Khozema Shipchandler: Yes, as it relates to Segment and kind of CDP more broadly, and I think your question was really towards its connection with Communications. I think that we do see a lot of opportunity there in terms of our ability to combine our data offering with our Communications offering. And we’ve started to launch a handful of products that do exactly that, bring together kind of all of the best capabilities of Twilio within single offerings. You see that today, for example, in our Flex Unify offering, which has been announced relatively recently. I think as it relates to the need and value of a CDP, like, we’re certainly open-minded about the way that we want to create value for the company. I think first and foremost, we’re very, very focused on durable and profitable growth.
We alluded to the fact that we are undergoing an operational review of Segment and with an eye towards value creation, again demonstrated through durable, profitable growth. I think that Segment happens to be a pretty unique asset that we think remains strategically important. We do think that having first-party data combined with Communications has a lot more inherent value than just a standalone CDP. All that said, I think there are a lot of opportunities for us to be able to improve the way in which we’re doing things. And we talked about some of the executional things that we want to get better on. But I think having Segment deeply embedded with others in the data ecosystem, we have opportunities to do that and then also pursuing partnerships with other ISVs. I think there’s an opportunity there too.
And so, we’re not taking anything off the table per se, but we do think that we have a really interesting asset. We’ll have a lot more to share in March when we complete our operational review.
Michael Turrin: All helpful. Thank you.
Operator: Your next question comes from the line of Ryan Koontz with Needham & Company. Your line is open.
Ryan Koontz: Thanks for the question. Appreciate how Aidan unpacked kind of the revenue guide down sequentially here with some compares. I wonder if you could do the same thing on the operating income guide, which seems even like a bigger move down percentage-wise. Is that mainly the new comp plan? Are there any other kind of impacts on the operating income line we should think about? I have one follow-up.
Aidan Viggiano: Sure. Yes, I’ll start. So you’re right. We’re stepping down on profit $173 million in Q4. Q1 guide of $120 million to $130 million. So there’s really three things that come into play, Ryan. So first, lower revenue. And the step down is really primarily driven by revenue seasonality in Q4, right? We talked about in our prepared remarks, we had record volumes during Cyber Week. We had a very strong holiday season. We expect revenue to kind of step down quarter-over-quarter as a result of that. So that’s a driver. The other drivers are on the OpEx line. The first is, as you mentioned, the new bonus program will begin accruing expenses in Q1 associated with that program. We noted in the prepared remarks that it’s roughly $20 million in Q1 and $90 million for the full year of 2024.
Those are net new incremental expenses that will hit the non-GAAP line. Importantly, this new cash bonus program will allow us to reduce our stock-based compensation expenses over time. So that’s one item on the OpEx line. And then the second is actually related to payroll taxes that are just higher in Q1 than they are in Q4, really due to resetting of tax contributions. That’s about a $10 million to $12 million headwind in Q1. That starts to abate as you move throughout the year just based on how payroll taxes work.
Ryan Koontz: That’s great. Perfectly clear. And wonder if you also kind of unpack the 10DLC, kind of where we are in that cycle. I know — I’m sure it’s a complex issue, but maybe just the 30 second version of kind of where we are in this 10DLC registration, fees and onboarding and churn you saw like, it’s been a bit of a journey. Thank you.
Khozema Shipchandler: Yes. I mean, it’s effectively over, is the short answer. The fees are abating and Aidan kind of alluded to that being one of the reasons for the margin step down Q3 to Q4. There were accelerated fees in Q3 as a result of an acceleration in registrations to be able to meet the deadline. That deadline since passed, I think we alluded to in prior remarks that 99% plus of our customers were able to get through that process. And so, the balance of those, we wouldn’t anticipate ending up there for a variety of reasons. And there’s actually nothing to talk about that. So that’s kind of where we are and it’s behind us.
Ryan Koontz: And those fees were like expedite fees, you’re saying?
Khozema Shipchandler: No, they were one-time registration fees associated with that process, and so they were [indiscernible] in this regard.
Ryan Koontz: Perfect. All right. Great. Thanks a lot. I’ll pass it on.
Operator: Your next question comes from the line of Pat Walravens with Citizens JMP. Your line is open.
Pat Walravens: Oh, great. Thank you. And I’ll just say, Khozema congrats on getting a lot done so far. So I know there’s still a lot to do. But — so, look, Twilio has over $4 billion in cash and less than $1 billion in debt. So I guess two questions there. Why not increase the stock purchase? And what are some of the possibilities in terms of what you could do with that cash?
