Q4 2025 Earnings Results February 12, 2026 1 Legal Disclaimer This presentation and the accompanying conference call contain forward-looking statements within the meaning of the federal securities laws, including statements about our future performance and goals. These statements involve substantial risks and uncertainties that may cause our actual results, performance or achievement to differ materially, as further described in the Appendix, as well as in our most recent periodic reports filed with the SEC ...

Core Insights - Businesses are enhancing customer experience (CX) to boost loyalty and gain competitive advantage, with generative AI and agentic AI playing a significant role in this transformation [1] Group 1: Trust - Trust is increasingly vital due to rising consumer fraud, leading Twilio to introduce features like Silent Network Authentication and FIDO-certified passkeys in its Verify product [2] - The company promotes branded communications, which have been shown to increase consumer trust and engagement, through initiatives like branded calling and RCS for messaging [2] Group 2: Simplification - Twilio's Segment solution allows businesses to utilize their data effectively for customer insights, exemplified by the Event Triggered Journey feature that automates marketing workflows for personalized customer experiences [3] - This approach enables timely responses to customer issues, improving transaction success rates and customer satisfaction [3] Group 3: Smart Engagement - Twilio is leveraging AI to enhance customer engagement, with updates like 'Conversational Intelligence' that analyzes conversations for insights on sentiment and compliance risks [4] - The 'ConversationRelay' feature allows developers to create voice AI agents using preferred large language models (LLMs), integrating with customer data for improved interaction [4]

Financial Data and Key Metrics Changes - Twilio achieved record revenue of $1.3 billion, representing a 15% year-over-year increase on a reported basis and a 13% increase on an organic basis [15] - Non-GAAP income from operations reached a record $235 million, up 29% year-over-year, with a non-GAAP operating margin of 18% [17] - Free cash flow for the quarter was $248 million, with year-to-date share repurchases totaling $657 million, representing approximately 95% of year-to-date free cash flow [17][18] Business Line Data and Key Metrics Changes - Messaging revenue grew in the high teens for the second consecutive quarter, while voice revenue growth accelerated to the mid-teens, its fastest rate in over three years [15] - Revenue from voice AI customers accelerated to nearly 60% year-over-year, with revenue from the top 10 largest voice AI startup customers increasing more than 10X year-over-year [15][16] - Software add-on revenue, particularly from Twilio Verify, grew more than 25% year-over-year [15][16] Market Data and Key Metrics Changes - Revenue from ISV and self-serve customers grew more than 20% year-over-year, indicating strong demand across customer segments [5][16] - International messaging growth was strong at 18%, with Twilio gaining market share through its multi-product capabilities [59] Company Strategy and Development Direction - Twilio aims to be the customer experience layer of the internet, focusing on multichannel communications, contextual data, and AI-driven orchestration [5] - The company is investing in new capabilities such as conversational AI and branded communications, which are expected to drive future growth [5][12] - The acquisition of Stitch, an identity platform for AI agents, is intended to enhance Twilio's authentication capabilities [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's operational rigor and discipline, which has led to exceeding quarterly guidance and raising full-year targets [4][18] - The company remains focused on executing its product and go-to-market initiatives while building on momentum into 2026 [19] - Management noted that while the holiday season presents challenges due to strong prior year comparisons, they are encouraged by the strength across the product portfolio [45] Other Important Information - Twilio's dollar-based net expansion rate was 109%, reflecting improving growth trends [16] - The company incurred $20 million in carrier pass-through fees associated with increased Verizon A2P fees, impacting gross margins [17] Q&A Session Summary Question: How should we think about the functions or features that Stitch complements with Verify? - Management indicated that Stitch helps expand capabilities for trust between businesses and consumers, enhancing the customer engagement journey [22] Question: What drove the strong net customer addition number? - The strong net customer additions were attributed to the end of free tiers for email and marketing campaign APIs, leading to conversions of smaller accounts [25] Question: What are the trends in voice AI adoption? - Voice AI customers grew nearly 60% year-over-year, with strong performance across various customer segments [28] Question: What drove the sequential adds in the non-messaging business? - The net adds were largely driven by email, with strong performance in self-service and voice contributing to overall growth [35] Question: How is Twilio approaching international messaging? - Twilio experienced strong growth in international messaging, leveraging its multi-product capabilities to differentiate from competitors [59] Question: What areas does Twilio plan to invest in for future growth? - Management emphasized ongoing investments in AI, automation, and enhancing the self-service experience to drive growth [63][82]

