All right, everyone. Thank you for joining us today. This is Andrew Zilli, Head of Investor Relations and Treasury here at Twilio. Thanks for joining us for our Investor Day during SIGNAL 2020, which, as many of you know, is our very first virtual SIGNAL event. Hopefully, you were able to tune in to Jeff's keynote yesterday, where we highlighted Nike's amazing use of Flex. We showed how Mount Sinai is transforming healthcare to be digitally driven and virtual-first, combining SMS and video. We introduced Twilio Frontline to empower employees to engage with customers over multiple channels, all via a single mobile app. We know it's been a few years since we last held an Analyst Day, and quite a lot has changed. We're excited to have you join us today.
Keep in mind that we just closed our third quarter, and as we're still closing the books ahead of earnings, much of our conversation today will be based on data available through the second quarter. Additionally, following this event, we will be in our quiet period until we report earnings later this month, so we won't be able to host any calls until after we report, and we appreciate your understanding in this. Now, everybody's favorite slide. As you all know, we are a publicly traded company. Keep in mind that some of our commentary today will be in non-GAAP terms. Reconciliations between our GAAP and non-GAAP results and guidance can be found in our most recent earnings press release, as well as the appendix of this presentation that will be available on our investor relations website following the event.
Additionally, some of our discussion and responses may contain forward-looking statements, which are subject to risks, uncertainties, and assumptions. In particular, our expectations around the impact of the COVID-19 pandemic on our business, results of operations and financial condition, and that of our customers and partners is subject to change. Should any of these risks materialize, or should our assumptions prove to be incorrect, actual financial results could differ materially from our projections or those implied by these forward-looking statements. A description of these risks, uncertainties, and assumptions and other factors that could affect our financial results are included in our SEC filings, including our most recent report on Form 10-K and subsequent reports on Form 10-Q, and our remarks during today's discussion should be considered to incorporate this information by reference. Forward-looking statements represent our beliefs and assumptions only as of the date such statements are made.
We undertake no obligation to update any forward-looking statements made during this call to reflect the events or circumstances after today, or to reflect new information or the occurrence of unanticipated events, except as required by law. Here's the agenda we have planned for today. We're going to kick things off with Khozema Shipchandler, our CFO, who will take you through our presentation, and we'll follow that with a moderated Q&A. We'll then welcome George Hu, our COO, for a Q&A session, and we'll wrap up with Jeff Lawson, our Co-Founder and CEO, for a Q&A session. For those of you on the Zoom webinar, we'll be using the built-in Q&A feature. If you have questions, please submit them there. I will moderate the Q&A by announcing who submitted the question, and then we'll read out the question for the group.
With all of that out of the way, let me go ahead and hand it over to Khozema to kick things off.
Thanks, Zilli, thanks to everybody for joining today. We'll be sharing a lot of financial detail with you today, but since we're doing this as a part of SIGNAL, there are also a lot of excellent product features, as well as some lighthearted features that I would strongly encourage you to view when you have some time. They're all located on our website and should be available for on-demand viewing. Without further ado, let's dig into the numbers. It's been a while since we've done one of these, so we thought what we would do is start by looking at where we were at our last Investor Day. At that time, we reported $115 million in revenue, 123% DBNE, 49,000 active customers, and nearly 2 million developer accounts.
Since then, we've quadrupled our revenue, increased our expansion rate, grown our active customers to more than 200,000, and as you may have heard in Jeff's keynote yesterday, we now have more than 10 million developer accounts on our platform. We've consistently delivered outstanding growth across every dimension of the business over the last 2.5 years. During this timeframe, based on thousands of interactions with developers and deep discovery with our customers, it has become clear that customer engagement has never been more important, and that is the driving force behind the demand for our platform. In fact, according to Gallup Analytics, companies see a 23% premium from engaged customers in terms of wallet share, profitability, revenue, and relationship growth compared to an average customer.
This is why companies are accelerating their digital transformation efforts and why they want to work with Twilio to drive their customer engagement strategies. These trends are driving a large and growing addressable market for us. When Twilio went public, we stated then that our programmable messaging, voice, video, and authentication products address portions of a $45 billion market. Since then, we've added email and marketing campaigns via SendGrid. We've added Flex to take on the enterprise cloud contact center market. We've added IoT to help companies connect devices anywhere in the world. In addition to growing in the markets in which the company started, expanding our platform with these additional products gives us a $62 billion TAM today. With these same products, by 2023, it is estimated our addressable market will be $87 billion. You can see that the growth comes across all of our product lines.
We have a tremendous opportunity ahead of us, and we're just getting started. We're addressing that market with our leading customer engagement platform. From the Super Network, to our APIs, to products like Flex, our platform provides three things that companies need: digital engagement, software agility, and cloud scale. Companies across industries and around the world are using our platform to power the next generation of customer engagement solutions. The use cases are nearly endless when it comes to how our customers are using our platform, from marketing to customer service, to IT alerts and more. Our platform allows companies to get to market faster with personalized content over any channel and at global scale. In fact, we offer our products in more than 180 countries. In the last year, we powered nearly 1 trillion human interactions.
In order to make this happen, our R&D teams work relentlessly to release new features and deployments, many of which are based on feedback from our outstanding developer community. In the last year, our team delivered 180,000 production deployments, which is just incredible. As you all know, it takes more than just good products to create a valuable company. We've built an extremely talented management team with diverse backgrounds across the technology spectrum, from some of the largest enterprises to Systems Integrators, to the military, and more. This year, we've expanded our management team by adding some great new talent, including Lybra Clemons, Chief Diversity, Inclusion, and Belonging Officer, Michelle Grover, as our first CIO, Christy Lake as our new Chief People Officer, Steve Pugh as our CISO, and Glenn Weinstein as our Chief Customer Officer.
Importantly, 10 of these leaders have experience at companies with more than $5 billion in revenue and bring important experience to Twilio as we continue to scale. Let's take a look at the results we've delivered and dig into some more of our metrics a bit more. We have consistently delivered strong revenue growth at scale. Since Q4 2017, we've delivered a 60% CAGR and have more than quadrupled our quarterly revenue. We continue to see broad-based strength and have experienced a modest tailwind from COVID as businesses look to digitally transform. While COVID has accelerated digital adoption in certain industries, we think these use cases will prove resilient over time. Negatively affected industries, while hard to call in terms of timing, should also provide a tailwind to the business as they rebound over time. That strength continued in the third quarter.
While we obviously just concluded the quarter yesterday, and we'll be working on closing the books ahead of earnings over the next few weeks, we are expecting third quarter revenue to come in ahead of the high end of our previously issued guidance. As we've talked about previously, COVID-19 has been a net tailwind for Twilio. Over the last few months, we've seen years-long digital transformation roadmaps compressed into just days and weeks. In fact, in a recent Twilio global survey of more than 2,500 enterprise decision-makers, respondents indicated that COVID-19 has accelerated companies' digital communication strategies by an average of six years, and almost all companies are now seeking ways of engaging customers.
Our customers across nearly every industry have had to identify new ways to communicate with their customers and stakeholders, and we've seen new use cases like remote contact centers, self-service, contactless delivery, telehealth, distance learning, and more. The new and accelerating forms of customer engagement resulting from COVID-19 are adding to the secular tailwinds which have long propelled our growth. We have a different model than many software companies, which is primarily based on the usage of our products. It's this usage-based model that allows for very little friction for customers during the adoption phase. In Q2, 76% of our revenue was usage-based, coming from messaging, voice minutes, video, and others. The remainder was from non-usage-based products like Flex seats, enterprise plans, phone numbers, support, and others.
Importantly, you'll notice that both email and Flex fall under both categories. As email has packages that are non-usage and overages that are usage. Flex has a seat-based pricing option that is non-usage, as well as a usage-based component for agent hours. In general, the bias of our revenue model to usage means that we win when our customers win. When you further break down our revenue and look at telephony-based voice and messaging usage, the split is even more distributed. While our reported international revenue, based on our SEC definition accounting for company headquarters, was 27% of total, for example, in Q2, you can see that our revenue split based on where we are sending messages and terminating voice minutes is actually about 50/50.
This impacts our gross margins as international markets tend to have a lower gross margin profile than the U.S., which we will talk about shortly. In addition to geographic diversity, our business is diversified across industries. This is a select group of industries that are representative of the broad reach we have. It's probably no surprise that IT-oriented companies represent the largest vertical for us. We also have a great presence in verticals like financial services, entertainment, and consumer on-demand. You may recall that we announced HIPAA compliance for several of our products earlier this year, and the ability to sign Business Associate Agreements, commonly known as BAAs. Healthcare is a huge opportunity for us, and we've already signed more than 240 BAAs this year alone. I'd also like to highlight one other area, and that's political revenue.
We know this is an area of investor interest, we wanted to make sure everyone was aligned on the contribution of this category to revenue, which was roughly 1% in Q2. While the dollars are growing, the rest of our business has grown so much faster that it isn't as significant of a contributor as it was in 2018. While we do expect this to tick up modestly in Q3 and Q4, it is not growing as quickly as the rest of our business, and we expect that it will remain a relatively small percentage of our total revenue. We also continue to diversify our business across customer size. Growth customers, which we define as companies with less than 100 employees, were 36% of revenue in Q2. Mid-market was 28%, and enterprise companies, which are companies we define as having more than 2,000 employees, is 36%.
This is up from 32% back in Q4 2017, so we're making good progress here as we expand our presence at the enterprise level. Our business is diversified across our product set. We've continued to expand our product offering over the last several years, adding Flex, email, and many others. You can see that application services, which includes products like Flex, Authy, Video, and many others, continues to grow as a percentage of our overall revenue. When you combine that with email, those high-margin products now represent about 28% of our revenue through the first half of the year. More importantly, you may have noticed that messaging has become a higher percentage of revenue in the first half than where it was in 2019. Let's take a closer look at the growth of the messaging product.
Messaging is a bigger percentage of revenue this year than last year. Excuse me. That's because our messaging growth is actually re-accelerating at a very large scale. In fact, we've already sent nearly as many messages in the first half of this year as we did in all of 2017 and 2018 combined. Of course, COVID has played some role in this, but customer engagement via messaging is becoming more and more important, and we are helping companies embrace this channel to provide a better experience for their customers. This is a great sign. Our biggest product is re-accelerating at a large scale. As we'll discuss a bit later, this is also driving some near-term gross margin pressure, a dynamic that we gladly accept in the near term.
Moving to look at our application services, this bucket of products is growing much faster than the core, and we have a range of products within this portfolio. Video, to no surprise to anyone who has been listening to our earnings calls, is growing extremely fast at nearly 600% for the first half of the year. Of course, it is growing off of a small base, but we are excited about our opportunity to build that into a significant revenue driver for the company. As I mentioned earlier, our core messaging business has also accelerated at scale. Additionally, there are some components of messaging within software that are growing even faster. Some examples of this are product like the WhatsApp API, Conversations, Insights, and others. We are excited about the growth opportunities here as customers look to engage across a myriad of messaging channels.
Next is our Engagement Cloud, growing at 94% year-over-year. This includes not only Flex, which we'll provide more details on shortly, but other products like Authy, Lookups, Proxy, Studio, and more. Lastly, other application services includes a variety of other products that are more mature, hence growing at a slower rate. Some of these products include recordings, storage, voice software, enterprise and support plans, and a few others. Speaking of Flex, we continue to release new features to the Flex platform at a blistering pace. It's important to note that we are not focused on reaching feature parity with the legacy vendors. They have been amassing features for three decades, and a majority of those features are actually never used. Regardless, the legacy platforms we're disrupting are not flexible nor scalable.
Instead, we are providing customers the features they want and need with building blocks in the cloud on a flexible platform where companies can build and own their own roadmap. Customers are buying our platform to allow them to grow beyond a contact center and think about customer care more holistically. In the first half of the year, Flex revenue was up 184%, far ahead of our total revenue growth rate. While it is clearly growing very well, it remains a relatively small percentage of revenue compared to products like messaging and voice. We aren't breaking out the dollar separately. We have more than 600 customers using Flex today, and that number just continues to grow. In fact, let me talk about a deal we just signed in the third quarter, which is one of our largest Flex deals to date, with a Fortune 100 insurance company.
They were using an on-premise vendor with plans to move to the cloud sometime in early 2022. In response to COVID, that transition was significantly accelerated. It was made even more urgent when their legacy vendor wanted to charge them for more remote functionality. We had a relationship with them previously and had built up trust, they turned to us for more than 5,000 full-time agents and a similar number of part-time gig workers. Our platform allows them to customize what they need from a feature standpoint and a pricing standpoint, they moved very quickly. This is what makes Flex such a powerful platform and why we continue to be extremely excited about what this product will do for us over time. I also wanted to give you an update on the SendGrid email business.
We closed the acquisition of SendGrid in February 2019 and delivered a great year of results in that year. Importantly, we've accelerated the growth of the product as part of the Twilio family. In the year prior to acquisition, SendGrid was growing 31%, and through the first half of 2020, we accelerated that to 36%. We've also grown the DBNE since acquisition, as we've expanded the reach of the product with our go-to-market team. We are very happy with our execution on this acquisition, and it has brought an incredibly important channel to our customer engagement platform. We've also continued to grow our customer base, adding more than 20,000 customers in the first half of this year. Keep in mind that the customers we have signed this year don't necessarily yet impact dollar-based net expansion and won't until we lap them next year.
