Frederick Havemeyer: And then just quickly for Elena. As you’re thinking as you’re looking at the portfolio of apps on Twilio, where are you thinking about really prioritizing your investments into the software and services in the platform?
Elena Donio: I think we’re not going to obviously break that out in a lot of detail. But what I will tell you is that our Flex product is just at a different stage of play than our Segment product. So, it’s got — there are fewer resources behind it, fewer sales reps behind it, et cetera. But we both see a ton of green build. We see had a great build opportunity across both of those solutions. Segment is creating connectivity to our comms platform through our Engage product. We think that product actually will ultimately fuel Flex as well as we utilize our data capabilities to power better engagement through Flex. And so, we actually see them — some real opportunity to bring them together and for them to be better together as well as fuel our communications business and vice versa.
So, we think they’re all equally important in our portfolio, but the Segment business is sort of just at a different stage of play. So, it’s got a little more girth and half to it than the Flex business does, but the Flex business is growing in a healthy clip as well.
Frederick Havemeyer: Thank you.
Operator: Your next question comes from the line of Siti Panigrahi with Mizuho. Your line is now open.
Unidentified Analyst: This is Phil on for Siti. I just want to touch on the last question. So, for Flex, I know it’s one of your key strategic priorities. How is it performing in this environment? And what sort of changes can you guys make to increase share in the CCaaS market? And also, what kind of traction are you guys seeing on the Engage platform?
Elena Donio: I’ll take that, and I’ll do it in reverse order. So just as a reminder, engage went general availability in Q4. So just a couple of months ago. And we’re excited about the trajectory that we’re seeing there. We’ve got a couple of dozen new customers deploying a lot of really new and interesting use cases on Engage and throwing through new e-mails and new SMS messages all as part of that. And so — and we’ve also talked about a couple of those customer wins in the back part of our prepared comments. There are a couple of others that we haven’t been able to share directly, but we’re pretty excited about in terms of their utilization of Engage and Segment, both from a renewal’s perspective as well as a good chunk of net news that we’re excited to bring live over the next couple of months.
So strong performance there with Engage. And we think real opportunity going forward. Flex had good performance in Q4 as well. And as I mentioned in prior calls, we’re in the process of building out these specialized sales forces doing a fair amount of hiring enablement onboarding. And as we see our sales reps coming online, getting out into the market, and beating the competition head to head in these deals, we just — our optimism is growing for how that product will perform in the space. Just to kind of cap it off with a word on the competition. We’re not seeing new competition, and we’re not necessarily seeing loss rates that are bothersome in any way. This is a matter of sort of getting out there into the greenfield opportunity, embracing it, making sure we’ve got the right marketing messages, campaigns, fleet generation programs, and then bringing those deals through to close.
So good momentum beginning to kick in as we see these new AEs coming online, and looking forward to sort of how that plays out here in 2023.
Operator: Your next question comes from the line of Alex Zukin with Wolfe Research. Your line is now open.
Alex Zukin: Thanks for taking my question. And honestly, congrats on one of the best, I would say, presentations, thus far, that we’ve seen from the company in many quarters on multiple fronts, including the buyback. I guess the first question is, maybe I missed this or I missed it in the letter, but can you maybe just go a little bit deeper into the headwinds that you saw on growth on both the communications side and the application side in Q4? Maybe also commenting on the linearity of the business in the quarter and what you’re seeing into Q1 both the headwinds, I guess, but also the tailwinds to the point of how well — how well you can be in both markets that are up and down?
Khozema Shipchandler: Alex, this is Khozema. I’ll take the question. And then if you have other color you’d like, Elena can certainly chime in as well. So, I guess what I would say is that I’ll just kind of echo something that Jeff said earlier, which is that, number one, we’re not losing share. And so that gives us a lot of confidence that the business is headed in the right direction. Number two, we’re just seeing a lot of dynamism in the macro environment. And as our business is usage based, in large part, certainly on the communication side, we start to feel those effects much sooner than many others do because we’re kind of a leading indicator in some ways, both on the way down as well as on the way up. And so, you saw a little bit of that, obviously, in our expansion rate and you’re seeing a little bit of that as well in our reported Q4 results as well as the way that we’re guiding in Q1.
In terms of some of the headwinds, it’s — there’s nothing beyond really kind of the things that we called out previously. I mean, I would point to general macro which is a very broad category. But some of the stuff that we called out previously is crypto and social and e-com, retail. All of those industries, as you know, have been impacted pretty significantly. And you see that in various earnings reports. You see that in the news cycle. And so, we’re just kind of caught up in the same. And I think what’s important for us is that we play through that we continue to grow through whatever the environment is, and importantly, that we generate profitability in spite of whatever that macroeconomic environment is. So that’s the way that I would really characterize it.
