[Management View]
Twilio reported strong Q2 2025 results with $1.228 billion in revenue, marking the fourth consecutive quarter of double-digit revenue growth. Key metrics include $1.153 billion in communications revenue, a 14% YoY increase, and $75 million in segment revenue, flat YoY. Non-GAAP income from operations reached $221 million, up 26% YoY, and free cash flow hit a record $263 million. Strategic priorities focus on product-led innovation and commercial execution, with notable wins across various industries.

[Outlook]
Twilio raised its full-year 2025 organic revenue growth guidance to 9%-10% and free cash flow guidance to $875 million-$900 million. Q3 2025 revenue is targeted at $1.245 billion-$1.255 billion, with organic growth of 8%-9%. The company plans to cease separate business unit financial disclosures starting Q3 to reflect the integration of Segment with communications capabilities. Future plans include continued investment in AI and product innovation, particularly in voice, RCS, and AI-enabled products.

[Financial Performance]
Twilio achieved record revenue of $1.228 billion, up 13% YoY. Communications revenue grew 14% YoY, driven by accelerating messaging and double-digit voice growth. Segment revenue remained flat YoY at $75 million. Non-GAAP gross profit was $623 million at a 50.7% margin, down 260 basis points YoY due to increased messaging mix, carrier fees, and FX movements. The dollar-based net expansion rate (DBNER) was 108%, the highest in over two years.

[Q&A Highlights]
Question 1: Can you speak to the traction of where you're seeing the most traction with ISVs?
Answer: We're seeing traction across verticals like financial services, healthcare, and professional services. Use cases often start with messaging and expand to other channels like voice and RCS. The Twilio platform's orchestration capabilities and newer products like conversational insights are driving ISV growth above company averages.

Question 2: Is there any impact from the price increase in the quarter?
Answer: Not material. The price increase primarily affects self-serve customers and has no significant impact at the consolidated level.

Question 3: Why now for a price increase, and is it tied to the Verizon A2P increase?
Answer: The price increase is not tied to the Verizon A2P fee increase. It reflects pricing power in our self-service business and modestly impacts enterprise deals over time.

Question 4: Where are new customers coming from, and how much is tied to the voice AI opportunity?
Answer: Broad strength is coming from our self-service channel, with innovations reducing onboarding friction and increasing conversion rates. This quarter saw strong new customer acquisition, particularly in the enterprise segment.

Question 5: Updated view on the durability and drivers of growth profile and actions to stabilize gross margins?
Answer: Growth feels durable across industries, customers, and geographies. Gross margin stabilization actions include price increases and platform optimization. Higher-margin products are growing nicely, contributing to near-term stabilization and potential future inflection.

Question 6: How did voice perform relative to expectations, and its contribution to top-line growth?
Answer: Voice performed well, driven by demand from voice AI customers and new products like Conversation Relay and Conversation Intelligence. Messaging remains the largest piece of the business, but voice growth is encouraging.

Question 7: Are messaging customers expanding toward RCS faster than expected?
Answer: Encouraged by RCS adoption trends, particularly among ISV customers. The holiday season will be a key proof point for RCS.

Question 8: Revenue outlook for this year and tougher comparisons in Q4?
Answer: Tougher comparisons in Q4 due to prior-year messaging headwinds and product improvements. Momentum in self-serve, cross-sell, ISVs, and international channels will help generate durable, profitable growth.

Question 9: How are you prioritizing product investments relative to efficiency targets?
Answer: Investments are predominantly in engineering to capture AI opportunities. Customer demand for RCS and voice AI capabilities drives accelerated roadmap development.

Question 10: Integration of customer profiles from Segment into communications business?
Answer: High customer interest in Conversation Relay and conversational intelligence. The combination of data and communications capabilities is driving significant ROI for customers.

Question 11: Evolution of Segment business and impact of CDP market shifts?
Answer: The original strategy was to integrate CDP into communications for intelligent interactions. The combination of Segment and communications capabilities is well received and driving ROI.

Question 12: Investments at the platform level to ensure efficient service delivery?
Answer: Examples include migrating email platform to cloud and establishing direct connections for messaging. These actions aim to stabilize and improve gross margins.

Question 13: Competitive environment for AI voice and Twilio's role?
Answer: Twilio provides voice infrastructure and integrates with various LLMs. The combination of voice capabilities and contextual data gives Twilio a competitive edge.

Question 14: Future pricing power with cohesive contract structure for multiproduct customers?
Answer: Initial focus is on growing multiproduct adoption. Periodic price increases on the core stack will bleed through over time, especially in self-serve.

Question 15: Impact of messaging price increase on second-half guidance and large deal traction?
Answer: Messaging price increase has no material impact on consolidated guidance. Large deal activity is driven by platform selling and cross-selling motion.

Question 16: Robocall market and Twilio's approach?
Answer: Twilio takes significant compliance measures to prevent fraudulent traffic. AI opportunities are more focused on customer care and service use cases.

Question 17: Impact of regulatory changes on business?
Answer: No short-term impact from regulatory changes. Twilio proactively engages with regulators, and long-term compliance reinforcement is mildly positive.

[Sentiment Analysis]
Analysts and management exhibited a positive tone, highlighting strong performance, durable growth, and strategic investments in AI and product innovation. The sentiment was optimistic about future prospects and the company's ability to navigate challenges.

[Quarterly Comparison]
| Metric | Q2 2025 | Q1 2025 | Q2 2024 |
|-------------------------------|---------------|---------------|---------------|
| Total Revenue | $1.228B | $1.150B | $1.087B |
| Communications Revenue | $1.153B | $1.080B | $1.011B |
| Segment Revenue | $75M | $70M | $75M |
| Non-GAAP Income from Operations| $221M | $210M | $175M |
| Free Cash Flow | $263M | $250M | $200M |
| Non-GAAP Gross Margin | 50.7% | 51.3% | 53.3% |
| DBNER | 108% | 106% | 104% |

[Risks and Concerns]
- Gross margin decline due to messaging mix shift, carrier fees, and FX headwinds.
- Seasonal and comparable headwinds in the back half of the year.
- Impact of Verizon A2P messaging fee increase on revenue and margin.

[Final Takeaway]
Twilio's Q2 2025 performance underscores its strong growth trajectory, driven by AI innovation and large deal activity. The company is well-positioned to capitalize on emerging opportunities in voice AI and RCS, while strategic investments in product development and platform efficiency aim to stabilize and improve margins. Despite some headwinds, Twilio's robust enterprise activity and customer adoption of integrated capabilities signal a promising outlook for sustained growth and profitability.