We're building a diversified customer base across regions, industries, and customer size. As we continue to land and expand, this customer base becomes an extremely important asset for us over time. We're becoming much more strategic. As you can see, we've more than doubled the number of customers who paid us $100,000 in the last 12 months. We've nearly tripled the number of customers who paid us more than $1 million. We've grown the $5 million bucket by 5x and more than tripled the companies who paid us more than $10 million in the last 12 months. All of this shows that our customer engagement platform is becoming more strategic to a broader set of customers. This is a fantastic trend and especially at the higher end, a positive sign of our enterprise traction.
Speaking of the enterprise, we've talked about increasing our presence in the enterprise as an important area of investment for us. When you look at the largest of enterprises in the G2K, you can see we've grown the customer count by 39%. More importantly, we've grown our revenue from G2K customers by 650%. Our go-to-market team is executing extremely well and helping us grow our footprint. It's important to note that while we've seen great traction here, we still have less than 20% of the G2K as customers today. It's still early for what we believe is a massive opportunity ahead of us. Continuing to move upmarket has other benefits as well. You can see that our revenue churn remains extremely low, consistently below 4% over the last 2.5 years for customers paying us more than 30,000 and $100,000 monthly.
Our focus on delivering the features and products that our customers are asking for with a highly reliable and scalable platform, drive success for our customers, who in turn use our platform more and keep our churn low. As customers use more and more of our platform, it drives our strong Dollar-Based Net Expansion, which ended Q2 at 132%. As you all know, this isn't a number we forecast or guide to, but it does show that our land and expand approach is working. Let's take a closer look at what makes up the expansion. You can see that increasing usage is still a majority of the driver of expansion. That's customers sending more messages or using more voice minutes. We're also seeing improvement in the expansion driven by new products.
I should point out that when we talk about new products here, it's at the high level of how we describe our products. This would be a messaging customer taking on Flex or Voice or Video rather than an SMS customer adding a new region. Overall, this is a good trend to see in that we're able to expand through both options, and in most cases, as we sell a new product, it will then drive that additional usage. Importantly, Twilio's business model starts with developers. We were founded by three software developers, and since day one, we have been focused on being developer first and making our platform easy and accessible for the developers of the world to embed communications into their applications with very little friction and very low upfront cost.
This slide is an illustration of how one customer scaled with Twilio, and we see that with many of our customers, they follow a similar trajectory. In the first phase, a developer signs up for Twilio with little or no upfront costs and builds a prototype and watches as usage starts to scale. This is how we "land." Developers start with one application or solve one small problem, and customers quickly increase their usage as they start rolling out more broadly. This developer may want to add more capabilities and enable more solutions for their customers. This is how we "expand." Our platform enables software developers to easily add a broad suite of communications tools to their existing applications, which are then made available to all of their customers.
As they use more, we earn more revenue, and so as a result, when our customers succeed, we succeed. Here you see the combination of our new customer additions, the land piece, and our high DBNE, which is the expand piece. Customers join our platform, stay on the platform, and continue to grow. That trend has continued with the 2020 cohort, which is outpacing all recent years. We get customers on the platform, they stay on the platform and continue to grow as they expand their usage, add new products, and add new use cases. We can't do all of this on our own, and we have built a great partner ecosystem to expand our reach.
Today, we have more than 300 partners in our partner program, and as I'm sure many of you saw, just a couple of weeks ago, we added our first GSI with Deloitte Digital. Partners play a critical role in helping customers implement and customize our platform. While our entire platform benefits from having these great partners, the contact center can be a particularly complex area for customers. Partners play a critical role in those projects. In fact, 70% of our largest Flex deals this year involved a partner. We're thrilled to have such an extensive community of great partners around us. With all that, I'd now like to switch gears and spend a couple minutes talking about gross margins. As you can see, our non-GAAP gross margins have been consistently in our target range of the mid to high 50s.
We've talked about a lot of the things that can impact this number, from international and product mix to FX and more. Yet we have still been able to keep it consistent. As we've said, we are not focused on gross margins today, but rather on growing gross profit dollars. We've consistently grown our gross profit dollars, which allows us the ability to reinvest back into the business to take advantage of the large market opportunity that I mentioned earlier. Again, different products will drive different results here. Let's take a bit of a closer look at our product margins. What we're showing here is the average product margin for each of these product categories over the last six quarters.
As we've talked about, messaging has the lowest gross margin of our core products, as there are obviously carrier terminations costs, and more recently, A2P fees that impact the margins. As you can see, our other core categories of Voice, Email, and Application Services all have higher gross margin than our corporate average. Over time, as those products become bigger percentages of revenue, we expect to see our overall gross margins continue to increase. As you'll recall from my earlier comments, our messaging business has re-accelerated and at a relatively lower margin rate that's going to negatively impact the overall margin rate in the near term. When we look at our product portfolio, product margins can vary. We put this chart together to help provide directional guidance across our products. To no surprise, international messaging has the lowest gross margin.
On average, international messaging gross margin is roughly half the gross margin of U.S. messaging. This is due to structurally higher costs in most international markets. As mentioned earlier, we are experiencing a re-acceleration within messaging, the largest portion of our business, which has resulted in a slight headwind to overall gross margin. When considering all of the "problems" businesses might be confronted with, especially in this environment, re-accelerating revenue of our largest and most mature product is a great problem for us to contend with. When considering some of Twilio's other products, U.S. Voice, even with a telephony-based cost structure, has higher gross margins than the corporate average. Furthermore, email and application services products have gross margins north of 85%. As we showed earlier, we've accelerated email since acquisition, and many of the app services products are growing much faster than the overall business.
We continue to have success with these products. That's what gives us the confidence for gross margin to accrete upwards over time as these products become a larger portion of the overall business. In this last section, I want to talk about our investment philosophy. At the start of the year, we talked about this being a year of investment. That was obviously before COVID. Due to COVID-related dynamics, we have not been able to make as many of the investments as we initially planned and expect to catch these up in 2021. Let's wrap up by taking a look at the investments we continue making to support growth at this scale. As we talked about at the start of the year, we have continued to invest in our go-to-market organization.
We have a very efficient go-to-market strategy as our developer-focused model allows for easy, low-cost onboarding for many of our customers. You can see we're one of the best in the tech industry, and we've maintained that efficiency while growing our quota-carrying reps by 79% year-over-year in Q2. We've also been expanding our go-to-market presence in international markets, where our quota-carrying rep headcount is up more than 90%. As we've continued to move up into the enterprise segment, hiring reps with enterprise sales experience is an important investment to allow us to continue to grow our presence in the market. Of course, we have to give those sales reps products and features to sell. We are continuing to invest in our R&D function. We have over 200 discrete engineering teams across Twilio, focused around the four key pillars you see on the page.
We are building scalable infrastructure, fantastic products that must serve all of our global customers, and trust through fraud and security protection is always the number one thing we sell. Ultimately, all of this is geared towards building the best customer engagement capabilities in the marketplace. Acquisitions are a part of our strategy. A preponderance of our acquisitions have been smaller tuck-in deals that added important functionality or brought in important talent. Of course, we've talked about SendGrid and the success we've delivered with that acquisition. When we consider M&A, we'll look for assets around customer engagement, product expansion, technology capabilities. Something that will expand our international presence and growth. We always go through a build versus buy versus partner discussion.
We've been judicious in our approach to M&A, and we do anticipate M&A will continue to be part of our strategy going forward. Quickly, we have made good progress on scaling our systems and processes to support our growth for the future. Our work is certainly not done here, but a few examples of areas that we've been investing in include adding more automated billings features to our platform, enhancing CPQ functionality for our sales team, streamlining our quote-to-sign process, and we are looking to upgrade our ERP over the next 24 months. We believe collectively, these investments will fuel our growth for the foreseeable future as we address this massive market. In the past, you've heard us describe our investments as geared towards delivering elevated growth over multiple years.
In fact, we expect to deliver 30%+ organic annual revenue growth for at least the next four years. From a margin perspective, you saw that we have several high-margin businesses that will continue to become a larger percentage of revenue over time, plus a re-accelerating messaging business. In the near term, we are focused on growth, not at all costs, but if it means reinvesting dollars that would otherwise drop to profit in the near term, we will do so if we believe it generates higher growth outcomes for investors. In the long term, there is no change to our model. We continue to expect non-GAAP gross margins north of 60% and non-GAAP operating margins north of 20%.
Let me wrap up. In doing so, I wanted to highlight a few key items. We have a large and growing addressable market and are delivering strong growth at scale. Our high-margin application services products are continuing to grow as a percentage of total revenue. We have a very diversified customer base across industries and customer sizes. Finally, we expect to continue to deliver elevated levels of growth at 30%+ for the next four years as companies continue to adopt our platform to deliver the future of customer engagement.
With that, we'll turn it over to questions and answers, and I hand it back to Andrew Zilli.
Thanks, Khozema. Like I said, we'll go ahead and go through the questions that have been submitted via the Zoom. We'll start off, the first question is actually the first two, are related to TAM. It comes in from Siti Panigrahi at Mizuho and Matt Stotler at Blair. What's driving the TAM expansion from $62 billion in 2020 to $87 billion in 2023, and how much of that TAM do you think is greenfield versus displacement? What level of penetration do you see in the major segments that we broke out?
There's a lot in that question. Let me just take a step back. I think what's helped us a lot is that we've been in markets that have been large and growing already. I think one of the pleasant surprises that we always experience when we work with our customers is that they continue to surprise us with many of the unique ways in which our platform can be used. They're always promulgating new use cases that we oftentimes don't even foresee. I think that's one aspect of the TAM expansion. The second aspect of the TAM expansion is our investment in new product categories. As I pointed out in my remarks, we started in programmable messaging and voice and things like that, and since then, we've gotten into areas like email, like marketing.
We've gone into the enterprise cloud contact center market with Flex. That's driven a certain amount of TAM expansion. Then I think the third dynamic, and this is perhaps illustrated by our relatively early foray into a vertical like healthcare, is that several of these verticals have not even really begun their own digital transformation journeys. As we continue to work with customers in some of these newer verticals, we're also seeing TAM expansion in that regard as well. Obviously, as we look at some of these TAM dynamics beyond our own experience, we look at what some of the external analysts and so forth put together in terms of the way that they're evaluating and analyzing the marketplace, and we use that to inform, in part, some of our investment decisions.
Great. Next question comes in from Will Power, and the question is, can you discuss the sources of upside to Q3?
There's not a lot, Will, that I can really say about Q3. We're not really providing any more details or comments outside of what was discussed during the presentation and our 8-K filing. We expect Q3 revenue to be ahead of the high end of our guidance, and we're still closing the books right now, and we'll share all those details with you when we disclose our earnings.
Great. Another question from Matt Stotler. 10 million developers is an impressive number. What is the total global population of developers that you think can use Twilio?
I think as we look at the marketplace, we obviously do have a very strong developer ecosystem, and we spend a lot of time ensuring developers have the best documentation and APIs, understand our platform, and can deploy use cases very quickly and efficiently. I think our developer community basically signifies the hard work that our developer evangelist team does curating developer mind share and ecosystem. With specific regards to the number, it's the number of developers that have signed up with a unique account, and so that could be an enterprise customer with tens or even hundreds of developer accounts, all the way down to a college student that's testing out an idea.
I'd also add that what doesn't necessarily put an upper boundary on that number, which makes it interesting for us, is that we're seeing more users on the Twilio platform that aren't per se software developers, but instead they're IT professionals, and are using products like a Twilio Studio and are able to avail themselves of our platform in that fashion. Hopefully that helps.
Great. Let's see, we have one from Marcelo Lima. Could you discuss to what extent you expect the adoption of 5G to accelerate the IoT business, and how big that business could get?
Yeah, we're very excited about the overall wireless business. We think some of the recent technology adoptions are definitely going to be accelerators. You probably saw, or hopefully you saw, and if you haven't, I'd certainly encourage you to watch Jeff's keynote from yesterday, where he provided a little bit more color in terms of what we're doing from a product perspective to ensure our success in the marketplace. IoT is a hard one for us to call because the market is so huge. I mean, the TAM on IoT alone is just massive. It eclipses even some of the numbers that we showed on this page. We've tried to kind of confine it down to wireless IoT only and some of the capabilities that we think we can add. It could certainly be larger than that. We have a great business today.
It's a relatively small business, so we're concentrated mostly on executing the business that we've got. Certainly excited about the prospects of that business in the future and think that we serve a massive TAM, and definitely 5G will be an accelerator.
Great. Our next question is from Ittai Kidron at OpCo. "While you post nice growth from the G2K, it still feels very low and under-penetrated. What is the barrier for greater progress here?
Thanks, Ittai. Excuse me, I was just taking a sip of water. I don't think there's a big barrier. I think it's just a function of time. George will be on in a few moments, to take Q&A as well. It's one of the areas that we've been making investments in. It's been a more recent investment, I would say, than some of the other areas we've been investing in. Generally, we're pleased with our growth in that market. We built out that go-to-market motion basically over the last couple of years. As we showed in the pitch, the enterprise contributes about 36% of core Twilio revenues, which is up several points. As enterprises look to digitally transform, I think our platform is going to gain prevalence, and it's going to become that customer engagement platform.
I don't really see a barrier other than time, and I think we just have to keep executing and we'll get there.
Great. Our next question is from Richard Valera at Needham. "Does your 30%+ for four-year revenue growth target mean 30%+ in each of these years, including 2021, or is it a CAGR?
Yeah. We're not providing specific guidance for every single one of the years in between, but we see an overall 30%+ number during that timeframe. I think we're still working out the details. We obviously have a forecast that we put together over a multiple-year period, but we feel good about being able to post 30% growth over multiple years.
