Jeff Lawson: This is Jeff. I’ll add one other thing. I’ll just point out one other thing. If you noticed, we tweaked a lot of our messaging at SIGNAL last year for the buyers of this market, right? We said, look, this is about acquiring customers more efficiently and then increasing your lifetime value, your revenue with those customers. And so that really is a targeted message based on how our products are relevant in this period of time. And I think you see some of the results that we put out, both in terms of JPMorgan adopting Engage Box, who is a long-time Segment customer moving into Engage, but also a leading e-commerce company that they adopted us in order to improve their ad spend. I mean these are really good examples from our customers that we could talk about in our prepared remarks of exactly what we see going on in the market.
Operator: Your next question comes from the line of Rishi Jaluria with RBC. Your line is now open.
Rishi Jaluria: Wonderful. Thanks for taking my question. Two from my end. First, I want to continue talking about Segment. Maybe this is one for Elena. As we think about the core communications side kind of returning to its PLG routes, how should we be thinking about the kind of evolution of segment go-to-market, especially considering the CDP market is a little bit more evangelical, it is a little bit more greenfield. And maybe alongside that, as we think about potential larger vendors trying to get into this space in a big way, be it Salesforce with its own offering in T&E or Adobe, what’s kind of the plan to maintain Segment’s market leadership as the larger software companies try to get into the space? And then I’ve got a follow-up.
Elena Donio: Thanks, Rishi. This is a strategic sales motion, getting in, getting the product introduced, getting customers using it in proof of concept and things like that. And so, we have really focused our attention on just building fantastic enterprise sales capability and blanketing the market with our message and getting in there and helping customers through sort of putting their dreams into action in the product as we show them our capabilities and turn them into paying happy customers. And so, while there’s definitely more we can do in terms of demos and the sort of the developer message, this really is an enterprise sales motion, and we’re investing in that accordingly. And we think the price tag obviously accommodates that as well.
So that said, the connectivity across our — the rest of our products is a real opportunity for lift. And so, finding examples within our Communications business, where the data can be useful and where then we can turn around and through the orchestration of engage, push communications back out, I think everything ultimately becomes better together. And the developer as a discoverer of those communications channels sort of opens that door for us on the communications side. And then I think we get to go back in from the Segment and Engage side as well. Second part of what you talked about was the big competition, and we’re certainly aware of the moves of our big competitors. But we love our chances that we have the better product. We have 100% sort of focus on the very specific and bespoke things we do in the CDP space and in the customer engagement platform space.
And we think we continue to stay ahead from a capabilities perspective and just we’ll continue to invest in the product to make sure that we stay ahead. The work for us is going to be to make sure that we’re competing every single time one of those decisions is made, and we’re orienting ourselves to do just that.
Rishi Jaluria: Got it. That’s really helpful. And then just a quick financial one for Khozema. Look, I appreciate the longer-term guidance and commitment to GAAP profitability. If I just kind of think about looking out and it’s hard to predict two quarters out, let alone five years out, but maybe let’s try or sort of talk about GAAP profitability in 2027 as well as bringing down your SBC to 10% to 12% of revenue. I mean, that just implies that your non-GAAP operating margins though in 2027, as you pivot more toward profitable growth and presumably reach a substantially larger scale, that your non-GAAP margins would be in that 10% to 12% range. And maybe just given all of the kind of areas of focus, that seems like it’s maybe a little bit low as a target to reach for. Can you maybe walk me through kind of the thought process here? And maybe where I may be wrong in my thinking on the long-term framework? Thank you.
Khozema Shipchandler: Rishi, thanks for the question. So, I think just one edit to what you said, and I don’t know if you misspoke or not, but I think what you said towards the end was that our long-term framework was 10% to 12% op margins, and that’s actually not the case. So, the way that, I guess, we’re thinking about it is that there’s the 250 to 350 in the current year, you can kind of run the math on what the implied might be based on our Q1 guide. Obviously, we’re not guiding quarter-to-quarter right now, or we are getting quarter to quarter. We’re not guiding for the year just given how dynamic it is post that, we see 300 to 400 bps per year. And I guess the way that we think about it is, is that if you stretch it out over those — that five year period is that, number one, we get to something that probably looks like if we can execute well and at the upper end, 20% plus, one; two, that if we can get to the 10% to 12% that I talked about that we disclosed in the remarks on the SBC side, which we feel pretty good about, just given some of the changes that we’ve made in terms of compensation and moving more from stock-based to cash-based.