I don’t know, Elena, if there’s anything else that you would add.
Elena Donio: I think that’s good. I don’t have anything to add.
Alex Zukin: And I guess just maybe following up from that. So, if we look forward from here, I know I always ask the question about net retention. But if I think about that one, 10 number and I think about the progression through the year, when you start to anniversary some of those negative effects, and to Jeff’s earlier point, on the way up the consumption model can be — or the usage model can be really good, if you think about the linearity of the year, understanding that you’re not guiding, how should we think about that progression? Or how are you thinking about it internally? Is it a back half normalization stabilization of that retention rate? Is it something that shifts to more net new? What’s the right way to categorize it?
Khozema Shipchandler: Alex, I wish I did know, I don’t. I think that we’re planning conservatively basically, given the macro. I think it’s just a really dynamic environment. And so, we’re not necessarily forecasting an uptick per se. Could it be better? Maybe. I think we’re all sort of hoping it’s going to be, but we can’t plan for that. And so, we’re going to plan for it kind of playing out the way that it has been maybe the last few months, last few quarters and kind of hope that it gets better. Obviously, our field teams are going to win like whatever the business they can. They’re going to try to grow share in every way that we can off of our existing base. We’re going to keep growing with the accounts that we have. But how that plays out in terms of DB&E, I just don’t know.
And as you know, like it’s not something that we’ve historically forecasted to. All I’d say is that as the economy picks back up, our business will definitely pick back up, and we’re certainly looking forward to the time that, that happens. By the way, I also appreciate your comments at the start of your question. Thank you.
Alex Zukin: Thank you, guys. Congrats again.
Operator: Your next question comes from the line of Derrick Wood with Cowen. Your line is now open.
Derrick Wood: Great. Thanks guys. As you look at driving more efficiency in the business, can you talk about how partners are going to play a role and maybe what you’re doing to drive more partner leverage, especially in light of shifting to a two-business unit strategy?
Elena Donio: Derrick, it’s Elena. I’ll take that one. We think partners play a vital role. They are helpful in bringing in some of the flagship customers. You heard us talk about both this quarter and over the last couple of quarters. We put them in a couple of different camps. There’s implementation partners that also could be reseller or referral partners. And then there’s also just straight up referral partners that might have a piece of technology that works together well with one or more of our products. And so, we are in the process of actually creating sort of bespoke partner acquisition, partner enablement and partner co-selling teams across our new sort of business unit structure. We think that will create a lot more focus on the opportunity there.
And we’re not going to sort of break out exactly what that trajectory looks like. But we do believe that partnership will play an important and growing importantly role in our growth and new bookings, both across the data and applications business as well as across the comms business.
Derrick Wood: Got it. Great. Maybe a follow-up for you, Elena, as well on Segment. Just wondering how the progression of growth trended over the year. You guys obviously had a lot of organizational change. Just was hoping to get a comment on that. And then as you look at kind of how Q4 ended and going into Q1, what end market demand looks like for CDP investments in this macro condition?
Elena Donio: Yes. Thanks, Derrick. And I think even the way you phrased the question is right. Into the beginning of last year is when we had some stumbling, lost a fair amount of key talent and then began to rebuild. That was a huge priority of mine when I came online in May. And we’ve worked to sort of execute through that hard time. And I think really, finally, you started to get our legs under us again in Q4 with a couple of really great customer wins. They’re listed in the documents from us, but JPMorgan Chase was a fantastic win across multiple business units and with Engage and Segment, Box and a couple of others. We had some great new seven figure consumer brand wins as well that we look forward to bringing live. So excited about the trajectory.
A lot more work to do. As I mentioned, these AEs, or account execs, are still coming online and getting their own legs under them, but we’re excited about the trajectory. I think the CDP space is still in early innings, but I think also the important thing to note is sort of where we take it from here. So, we think the data in the CDP can create amazing power across our applications. And then we also think what we’re building in terms of orchestration with Engage, also in terms of connectivity to our communications platform as well as to Flex really just create such an incredibly powerful set of capabilities for our customers but also competitive differentiation. So, it’s a matter of getting people to part with precious budgets right now. We feel like we’ve got a great message there.
We feel like we really do create lift for brands, particularly in a time like this when it’s really important to be super surgical about how they spend every single one of their marketing dollars. But when ad spend and marketing spend are impacted and are strained, people just want to spend a little bit more time in the sales cycle, a little bit more time making sure that it’s exactly what they want. But we also know when we get to proof of concept, we tend to win. And so that’s really what we’re focused on is making sure we get into the game and get those deals closed over time. So, I wish I had a crystal ball on the macro environment, but we play through, and we think we do well in that context.