Great. Next question from Matt Stotler: "Can you break out Flex specifically as a percentage of total revenue?
As we said, we're certainly excited about what we're doing on Flex already. In terms of breaking it out as a more specific number, I don't think we're ready to do that yet. We're very happy with the progress that we're making. As you saw in the pitch, that revenue rate is growing much faster than the overall business. COVID has certainly been a contributing factor in terms of digital transformation and contact center. We noted one of our largest deals ever. Andrew noted our relationship with Nike, that Jeff talked about yesterday. We continue to invest in the product, R&D, go-to-market, sales specialists. Look, we've been transparent in also letting you know that Flex is a relatively small percentage of revenue today, and it just doesn't make sense for us to break it out, I would say, at this point in the life cycle.
Great. Our next question is from Brent Bracelin at Piper Sandler. "What are the growth rates across usage versus non-usage revenue segments? Non-usage is 24% of mix, but back in 2017 was less than 10%. Could you walk through the biggest drivers of non-usage growth and growth rate year-over-year?
I do not have those details at my fingertips. Zilli, do you have any of that math with you? Otherwise, we may have to follow up on that one.
I don't, since my screen is up and sharing right now. Brent, I'll follow up with you, and get back to you on some of the details. From the non-usage percentage, obviously, that has some significant contribution there from things like SendGrid, right? Although we showed on the slide that SendGrid, the email portion, actually contributes to both usage and non-usage. A bulk of that is in the non-usage bucket. That's a big contributor there. Additionally, something like Flex, where we have pricing options that are based on seat counts versus agent hours are also driving some additional contribution to the non-usage part of that business. We'll follow up if there's anything else more specific that would help clarify that a bit more.
Hey, Zilli, before you go to the next question, I just wanted to clear up or add to one of the answers that I provided earlier in terms of our revenue growth. It is going to be 30% in each year. I wasn't as clear about that as I could have been. Just to add to that earlier question.
Great. Next question is from Nikolay Beliov at BofA. As you scale and have more purchasing power, could messaging gross margins go well beyond 45%? Are there ways you can alleviate structural issues that currently limit messaging gross margins?
I think that's certainly something that we look at. I think the general basis of your question is that, as we aggregate volume, would we get some sort of volume leverage? I think there is some truth to that. I think there's potentially some opportunity. I would encourage you to remember, there's still a lot of puts and takes in terms of what makes up the margin rate of messaging. We showed you some dynamics around international messaging, for example, that are a lot higher than, I think, what a lot of folks thought just based on the way that we broke up international. There are going to be puts and takes. I think in terms of our total, we feel good about being in the mid to high 50s. We feel good about our long-term model being over 60% in gross margins.
I think we got a lot of other products that contributed to it, and messaging over time perhaps could be one of them.
Great. Our next question is from Alex Zukin. When would you expect messaging revenue growth to normalize, and how important is bidirectional messaging as a growth driver near and intermediate term? What percentage of total messaging growth is outbound versus bidirectional today, and where do you see that trending?
Okay, there's a lot in that one. Let me start with just generally messaging. I think one of the things that we're clearly really excited about is that we had a great messaging business, and it had been growing historically really fast anyway. What we've seen over the last year or so as a result of partially COVID, no doubt, as a result of certainly a lot of hard work and investment into our products, that we've been able to re-accelerate it. We feel great about how that segment of the business is doing today, and I think we feel good about where that's headed, and that certainly informs the way that we're thinking about our belief around growth over the next several years.
We're not breaking out outbound versus inbound specifically, but more of it is going to be outbound, which is probably not surprising. We are very excited about Conversations, and I think it's a product like a Conversations, which really allows us to create that true customer engagement platform, which obviously lends itself to bidirectional communication. Pretty early days there, but we think that there's a ton that we can do, and as companies look to engage with their consumers, that's certainly going to be one of the features in the toolkit that they're going to build out to build customer engagement.
Great. Next question is from Nick Lawler. Are newer cohorts more, less, or similarly likely to start their journey on a higher-level service like Conversations or Notify versus the base messaging service?
Yeah, I'm not sure that there's a particular trend there. When we work with customers, first of all, there's a developer angle, right? A lot of it happens very organically, and depending on the particular customer that's working with us, they're simply solving for a use case. Our platform, the great thing about it is that it has all of the different building blocks that one needs to serve whatever it is that the use case is. I think what tends to happen is, we showed on one of the slides earlier, is that they start to grow with a certain product as they continue to build out additional use cases or potentially go into other markets. Beyond that, they start adding more and more products as we showed, and that leads to a net expansion rate expansion, if you will.
I wouldn't call out one or the other, but probably they start with some of our more messaging and voice-oriented products. I wouldn't say that there's a trend that persists through the business in that fashion. They could start with anything, and we are actively encouraging them to use whatever it is that satisfies their use cases.
Next question is from Alex Zukin. The 30%+ guide for four years is truly amazing. I guess, can you talk about the confidence to guide four years out, coming off of a quarter where you didn't have enough visibility for a full-year guide?
I think that when you think about the near-term dynamics versus the long-term dynamics, the near-term dynamics are a little bit more tricky, obviously. We're still navigating a global pandemic. We're still navigating a variety of different macro issues, obviously. It has been a little bit harder in the current year to forecast revenue. We're not unlike a lot of other companies that withdrew their annual guidance in Q1, just given some of the impacts like those. I would also say, in a model like ours, where 75%, as we showed, of our revenue is usage-based, forecasting in a particular period can be a little bit more challenging than in a standard SaaS business in the short term.
What we've done, and taken great pains to develop, is a long-range plan, and we are very confident that when we look out over the next several years, that we have the ability to execute against that plan. We talked about the massive market opportunity, and we believe in our own execution, and we believe that we can continue to deliver those very high levels of growth. Excuse me. Rather than just focus on the short term, I think this is a better way, honestly, for us to think about our intermediate term growth targets.
Great. Next question is from Derrick Wood. How much of your business is channel-driven or influenced today, and where would you like to get that over time?
I assume we're talking about partner-driven and stuff like that. Yeah. I think it's still a relatively small percentage of the business. It's obviously growing very rapidly. We think partners are going to play an important role. I would distinguish that there are two types of channel/partners. You've got ISV and SI. We've had great relationships with a number of folks who either are or act like ISV for a long time, and SI are clearly a little bit earlier as a motion for us. Being able to register a GSI, I think for us, was a great add to our overall partner ecosystem, and we're making great progress.
Great. Our next question is from Michael Turrin. Where are you in terms of international penetration? Mentioned 50/50 split on voice and messaging, U.S. growth has outpaced international year to date. Is there overseas appetite for the broader product set as well?
Yeah, there is. Just to maybe unpack that a tad, what we showed was in terms of the way that that traffic is sent or terminated. What we disclose when we break out our earnings after quarters is international based on the company's origin or company headquarters, basically. There's a little bit of a difference, just to clear up the question in terms of what we showed today versus what we historically show when we break out our earnings guidance between domestic and international for SEC purposes. In terms of our overall enthusiasm and investments in international, I think we're very excited about it. We feel like there's a lot of opportunity in a variety of markets. We've been very specific about investing in particular markets, one at a time on a kind of named country basis, if you will. We're very excited about international.
As I noted in the presentation, we're hiring in international markets at a higher clip, than we are in aggregate. I think that remains a really important area for us to keep investing in, and we're very excited about it.
Next question is from Marcelo Lima. We've seen the impressive cohort and DBNE data, but could you give us a sense of payback period on sales and marketing investments and LTV to CAC?
Yeah, we don't break out those metrics. I would say, as you saw from the slide that I provided, that we have a very strong ROI on our go-to-market investments. We remain very low in terms of that spend as a percentage of our total, and I think a lot of that is attributable to our developer-first model, and we feel great about the way that we've been able to spend money there and generate returns. I think, the proof of that is obviously in our elevated growth rates.
Great. Next question is from Meta Marshall. Does that gross margin given on messaging include the A2P fees?
Yeah, those numbers are all in. Yes.
Yep. From Alex Zukin. Video continues to grow off a very small base, I guess if you could look out over the course of four years, what percentage of revenue could that represent?
Well, we're just seeing a lot of activity right now in video. While we provided a forecast over the next four years, we're not providing a detailed revenue forecast by product over the same timeframe. What I will say is that you clearly have seen some tremendous growth in video over the period that we just showed. We're really excited about the product. It's getting great traction with customers. We are investing in it, and I think the notion of having an experience all within the context of your app versus having to leave and use some of the other products in the marketplace, ours is a lot more attractive, particularly when you look at some verticals like telehealth or e-learning, and we've just seen great traction there.
We're really excited about what we can do with it, but we're not breaking out products for the next four years.
All right. Next question from Nikolay Beliov again. What are the factors driving the 2020 cohort running higher than pre-2020 cohorts?
There's always a series of dynamics in these years. I would caution you to think about any given year as like having a particular story. I think 2020 has been just sort of a consistently strong year. We've been growing and expanding with our customers in every one of the cohorts. Even if you look back to 2011, customers there continue to increase usage and find new use cases that they can leverage. I think what we're seeing in the current year is simply a trend of what we've seen over a long period of time. I think, again, our investments in go-to-market make a difference here. Our investments in having really easy-to-use products make a difference here. COVID-19 obviously provided a slight tailwind, but there were some negatives in there as well due to some affected customers.
I'd say it's just part of a longer-term trend that we've been a part of for that timeframe.
Great. Next question is from Alex Kurtz. With your guidance of 30%+ growth over the next four years, how much will Flex contribute to that?
Yeah, again, we're not breaking out the revenue guide by product. We feel good about the way that Flex has been performing. We feel great about some of our recent wins on Flex. Clearly, application services is growing faster as a percentage of our total product suite. We expect it to continue doing so. On a relative basis, I'd expect that it does contribute more over time. Certainly that's part of what informs our long-term model around gross margins. All that said, we've also got a re-accelerating messaging business right now. There are going to be some puts and takes, my net expectation would be that it's a higher percentage, we're not breaking out products today.
Great. Next question is from Meta Marshall. Are there any single product customers in the million-dollar-plus annual revenue cohort?
Just to make sure I understand the question, or maybe you can infer it. Meaning, are there any of those customers that are just using one product?
I believe so.
Yeah. We typically don't break out what individual customers are doing. I'd have to go back and look at that data specifically to give you an answer. I just don't have that one at my fingertips, Andrew. Let's take that as another follow-up.
Will do. From Matt Stotler, "Roughly how many quota-carrying sales reps do you have today?
That's not a piece of data that we break out, and we did talk about that we have very efficient sales and marketing expense. We did talk about the fact that we've increased that number by 79% through the Q2. We try to give you a few data points around the significant investment that we've put into that portion of our employee base. That's not a number that, similar to any of our numbers, that we're not going to break that out separately in terms of our employee base.
Okay, next one from Siti Panigrahi. "How has your investment and product strategy changed since March from the pre-COVID world?
I think the interesting thing is that whether it's product strategy or anything else, I wouldn't say anything has had a markedly different focus. A lot of the investments that we talked about, frankly, back in January, which feels like ages ago, but from back then, we talked then about R&D investments being important. We talked then about go-to-market investments being important, and we talked about infrastructure investments being important. I think all of those have been areas that we've continued investing in basically at the same pace to the extent that we can. We have had a little bit more difficulty in hiring, as we've noted in the past, and it's just harder in some respects to do some of this stuff remotely. That's what causes us to kind of think that some of this stuff rolls into 2021.
In terms of product, if I was to highlight a couple specific items, clearly video, per the last question or two questions ago, that's certainly become a really interesting area. Just given the excitement that we've seen with customers, given the growth that we've seen with customers, I think that is going to be enhanced focus area for us from a product standpoint. Flex, given the enthusiasm that we're seeing with customers, the adoption rates, given some of what we noted even on today's call, I think that's going to be another area that we've been investing in. I don't know that that one markedly changes, but what we've seen is reinforcing, for sure, in terms of the product investments that we were making.
I think maybe it was a little bit coincidental, like having the HIPAA certification and being a big player in healthcare, I think that was important to us, and I think there may be some vertically oriented investment that we do there in that particular category, just because we think that's a good one. In general, I wouldn't say there have been radical changes in the way that our investment or product investment philosophy has evolved.
Great. Our next question from Derrick Wood, "Do you anticipate any directional changes in gross margin within each product area, particularly when you look at messaging and voice?
Again, we're not providing guidance on margins per product per se. What we tried to do today was give you all a sense of what are the gross margins in terms of each of these different products. We try to kind of give you them at a slightly more detailed level even on a scale in terms of international versus domestic. These things bounce up and down from time to time. Our kind of revenue mix bounces up and down a little bit time to time. There's FX, there's international dynamics. I'm not sure that I'd even be able to provide a really detailed answer, and we're not providing guidance at that level.
Great. Another one from Matt Stotler, "How do you think about 30%+ growth for the next four years as it breaks down between new and existing customers?
Yeah. I think one of the things that's been great about our model is that we've continued to expand at a really great clip with a lot of our existing customers. That kind of same-store sales metric, if you will, has done well. I do think it's going to fade a little bit over time. It just has to, given how large the business is becoming. I think we feel great about continuing to grow with a lot of our existing customers, and if you just think back to that cohort chart that we shared with you, and just reflecting on some of those 11 customers as they continue growing, I think we feel like it's going to be pretty balanced. New customers are going to grow with us. We continue attracting new customers at a really rapid rate.
