Khozema Shipchandler: I think sales efficiency generally has been pretty good. I mean, we obviously took some very significant cost actions last year. Revenue line continues to grow, as Aidan mentioned. We’re anchoring everybody against the gross profit dollar metric, and we think that’s important to be able to incentivize the sales force. And so, I think that combination of things has yielded a lot of the operating leverage that you’ve seen over the last year, which we continued into Q1. And obviously, a lot of that now is starting to translate into really significant cash flow, which feels quite good.
Pete Newton: Very helpful. Thanks, guys.
Operator: Thank you. One moment please for our next question. And our next question comes from the line of Arjun Bhatia with William Blair.
Arjun Bhatia: Hey guys. Thanks for taking the question. Just one quick one for me. When we’re thinking of some of the Segment plans that you had laid out with the deeper integration into Comms and I think you touched on some of this a little bit, but curious like how long — I know there’s quite a bit still left to do here, but how long before we start to see results from some of that flow-through to enhance the Comms business? Is that something that’s a ’24 outcome or with the — with some of the product work still to be done, something that maybe we should expect in ’25 and beyond?
Khozema Shipchandler: Yeah. I mean, I think we have to delay a little bit between when it shows up in our financials versus how customers are starting to get value from it. But we cited an example in our earlier remarks about how when a customer fielded the combined capability of Segment inside of Communications, that was the specific contact center environment, it was a really powerful outcome, right? They were able to reduce their cost by about 30%. They were able to increase their deflection rate by about 70%. And what’s at the core of this is fundamentally how do we deliver a better outcome for our customer at a materially lower cost point for them overall? Now, some of that value obviously accrues to us because we’ll be able to kind of upsell using AI some of these different products that we’re trying to uplift.
So, I think that in general, we feel pretty good about the customer delivery. And again, we’ll use examples like that to kind of prove that this adds really demonstrable value to customers. We’ll continue signing new logos on that basis over the next several quarters, and then those bookings will just take time to turn into revenue. But so far so good, and I’m certainly very encouraged by some of the early examples.
Arjun Bhatia: All right. Perfect. Helpful. That’s good to hear. Thank you.
Operator: Thank you. One moment please for our next question. And our next question comes from the line of Michael Funk with Bank of America.
Michael Funk: Yeah, thank you for the question this evening. So, on the international softness that you cited, I’m curious how much of that is due to shift in traffic, so to RCS and WhatsApp, for example, versus a reduction in traffic volume?
Khozema Shipchandler: Yes. I wouldn’t say it’s due to a shift in anything actually, Michael. I think that there’s just a little bit soft from a kind of demand environment perspective in terms of that international termination. I think in terms of RCS more specifically, like, we haven’t really seen significant activity there yet. We certainly expect RCS to play a role down the line. I think if anything, it’ll probably be accretive to the business, but that’s not what we saw in international volumes.
Michael Funk: No, that’s very helpful. And one more quick one, if I could. Thank you for the color on Agent Copilot embedding segment and more of the comms products. For clarification there, are you charging additional or separate for the embedding of segment or is it more of a teether to get customers more familiar with segment and hopefully drive churn lower, higher usage and engagement and interest in that product over-time?
Khozema Shipchandler: Yeah. Ultimately, it will result in a price upsell. There’s like a lot of details, but just to answer your question in short, it will fundamentally result in a price upsell. There’s a number of, like, kind of packaging and pricing considerations that kind of go into how we’ll ultimately take some of these products to market. But the short answer is, it will ultimately result in increased price.
Michael Funk: Okay. But in the short-term, as you initially launch, there is no price increases simply embedded in the product, but over-time, there will be separate SKUs or pricing. Is that correct?
Khozema Shipchandler: When it’s in private beta, we typically offer it for like a teaser period where there’s not as much of a price increase, but once it kind of goes out of the private and it’s fully GA’d and the customer is actually using it beyond kind of the test period, then there is fundamentally a price increase that goes into effect. So it’s not meant to be just protective, it’s meant to be value enhancing and therefore with the price uptick.
Michael Funk: Great. That’s very helpful. Thank you.
Operator: Thank you. One moment please for our next question. Our next question comes from the line of Peter Weed with Bernstein.
Peter Weed: Thank you. One of the things that you changed in communications here recently was grouping and coaxing some of the marketing in with communications. And I’m wondering how much they may either be benefiting or dragging on the communications business if we just looked at what would be isolated and what we might have been looking at in the communications business more historically.
Aidan Viggiano: I think the question was when we moved over Flex and marketing campaigns to communication, is there like a, well just to be clear, like when we talk about communications, we talk about it on an apples to apples basis. So all of history has kind of been recast for Flex and marketing campaigns moving over, so there’s no like artificial benefit from that reorganization.
Peter Weed: Sure, yeah, yeah, no, I get that. I’m more like, I’m just thinking about before it was moved over, we kind of knew how it was going. And I just don’t know if they are — the reason that is ticking up from an NRR or would NRR for communications be ticking up more aggressively and those are more like segments where they’ve got a below 100% NRR and actually dragging down communications.
Aidan Viggiano: No, I wouldn’t say so. I’d say like, it would be roughly in the same position. They’re not dragging down. They’re not necessarily benefiting the communications business either, in terms of pulling up the NRR, If you [indiscernible].
Peter Weed: Okay, thank you.
Operator: Thank you. Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program, and you may now disconnect.
