MS TMT Day 2 Summaries Part 2: TWLO, ANET, CRM, BILL, ALAB

TWLO: Khozema Shipchandler, CEO

AI Strategy and Monetization

• "We quoted a few numbers, right, $260 million in revenue, 9,000 companies, 90% of the Forbes 50 ... from these customers over the last 12 months ... the opportunities in AI are obviously amazing ... the technology is incredible ... we’re now starting to combine that with AI workloads ... having native data capabilities through a communications API, that was paramount ... we saw a bunch of success with that ... companies will never give up their contextual data ... it would be crazy for them to help train up large language models to disintermediate them from their consumers one day ... they want a platform like ours to interoperate with their environment to keep the data there ... we developed an AI agent ... using contextual data about health care consumers that’s basically able to solve billing inquiries as they come in ... that’s hard ... that’s what we believe is sort of the destiny of the company."

Revenue Growth Trajectory

• "We definitely do see positive signs in terms of the growth trajectory of the company ... we’ve given guidance that we feel good about ... fundamentally, we’re running it to something higher than that ... we are running the company towards double-digit growth like we feel good about the things that we’re doing to be able to get there over time ... whether it’s go-to-market, whether it’s product investments ... we want this to be an execution story ... we feel pretty good about the kind of tailwind that we saw in Q4 ... certainly feel good about the setup for the year."

Financial Discipline and Profitability

• "Last year ... we talked a lot about the financial discipline with which we wanted to run the company, the operating rigor and the innovation focus ... in the year that’s transpired, you’ve seen a number of proof points that sort of validate that ... we took a company that was fundamentally losing money that was using cash ... every one of those metrics is starting to turn around ... we’ve said 500 to 600 basis points of margin accretion over the next few years ... we feel very good about our head count ... that will kind of drop to the bottom line."

Go-to-Market Improvements

• "The way in which we organize our go-to-market team ... was fundamentally flawed ... refocusing and having dedicated sales reps that can just take CDP to market ... we’ve kept the segment sales reps a little bit isolated ... we put much heavier incentives in terms of cross-selling ... a lot of investments into self-serve ... we wanted customers to be able to get to a magic moment in minutes ... their ability to seamlessly go through the self-serve sign-up process is made a lot easier ... it’s predominantly cross-sell ... customers that use more than one product drive 90% of our revenue, yet the majority of our customers don’t ... that’s a huge opportunity."

Market Opportunity and TAM Expansion

• "A TAM of nearly $120 billion in our core markets, growing to nearly $160 layering in AI ... our ability to continue growing within a growing TAM between now and 2028 ... if nothing else changed, that would be a pretty decent story ... our ability as a company to have taken share relative to our other competitors in that marketplace ... the intersection of the categories ... with CDP, with CCaaS, with our core CPaaS business ... this market convergence just opens up an even broader TAM ... contextual data is the thing that’s going to ultimately activate that growth trajectory."

Partnerships and Ecosystem Leverage

• "Partners is an area, frankly, that we’ve not done as great of a job in ... there’s obviously volume leverage distribution there ... we don’t co-sell with a lot of them ... now there should be no friction in our ability to work with one another to go pursue customers together ... our infrastructure is required ... enter SIs who now have an ability to make a buck off of stringing these different things together ... we have hired a new head of our partners’ programs ... I’ve been very excited about what I’ve seen so far in terms of these early relationships."

Innovation as a Long-Term Driver

• "Going forward, it’s about how do we start to focus more on innovation as a means to kind of set up the next three to five years ... the discipline and the rigor never stop ... long term, this is going to be an innovation story ... our ability to make it easy button simple for customers to avail themselves of data while they’re using communications workloads ... there’s a number of these new features that are pretty accretive to our top line, like a Verify, like a Voice Intelligence ... it’s all self-help ... putting it on us to drive an ROI story."

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ANET: John McCool, SVP Engineering

Cloud Customer Dynamics

• "The relationship with Meta still remains very strong ... we completed our 7700R4 product ... third generation of co-design products that we’ve done with Meta ... we had some phenomenal growth at Meta in 2022 and 2023 as we went through the 400 gig cycle ... we expect them to be an over 10% customer this year ... our other cloud customers outside of Meta grew around 30% without a meaningful AI contribution."

AI Revenue Targets

• "We reiterated our confidence in the $750 million number ... that is backend only ... substantially that revenue is all switching ... at the time we made that announcement, big questions of whether Ethernet was viable ... we’ve seen more customers come into play now that have confidence moving forward with Ethernet ... we’ve moved from a trial mode into production with a number of customers ... three cloud customers with 100,000 GPU clusters will largely ramp this year and another one in 2026."