We've got a really strong and super diversified base underneath that. I think we're in great shape there. I think G2K is another area in which I think we have a lot of opportunity to grow and certainly work with our partner ecosystem too.
Great. Next question is from Marcelo Lima, "What big picture question do you wish investors were asking you right now but aren't?
We tried to kind of tee this up in the beginning. I think that the focus of our messaging, which is not a coincidence, is consistent with kind of the way that we think about the company, and you should certainly ask Jeff and George about this during their sections too. We're very much oriented as we go forward around customer engagement. We think we have a platform with all of the winning capabilities that are required to help customers develop phenomenal engagement strategies with their consumers. What validates that for us every day is our usage-based model, which is maybe another area we don't get a lot of questions about, but our usage-based model that is kind of self-reinforcing.
When every day we show up for work, we've got to earn our customers' business, and the fact that they're using our platform more and more every day means that they're getting a great ROI out of the usage of our platform. Whereas perhaps before it might have been geared around specific communications, the reality is that we look at the marketplace all through the lens of how do we engage with customers, how do we allow our best customers and all of our customers to engage with their consumers and create the best experiences to be able to do that. I think in the big picture, that's really what this whole thing is about.
While we feel great about some of the underlying metrics, we feel great about our long-term model, we certainly have a lot of confidence in where we're headed, otherwise we wouldn't have said 30% over four years. I think the real story behind the story is customer engagement. I think that is the transformative thing that's happening. I think that's the secular tailwind that's behind digital transformation. That's what's going to create stickiness and great relationships with us and our customers.
Great. Next question is from Alex Zukin. Given the COVID tailwinds you have seen in the business this year, how do you think about comping those growth trends next year? Is there any reason why or why not, given the new customer growth this year with accelerated digital transformation trends, why DBNE would go up next year?
Again, we don't guide on DBNE, but I'll take the basis of the question. As I said in my earlier remarks, what we think is really interesting that's happened with some of the COVID tailwinds, let's say, is that if you think about a sector like a healthcare and education or e-commerce, what's great about those use cases that we've been able to deploy is we think that we are supporting what was already a secular tailwind, is now taking hold in those industries. Excuse me. We think there's very resilient revenue in those industries, and we think we can continue to grow with customers that we've landed there. The other dynamic is that there have been some negatively impacted industries, which we've discussed before.
Again, I don't know if it's going to happen next year or earlier or later, but we do think that the folks in rideshare, hospitality, travel, those industries are coming back at some point, and I think that's going to provide a nice tailwind for the business as well and allow us to continue growing. How it affects DBNE, again, I'm not guiding to that. We feel great about the numbers that we've put up thus far.
Great. I think with that, we will wrap up with Khozema, and we'll give about a minute of a break here, and we'll welcome George Hu, our COO, to join us for a Q&A session. I just cleared out the Q&A queue. For those that still had questions in there, we will try to get back to you or maybe cover those as we chat with you after we report earnings. If you have questions that you'd like to pose to George, go ahead and add those to the queue now, and we'll welcome George here in about a minute or so.
Okay, looks like we have a few questions coming in. George, just want to check to make sure you're with us.
I believe I am.
Great.
If you can hear me, then I am.
Indeed. All right, we'll go ahead and get started here. I guess actually first, George, if you just want to give maybe just a minute or two intro on what your takeaways from SIGNAL are this week and what you're excited about.
Sure. Well, first of all, it's great to be on this call with everyone. We're having a fantastic SIGNAL. I don't know how much of the conference you guys have been able to attend, I've just gotten great feedback from customers that are excited to do more with us. I think that's the main message, is that we are seeing this digital acceleration not just happening in our research, now we're seeing it confirmed in all of the meetings and reactions we're getting from customers. I think there's just a lot of excitement about our company, about the space we're in, and really about the potential to be long-term partners with our customers. Couldn't be more thrilled. Also I want to really thank our marketing team for putting on such a fantastic conference in the middle of very difficult circumstances.
Great. All right, with that, our first question comes from Alex Zukin. George, you guys have talked about adding enterprise reps well ahead of the growth rate. Maybe just discuss the trends you are seeing this year versus last in those larger enterprise Conversations, and can Deloitte and others be helpful beyond Flex deals?
Yeah. That's great question. Khozema walked through some of our growth in investment and distribution as well as our momentum in the enterprise and the G2K accounts and such, and I think if you look at the data, you notice that our ASPs are going up, and we are selling higher than ever before. I think you can see that even from the people that are speaking at SIGNAL. We have got two fantastic CEOs from Delta and Nike. We're able to access higher and higher levels in the organization, and we're having really a broader conversation. I think that what COVID really did for us is it really enabled us to have just a different kind of conversation for a lot of customers that maybe started with one use case.
If you look at Nike, for example, they started with relatively straightforward SMS use case with us a while back. Now we're having a very different conversation because, now we've got to empower our frontline employees, and we've got to transform our contact center, or we've got to add new channels with video, or we have to do contactless delivery and update our mobile experience. All of this rapid change and acceleration is causing a much more strategic conversation, which means, I think, the ability to sell more products, I think the ability to increase ASPs, the ability to build stickier relationships, and the ability to sell higher, which has honestly been the strategy all along. I think COVID has been an accelerator for that for us. I think that's also drawn interest to the GSIs, to the second part of your question.
I think that there's something correct about the question in the sense that I do think Flex has been a really concrete jumping-off point for SIs in general, not just GSIs. From the nature of all the Conversations we're having with companies now, there is no reason why we cannot broaden the SI work beyond Flex. In fact, even recently, I've been in a bunch of Conversations with customers who've brought in SIs for, let's say, video work, which is something that was obviously not as much on the radar a year ago. I do think that we're just at the beginning. We are targeting more GSIs than Deloitte. We view it as the first of maybe not a ton, but first of an important group of GSIs we want to bring to the table.
We couldn't be more thrilled with the progress, and I'm glad you guys can stop asking me when we're going to add a GSI.
Next question is from Michael Turrin at Wells. Can you talk about the Flex ecosystem announcement? Does that help unlock a certain sub-segment of the contact center market that was previously harder to reach?
Well, I think it's less about maybe unlocking a segment in the sense that we've always stated from the beginning that we thought Flex was a great fit for the enterprise contact center because of the nature of the build model, the need for customization. Those enterprise contact centers have legacy tools that they need to keep some pieces of those. They need to be able to integrate with those. It's something that we've seen, I would just say more generally, I think that the ecosystem will accelerate our Flex momentum. As we've been out in market for a couple of years with the product, we've definitely gotten feedback from prospects and customers that these types of integrations, out-of-the-box integrations, would accelerate deployment, accelerate or remove friction in the sales cycle.
I think it's a broad-based accelerator for Flex, more so than I would say it's targeted at any particular size segment or industry segment. I think it's largely a continuation of the strategy that we laid out, and I think that's one of the nice things that I've seen in my time at Twilio, is that the core pillars that we lay out, we stick to, and we grow with them over time, whether it's products like messaging, voice, or Flex, or it's pillars like enterprise or international. We take a long-term view and just continue to add piece by piece by piece to the strategy, which is great.
Great. Our next question is from Anouk Dey at Endurance. Hi, George. Can you elaborate on customers wanting to do more with us? Are new customers starting their journey with Twilio on different services, i.e., Conversations, than in the past? When new customers typically start, or when new customers typically started their journeys on messaging?
I would say that the historical pattern has largely been messaging as the Trojan Horse, the number one Trojan Horse entry point for Twilio. With the acquisition of SendGrid, I think it added another material entry point, which is email. Those two are, by just count of company, by far the two largest entry points for us. I would say that Flex, by count of company, maybe has not been the largest entry point, but it is bringing us into a new set of companies and decision-makers, ones that have not been thinking about a messaging solution per se, but a contact center solution. For 2020, video has been an interesting entry point. That's why I'm very excited about the Twilio Video WebRTC Go product.
I think that if we execute that correctly with our developer evangelism motion, that that could be a very interesting new onboarding vector for us. How that will play out as we get through the pandemic and enter more of the new normal, I don't know. What's really exciting now is that there are more and more vectors and dimensions for companies to onboard onto the platform.
Great. We have a couple of questions here that I'm going to combine together, one from Jeff Kvaal and one from Alex Zukin, just around the competitive environment with Microsoft announcing their Azure Communication Services. Just what you see as the evolution of the competitive dynamic, how we've differentiated against them and how that's changed over time.
I would say that, taking a step back and look at the big picture here, I was at Salesforce, as many of you know, for 13 years, we launched plenty of products. There's plenty of pure play companies that all did very well despite that. I think the reality is that, while we respect every company out there, we know that we are more focused on this space than anyone else, and we are putting all our energy into this like no other company in the market is. You see that in the breadth of our vision, the investments we're making, the platform, and the developer momentum. I think it's a little bit of a shame we're on a virtual conference versus a physical conference this year. I think you'd feel it even more, how much energy there really is around this company right now.
Over the long term, I think we're going to win by basically being against any particular company out there, by being more focused and really the things that we do really well: APIs, cloud, developer, breadth of vision, complete platform, and the quality of our people and the teams and the ecosystem we bring to that. I think those are all the core competitive areas we're going to win on. In the short term, I think right now, our understanding is they're pretty early days, and I think there's not a lot of comparison right now. We're focused on the long term, and we're not honestly focused on any particular competitor. We're focused on just the huge market opportunity in front of us and how we're going to out-execute and meet customer needs better than anyone else.
Our next question is from Ryan MacWilliams at Stephens. George, has your strategy to engage new enterprise customers shifted as a result of COVID? Have any products launched over the last two years particularly resonated with those customers?
I think that at a tactical level, obviously things have changed. We're not flying around on planes anymore. Different tactics you use in a video world at the top of the funnel get to get the meetings and move the cycles forward. I think at the tactical level, yes, there are some differences. I would say largely it's been pretty similar, I would say, in the sense that we have a set of plays that we've been using to get our foot in the door. A lot of them have historically, as I mentioned, been around messaging. Are we doing some more of them? Yes. As I mentioned, we have some new vectors to go in. A lot of them are also, frankly, just new use cases around the vectors we already had, like messaging, for example.
Whether it's contactless delivery or notifications around deliveries and things like that. I think it's largely accelerated the motions we have, with maybe a few new tactics sprinkled in.
Great. Our next question is from Will Power. Twilio Frontline looks like a very cool product. Can you talk about some of the early use cases and any early comments from customers?
Yeah. I think it's a cool product, too. I think it's really a great product that has been born out of, honestly, the evolution of the discussions we've had with customers out of things like our Conversations product, where there's been a lot of excitement around the vision. Customers basically wanted to lower the lift, frankly, to build some of the tooling and the end user application side of it. We're excited about it, and I think it's going to be very helpful in a couple of core use cases. Where are we seeing it? We're seeing it in retail clienteling. We're seeing it in wealth management. We're seeing it in that last mile delivery, logistics, things like that. We're seeing it in field service, so things like the Comcast technician type person who's going to come to your house.
Those are the four core use cases that we're designing around. Early feedback is good. Obviously, it's a newer product, so there's a lot of things they want, a lot of features and additions and things they want. At the end of the day, there's a lot of excitement around the product. I do think that I view this as part of a solution, and I think it'll complement Flex very well. I think this is a great way of fueling more parts of the messaging business and the Conversations product. I think I view it more as part of solution than maybe like a standalone massive revenue driver on its own. I do think it's going to be a cool part of the solution, as the adjective you used.
Great. We have a few questions. Again, I'm going to try to combine together various questions from Will Power, Ittai Kidron and Nikolay around the G2K. What are the keys to driving deeper penetration over the next several years in the G2K? What are the barriers to getting in? How do you think about the acquisition cost versus the pure developer-led go-to-market side of things?
Good question. I think the most fundamental thing you need is you need capacity. You need distribution capacity. You need people that are willing to go talk to customers. I think that's a lot of still, even if we're not traveling, it still takes time to build relationships and go through all of the process it takes just to get into an enterprise. To support that does take a different set of resources. Some of those are external to the company, like the GSIs, as we talked about already on this call. Also, we've brought in a set of things like vertical specialists on things like healthcare and financial services. We've complemented that on the product side with investments in things like HIPAA and other types of compliance and security and enterprise technologies or features.
Yeah, it is a different investment model to penetrate the enterprise. The return from that obviously comes from bigger transaction sizes. I think that the enterprise is the most fertile ground for us to sell our highest value of stickiest, most interesting products, especially around the application services area. Long term, I think the enterprise is the place that we're not just going to be able to get to seven, eight-figure type annual relationships, but also ones that have a really good mix of the types of higher level, higher margin services and products that we get more and more excited about in the company. I think that's a long-term payout for making that investment today.
Great. Next question is from Brent Bracelin at Piper Sandler. Given your background in scaling multi-billion dollar models at Salesforce, the 30%+ growth bogey would put revenue at $5 billion-$6 billion over the next four to five years. What are the biggest hurdles internally that still need to be addressed to scale Twilio from $1 billion+ to the $5 billion-$6 billion scale?
Well, I think that there's probably nothing I'm going to say that's too shocking in the answer. I remember when I was at Salesforce, when I was over there as COO, one of the first things I tackled was a big investment in systems, to really overhaul a lot of the systems that we had. I think a lot of things were being done manually. That's why I'm very excited about hiring Michelle Grover, our CIO. She is fantastic, and I think it's probably a sign of the things we need to do, the fact that she's our first CIO at this point in our journey. I think that's one. Obviously, we have to hire well, hire smart, and hire great leadership across the company, and especially in areas that are more nascent.
