Twilio Inc.

Good day and thank you for standing by. Welcome to Twilio Inc. 3rd Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Brian Vanneman, SVP of Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining us for Twilio's third quarter 2024 earnings conference call. Joining me today are Kozema Shipchandler, Chief Executive Officer, and Aiden Biggiano, Chief Financial Officer. As a reminder, we will disclose non-GAAP financial measures on this call. Definitions and reconciliations between our GAAP and non-GAAP results can be found in our earnings release and our earnings presentation posted on our IR website at investors.twilio.com. We will also make forward-looking statements on this call, including statements about our future outlook and goals. Such statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those described. Many of those risks and uncertainties are described in our SEC filings, including our most recent Form 10-K and our forthcoming Form 10-Q. Forward-looking statements represent our beliefs and assumptions only as of the date such statements are made. We disclaim any obligation to update any forward-looking statements except as required by law. And with that, I'll hand it over to Kazamin, who will discuss our Q3 results, and then we'll open the call for Q&A.

Thank you, Brian. Good afternoon, everyone, and thank you for joining us today. Twilio delivered a strong third quarter. We exceeded our Q3 guidance, delivering $1.134 billion in revenue, up 10% year-over-year, and generated $182 million in non-GAAP income from operations. We also delivered another strong quarter of cash generation with $189 million of free cash flow. I'm encouraged to see the acceleration to double-digit revenue growth this quarter alongside strong operating leverage and continued product innovation. Our commitments to financial discipline, operating rigor, and innovation remain key guideposts for the team, and I'm proud of what we accomplished in Q3. Since becoming CEO at the start of the year, I've met with hundreds of customers in nearly every industry across the globe. In my conversations with customers, many of the problems they're encountering can be solved by greater personalization vis-a-vis communications, plus contextual data, plus AI. Our concerted focus on embedding AI and machine learning throughout the Twilio platform has resulted in a differentiated offering that strategically positions us to capture a massive opportunity as we leverage the strength of our platforms, the leading CPaaS supported by unmatched data tools, including Segment, to minimize complexity and create better customer outcomes. More customers are turning to Twilio because we deliver a stronger ROI. driving demonstrable results that help customers increase their revenue and reduce their costs. By integrating AI with our core product suite, we're able to automate capabilities, boost productivity, and drive personalization at scale. As an example, a longtime customer that is a global business supplies retailer has been using our AI recommendations product. which leverages machine learning to automatically determine a specific product, brand, or category a customer is most likely to purchase. The company recently ran an email campaign targeting customers most likely to purchase Apple products and saw a 592% increase in sales per email. that Twilio offers, helping brands create better engagement, deliver greater value, and build more trusted customer experiences. AI presents a huge opportunity to improve and expand the impact of CPaaS solutions to truly enhance the customer experience. We're well positioned to win in the age of AI because unlike other CPaaS players, our true value comes from the integration of communications with data. Twilio uniquely combines communications and customer data to help brands drive deeper customer engagement. What sets Twilio apart is our ability to unify this valuable contextual data, whether it's real time, triggered by customer interactions, or stored in a data warehouse or a system of record and help brands to activate it. With our platform, we're already powering these intelligent interactions at scale, whether it's personalized engagement via unified profiles on IVR and Flex or fraud prevention with our security products. We're powering over a trillion emails and billions of messages annually. and ingesting hundreds of thousands of events per second. We recently announced our integration with OpenAI's new real-time API, making it easier for Twilio's customers and developers to build powerful conversational virtual agents. As the world of conversational AI evolves rapidly, this is an exciting milestone. It enables customers to take advantage of OpenAI's flagship multilingual and multimodal GPT-4-0 model to create solutions and build virtual agents for IVRs that feel more human, making these advanced tools accessible for businesses of all sizes. Now, let's turn to our business highlights. Our Twilio communications business had a strong third quarter with revenue of 1.060 billion, up 10% year over year. Our quarter over quarter growth acceleration was driven predominantly by strength in both messaging and email. As we've referenced on previous calls, our near-term growth will be fueled by our ISV customers, self-service enhancements, and cross-sell opportunities. We're seeing good performance in each of these areas, and a continued bright spot is our ability to deliver increased value through software capabilities built on top of Twilio's core channels. Verify, SMS pumping protection, engagement suite, and voice intelligence leverage AI and machine learning to drive better outcomes which include things like combating fraud and providing better data analytics in real time. These products are designed to deliver smarter and more trusted communications, which