Twilio(US:TWLO)2025-10-30 22:00Financial 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]