This is the time you bring in the builders for your global regions, for your key functions, for different segments. I think we've done a great job of that. We've got now, I think, some just fantastic leadership, especially, I can speak for the area that I'm more responsible for on the go-to-market side. We've got some phenomenal leaders that I think have a lot of scale in them. I think that plus investment in the systems and the processes are the keys.
Great. Next question is from Derrick Wood. Given how much the environment has changed and how you've seen demand for so many new use cases and initiatives come your way, how have you instructed the sales force to evolve the messaging, and what are you doing to shift to do more solution selling?
Great question. This has been a big area of focus for us to move away from selling APIs to really doing deeper discovery and solution selling. I have to credit our enablement team and our product marketing team. They've put together a fantastic program that we call Use Case University, where when I first started, our sales enablement was focused on, here, we're going to train you how to sell SMS. We're going to train you how to sell voice. Now we've moved completely away from that to, here's core use cases, both horizontally and vertically. Here's how you have these Conversations. Here's the questions you ask.
Even the way we hire people now, we put a lot more emphasis on finding people that are great at whiteboarding, great at doing discovery, great at having a very broad-based conversation with a customer, more so than let's just say straight technical acumen on how to understand our technology. I think that's just part of the natural evolution of the business, and we're still early days in it, but I feel really good about where we are, and the feedback from the field has been fantastic.
Great. Our next question is from Alex Kurtz. On the healthcare front, who are you displacing, and how much does that sales team need to be built out to capture the opportunity here in the U.S.?
Well, I think that who we're displacing depends obviously by product, and sometimes these are new use cases, sometimes they're existing use cases, so that's a pretty broad question to answer. I don't think there's anything massively surprising. I will say on the video side, what is interesting, or the telehealth side, what's interesting is, and I think it's part of a broader phenomenon we're seeing, which is even beyond healthcare, is that when the pandemic first hit, we saw a bunch of companies put in horizontal video applications, the ones that you and I use every day as knowledge workers to do meetings and try to use them for things like distance learning, telehealth, financial wealth management, exam proctoring, what have you. These horizontal apps were never purpose-built for these things.
Now people are taking wave two and coming back in and replacing them with more purpose-built applications, which is where you need a platform where you bring in your developers. I think that's a trend that favors us over time. If you look at some of the telehealth wins we've had, it's not that there wasn't an existing tool, but it was typically a not very customizable off-the-shelf video application. Then when COVID hit, things need to change, it was suddenly, uh-oh, we can't modify it, we can't change it. We got to turn to Twilio.
Great. Our next question is from Mark Murphy. Did usage revenue from the travel hospitality verticals actually contract materially during the pandemic, or were there enough situations such as Delta, in which they found new use cases for Twilio that they held steady throughout? If it did contract, when do you expect a full recovery?
Well, I think that we've already talked before in some of our previous earnings calls that our success broadly was due to, I think, a diverse customer base and diverse by industry, especially. I mean, broadly speaking, travel and hospitality was somewhat negatively impacted by COVID, and that was offset by gains we saw in other areas that we've already talked about. I think that's probably the broader narrative. We have seen some bounce back, it's probably what you would expect given what you see in the broader economy. I don't think there's a huge story there. I think as those sectors recover in the broader economy, we'll kind of generally go along with it. Our hope is obviously that while we're doing that we are going to also keep a lot of the gains we've gotten into these other industries.
Also, frankly, that we do really believe what we're saying about this digital acceleration, that it's not just this was a temporary thing and everything's back to normal. We do really think that a lot of things have moved from physical to digital and will continue to stay that way. When we talk to our customers, like some of the biggest financial services customers we have, they're not planning for the world just magically to snap back to everything's going to go back to physical again. They're planning on a huge chunk of that staying digital. That is, I think, what we believe as well.
Great. Next question is from Meta Marshall. You have noted hiring more contact center sales specialists, with most of those specialists being trained on traditional on-premise solutions. How has the process been of transitioning to more of a modular approach with Flex, and has there been a particular rep background that has been the most successful?
Yeah, we have a specialist model today. We're hiring a kind of like a Green Beret team, if you will, of contact center specialists, both on the sales side and as well as the technical sales engineering side. That's a way of saying that we're not hiring them in massive numbers, right? We're hiring, being very selective and able to, I think, really get the best of the best. It is a more technical sale. It's a building block product that requires developers. We definitely are looking for people on that side, especially on the SE side, that have a little bit more of that bent. By and large, we're able to find the talent we need, and especially at the volumes we're hiring them, because we are still largely selling Flex through the broader sales force and bringing the specialists as needed.
Staying on Flex, from Siti Panigrahi, are you seeing Flex as supplementing the current contact center solutions or replacing existing solutions at customer sites?
It's both. It really just depends on the customer. I think that what is exciting is that even when it is an augment, once people get a taste of it, people get an intention to really move to it more and more over time. There's, not the one on the slide, but there's another insurance company in the U.K. that, during the pandemic, had to move everyone home, all their agents home. They were on a Avaya system. They had to do it in two weeks. They had to do it on Flex because they just couldn't do it on Avaya. Now that their CIO, their CTO have gotten a taste of Flex platform, there's definitely a strong intentionality now to move more and more of that Avaya stack over to Flex over time. I think that's the playbook.
Over the long term, our intention is, of course, to win the entire contact center business for these customers.
Great. We have a couple of questions on Frontline again from Guy Tartakovsky and Drew Frank. The question is really around, how do you think about the decision to invest resources into selling a more packaged solution like Frontline versus letting the developers create the solution themselves? Are these more packaged solutions likely something that they should expect to see more of?
Yeah, I think it's a great question. One of our core values at Twilio is to wear the customer's shoes. One of the things I really like about our culture and our philosophy is that, yes, we're great at APIs and we're a platform first. Of course, that's true. We're not truly dogmatic about these things. Our job is to serve customer needs. We as a platform, Frontline came from, as I mentioned, a lot of Conversations with customers talking about both our, a couple of years ago, just using SMS in these types of use cases, to then maybe using Conversations, and learning that there are a set of builders in the world that want to do this part of the work. At the end of the day, they really want to focus their time and effort on the things that are differentiated.
The technology in Frontline is something that we saw a lot of customers recreating the wheel. How do you build a mobile app that enables people to do messaging and handle kind of just the basics, was not something that we felt like was something that customers were going to build a lot of differentiation in. We want our customers to focus their development resources on the things that really give them value and differentiation. That's similar to the approach we have with Flex. If listening to our customers brings us to more and more things that look like Frontline, so be it. That's great. I wouldn't read into this that we've made some fundamental psychological shift and now we're going to go do a lot of apps suddenly.
I think the consistent theme is listening to customers and going where they take us.
Great. Excuse me. Another question from Brent Bracelin. How ambitious are the M&A aspirations to augment growth and expand the portfolio, given the increasing success and popularity of other API models like Postman and Zapier, kind of against the backdrop of Microsoft? Why or why not would you look to be more aggressive in consolidating the best APIs?
I'll go back to what I just said. I think that we have great organic growth. It's not like we have to do any particular acquisitions to hit a particular growth number like maybe other companies think about it. No, we're focused on what customers want. We want to create the world's leading digital engagement platform. That's what we want, that's what our customers tell us they want. That's what we think is the big, untapped, underserved opportunity in the market. To the extent that we can do it by building things, we'll build it. To the extent we can accelerate that by buying things, we will.
I don't think it's a view of, well, we should get every API company and acquire them. I think it's that we've got to become a great customer engagement platform. Let's do whatever it takes to go do that.
Great. Next question is from Greg Terry . How does the product roadmap look today versus five years ago? Do you feel like you've tackled more of the known opportunity than years past, or does it just continue to expand?
Well, I think one of the super interesting things about Twilio is that when I joined the company 3.5 years ago, we were pretty much known for a voice API and an SMS API. At some level, you could say, well, that means that all the rest of communications is open to you, so maybe you could argue there was more opportunity back then. I view it very differently. I think that while theoretically the whole market may have been out there, what's realistically achievable, a lot of it was three to four to five steps away from where we were. It was just too far away to really realistically think about executing it.
Now that we have email, now that we have Flex, now that we have Autopilot, the things that are now only one to two to three degrees of separation away from where we are today are actually much greater. I think that it's much more strategically interesting today than it was even back then, because the art of what's realistically possible for us is exponentially larger now, given the surface area of what we have, and still against the backdrop of a massive untapped market opportunity. I think there's never been a more interesting and wide-open time for the product possibilities here at Twilio.
Great. Next question from Alex Zukin. George, when you look at the 30%+ four-year growth guide, what gives you personally the confidence to be able to deliver that number in year three and four that may not be so obvious to investors at first glance?
Well, I think you got to talk to customers. I think that when you talk to customers and you ask them how far are they down on their journey for where they want to be, the vast majority of our customers say they're just scratching the surface. Most companies out there, even the biggest enterprise in the world, are still wrestling with some of the most fundamental questions in customer engagement like, how do we even understand who my customer is? We're certainly not in the eighth inning of a problem that's almost solved. We're at the beginning of a big opportunity that's unsolved.
I think as long as that demand is there, or that need is there, excuse me, and as long as you fundamentally believe that digital engagement is the way we have to reach our customers more and more, which I see and I believe personally, and I see it from our customers. I think that the market's big enough to support that kind of growth, and then it just becomes about execution. I think we're doing the right things on that side. We're investing, and we're thinking long term. When this pandemic first hit in March, we did not pull back our hiring plan. We kept going, and that was intentional.
I think decisions like that and mentality like that and mindset like that are what gives me confidence we'll do the right things to also keep that growth going years three, four, and five, versus panicking and doing things based on short term.
Great. Next question is from Derrick Wood. How do you think about the opportunity for messaging services within the internal IT or internal business communications landscape? Is that an area you intend to focus more on in the future, or would you rather stay predominantly B2C focused?
I think that we've got a long way to go in terms of business to consumer communications, business to consumer engagement. I think that is where our value proposition plays best, because where our approach, where our model shines is when you need developers because you want to do something that's unique and different and differentiated. By and large, B2C is all about that, whereas internal, let's say, employee-to-employee communications, do we have use cases for that? Yes. Is there an opportunity for us there? Yes. Is it our absolute sweet spot compared to B2C? Probably not. You probably want to be able to, when you go to a new company, figure out right away how to use the tools because you don't want them to be highly differentiated from the last company's tools. I think that's how we think about it.
Now, look, if our customers say to us, all say to us at the end of SIGNAL, "This is all great, but what I really need is a new way to actually facilitate employee-to-employee communication," maybe we'll go have that conversation. I do think that Frontline could open an interesting door there for us, certainly that's not the focus for the company right now.
All right, next question is from Guy Tartakovsky. With 97% of customers saying digital transformation accelerated by six years, do you see higher top of funnel interest, higher pipeline coverage, shorter sales cycles, et cetera, and do you see more C-level engagement?
There's a lot of detailed questions inside that one question. For sure, during 2020, we've seen definitely spikes in top of funnel engagement. I would say, especially earlier in the pandemic, although we still see very healthy top of funnel growth right now. That obviously makes its way through the funnel, and we feel good about our sales productivity numbers at this point, and I think Khozema talked a bit about that. It's one of the things I've been very excited about since our last Analyst Day years ago, is that back then we talked about good sales productivity, and I'm excited that we've invested as much as we have in capacity, and we can still talk about good sales productivity. I think that's just very exciting.
Andrew, I feel like I'm missing the very last part of that question.
Let me go.
Maybe I didn't.
Let me just scroll through again. Just are you seeing more C-level engagement?
Right. That's right. Absolutely. As I mentioned earlier, we're seeing. I don't think three years ago there was any way that we would've gotten the CEO of Nike and/or Delta to be coming to SIGNAL. I don't know if you remember SIGNAL from 2017, I do. Quite a different type of experience than what we're doing today, even in a virtual world. Really excited about the maturity there.
Great. Next question is from Mike Walkley. On the competitive environment, how rate sensitive are buyers? Once a use case scales, what keeps a customer from moving to a lower priced competitor or platform running on an owned network, et cetera, and do you see this happening at all? If so, how do you fight back?
I would say this, by and large, the vast majority of customers that we talk to understand that, look, like everything else in life, at higher volumes, generally, people get different price points. I think that's true for us, it's true for everyone. It's true for all software. It's true for the company I came from. The exciting thing is that when I talk to customers, by and large, they say that their strong preference is to stay with Twilio, right, all other things being equal. Our job is to listen to our customers and make sure that we are with them and, for the core products we use today, make sure we're recognizing it when they do have growth with us and making sure that gets factored in.
I do see us get consistently a premium in the market because people value the breadth of our platform, the quality of our delivery, the quality of the APIs, the quality of documentation, the whole experience. Our job is to expand the usage over time. As we expand our relationship, as we sell them Flex or Authy or other technologies out there, it's like anything else in life, the relationship gets deeper and stickier and all the kind of things you would expect. That's our job. By and large, people really are positive on the experience they have with us. By delivering that great customer experience, I think that gives us a huge edge in long-term customer retention, and you see it in our churn number, and you see it in our DBNE numbers.
We couldn't get those numbers if we weren't able to retain our customers and grow those relationships.
Great. Our next question is from Anouk Dey . What was the thought process behind pricing the Video WebRTC Go product at a free level?
