Twilio has secured the largest-ever win for its customer data platform (CDP): Segment.
Khozema Shipchandler, CEO of Twilio, shared the news during a company earnings call.
While the CEO didn’t expand much further, he confirmed that the new customer is one of the world’s largest financial services companies.
The megadeal is a welcome boost for Twilio’s Segment business, which dropped one percent in year-over-year (YoY) revenues.
However, its deferred revenue build appears strong, with implied billings rising by 20+ percent. That suggests that Twilio’s Segment business is seeing a bottom.
Also, it’s on track to achieve breakeven in Q2, with Twilio much more positive over the CDP’s future than just 12 months ago.
Back then, Twilio arranged an operating review of the platform to outline that future, pinpointing several improvement opportunities.
Since, the company has acted on those opportunities, and Shipchandler isolated three key reasons why he is much more optimistic about the platform’s future.
“Number one, we’re seeing a lot more stickiness in terms of the deals because they are more multi-year,” he said.
Number two, we’ve done some work on the technology side to get customers activated much more quickly so that they’re getting ROI. I think that certainly helps.
“And then, three, the way in which it now interoperates with some of the data warehouses, which was long a request from customers… all of that is in place,” concluded Shipchandler.
Across all its offerings, Twilio achieved double-digit revenue growth for a successive quarter, with earnings up by 11 percent YoY, rising to $1.195BN.
Yet, perhaps most notably, Twilio delivered quarterly GAAP operating profitability for the first time in its history in Q4. As per Shipchandler, that’s far ahead of his initial target when replacing Jeff Lawson as CEO last year.
Blending Its Portfolio: Twilio’s Ongoing Challenge
Twilio has always done an excellent job of attracting customers of all shapes and sizes. From standalone developers to large enterprises, its install base is deep.
Indeed, 90 percent of the Forbes 50 AI start-ups are building on Twilio.
However, by its own admission, the company has not been so good at blending its portfolio. So, it’s landing lots of great customers but not expanding on them.
Thankfully, this is changing. That’s evident in its dollar-based net expansion rate increasing to 106 percent last quarter, representing its best performance since Q1 of 2023.
A 106 percent net expansion rate suggests that – if Twilio hadn’t secured any new customers over the quarter – its revenues would have grown by six percent.
Over recent earnings, that figure has languished between one and four percent. Yet, it’s gradually creeping up, giving investors more hope in Twilio’s growth prospects.
That hope is high, with its stock rising by over 100 percent year-to-date (YTD). Of course, many other elements are at play here, but this metric is significant.
Pulling Segment further into the fold will be key to boosting that net expansion rate further, helping Twilio deliver not only AI and channels but that crucial data element, too.
More Big Wins for Twilio in Q4
As noted, cross- and up-sells are pivotal for Twilio. One excellent example of a Twilio upsell in Q4 comes in a deal with a US healthcare systems provider.
The long-standing Twilio Voice customer – which operates across 33 hospitals – has now adopted Twilio’s RCS Messaging, Branded Calling, and Engagement Suite.
In doing so, the business wishes to bolster its brand presence, enhance customer engagement, and increase message deliverability.
Additionally, Twilio signed a new deal with a “leading” web hosting provider. The longtime Twilio Messaging customer expanded its use to include Twilio’s Conversations API and power two-way SMS and voice channels.
Sharing more on the deal expansion, Shipchandler said:
With Twilio, the company has integrated the product into their own proprietary unified inbox, giving customers the ability to manage their business communications needs on their smartphone and simplify the communication with their own customers.
Elsewhere, Twilio boosted the messaging services offered by a prominent European bank, which is another loyal customer.
Yet, new deals are where the company continues to win big. Alongside its monster Segment win, Twilio penned a seven-figure contract with a global investment advisor.
In doing so, Twilio will help the company consolidate its authentication systems and integrate with various solutions, including Lookup and Verify.
Lastly, Twilio also secured new business from Klaviyo and O’Brien Glass Industries.