And then three, I think that the net of those two, obviously, yields some GAAP profitability overall as well. So that’s kind of the math that we’re doing. I mean, could it be better? Perhaps. But that’s certainly not something five years out that I would want to commit to. We feel good about the setup. Certainly, in the current year, we — if we execute, we can be on the higher end of that. If revenue is tough, we’ll be at the lower end, but all the same will be very profitable in 2023. And then over multiple years out, we see really strong op margin accretion, which we think is a good signal. And then being GAAP profitable is really the name of the game, obviously. And our ability to control SBC is going to be the principal lever and we know how to do that.
Operator: Your next question comes from the line of Will Power with Baird. Your line is now open.
William Power: Okay. Great. A couple of questions. Let me start, I guess, on the Communications segment. I’m just trying to think through go-to-market and potential impacts to growth there. I think you suggested earlier you didn’t expect limited growth, but a little bit of an impact. I’m just trying to understand, just given the magnitude of the changes taking place there, how you get comfort that there’s not a more meaningful impact to revenue growth? And any framework you could maybe provide around what you expect for growth in that Communications segment, whether this year or next couple of years?
Elena Donio: I’ll take that. In my — in the capacity of my prior role, just covering go-to-market, very large, it’s Elena here, and then Khozema can jump in if you’ve got anything else to add. So, I understand the point. We obviously did a substantive cost cut here. And I think the important — there’s a couple of important things to think about. And that we’ve sort of started to talk about over the last couple of quarters. It was really important to us to begin to demand more of our products, more of our tooling and more of our process as we think about the right go-to-market model for communications. And so, we believe there’s a lot of efficiency to be gained there. We’re making progress against all three of those dimensions now and plan to even make more improvement in how we create efficiency across the team going forward by increasing our capabilities in product like growth and in self-service.
I think when you actually really sort of peel the layers back in how we were servicing our customers historically, we had a number of people involved in any kind of — in any sort of customer experience. And we believe we were a bit over levered there. And that when you kind of get underneath where our efficiency was great and where it wasn’t, we think we can provide those fantastic customer experiences and really benefit from our customers’ usage of Twilio without having people involved at every stage of the process and really reserving that human capital for the times when our customers really and truly need us. And that’s when they’re making a decision when they’re deciding whether they turn left or right with their use cases and when they’re struggling with something with solving a problem.
And so that’s really where we want to apply that human capacity and capability. And we’re not going to let go with that. We will still be there for our customers when they need us. But as it relates to sort of new customer acquisition, that’s also more human-capital intensive at times. When it’s big customers making — running big loads on Twilio, we’ll be there for those customers as well. But there was a lot of space where we have begun to see that our efficiency was degrading as we added large numbers of talented individuals over the last number of years. So, we just don’t feel like that’s necessary for us to continue the growth trajectory given our penetration in the space, given how our tooling and products are coming along and given what we believe that we could do with the human capital we have around keeping our customers satisfied.
William Power: Okay. And then maybe, Elena, just to follow up with you. I mean, I guess shifting over to your new primary focus — congratulations on that, by the way — and thinking about applications and software. Can you maybe just remind us, as you think about Flex and Segment, what are the synergies there might be on go-to-market? I know you’ve got some specialized folks you’re hiring probably for each of those segments. But just trying to think through the synergies and differences and kind of how you balance that with those two different products?
Elena Donio: Yes, for sure. We really see sort of the best uses of Flex being where a customer is running a digital contact center where engagement is key. We’ve got some great use cases of customers using Flex where they’re actually in selling environment, not just service or support environment. And so, we believe there’s a really interesting synergy in tie with Segment, where the data will actually create incremental efficacy in those interactions that are happening in Flex, and we’re beginning to lay that track now. We expect to see some of that capability here actually in 2023. But I want us to lay that track first before we begin to think about this as sort of one product or one set of use cases. They are pretty different today.
And so, we’re going to keep those sales organizations really specifically focused on those unique customers, those unique buying patterns, what those customers need from us. But we will be working on adding some of the benefits of Segment into Flex, and we expect to see some of that this year.
William Power: Thank you.
Operator: Your next question comes from the line of Pat Walravens with JMP. Your line is now open.
Patrick Walravens: Great. Thank you. And congratulations on all the progress. Jeff, this is a very big picture. But Twilio has this unusual situation where you have a dual class of stock that collapses to a single class seven years after the IPO. So, in June. And as the founder, I would just love to hear your thoughts and sort of the history on why you guys originally structured it that way. And now that we’ve hit the milestone, how do you feel about the decision and how things might be going forward?
