Twilio Sees Strong Demand, Especially in Voice AI

Bloomberg

Watch Twilio Sees Strong Demand, Especially in Voice AI - Bloomberg on Dailymotion

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00:00Analysts, investors very excited about the voice AI applications in particular for their

00:05customer engagement. Is that what drives us? Well, we had a great quarter and I would say

00:10across the board voice AI was certainly a contributor but every single one of our products

00:15contributed this time. I'd say messaging and voice in particular were particularly strong

00:20in addition to that across channels, across geos, across customer segments. It was just a really

00:26good quarter for us and fortunately we were able to beat on revenue, profit, cash flow as well as

00:31race for the year. So we're pretty excited about the results. You go into the detail of how the 10

00:36largest voice AI startup customers are increasing by 10x. Where particularly are they finding the

00:42rewards? Because many have questioned really the sort of pilots whether they're working or not.

00:46Where have yours been working? I think you've got two ends of the spectrum. So on the one hand you've

00:51got voice AI startups and these are companies that want to get going super quickly, right? So we're

00:59an extremely well-known brand. They come to us first in most cases and so we're really lucky to be able

01:04to count on their business just to get their workloads out in the world. On the other hand though you've

01:09also got enterprises. Enterprises they definitely see an opportunity to take out costs but as well as

01:15enhance their revenue experience and so I think more durably you're seeing enterprise customers

01:21begin to adopt these tools. It's probably happening at a slower rate than it is with the voice AI

01:27startups but all the same it's really exciting. I just think about some of your key customers,

01:31Lyft, Reddit, Dell, Resi, Uber, Shopify, some of the biggest brands out there. Key bank analysts in

01:36particular signaling that this is just a wave that they think is just beginning to build. How much larger

01:42do you think this has become? How much am I just going to be talking in a customer relations perspective

01:46via voice? I think it's going to become pretty commonplace. I mean you're already starting to see

01:51it. I'm sure you've experienced it a handful of times in your interactions. I think what's key about

01:57being able to deliver a good experience is being able to have contextual data underneath it all. If you

02:03have contextual data which is a big part of our story in communications plus contextual data plus AI,

02:09but that data is what really allows the customer's problem to get solved, right? You don't want just cool

02:14tech. You want problems to get solved. You want to be able to create richer and richer experiences

02:19that actually create customer engagement and I think that's where the real unlock is. The real unlock

02:24being about AI agents for many and I know you've actually been making some acquisitions in that space.

02:28You think about Stitch, the identity platform within AI agents. Is M&A going to be a real use case

02:35here for you to bolt on to get the talent that you need to get the tech that you need?

02:39I think we have optionality. I mean we're generating so much cash that we've been buying

02:44back a lot of our own stock. We also just dipped our toe as you pointed out into M&A. Stitch was a

02:51great acquisition from our perspective. A small tech and talent tuck in less than $100 million in

02:58purchase price and I think it's exactly the right kind of asset that allows us to accelerate our roadmap.

03:03With that one in particular they're very developer focused which is very much in our DNA and they

03:10also allow us to faster realize our platform ambitions in terms of delivering purely agent

03:18experiences that require identity to be a part of it for us to be able to trust who we're interacting with.

03:25Twilio shares just showing how much people are loving this revenue and the numbers.

03:29Gross margin still an area that some called out as being pressured quickly. Is that something you're

03:34focused on? I mean of course we're focused on it right. The commitment that we made last quarter

03:39to investors was that we would stabilize gross margins and I think in Q3 that's exactly what we

03:45did. We'll continue to work to stabilize gross margins. I think it kind of overshadows the story

03:50in some respects. I mean the reality is is that we maintain an incredible amount of price discipline.

03:56A lot of that gross margin pressure frankly comes from two areas. One is the success that we're

04:01having in our messaging business which is growing super fast. I don't really think we should have

04:06to apologize for that and frankly I think that allows us to grow into other customer opportunities

04:11over time. And then the other area is just fees that get passed down by carriers. I think that is

04:17purely an optical element of the story. It doesn't impact our ability to generate gross profit and

04:22importantly has not impeded our ability to drive operating leverage and free cash flow.

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