by a belief that the safety of our team, our customers, and the world at large are what's most important. With that in mind, I hope that you all are faring well during this challenging time and that you and your families and friends are safe and relatively comfortable as we ride this out. I also want to stress that safety of our employees has been top of mind during COVID-19. and we moved to a fully distributed work model in early March. I want to thank our employees for their flexibility during this time and for their mutual support of each other and of our customers. You all exhibited the Twilio magic and I thank you. While we wouldn't have wished it this way, in many ways Twilio was built for this. Our platform provides three things the world needs. Digital engagement, software agility and CloudScale. Technologies such as messaging, email, voice and video have enabled many parts of the economy to continue working while keeping its participants safe. Moving quickly, building prototypes and iterating as our needs evolve has been critical for nearly every kind of organization. That's the essence of agility and Twilio has enabled organizations to reimagine many of their communications workloads in days and weeks. As you can tell from the numbers, Q1 was a strong quarter for the company, both before the COVID-19 impact began and as the impact was starting to be felt across society. Our diversified customer base currently consists of over 190,000 organizations spanning many industries, countries, and company sizes, from startups to Fortune 500s, nonprofits, and even government bodies. This diversification served us well during this period of time. While some customers saw declines, others saw growth. As you can imagine, customers in hospitality and travel have exhibited very unusual patterns during this period. First, there were spikes in volume as airlines and hotels dealt with rebookings and canceled flights during the transition from pre-COVID-19 into travel restrictions and shelter-in-place protocols. There was a stark decline as business slowed. Another example is that ride sharing saw a large decline during this time, with offsets in many cases by sharp increases in demand for food delivery, curbside pickup, and retail logistics. In addition, telehealth and work-from-home contact centers saw a pickup of adoption during this time. While we are cautiously optimistic, no one can predict what exactly will transpire in the back half of the year. Given the uncertainty of the macroeconomic environment. So while we are certainly seeing headwinds to our business in certain industries, we believe that we have a resilient business model because of our diversified customer base. And long term, we expect that usage in many of the impacted industries will return and others that may be newer to use cases will continue to grow in importance. We also saw other use cases where a project that was slated for some time in the future became we need this now. and we made several product announcements in the quarter to strengthen our offering. We announced that several of our products are now HIPAA eligible, meaning customers can more fully utilize our voice, video, SMS and SIP products to develop communication workflows containing protected health information in a compliant way. HIPAA is another milestone for Trilio in elevating our data privacy and security to meet the needs of our HIPAA compliant customers. and we are committed to providing a platform trusted by customers and patients. We also released Flex Dialpad to public beta, enabling outbound calling from Flex instances. We also announced Flex Boost, which provides technical, operational and financial resources for contact centers affected by COVID-19. Shortly thereafter, we also launched Video Boost, giving qualified prospects three free months of our video API. We've seen companies across multiple industries adapt in real time due to COVID-19. Digital transformation projects that could have taken years, such as transitioning from an on-prem contact center to the cloud, instead took a weekend. Developers at companies big and small got to work, reconfiguring the world for a work-from-home and nearly 100% e-commerce reality. Let me give you just a few use cases across various industries that we've helped our customers with over the last couple of months. With shelter in place and social distancing going into effect, demand for telehealth solutions has soared. Virtual care became a new reality for doctors, nurses, clinicians, and millions of patients around the world. And Epic, the company that supports the comprehensive health records of 250 million people, mobilized to build its own telehealth platform powered by Tulio's programmable video. The solution allows providers to launch a video visit with a patient Review relevant patient history and update clinical documentation directly within Epic. Protecting customers and employees from unnecessary in-person contact became a top priority for many businesses, including Comcast. Over the course of just a few weeks, developers at Comcast integrated Twilio Voice into their home drone customer database, enabling technicians and customer care to contact customers for service requests remotely They also initiated a pilot to incorporate Twilio Video into the same database, which could enable a customer to use the camera on their phone to show a Comcast technician their setup, and the technician can walk them through a self-diagnosis and repair without ever setting foot in their home. With widespread school closures, online learning has gone mainstream in a hurry, posing new challenges to keep students engaged and on track with their studies. Blackboard is using Trilio SMS for critical communications to connect patients and teachers and keep students updated. And SchoolClosures.org deployed a distributed contact center on Flex in two days to connect families and teachers dealing with closures with an educational specialist who have experienced teaching from home. Nearly every contact center, especially those on-prem, needed to be reconfigured to support distributed workforces and increased usage. The city of Pittsburgh needed a way to enable 3-1-1 operators to continue to perform their critical work without going to their legacy on-premises call center, as usage was spiking in response to COVID-19. They turned to TrioFlex for a solution, and within four days were up and running with agents working safely from home and no disruption in service for residents. Nonprofits have also had to scale up to support the unprecedented demand of the current environment. City Harvest provides New Yorkers with emergency food relief in a safe way through Plentiful, an SMS reservation system built in partnership with United Way for New York City on Twilio. And with 62% more clients scheduling appointments and a 474% growth in volume of messages from partners, they are helping more people We know that circumstances like these often bring opportunities, and based on the numerous new use cases and unprecedented digital acceleration that's happened over the last month, I believe that this time has actually created even more long-term opportunities for us to address. As such, I'm even more excited about what lies ahead for Twilio. I want to give a thank you to our Twilio.org team for everything they've done to respond to this pandemic. Within a week of COVID-19 being declared a global pandemic, Twilio.org donated a million dollars to various organizations focused on driving the medical response to COVID-19 and serving low-income at-risk populations who may be severely impacted by the virus. Tulio is also matching employee donations two to one for charitable organizations focused on the COVID-19 response, including the CDC Foundation, Global Relief International, Give to Asia, and International Medical Corps. These acts are part of our initial response to the pandemic, but we are acutely aware of more need in communities around us and will continue our efforts to invest in our communities during this time of need. I also want to welcome a couple of new leaders at Tulio. We recently hired Christy Lake as our new chief people officer, and she'll be responsible for our global people team, driving the company's talent development and acquisition strategy and growing the Twilio magic around the world. We also welcome Steve Kueh as our new chief security officer to lead Twilio's global trust and security team responsible for corporate, physical, and cybersecurity. We're excited to have you both on board. Before I hand it over to George, I want to thank those who are on the front lines of this pandemic. The medical professionals, the truck drivers, the food delivery workers, the grocery store workers, the manufacturing workers, and everyone else who is playing a role in slowing the spread or providing us with the stock shelves in our local stores. Thank you. Thank you for everything you're doing for the rest of us. With that, I'll hand it over to George. George?