Q2 2025 Financial Performance - Total revenue reached $1,228 million, with a year-over-year growth of 13%[9] - Non-GAAP gross profit amounted to $623 million, resulting in a non-GAAP gross margin of 50.7%[9] - Non-GAAP income from operations was $221 million[9] - Free cash flow stood at $263 million[9] - The dollar-based net expansion rate was 108%[9] - Active customer accounts exceeded 349,000[9] Communications Segment - Communications revenue was $1,153 million, showing a year-over-year growth of 14%[12] - Communications non-GAAP gross profit was $567 million, with a non-GAAP gross margin of 49.2%[12] - Communications non-GAAP income from operations reached $281 million, resulting in a non-GAAP operating margin of 24.3%[12] - Communications dollar-based net expansion rate was 109%[12] - Communications active customer accounts exceeded 342,000[12] Segment Performance - Segment revenue was $75 million, with 0% year-over-year growth[15] - Segment non-GAAP gross profit was $56 million, resulting in a non-GAAP gross margin of 74.3%[15] - Segment non-GAAP income from operations was $6 million, with a non-GAAP operating margin of 8.0%[15] - Segment dollar-based net expansion rate was 95%[15] - Segment active customer accounts exceeded 7,000[15] Q3 2025 Guidance - Total reported revenue is projected to be between $1.245 billion and $1.255 billion, representing a 10% to 11% year-over-year increase[22] - Organic revenue growth is expected to be between 8% and 9% year-over-year[22] - Non-GAAP income from operations is projected to be between $205 million and $215 million[22] - Non-GAAP diluted earnings per share are expected to be between $1.01 and $1.06[22] Full Year 2025 Guidance - Total reported revenue growth is projected to be between 10% and 11% year-over-year[23] - Organic revenue growth is expected to be between 9% and 10%, an increase from the previous guidance of 7.5% to 8.5%[23] - Non-GAAP income from operations is projected to be between $850 million and $875 million[23] - Free cash flow is expected to be between $875 million and $900 million, an increase from the previous guidance of $850 million to $875 million[23]

Company Overview - Twilio (TWLO) shares increased by 6.5% to close at $126.16, with notable trading volume compared to typical sessions, and a 1.6% gain over the past four weeks [1] - The stock's recent performance is driven by optimism surrounding its AI-driven platform, enhancing personalized customer interactions through voice, messaging, and web [2] Financial Performance - Twilio is expected to report quarterly earnings of $1.02 per share, reflecting a year-over-year increase of 17.2%, with revenues projected at $1.19 billion, up 9.5% from the previous year [3] - The consensus EPS estimate for Twilio has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [4] Industry Context - Twilio operates within the Zacks Internet - Software industry, where Block (XYZ) closed 3.9% lower at $66.01, with a 6% return over the past month [5] - Block's consensus EPS estimate has decreased by 1.3% to $0.6, representing a significant year-over-year decline of 35.5% [6]

