But we treat it as I think we should, which is, when it helps differentiate us, when it gives a one-stop shop service to a customer, when it helps us win a deal or a customer, we should absolutely use it. Otherwise, we’re far more interested, in putting our proactive efforts, obviously, into our 65% gross margin Connectivity business. And that shows up in our funnel in spades. More than two-thirds of our funnel right now is IoT Connectivity, okay? And about a third is the Managed Services Analytics stuff that goes into IoT Managed Services. And look, I could go on and on because I’m passionate about sales and deals and so forth. But yeah, that’s kind of how the funnel has evolved.
Lance Vitanza : No, that’s really great color. I appreciate that. If I could just ask one more question, this one on the competitive landscape, if you’ve seen any changes there since we last checked in? Is there, when you’re going in and competing for this business, is it really just sort of trying to convince them that the use cases make sense? Or are you having to sort of fend off other would be providers? Or s it you’re trying to keep them from in-sourcing? Or like, how does that changed at all recently?
Romil Bahl: Yeah, another great, great question around the competitive dynamics. I’ll tell you what’s probably most striking about 2023 to date, and I think we’re still building momentum, and there’s more of this to come. But it’s how pervasive is it, right, eUICC, not the form factor but that one SIM updatable in the field, put it anywhere, right? It’ll figure out, it’ll call home, it’ll figure out where it is, you can download a profile to it, or indeed a multi-IMSI based single skew solution, like Super SIM, which is what Twilio brought to us, right? The — it has got to the point, Lance, where there is not a conversation we are having. There’s obviously slight exaggeration in there, but the exceptions will prove my rule, right?
The exceptions will prove the rule, which is, every conversation with a customer has an eSIM component, even if they’re not ready to buy today, we’re still positioning eSIM, right? And we’re interested in learning about it, and making sure that their next device generation can utilize it. It’s such a massive simplifier of their supply chains, and so forth. So you say, okay, so if the world is going to ship between $3 billion and $5 billion eSIMs over the next three to five years, and if you were to pick two. Certainly of the top three, I’m biased, I’ll say two of the top two eSIM providers in the world, where are they today? They’re all under the same roof, right? Because Twilio’s Super SIM product and KORE’s OmniSIM product are absolutely leading products.
And so, if every customer wants an eSIM, we’ve got that best product. We think we’re pretty darn well positioned, and the differentiation, to your point, is starting to become more clear. And what’s even more exciting is the next gen of the best breed of these, right? Which, let’s just say we’re launching about a year from now. And if we get that product right, sort of look out world, right? So that’s one aspect of competitive dynamics. But it spawns off a couple of other points. By definition, we are global. There are certainly other competitors out there, we respect, some of them — some of them have done little roll ups, kind of like KORE did early in KORE’s era, but they’re more regional or, Pan-European in nature and that sort of thing.
But as the leading independent, and as we are actually deepening and widening our competitive moat with our eSIM offer, with our platform and tech, I’ve actually never felt better. And not to put too fine a point on it, but the one company that used to scare me a little bit is here now, so.
Lance Vitanza : All right, great. Thanks, guys. Appreciate the discussion.
Romil Bahl: Thanks, Lance.
Operator: Thank you. Next question is coming from Jamie Reynolds from Morgan Stanley. Your line is now live.
Jamie Reynolds : Hey, everyone, you’ve got Jamie on for Meta. I appreciate you taking the question. I guess, first, how is Twilio IoT business performing to expectations? And have you guys been able to retain the engineering resources? And then I guess, just as a more broad follow-up, are you seeing any customers renegotiate pricing given the macro conditions?
Romil Bahl: Yeah, so two questions there. Let me just let me take the Twilio IoT team integration question first, or actually the status of the business even you asked. And I don’t think it’s any secret because we said this already on the last earnings call but the year or so that passed between when we first saw the management presentations and projections from the Twilio team, and when they started to first hear internally from their management that they were, “not strategic to the future”, has been detrimental, right? It was more than just a distraction to the team. Quite a bit of attrition happened on the sales force. And there’s no company that can act cavalier with its talent and maintain its momentum, right. And so the Twilio IoT unit that we took on was significantly smaller than what their projections were.
And perhaps, more concerningly than just pure size, the sort of momentum, the right growth, I mean, they were supposed to be accretive to our growth rates, they’re actually diluted right down to the KORE growth rates, right, in Connectivity. Now, it doesn’t panic us out at all, because I think their teams sort of come into KORE and kind of, unleashed a new life, right? They’re like, this is all about IoT, this is what we do, as opposed to being that other small little unit part of a much larger corporation that was focused on other things. We replenished the sales team. The momentum is significantly different already. It’s not a switch you flip and suddenly growth rates are back to 20%, 30% and the like. But the pipeline, you can see the early sides, you can see customers renewing with KORE.
The ease, I’ll say almost with which the customer transfers have been done to KORE. We haven’t lost any significant customers to any concerns about, oh, my God, we used to be Twilio now we’re KORE. So I can confidently tell you that given that talent base, given their customer base, these guys will become accretive to our growth again, actually, in — but at some point, Paul’s not going to be able to tell what’s Twilio and what’s that, right? And he shouldn’t be able to because it’s one team. But I think they will be helpful and we’ll get back there. And I’m very confident in that. On the talent retention side, in general, again, very, very pleased. It’s not something we take lightly. It’s not something we sit back on our walls and say integration is done.