Well, we view that as a way of really going for it in the video product in the sense that we are seeing big growth in the video product, but there's a huge untapped universe of developers that are basically trying and experimenting and prototyping on WebRTC. Rather than just focusing on short-term monetization, we want to grow the pie as big as we can, and we think the way to do that is by onboarding a lot of these developers that are in their prototype phase and telling them, "Hey, you can do the same thing that you're doing over just on your own, but get a ton of benefit, have it run with a lot of the problem solved, and also still do it for free."
I think this is probably the best marketing, at least in our minds, that we can do for the Twilio video product. Obviously, time will tell, and we'll see how it plays out, and we'll adjust as necessary. I think it's a smart play, and we're excited about it.
Great. Our next question is from Mike Latimore. The Conversations API was a big focus last year but didn't seem to be as big of a focus among sessions this year. How is interest there? When you look at some of the larger Flex deals, how many of them involve things like just voice or being more messaging centric?
I think that there's kind of a bunch of questions wrapped in there. On the Conversations front, we are seeing interest in Conversations. I view Frontline as honestly a natural evolution of Conversations. I think the fact that we're coming back and talking about another product in this, it's really Conversations as an app is how I think about it, I think speaks to the level of demand, at least, that we see from customers for this. In terms of Flex. Part of the core value proposition for Flex is the omnichannel value proposition, customers come to us for that. Obviously, they don't go and roll out six channels day one. They typically start by getting their feet wet with one channel, add them over time. I just had a meeting with one of our early Flex customers, who started with us on the voice channel.
Their vision was always to go to messaging. As of today, they've already moved 42% of all of their support load to messaging, and their forecast is within the next six months, they're going to move it to north of 80%, almost closer to 85% messaging. I think that speaks to where we see the direction of a lot of our customers going, which is, start on one channel, and then add the next one. Oftentimes, messaging is first or second on that list. Yeah, we really do believe in this messaging-based modality for engaging customers, and I think you see that in Flex, I think you see that in Conversations, and you see that in Frontline.
Great. Next question is from Marcelo Lima. "Twilio Showcase lets customers contact partners, but do you plan on building a curated app store where customers can buy and use apps built by other developers?
I think that's probably a better question for Jeff. I think it's a more straight product strategy question, and I think he's coming up in five minutes. I'll let him tackle that one. I will say that, having been at Salesforce for the AppExchange, I do strongly believe in the power of ecosystems. I think that Flex is exciting because I think it gives us really that first center of gravity to build an ecosystem around. I think there's a lot more opportunity there. I think I'll let Jeff give you the bigger picture there.
Sounds good. I actually think the remaining questions are also more product and R&D focused that I think would probably be better held for Jeff.
Great.
For now, that is it. Thank you, George, for joining us. Really appreciate it.
All right. Thanks, guys. Enjoy SIGNAL. All the best. Bye.
We'll be back with Jeff in just about two minutes. Go ahead and, if you have more questions that you'd like to submit for Jeff, go ahead and do so, and then we'll get started in a few.
Okay, I think we'll go ahead and get started. Jeff, are you on with us?
I am. Can you hear me?
Yes, absolutely. Thank you so much f or joining.
Fantastic. Thank you, everybody, for being here today. Appreciate it.
Jeff, I think we'll just get started with maybe just a high level, and it actually kind of covers one of the questions. What are you excited about that we announced at SIGNAL, and what's your takeaway from yesterday and today?
First of all, just say I'm excited to have SIGNAL in this virtual format. Obviously, this year's thrown curveballs to so many people in the world, and to be able to get our community together, investors included, to really be a part of Twilio's story and what we're building and what our customers are building, for everyone to learn from each other, especially when customer engagement, digital engagement, software agility, cloud scale, these are the things every company is working on. To be able to get everyone together under one virtual roof, if you will, is something I'm so excited to be able to do, and I'm really happy with how the team executed. I'm really excited, actually. It's a small thing, but the fact that our team really stepped up and built the Twilio event platform using Twilio is such a cool thing to be able to do.
Maybe we wouldn't have done that if it wasn't for the virtual SIGNAL, so that's a neat thing. As far as the product stuff that we've been investing in and that we announced at SIGNAL, there's so much to be excited about here. First of all, the Twilio Video WebRTC Go, I think is a really important product. Obviously, video is seeing such a tremendous growth right now because of work from home and COVID and contactless everything. This product is really going to help onboard a new level of developers to the product because WebRTC is open source. It's built into every browser, so there's APIs essentially built into the browser that you can use that are free if you don't need sophisticated use cases. In some ways, we're competing with just sort of open standards, what's built into the browser.
What I like about WebRTC Go is that we're enabling developers who are lured by the app, but who will then encounter all sorts of hard problems that they need to solve if they go that route, now can get started using WebRTC for free using our toolkit. Then when they realize there's all these other things they might want to do, or their use cases get more sophisticated, they've got a path to continue to grow using Twilio instead of going down a dead end and then having to figure out what to do once they hit all these obstacles at some point.
Event Streams, I think, is a fantastic product, because it's really unlocking the engagement data that Twilio has in a really streamlined way that can enable companies to use all the data that Twilio has about how customers are engaging with them using all of the channels that Twilio provides, in a really interesting and novel way. I think Event Streams is great. I'm excited about the Flex ecosystem and the Deloitte partnership that we announced last month, but really put forth at SIGNAL in a bigger way. The whole ecosystem we're building around Flex is exciting. Of course, Frontline. I think Frontline is a really exciting product for us because, I think Simon said this in the keynote yesterday, but basically there's more non-desk workers in the world than there are desk workers.
When we think about people engaging digitally, a lot of people think about sitting at a desk and at home and using tools like Zoom to talk to each other or to collaborate with customers, and that's the world a lot of us live in, yet there's more people who aren't at a desk in the world than there are in the world. What Frontline allows us to do is to empower those frontline workers with an app and empower companies who employ those people to really quickly build and deploy the right solution for all those people who are on the go, whether it's the service technicians in the field, the delivery drivers, the retail employees, the healthcare providers, people who are out there actually working with customers can now digitally engage with those people as well.
I think that there's going to be a lot of new use cases that we start to see emerge now that we've lowered the bar and made it a lot easier for companies to roll out those types of engagement scenarios, not unlike what we saw John Donahoe talk about yesterday, that Nike has rolled out using Flex. I'm really excited about the set of use cases that can emerge when we turn every frontline worker into someone who can now safely and securely engage with customers over a wide variety of mediums and platforms.
That's great, Jeff. Super helpful. I think we'll just jump into some of these questions. You mentioned actually the conference solution that we built, and question from Alex Zukin was sort of around that. You guys built your own virtual conference solution, which by the way, was slick in only three months.
Thank you. Thank you, Alex.
I guess at what point can you field a team like Ignite or Inspire, which I think are our Salesforce and Microsoft-like teams, kind of take it into the Fortune 500 companies to figure out their major customer engagement pain points and help them build on top of Twilio to solve those problems?
Sorry. I think I kind of missed the bridge from the conference platform that was really slick to what the question is.
At what point could we build a team similar to Ignite, which is a team that Salesforce has? Basically, a team of people that go into a Fortune 500, help them figure out the major customer engagement pain points, and then help them build that on top of Twilio.
Well, we actually already do that. We do these workshops with customers already, and we have a team who will go in and essentially do the sort of whole whiteboard design ideation phase with customers, and really imagine, we like to say, the art of what's possible, right? We've been doing that for several years now, and I think that works out really well. When we go in with a customer, we show them what's possible with Twilio, and we, instead of just sort of try to sell to them, like, "Oh, here's all these products," you go in, you say, "Okay, what are you trying to solve for? What's the customer experience you're trying to build in your dreams? Let's map it out.
Let's put it on a whiteboard, and then let's map the journey to how one would go about building that. Because usually building, it's not all one and done. It's a journey. You build the first part, and the second, and the third, and it's iterative. We'll help them map out that approach. When we do that, I think we find that customers are excited about what we're able to ideate with them. I think we land more pipeline. I think those deals tend to be bigger, and the relationships are certainly better because we're seen as a trusted advisor helping them grow their customer engagement strategy, as opposed to just a technology vendor. That is something that we've been doing for a couple of years now quite successfully, and I think as we see success, we expand on those types of initiatives.
Great. We have a number of questions in here that kind of revolve around the M&A topic. Thomas McGannon at Whetstone said you guys called out some marketing tech opportunities when you did your last equity raise. Could you pick up that conversation and kind of help think about the future up-stack market opportunities? Other people have asked about where filling out the product portfolio and some of the larger bets versus where you might think about tuck-ins, things like that.
Yeah. Thank you for the question. What we tend to look at is where is our product roadmap taking us? That's basically where are customers pulling us? Where are the big problems that customers are telling us and showing us with their actions that they need big problems solved? Therefore where are we going as a company? When we see opportunities to accelerate that roadmap in solving the problems that our customers need solved through inorganic means, those are the types of opportunities that look attractive to us. We're always running the active game board to look at the variety of companies that could be out there. When I think about it, there's the category of things that are in the AI and ML space that can make use of a lot of the data that Twilio has to unlock new outcomes for customers.
There is capabilities as we grow internationally. We've done a couple of small tuck-ins to grow our international footprint. Then there's the Engagement Cloud. When we look at the Engagement Cloud, what we see, because of how customers build on top of us, is that there are major problems out there with the status quo and how companies have to stitch together various apps in order to have a coherent customer strategy. They're looking for a new way of doing that.
That's the observations that led us to build Flex, to build a more flexible, in the cloud solution that allows developers to go in and really integrate Flex with other systems and build a much more integrated approach, not be locked in to the features and functionality that were in the box when it got delivered to them, but rather to take that as a baseline and then go innovate on top of that. Companies who innovate in the eyes of their customers and the things that customers experience, those are the companies that tend to win. When we look at that playbook that we did with Flex, we are seeing opportunities to go serve customers across a wide variety of areas. We have talked about marketing.
We see a lot of companies building new marketing solutions on top of Twilio, either the SendGrid APIs or the Twilio APIs, in order to engage with their customers in the marketing stage. We're curious to hear why it is that customers want to go build new solutions, why the legacy marketing clouds may not be cutting it for them. We also want to hear about other parts. I think we've started, one of the things we've talked about in the past is field service is an area where a lot of companies are building on top of Twilio, and I think Frontline actually starts to get at that problem domain.
These are just all areas that in the fullness of time, our roadmap entails that as we hear these problems, we feel an obligation in many ways to our customers to go solve the problems that customers have in the world. We have this great vantage point to see the areas of customer engagement where every company struggles, because they use our platform to go build a better solution on top of it. When we see those opportunities to serve our customers, those may be accelerated by some inorganic means. No specifics obviously to share, but we're always running an active game board to ask how can we accelerate.
Great. Our next question is from Ryan Koontz. "Jeff, how do you expect RCS to roll out in networks and consumer devices, and how will this affect Twilio's core messaging business?
Thanks for the question. RCS is interesting. It's exciting in the sense that RCS enables a whole new set of capabilities inside of the messaging app, right? If you think about the world, it's like, well, there's certain things you can do in, say, Facebook Messenger or WhatsApp, and then there's the sort of the dumb universe of SMS, if you will. That's because the SMS protocol is, like, 40 years old. What RCS is really an upgrade to the SMS protocols to give it some new tricks, to enable commerce to happen inside of SMS, to enable photo carousels and advanced capabilities and recommended next action buttons that make it really good for bots and marketing and all sorts of interesting things. There's a lot of excitement about the potential of RCS.
The challenge of it is that you have to convince what a few thousand carriers around the world to upgrade systems, to adopt the same standard, to not deviate from the standard as they roll it out, and to build an inter-operating and working ecosystem. That's a big lift. Carriers to get that level of cooperation typically takes a lot of time. While we are excited about the technology of RCS and what it can unlock for our customers and new use cases, like doing commerce straight inside the messaging app, we know that it's a long road to get there. What we're doing is we're working with our carrier partners.
We are having active Conversations to understand where they're at in the process, seeing how we can help, seeing how we can be a part of bringing the B2C, like the businesses who want to engage with customers to the table, because I think carriers first instincts in something like RCS are to think about the consumer to consumer, so you texting with your grandmother, let's say. That's the first instinct that they have, and what we are a great partner for is we have this great ecosystem of more than 200,000 companies who are using Twilio to engage with their customers, and so we bring that needed perspective as well. It's a good collaboration. I just think it's a long road, and I think the carriers kind of acknowledge that. They see it too. We're cautiously optimistic about what RCS can bring to customers.
We also know that it's a long road to get there. As far as other impacts, it's a carrier-provided product, and it will have, we expect, economics similar to SMS. We believe that essentially we'll be able to unlock all of our carrier relationships are a great asset here, and that we'll be able to unlock more capabilities for our customers to do business inside of messaging. It's an economic model that is quite similar to the one that we have with SMS.
Great. This is a question that came up for George that we think was probably better suited for you. Twilio Showcase lets customers contact partners, but do you plan on building a curated app store where customers can buy and use apps built by other developers?
Oh, great question. You should have asked George that. It's a great idea. Obviously, the idea of being able to seamlessly buy a solution from a third party, plug it into the Twilio platform, and line it up with some simplicity is an attractive idea, and I think an ecosystem like that is definitely an interesting one. It seems like we are on the first steps right now of trying to create that ecosystem of giving partners visibility, enabling commerce to happen. I would say that an ecosystem like the one you describe is certainly of interest, but we're at the early stages of building a platform that's capable of creating that kind of ecosystem.
