So Twilio continues its slow but significant re-acceleration from the lows of 18-24 month ago. Growth is back to double digits, NRR is up, and free cash flow is strong. And its bets on AI seem to be paying off. Voice agents are a large growth vector.
Is it a better Twilio though? It’s a leaner, meaner Twilio, focused again on its core, with more AI but less headcount than before. The future will show us if a tighter focus is the long term winner.
5 Interesting Learnings:
1. Growth Has Reaccelerated, Though Still Far Below Its 2021 Peak
12 months ago, Twilio was growing revenue at 7% year-over-year. Today, that growth has slowed to 12% year-over-year, with Communications revenue growing 13% and Segment revenue nearly flat at 1%. That’s impressive re-acceleration, although far below its 53% (!) growth at $2B ARR.
2. Profitability Continues to Improve
Twilio is continuing its slow and steady growth in non-GAAP margins, and is also now GAAP profitable for the first time.
3. NRR Up To 107% From 102%, But Still Way Down From Peak
12 months ago, Twilio’s overall DBNER was around 102%. Today, DBNER is up to 107%, with Communications at 108% and Segment dropping to 94%.
But at $2 Billion ARR, in the Go Go Days of SaaS, Twilio’s NRR was a stunning 140% (!)
2018-2021 was so, so different:
4. Segment Is Struggling Even More
A year ago, Segment was growing at 5% year-over-year with a DBNER of 100%. Today, growth has slowed to just 1%, and DBNER has dropped to 94%. Segment’s negative operating margin (-2%) also highlights its ongoing struggles. Twilio made a big M&A bet buying everyone from Sendgrid to Segment and many other deals. For the most part … they haven’t worked out. And Twilio has returned to its core phone, SMS, and messaging roots.
5. International Revenue Remains Flat
Twilio continues to generate about a third of its revenue from international markets, the same as 12 months ago. While this is impressive for a communications company, it shows that Twilio hasn’t made significant progress in expanding its global footprint.
6. Headcount Efficiency Has Improved
Over the past 12 months, Twilio has reduced headcount by 10%, following a 25% reduction the year before. Despite these cuts, revenue has continued to grow, demonstrating improved efficiency.
And a few other interesting learnings:
7. ACV Growth Is Growing Modestly
Twilio’s average customer value (ACV) has grown to $12,000, up from $11,000 a year ago.
8. Big Customer Wins Highlight Enterprise Push
Twilio continues to land large enterprise deals, including an eight-figure deal with an identity and access management company and a seven-figure deal with a last-mile delivery platform. These wins show the potential of Twilio’s enterprise sales motion.
9. AI is Becoming a Core Growth Driver, Customers Looking to Automate 30% of Inbound Calls With AI
Twilio is doubling down on AI, launching new products like Conversation Relay and generative custom operators. These tools are designed to help customers build AI-driven voice agents and automate complex tasks like call scoring and compliance monitoring. Notably, Twilio’s partnership with Eleven Labs brings over 1,000 AI-generated voices across 40 languages, enhancing its voice capabilities.
10. 85% of Its Inbound Leads Handled By AI (!)
Twilio’s investments in AI-powered self-service tools are paying off. In Q1, 85% of inbound leads were handled by AI, and customers who engaged with Twilio’s AI assistant were 3x more likely to upgrade from a free trial to a paid account. This efficiency is driving growth in the self-service channel, particularly among AI startups.
Twilio’s all-in on AI. Really, it has to be, because AI is already remaking the contact center and big parts of voice communications already. Those are some of the segments getting the biggest early big benefits from AI.
