Aidan Viggiano: Thank you. Yes. Let me just touch on free cash flow. So this was a record quarter for us $195 million of free cash flow in the third quarter, second quarter of solid free cash flow generation. So a couple of things to consider there. Obviously, as we become more and more profitable, our free cash flow metrics should generally correlate with non-GAAP profit. We’re not going to give a guide right now on what the free cash flow margin should be. But as profitability improves, free cash flow will improve. Now, what tends to happen on free cash flow is there is some variability quarter-to-quarter with working capital. And this quarter we ended up with higher collections or heightened collections relative to prior periods.
We had about a three-day improvement in DSO. We just don’t expect that to happen every period. What I will say is even excluding that unusual heightened collections, our free cash flow was better in the quarter than the second quarter. So we did see improvement quarter-over-quarter. But you’ll always have some of that lumpiness, whether it’s collections or there’s a prepayment in the quarter going the other way. And so it’s never perfect, it’s never linear. But like over time, we should see free cash flow improve as we see profitability improve.
James Fish: Right. But can you talk about any linearity within the quarter itself, what you guys kind of saw earlier on versus kind of exiting here?
Aidan Viggiano: No. We’re not going to break it down within the quarter.
Operator: Our next question comes from Derrick Wood with TD Cowen. Please go ahead.
Derrick Wood: Thanks. I wanted to touch on the continued pressure and net new customers at, I think, about 2,000 in the quarter. And I guess, how are you guys balancing investments in new customers versus cross selling the base? And how are you feeling about the effectiveness of the PLG motion and driving new customers on the comm side?
Aidan Viggiano: Just touch on the metric quickly and then I’ll let Khozema and Jeff talk more about the business. So one thing to note is that you’re right. The communications customer count, first of all, is up 10% year-over-year, up 1% quarter-over-quarter. There was a small detractor in there driven by the disposition. So it would have been up slightly more if we didn’t dispose of the value first business in the quarter. I think importantly in that business, churn continues to be low. And so we don’t see churn as a concern within the communications business. So let me hand it over to Khozema and he can talk more about what’s going on.
Khozema Shipchandler: Yes, I mean, I think just to provide a little additional color on the self-service side of it. To answer your question outright, I mean, I feel quite good about some of the progress that we’ve been making there. We’ve obviously focused a lot of our efforts on streamlining it. I would say in the very recent past, the 10DLC registration process that we went through certainly drove some friction in terms of new customer sign ups and stuff like that. But absolutely it was the right thing to do. And we feel really good about the trust that we’ve been able to create in the ecosystem as a result of that. I think beyond that, we do feel like a, that there will be ongoing efficiencies that we’ll be able to drive into the self-service side of things.
But I don’t think it’s going to end up coming at the expense of growth. I think importantly, we’re not seeing any pressure on pricing. For example, we highlighted a number of really interesting wins in the quarter that actually came from products that were beyond messaging. That also feels pretty good. Aidan kind of alluded to the fact that it is a bit of a volatile macro. I think in spite of that, the business continues to perform quite well. And I think probably the most important dynamic in the whole thing is that we are seeing a stabilization in volumes. And while we don’t necessarily see an inflection yet, I think we do have a fair amount of optimism about Q4 and how things look heading into 2024.
Derrick Wood: Thank you.
Operator: Our next question comes from Samad Samana with Jefferies. Please go ahead.
Unidentified Analyst: Hi, everyone. This is Billy Fitzsimmons [ph] on for Samad Samana. I want to dig a little deeper into the macro impacts in the prepared remarks and build on some of the questions that were already answered by kind of digging into the incremental macro impacts in the third quarter. It sounds like churn remained stable and you called out gross slowdowns and cost cutting measures for some of your customers. But curious if you could dig in a little more into how the business metrics tracked over the course of the third quarter when compared to the second? And Twilio was pretty upfront about the macro impacts in the first half of the year. And you talked about business trends a little bit and the answers to some of the other questions.