is key to unlocking more value for our customers. Furthermore, as we focused on integrating our communications products with segments products and contextual data, I've been excited to see how products like personalized virtual agent leverage Twilio's unified profiles to help brands better understand their customers and make incremental changes to improve the customer experience through every interaction. Another area driving improved messaging volumes is our platform feature updates that now give customers greater transparency into communications deliverability and engagement. Within our console, messaging customers now receive a deliverability score with personalized actionable instructions from our AI agent so that they can immediately take action to remediate messaging deliverability errors. By providing analytics, we're radically simplifying the messaging experience for developers, leading to better engagement and ensuring that the message they intend to send are delivered error-free. In addition to enhancing our current products, in Q3 we released new innovations to support branded communications. RCS business messaging went into public beta, which is key for brands who want to deliver a more custom, personalized experience. In a recent Twilio survey, we found that 75% of consumers who received a branded text said it increased their trust in the communication. RCS business messaging improves the branded experience through rich content and interactive messaging features, including carousels, high quality media, content cards, and location sharing. Customers like Fresha have deployed RCS capabilities to build brand trust and increase message open rates. And one of our ISV partners, Hive, will leverage RCS to enhance marketing campaigns for their customers in the live events industry, driving greater fan engagement and boosting ticket sale conversion rates. We also saw exciting wins with branded calling, which allows brands to display their name, logo, and call reason when placing calls to customers. CareSignal, LightBeam's deviceless remote patient monitoring company needed a cost-effective way to improve patient pickup rates and achieve health outcomes in the process. With Twilio branded calling, they've been able to improve call pickup rates by 67% in just three months. In the future, we expect this type of incremental value will accelerate as we continue to help brands use their contextual data to unlock smarter and more personalized experiences. Turning to our Trilio segment business, segment delivered revenue of $73 million flat year over year as we continue to focus on and make progress against the priorities we outlined in the operational review earlier this year. We ended the quarter with an increase in our win rate, both quarter over quarter and year over year, and a reduction in churn and contraction. While there is more work to be done, we're encouraged by the progress that we're making and Segment remains part of our long-term strategy, enabling us to differentiate our communications products by infusing contextual data while we continue to innovate for standalone CDP buyers. With respect to product innovation, we continue to enhance our data warehouse interoperability capabilities and improve customer time to value by graduating many features to GA. For example, with segment products like DataGraph and linked audiences, we are addressing key pain points that our customers are trying to solve, such as removing data silos and disjointed customer profiles. We have advanced our data warehouse integrations with Databricks, Snowflake, Google BigQuery, and Amazon Redshift so that customers can activate their data in meaningful ways to drive more personalized touchpoints with consumers. This is an important step in our Unified Profiles offering as we're making it easier for customers to leverage their existing data from websites and mobile apps and combining it with data in their warehouse from systems of record like CRM, contact centers, or ERP to deliver personalized emails and communications. We are seeing promising results and we're excited to add additional integrations with other major data warehouses moving forward. Our new features and integrations for advertisers to create targeted campaigns began delivering promising results. First, our generative audiences feature that uses generative AI to create audiences with natural language prompts is significantly reducing the time and resources required. to build targeted audiences for customer engagement campaigns. Over 25% of our segment CDP customers have already started taking advantage of this new capability in the few weeks it's been made globally available. Second, we've expanded and created new integrations with Amazon, Google, LinkedIn, and Meta, giving marketers the ability to activate their data in campaigns across these platforms and reduce their customer acquisition costs. As an example, The Motley Fool needed an out-of-the-box integration to help build, manage, and activate audiences. With Segment, The Motley Fool was able to increase its operational efficiencies by automating processes, accurately target paid ad campaigns to decrease its cost per acquisition, and make the experience more relevant for its premium members, helping with retention and lifetime value. I am incredibly energized about the opportunities ahead. The solid quarter that we delivered and significant progress we made against our financial goals is a testament to the hard work and focus of our team. As we look to create a world in which every digital interaction between businesses and consumers is amazing, I firmly believe that Twilio has the right strategy, leaders, and innovative platform to unleash the full potential of communications, plus contextual data, plus AI. And with that, I'll turn it over to Aiden.