Twilio Inc - Ordinary Shares Class A

Q2 delivered strong acceleration + cash generation (good): Twilio reported $1.5B revenue (+22% YoY reported, +17% YoY organic). Non-GAAP gross profit grew +18% YoY to $736M and non-GAAP income from operations was $285M (+29% YoY). Free cash flow was $353M (record); completed $66M share repurchases and has ~$800M remaining under authorization.

Growth drivers were broad-based across messaging, voice, and add-ons (good/surprising): - Messaging revenue +28% YoY (driven by volumes; includes ~10 points from incremental carrier fees; growth also helped by WhatsApp + RCS). - Voice accelerated to >20% YoY, helped by balance of volume + software add-ons, including triple-digit growth in Branded Calling and Conversational Intelligence. - Software add-on revenue +25%+, with Verify accelerating to 30%+. - DBNR (dollar-based net expansion) = 116%, with carrier fees contributing ~5 points; management said DBNR accelerated even excluding fees (i.e., retention/expansion strength, not just pass-through).

AI “tailwind” appears real, but still early innings (opportunity/uncertainty): Management emphasized AI-driven traction is most pronounced in Voice AI, while Messaging AI is earlier. Examples cited include AI-native customers expanding connectivity + adding software add-ons (to multi-$M annual run rates). They described Voice AI momentum as broad-based across channels (including self-serve Voice growth >50% YoY), but acknowledged it’s too early to assume steady-state and expects “ups and downs” as the AI market evolves—though ROI and context reduction benefits suggest durability.