Great. Next question is from Mark Murphy. Are customers asking you to provide them a customer 360 type of capability, not just across messaging, voice, and email, but a central repository to understand customers across all other contact points like website, CRM system, e-commerce, et cetera? Is this an opportunity that's attractive or better to hand off to others?
That's a great question. If you want to engage your customers, you need to know a lot of information about your customers, and you need to not just treat them like a row in a database, but you need to personalize and individualize those communications to make them relevant. As we talk to customers about their customer engagement strategy, it's true that a lot of customers are saying they're struggling to build a cohesive picture of their customer. We are hearing that as a common problem that a lot of companies, especially bigger ones with myriad systems or they've integrated acquisitions of their own, they struggle to get all these systems talking together. It is a pretty common problem that we see out there in the world.
Great. Next question is from Brent Bracelin at Piper Sandler. It's kind of a positioning question. You've gone to customer engagement platform from a communications cloud. How should we interpret the product messaging that has more recently centered around customer engagement? Have you refined the thinking around what parts of that communication stack you're going after?
Well, if you think about, we started life as a communications platform, and that's obviously where we began this journey. What we've come to realize over the course of the last 12, 13 years while building Twilio is that the most strategic communications that a company has are those that it has with its customer. That comes from observing how customers are using our product. You think about there's all sorts of things that companies could have built using Twilio but didn't. There's all sorts of things that they have gone crazy building. When you really look at the pattern, the things that companies really feel the need to innovate on is in their B2C communications.
How you use everything you know about your customers and how creative you are, how well you listen to your customers and understand their core problems, and then go build that in a way that touches customers, that makes their experience better. That is one of the most strategic things that companies do. As we've taken and layered the next thing on top of our communications platform is a customer engagement platform to use our communications in the way that our customers are already showing us is most valuable, but helping the customers to accelerate their building and to get even better outcomes and to integrate these various parts of their customer engagement together. I see this tremendous opportunity in customer engagement that is additive to our opportunity in communications itself.
As you think about the story arc of the company, I think act one is communications, and act two is realizing how a particular kind of communication is even more valuable and is much more strategic than some other kinds of communications. We're double-clicking there, and that's where layering on act two of the company. We couldn't be more excited about that, and I think our customers are, too. If you look at the proof points, several years ago, before we started talking about customer engagement is really what this is all about. I don't think you would've had John Donahoe from Nike on stage talking about Nike. I don't think you would've had Ed Bastian at Delta talking about Twilio. Sorry. You wouldn't have John Donahoe talking about Nike because he wasn't there four years ago. You get my point.
You wouldn't have CEOs of Fortune 500 companies talking about the importance of Twilio to their business model when it's communications, now that it's customer engagement, it very closely aligns with some of the most important projects that are happening inside of companies. This is something we've been talking about for several years on earnings calls and in my shareholder letters about how customer engagement is one of the most strategic activities that every company is doing. The way we've been building our platform over the past several years is very well aligned to that, you see it in things like our SIGNAL keynote, where we're now really reaching into the C-suite for people to sing our praises, I think that's fantastic.
I'm so glad to be partnering and working with those types of people on some of the hardest problems that these big, very sophisticated and impressive companies have. I'm so glad to see that we can be a partner and be thought of that way.
All right. Next question is from Matt Stotler at William Blair. Do you plan to add the conference solution that you've built here for SIGNAL to your portfolio of customer-facing products?
I was waiting for the question. I don't know. I haven't looked at the code. I wouldn't be surprised if it's one of those, use it once type of code bases but I have no idea. Our team, when you build a team of people who love code and love to innovate, and you hand them a problem like, okay, we need to do a virtual conference in three months, and we need to make it as good as the in-person conference and as compelling and as engaging. We actually set the goal. We said, "We want to be the best virtual conference of the year." Our team really took that mission to heart. I'm incredibly proud of what we did. I don't think we built it with the desire to actually productize it. That feels a little bit probably off the beaten path for us.
Yeah. You never know. Maybe we'll get a lot of people inbound into us. I wouldn't be surprised if there's an opportunity somewhere in our queue right now, like, "Hey, mind if we use this?" I don't think that's why we built it in the first place.
Next question from Marcelo Lima, how much R&D effort is being made by Twilio to integrate the various solutions, for instance, email, Flex, SMS, or does most of this effort come from developers?
That's a great question. This is obviously an area where we are working with customers to understand how they want these things integrated. Sometimes it's in things like Flex. When you spin up a Flex instance, it's got all the channels right there in it. Other times it's more like at the API level, like when you think about the Conversations API, like it can pull together multiple different mediums into one sort of unified API. There's a lot of different ways you end up expressing this idea of the channels coming together. Absolutely, we are working with customers understanding what that means to them, what are the types of problems that they want solved in a cross-channel or omnichannel way.
It's not like a one and done, like let's just throw all the APIs into a soup and stir it, and you get the one mega API out. I think it's really taking what we have, talking to customers, and often learning from a lot of the early customers that we have about, oh yeah, we put together email and messaging and all this into this type of solution, and learning from them about, essentially what are the parts that are unique to their business and which ones really aren't, and which ones they would have liked us to pre, essentially bake for them. That is obviously an area where we are investing a lot of energy. When you say, are you going to do it? Well, we have been doing it. We've been doing it sort of all along.
It takes different forms and different products, but that's absolutely the sort of fusion of these channels and making it so customers can build once on our platform and not have to worry anymore about this channel or that channel, or having to expend a lot of new engineering work when a new channel comes along or a new capability is added to a channel. That is certainly part of the core mission, and that's what we've been doing with a lot of these products we've been launching for the past several years.
Great. Our next question, is not surprisingly, around Microsoft's recent announcement, with Azure Communication Services. Curious about how you see their ambitions in the market over the longer term.
Yeah. Thank you for the question. I'll give you the same answer that I've given over the many years, whenever a competitor has enters the market. Like when Amazon started building communications products several years ago, when Google did, when Facebook did, even when I remember when BlackBerry dropped a press release on the morning of, I think it was our first public earnings call, that they were going to go take down Twilio. It's sort of the same answer. First of all, it's a huge market, so of course there's going to be competition. That doesn't worry us because second, we're no stranger to competition. The reason we continue to grow so quickly, despite various kinds of competitors we've had over the years, is our differentiation and our focus. It's in the breadth and the depth of the complete product suite we have.
It's in our relentless developer focus. It's in our Super Network and building that flywheel, which continues to grow, which you've seen, by the way, has been on fire lately, fueling that acceleration of growth, especially in messaging. Last, I'll close with, we really don't focus on competitors. Like, yes, we're smart, we're aware of the competition, sure. We focus on customers because they guide the way, and I think a mistake that a lot of companies make is they focus too much on competitors, as opposed to focus on customers. We focus on customers, that's what we're doing, and we're going to keep building. It's a big market, and so I don't really particularly worry about any one company entering the space, just like I don't particularly worry about any of those others who have entered the space over the many years.
Okay. We have a couple questions around your keynote yesterday with the demo of OpenAI writing TwiML code. Guy Tartakovsky and Alex Zukin both brought this up. Is there a broader opportunity to build sort of a no-code, drag and drop AI-based solution, to expand TAM opportunities and how are you thinking about maybe even monetizing an AI-based product?
Yeah. Well, I think to address the specific example you gave, I am a big fan of low-code and no-code solutions. That's why we built Studio, that's why we have Functions. There's a lot of different ways that gets expressed already in our product. I think that there's a tremendous opportunity to continue growing that area because I think code should fundamentally, building, I should say, should be accessible to a wide variety of builders inside of a company. You don't need to necessarily be one of the whatever 30 million professional developers there are to build things, especially relatively straightforward things. I'm a big fan. I like to say there's three types. There's low-code, no-code, and yo-code, just for the people who love to write code. I am a fan of that.
Whether AI is going to be the thing that does that, it's very early days, and people, since GPT-3 came out, there have been people experimenting, as we did on stage, with the idea that GPT-3 might be able to write code. Look, it can pull off a few simple tricks today. I think even the folks at OpenAI would tell you that, look, this is not ready for prime time, and probably won't be for a very long time. It can pull off a few interesting tricks. Where it goes, nobody knows exactly yet, but the idea of actually unlocking the ability to build low-code or no-code solutions is definitely something that we're very interested in.
If it turns out that some advanced machine learning is able to take some simple things and pull them off the shelf and put them together, that would be really neat. I think we're probably still a fairly long ways off from that, to being like building compelling business solutions.
All right. Next kind of set of topics. There's a few questions here that I will not inundate you with all at once, but, it's around IoT. From Meta Marshall, with increasing evolution towards customer engagement, how does IoT fit into that vision? Are those generally disparate customer sets?
The IoT world and the customer engagement world are a little bit different from each other. First of all, you've got different types of developers. Those are sort of the more hardware-y oriented folks, which is different from kind of pure software folks. The development life cycles are different. When you write software for some cloud service, you write code, you put it through your test suite, looks good, it might go out that day or the next day, or maybe a week later. Or if you're an early startup, you just push it out live in a minute. Whereas when hardware, you do your prototyping, and then you get it just right, and then it gets sent off for design and manufacturing and production and distribution. It's a very different ballgame.
The fundamental similarity and the way in which we're using some of our core competencies here to solve a different set of problems is, number one, obviously with developers. Number two is abstracting tremendously complex systems, whether with the Super SIM, it's the global network of carriers that you might have to, excuse me, interrupt with your solution. To get it onto those networks and do the certification and all that kind of stuff, or to strike economic deals with all those different carriers. Let alone kind of optimizing it over time and making, using software to drive it to be more and more efficient over time. That's something we've been doing for 12 years with our Super Network for voice and messaging. To be able to do it again for IoT is just really leveraging a lot of the competencies we already have.
The second thing is enabling innovation by lowering the bar, making it easier for folks to do this kind of work, really making better products emerge, letting new use cases emerge that might not have emerged otherwise. That's really at the core. The way I think about it, if we started Twilio 12 years ago with voice and then messaging and then chat and then video, what that led us to the doorstep of is the next great opportunity in customer engagement. IoT is like starting the next platform. We launched our IoT product several years ago, and that was like the 2008 moment for that world.
As we continue to grow the IoT product roadmap, I think we're gonna continue to see, and we're gonna be able to look at how customers are using our IoT products, what challenges arise, what they have to go build on top of us, and ultimately the business solutions they're trying to solve, and that will enable us to continue growing in this IoT footprint. IoT is a nice market today, but it is still at its infancy. I think that when most people think of IoT, they think of their home, and they think of their, like, I'm staring right now at an internet-connected air purifier because I'm here in San Francisco where the air is bad today. I'm looking at my internet-connected air quality monitor. You can see a trend here. That's what a lot of us think about when we think about IoT.
Really the biggest opportunity in IoT are a lot of these industrial use cases of automating factories or making our cities more efficient or transportation use cases. Actually, there's a strong case to be made that IoT is going to be a big part of negating climate change, because when you are able to track conditions out in the real world and adjust accordingly, you can actually make a lot more efficient use of resources. We've already seen that. If anyone remembers, a couple of years ago when we announced Super SIM, we had the company that was doing the internet-connected garbage dumpsters, and it was kind of a funny product to launch with.
When you think about it, they're able to make the garbage pickup routes a lot more efficient because they're actually measuring if there's garbage in the bins and if the trash needs to get emptied. There's a lot of these use cases out there. I still believe IoT is at the very infant stages of this market. In particular, what we've found, I always say we build one thing, and that just leads us to the next problem that we can solve and the next. We provided the connectivity solution with our Super SIM, and of course, we have the Narrowband product as well, that provides lower battery and much longer life solutions and low bandwidth and low-cost solutions.
That led us to understand, yeah, we loved the connectivity, but we're gonna be spending the next year just trying to get the firmware to boot up and building all this stuff in the guts of the device, and that's what led us to launch the Microvisor product that we launched, which drastically simplifies the building, debugging, remote supporting, and remote update deployment capability for IoT developers, which I think removes a big stumbling block that a lot of companies have to getting a product into market. Yet another great opportunity that our customers have shown us. I think about that as being the next big market. We think that can be huge.
While most of the thrust of the company is in customer engagement and the communications underneath it, we have this great new initiative that's been running to tackle the emerging IoT market. We can't wait to see what the world builds with it.
Great. Next question from Mike Walkley. With COVID-19 accelerating companies' digital transformation plans, is Twilio seeing a change in customer usage patterns, and is this leading to a shift in investment priorities? What are your key focus areas of investment over the next 12 months, considering that as we talked about, we were a little bit behind on our investment plans for this year in light of COVID?
It's funny. If you imagine a nuclear power plant dashboard in front of us when COVID started, you would have had every dial going some way or other. Some of them going way up, some going down, some going sideways, some of them blowing up. It's a wacky year. It threw all the usage patterns into flux. Some companies where we saw usage patterns going through the roof. Other companies, other industries, you saw it declining massively. You saw net new use cases coming about. New products, like video, taking on a whole new set of use cases and growing faster than we've ever seen it grow before. Of course, that has impacted our investments. Some products we were investing in scale and growth and things like that.
Other ones, you see different features and capabilities that might be needed for the changing world, sometimes there's roadmaps that change to address that. I know our Flex team invested a lot of cycles this year to make sure that the contact tracing use case would be successful on Flex. That's just an interesting example that I think has more to do with pride that we could play a role in contact tracing and helping the world open up again, as opposed to it being the long-term. God, I hope we are not doing contact tracing for many years in the future, I'll put it that way. Sure, it impacted our roadmaps. I think that what you're seeing, these aren't major deviations. It's not like we were going in one direction, we were going north and suddenly we had to go south.