Investment Rating - The report indicates a bullish sentiment towards NVIDIA and its leadership in the inference market, particularly with the introduction of DeepSeek, which is expected to significantly expand the inference revenue pool [1][2]. Core Insights - NVIDIA is positioned as a leader in the inference market, with the DeepSeek model democratizing reasoning capabilities and potentially increasing token consumption per user by 13-20 times, leading to a twenty-fold expansion in the inference revenue pool [1]. - The GB200 architecture is designed for multi-GPU reasoning, transforming training chips into inference workhorses, which aligns with the growing demand for long-context inference [2]. - The report emphasizes that inference is eclipsing training in profit potential, prompting a shift in cloud capital expenditure towards sustained demand for accelerators [2]. - Open-source acceleration through DeepSeek is expected to optimize future models for NVIDIA's NVLink from inception, reinforcing its platform advantage [3]. - A breakthrough in combining Mixture-of-Experts with MLA compression technology is noted, which reduces memory usage while maintaining accuracy, thus bending the cost curve for large language models (LLMs) [4]. Summary by Sections NVIDIA - The DeepSeek model is a significant catalyst for expanding reasoning capabilities, with a model size of 671 billion parameters that enhances user engagement and revenue potential [1]. - The GB200 architecture is tailored for multi-GPU reasoning, enhancing NVIDIA's position in the inference market [2]. - The report highlights the shift in profit pools from training to inference, indicating a robust future for NVIDIA's cloud services [2]. - Open-source initiatives are expected to solidify NVIDIA's competitive edge by ensuring new models are optimized for its technology [3]. - Innovations in memory compression techniques are set to lower costs while preserving performance in LLMs [4]. ServiceNow - ServiceNow is experiencing tangible AI successes, with significant transformations in major accounts demonstrating real value [5]. - The company is rapidly monetizing its AI capabilities through Pro Plus and turnkey agents, indicating a shift in market perception of AI as essential [6]. - Federal revenue growth of 30% year-over-year showcases the strength of ServiceNow's vertical strategies [7]. - The company has engaged with over 40 Fortune 500 companies in AI design sessions, indicating strong demand for its services [7]. Twilio - Twilio's focus on AI-driven efficiency and high-margin products is expected to sustain margin growth [8]. - The company has achieved a significant increase in operating margins, with automation and AI expected to further enhance operational leverage [9]. - New software-centric products are projected to improve gross margins over time [10]. - Twilio's strategy emphasizes partnerships over building proprietary models, allowing for rapid deployment of AI solutions [11]. Booking Holdings - Booking Holdings aims for over 8% growth in bookings and revenue, with a focus on alternative accommodations outpacing traditional hotels [14][15]. - The company has successfully expanded into the flight booking sector, demonstrating rapid growth potential [35]. - Attractions revenue has surged by 92% year-over-year, indicating strong market demand [36]. Microchip Technology - Microchip Technology expresses optimism in the analog sector, supported by record bookings and backlog growth [16]. - The company has raised its revenue and EPS guidance based on strong demand data [17]. - Inventory management strategies are in place to recover gross margins to targeted levels [17][20]. Cisco Systems - Cisco Systems is positioned for a durable growth cycle, with a focus on disciplined spending and transparency [27]. - The company reports steady demand despite tariff concerns, with significant year-over-year growth in product bookings [28]. - Cisco is capitalizing on a multi-year AI networking cycle, with opportunities in various sectors [29].

Core Viewpoint - Needham analyst Joshua Reilly maintains a Buy rating on Twilio (TWLO) with a price target of $125, expressing positive sentiment after attending the Twilio Signal customer conference, highlighting increased product usage and favorable customer feedback [1][2]. Group 1: Company Performance and Strategy - Reilly noted an increasing pipeline of projects and a more efficient implementation process utilizing AI, which positions Twilio strategically for cross-selling opportunities, particularly with the recent Microsoft partnership [2][4]. - The collaboration with Microsoft enhances Twilio's capabilities in building multi-channel AI agents and improving customer engagement through advanced features like Twilio Agent Copilot [3][7]. - Twilio has addressed many operational challenges over the past 24 months, allowing a stronger focus on product development and customer benefits moving forward [4][9]. Group 2: Product Development and Customer Experience - Twilio is working to streamline the billing process for its services, which currently operate on separate platforms, to improve customer experience and facilitate easier bundling [5][6]. - The company launched several new products at the Signal 2025 event, with Verify and Lookup receiving particularly positive feedback from customers [7][8]. - Discussions with management indicated a projected growth trajectory for voice volumes that could significantly exceed 2024 levels, reflecting sustained optimism among partners and customers [9][10]. Group 3: Financial Projections - Reilly projects fiscal 2025 revenue for Twilio at $4.82 billion and earnings per share (EPS) at $4.45, indicating confidence in the company's financial outlook [10].