This was the path that we were already on, as were our customers. They were already on most of these paths. It's just priority shifted. When the priority shifted, our customers and a lot new life and a lot more vigor and had urgency to them. Obviously, we're there to help our customers, and for the most part, we have the product that our customers have needed. We were fortuitous in the fact that we rolled out HIPAA compliance and the ability to sign BAAs just prior to COVID landing, and that had been something we'd been working on for, gosh, at least 12, 18 months before the time we launched it. That's a big lift. Being able to support those kind of workloads.
We did accelerate the HIPAA roadmap after COVID to enable even more products to be under the HIPAA compliance umbrella as a result of COVID. Yes, we've accelerated some of these efforts. I would say it's not like a left turn in any way. It's more a organic refiguring of some of our priorities and roadmaps, but all stuff that I would say is the right things for us to be focused on for the long term, as our customers are accelerating their own plans in customer engagement. We are asking ourselves, how do we support them? How do we get this business? How do we forge new and more strategic relationships with these customers because these projects are so urgent and critical for them?
Let's be there for them, let's be the trusted partner, and that will open the door to even more business as time goes on. I'm excited to do that.
Great. Our next question is from Anouk Dey at Endurance, or sorry, at Durable. Two years into Flex, what have you learned? Would you rather go deeper into Flex or focus your time specifically on introducing another application?
Thank you, Anouk . I think the answer is it's both, right? We put a lot of focus and energy onto our existing products, and Flex is still very early in its life cycle, right? It's a huge market, and the product is off to a fantastic start. We've got great customers on it. There's, of course, still a lot of building that we're going to keep doing. At some point, when I spend my time, I tend to focus a lot on getting the directional energy right. Very early on in Flex, before we launched it or in the very early days, when it was in alpha or beta or whatever it was, I'd spent a lot of time with the team to figure out, okay, what does it mean to be Flex? What does it mean to be a programmable contact center?
What does that concept even mean? How are we going to fulfill on that promise to build great APIs that allow developers to do their work while still developing something that feels like a solution when you stand it up? We got a lot of those things right, I believe, in the first iteration because we spent a lot of time, and now the team is taking a lot of direction from customers and hearing feedback and building a lot of those features that customers need. The really important bones that you need to get right at the beginning, I feel like we did with Flex. That means that I'm able to spend a little less time than I spent with Flex in the very early days, and I get to focus on a variety of other things.
at any point in time, there's a variety of things that we're working on that we think could be interesting. There's always a bunch of things we're working on that turn out they may be nothing, and we may never launch them. there's other things we're working on that we think could be big opportunities. that's how I like to spend my time, is to dial up my time in the early days, at the inception phase, when you're making sort of key decisions that you'll live with for the next decade or two. as we have something, we're able to spend less time because customers often help you guide the roadmap from there.
All right. Our next question is from Brent Bracelin at Piper Sandler, titled Video Killed the Radio Star. Video has really taken off i n the midst of the pandemic with prolific new use cases.
Hold on. I've got a new setup here, as so many people do for their Zoom stuff, and I've got a button here. Hold on. I don't know if you can hear it. I can actually hear it.
Yep, it's coming through.
Did I hit the right button? Was it the applause button?
It was the laughter button.
The laughter button. Oh, sorry, I meant the applause. I didn't mean to laugh at you, Brent. I meant to applaud you. That's great. I love the Video Killed the Radio Star. Okay, let's move on.
We've seen prolific new use cases in telehealth apps powered by Twilio. It comes a couple of years after the first introduction of the Video API. How important is the new WebRTC Go API in further accelerating video consumption on the Twilio platform, and do you look at this as one of the bigger new product announcements? If not, what do you think is one of the bigger new product announcements?
Yeah. I think as I talked about, I went through some of these earlier, so I won't totally rehash it. I think WebRTC Go is a great product, because I want to onboard many developers who might go look at WebRTC as just this thing that's already built into the browsers and say, "Well, that's all I need." I've talked to so many customers through the years who we've said, "Oh, you should use our video product." They're like, "Well, WebRTC is free." We tell them, "But you know all the hard things you're going to be dealing with over the years if you succeed. There's a lot of rough corners to that thing.
All the browser versions you have to test, all the network conditions you have to account for, all of the instrumentation and visibility into what's happening that you will be flying blind with that you won't have." when customers write into your support, "The video didn't work," and you're like, "Well, I don't know why. Why don't you restart your computer," right? There's all these things that we've solved, and there's always this tension between, "Well, but it's free, so we'll get started with it." what I like is that we've resolved that tension I've made it so like, look, there's a product that supports you in adopting this free technology. the reason it's free, by the way, I should preface this.
When you do a one-to-one call between, let's say, two web browsers or two mobile devices or whatever it is, using WebRTC, you're not using pretty much any centralized infrastructure. There's very little by way of resource consumption going on in a server somewhere. The bandwidth is really just your home internet connection or whatever. It's not really using resources. It's kind of by its very nature, free, and that's why it makes sense that, oh yeah, well, that shouldn't cost anything. That's like charging me for air, which actually I would pay for in San Francisco right now. It makes sense.
I wouldn't argue with a developer saying, "No, no, the air shouldn't be free." What I will say is there's all these hard things you then have to go solve for, and that's what our product wraps around this sort of core technology of the internet now. What I like we've done is we've provided a great on-ramp. We've made it so developers don't have to pick between, well, WebRTC is free, but Twilio solved all these problems. They kind of get the best of both worlds. They get kind of a light version of our product. For the one-to-one use cases, it is free, as it should be, basically. I think what that will do is provide a great on-ramp. I think many more developers will get exposed to Twilio.
I think that some of them will then realize that they should buy these other resources that surround the product and pay for those. Yet others will say, "Oh, I started with a one-to-one use case, but then I realized I needed a two-to-one or three-to-one, or a five-way or a 10-way or a 50-way." There's a great, "Okay, great," that's an easy transition into our other products. Which, those other use cases, by the way, do use server resources, do use our bandwidth. There is a cost, whether we bear it or the customer tries to go build it themselves, somebody's bearing a hard cost to serve those use cases, and that's where we solve even harder problems for our customers and where it's a really great set of use cases.
I think that WebRTC Go finally resolves some of the tension between, well, this is sort of free thing that's just kind of built into the internet at this point, as opposed to a vendor solution, which costs money but solves a bunch of problems. We've kind of resolved that tension now, and that, I think, will net us just a much bigger set of developers using Twilio, which will lead to great things. As far as the other products, I kind of rehashed them before. I'm particularly excited. I think Frontline is neat because it opens up a whole new audience, and we see a lot of customers like Nike building this on top of either Flex or some people are building on top of Conversations. Before we had Conversations, a lot of people kind of built it themselves in their own ways.
I think this is really solving a problem that we've seen across many, many industries to provide a way for those frontline workers to digitally engage with customers, whether that's those delivery drivers, or the restaurant workers, or the field service technicians. There's so many different variations of people who aren't at a desk, who are interacting with you from a company, that now we've got a great solution for. I'm excited about that. I found the right button. You want to hear it?
Yes.
It's funny, I can't hear it, but I assume you all can.
Yep, we can. Next question is from Michael Turrin. "The Event Streams announcement grabbed our attention. Can you expand on the sets of data Twilio collects, the value of that data can provide your customers, and ways that you can effectively monetize that, whether it's Event Streams or cross-channel orchestration or some other application?
Event Streams, I feel like we finally, working with customers, figured out the right starting point to help customers get value out of all the engagement data that Twilio generates as a result of how customers are using Twilio across all these different channels. that's really the first step. I don't want to go too far into the future, but this is, I would say, the beginning of a roadmap where we are helping customers to make sense of their engagement data, about things customers are saying to them or what they're saying to their customers, and starting to help customers use that data to make smarter decisions, whether it's about which channels are working, which messages are working, or which channels customers prefer to use.
Really bringing all that data together into a feed that allows them to consume it, make sense of it, is the first step. We listen to customers and let them guide the way for how we can take that product and continue to expand it over time to get more and more value for our customers out of the engagement data that Twilio sees. You can see, I think we said in the investor presentation that we powered, was it close to a trillion human interactions, right? That's a lot of data about how companies are talking to customers, and most companies don't even have a way to look at all their own communications in one spot, let alone make use of it. The first step is trying to give them a way to actually get a handle on all that data.
Great. Question from Alex Zukin. "Jeff, you guys have laid out a great framework for both high growth and long-term margin targets, but I guess at what size of revenue do you feel it's appropriate to start putting up some good operating margin leverage and even getting into the double digits?
Thank you for the question. Not maybe a new question. Look, I think it's the same thing that we've really said all along. We do believe there's a great long-term model here with 20%+ operating margins and 60 %+ gross margins, all those things. what we are doing is investing for growth. This is a huge market opportunity. I think that the engagement, whether it's communications or the software of engagement, is one of the largest, if not the largest, opportunities in enterprise software. when you're looking at an opportunity this big, you are not just inclined, you almost feel obligated to invest to really capture this opportunity. we remain focused on growth. That is our main priority. We are not a company that invests at all costs. We are prudent with our investments. We make wise investments.
I think some of the stuff we've talked about, like the investments in go-to-market that we've made over the past several years are working very nicely. We keep a close eye on whether those investments are the right ones, and we continue to invest. We see a tremendous opportunity to play the long game here and to win in this world of customer engagement. That's what we're doing. I don't want to give you a time frame or a dollar amount, because to me, that's not how I look at it. I look at it as we have an opportunity to unlock growth outcomes for a long period of time because we have a huge market and a very big opportunity ahead of us, and customers illuminating a path to continue to have elevated growth. That's what we want to do.
Great. I think we'll do one more question to wrap things up, and it comes in from Derrick Wood at Cowen. Twilio has been a big champion of build versus buy. George spoke to how some customers had existing solutions that chose to rip and replace with Twilio because of the additional functionality and customization that can be built. Do you think COVID is becoming an accelerant for this build versus buy way of doing things? Is this something that could resonate up to the CIO level?
I think there's two big trends happening. First is that engagement needs to be built to some extent. If you think about a lot of, let's say, B2B companies or even backend systems, like maybe an HR system, standardization is of great value. buying an off-the-shelf solution and getting best practices built into it is a value that you get actually when you buy something that's a bought product. when it comes to engaging with your customers, especially if you're, say, a B2C company, that engagement is really how you differentiate. imagine your bank or an airline or whatever, pick your industry, and they've all bought the same solution, plug it in. In the eyes of their customer, the experience is undifferentiated.
Eventually, a digital disruptor comes along and builds something that really listens to customers, here's what they need, iterates on it at the pace of software, is deploying updates all the time, and is really innovating while customers will start to flock towards that. That's why I say it's not build versus buy, it's build versus die. Because the company who's able to listen to its customers and be agile and solve customer problems because they have that muscle, those are the companies that history has shown tend to win. That was kind of the hypothesis that we had back in 2008 when we started the company, and I think it's largely played out, right?
You see some of the biggest companies on the planet, legacy companies that have been around for 100 years, are hiring armies of developers and building software practices and competing in this new digital frontier. The second thing I'll say is that, the second thesis or whatever, is that agility is key to that. Because agility is the ability to take new information, a changing market, a changing competitive dynamic, changing customer preferences, and to turn it into new solutions and turn it into new ideas. That agility is what is needed in this digital era because the pace of business obviously is accelerating so much.
What COVID has shown us is that the value of agility and the value of being able to see a problem and have the muscle to be able to go solve it by building something is so important, because that was a muscle that was needed by nearly every company this year as they had to reinvent themselves to a new set of conditions in the world and respond and build their way out. That's why it's so exciting to be where we are in this moment, is because I think it was clear to most companies before that you can't just buy everything and expect to have a differentiated outcome. You need to build. You don't build everything. You build the things that customers care about.
I think what you're seeing in COVID, by the way, is a bifurcation of the companies who really had zero muscle in this regard. I think a lot of those companies are the ones that you see not making it this year. The companies that had been investing in digital transformations and had been building software development teams and had been focused on agility and adopting platforms like Twilio, those are the ones that when COVID hit, picked up their tools and started building. Those are the ones, all those calls that I was getting that weekend of March 13th, that I talked about in my keynote yesterday. Those are the companies who were like, "Situations changed, new reality we're facing, we're building. Can you connect me to someone? We had some help or some advice," or whatever it is.
Those are the companies that are going to thrive. I would go so far as to say that I think those companies are It's a really bad thing to say in some ways, but they're almost better off because of COVID, because it forced them to sharpen their thinking and sharpen their pencils. Like John Donahoe was saying yesterday, they had digital, and then suddenly they were thrust into a 100% digital business. They were prepared for it, and now they're even more prepared for what's coming in terms of digital engagement, building those relationships, and digital competition. If digital is the competitive battlefield, if you will, then those companies that had the muscle and used it this year and accelerated those plans are now, in some ways, in even better spots than they might have been if it was like the business as usual world.
We're happy to be partnering and working with those customers every day.
Great. Well, I think that's a great way to end it. Jeff, thank you very much for joining.
Thank you, Zilli. Thank you for all the fantastic questions, everybody.
Yeah. Thanks to everybody for joining today. We're excited to have had this opportunity to meet with you. Stay tuned. We'll be announcing earnings, obviously, in the next few weeks. We look forward to catching up with you then.