Dear Fellow Twilio Stockholders,

In normal times, it’s common to start a call or a meeting with “How ya’ doing?” “Fine,” the other person says, almost instinctively. But now, I find after the automatic pleasantries are exchanged, comes the real question: “No really, how are you doing?” That real question, I find ourselves asking each other so often now, is an acknowledgement that in fact, nothing is actually “fine.” And it’s an invitation to a real conversation about how we’re all faring personally in these scary times. But, it’s also a reassurance - we will get through this if we support each other and understand that everybody is struggling in some way right now. Yet, as a technology company, we count our blessings, appreciating the relative ease with which our employees can work from home and the applicability of our business to solving some of the great challenges of our time. We acknowledge our responsibility to the communities around us and commit to doing our part in providing for collective recovery - with our product, our people, and our money, both individually and as a company.

So with a spirit of awe and humility that these days bring, it’s my honor to pen our fourth annual stockholder letter as a public company.

** 2019 in Recap **

In 2019, we...

• Crossed the $1 billion revenue mark, reporting total revenue of $1.13 billion for the full year 2019, up 75% year-over-year, which includes revenue from Twilio SendGrid.
• Completed the acquisition of SendGrid, the leading email API platform, and brought on over 400 Gridders to the Twilio team. This acquisition allows Twilio to provide a complete platform for virtually every form of digital customer engagement. In terms of scale, in the week leading up to and including Cyber Monday, Twilio processed over 22 billion emails for our customers without a single alert going off.
• Added nearly 115,000 active customer accounts, including those from our acquisition of SendGrid, ending the year with over 179,000 active customer accounts.
• More than doubled our number of 7-figure deals compared to 2018 - a great sign that we are becoming more strategic to our customers.
• Powered nearly 800 billion interactions across the platform on behalf of our customers. In fact, during 2019, we averaged more than 500 calls a second, over 127 million messages per day and 2 billion emails per day.
• Grew adoption of Twilio Flex, our contact center platform. 2019 was the first full year of Flex general availability, and companies of all sizes are continuing their digital transformation efforts and are looking to move their contact centers to the cloud to better drive omnichannel customer engagement. We on-boarded large global enterprises such as Allianz SE, CompuCom System - a subsidiary of Office Depot, and Southwest Airlines, as well as fast growing innovators such as TripActions and Hubspot on Twilio Flex. Our product team delivered more than 70 feature enhancements including outbound dialing, real time monitoring and integrations with Salesforce, Zendesk and other complementary applications.
• Added more than 1,400 new employees, bringing us to 2,905 global Twilions at year end, and meaningfully expanded our leadership bench with new leaders, including our Chief Product Officer, Chee Chew, Chief Customer Officer, Glenn Weinstein and the CEO of SendGrid, Sameer Dholakia. We added Jeffrey Immelt to Twilio’s Board of Directors. Twilio was named one of America’s Most JUST companies by Forbes and Just Capital. We also added six new offices, including international offices in Brazil, France and Japan.
• Hosted our largest ever SIGNAL conference with more than 3,200 customers, prospects, developers and business leaders in attendance. We launched new products including Twilio Conversations, Media Streams and Verified by Twilio and hosted our second annual Creator’s Summit where more than 200 VIP customers joined us to discuss the future of customer engagement.
• Reached 100 million people through Twilio.org, on behalf of our social impact customers and gave $7.5 million in grants to 53 organizations. Twilio.org also launched our Crisis Response initiative to enable communication efforts by nonprofits supporting individuals and communities in times of crisis.
• Launched WePledge, an internal employee impact program that encourages Twilions to commit 1% of their individual time and/or equity to the causes they care about. In turn, Twilio empowers employees with 20 hours of paid volunteer time, a $500 matching gifts budget, and a way to donate their company equity with just a few clicks. Since the program’s launch in September 2019, hundreds of Twilio’s employees have already taken the pledge to commit 1%, resulting in the donation of hundreds of thousands of dollars and nearly 5,000 volunteer hours that support more than 450 charitable organizations. We’re just getting started.
• Made progress towards our aspirational diversity and inclusion goals. At the end of 2019, according to self-reporting, women represented 33% of our workforce, underrepresented populations represented 21% of our U.S. workforce, and notably, underrepresented populations made up 29% of Twilio’s U.S. leadership - up 7% year-over-year. For the second year in a row, a third party wage gap analysis showed a statistically insignificant pay gap. In the U.S., women earn 99% compared to men, and non-white Twilions earn 100% compared to white Twilions. Hatch, our software engineering apprenticeship program that targets underrepresented candidates, made huge strides. 100% of 2019 Hatch graduates were offered full-time positions at Twilio and 89% accepted their offers. Finally, Twilio was named one of the 2019 Best Workplaces for Diversity by Great Place to Work and FORTUNE, acknowledging the progress we’ve made, and our focus on creating an environment of inclusion and belonging for all employees going forward. I’m proud of the progress we’ve made, but recognize this is a long journey, and there’s much work ahead to build a company that more accurately reflects the world around us.
• Completed a follow-on offering of Class A Common Stock, which resulted in net proceeds of $979.0 million after deducting underwriting discounts and offering expenses.
• Made significant progress on our multi-year initiative to prevent and combat unwanted robocalls. Ending robocalls is going to take the combination of public policy, technological developments and industry cooperation. In 2019, Twilio joined the board of USTelecom, the board of the Alliance for Telecommunications Industry Solutions (ATIS), was appointed by the FCC to the North American Numbering Council and joined the anti-robocalling initiative launched by a coalition of 51 attorneys general representing all 50 states across the U.S. as well as Washington D.C.. Twilio also launched Verified by Twilio to help give consumers the confidence to answer the phone again by sharing who is calling them and why.
• Launched the Enterprise Hackathon program, where we go onsite with Fortune 500 customers and, in a single day, train their developers to rapidly prototype Twilio-powered solutions to business challenges, and then demo those solutions to their executives.

** Built for This **

At times, it feels like Twilio was built for the challenges brought about by the COVID-19 crisis. We provide three things the world has needed during this crisis: digital engagement, software agility, and cloud scale.

First, digital engagement. It may be obvious, but nearly overnight so many of the world’s in-person workloads turned to digital. We had to get our groceries, educate our children, and even see the doctor, all while minimizing human contact. The answer, of course, is digital engagement.

Technologies such as messaging, email, voice and video have enabled many parts of the economy to continue working while keeping its participants safe. Telehealth, distance learning, work-from-home contact centers, mass alerts, and more have helped people stay safe, connected, educated, and working.

Second, software agility. This is not a time when people can pretend to have a normal roadmap or know all the answers. We’re literally rebuilding society in real time to accommodate the impact of this virus on modern life. Nobody has time for long consulting projects and years-long roadmaps. Rather, moving quickly, building prototypes, and iterating as our needs evolve has been critical for nearly every kind of organization. That’s the essence of agility, and Twilio has enabled organizations to re-imagine many of their communications workloads in days and weeks, not months and years.

And third, cloud scale. In the midst of a crisis, teams don’t have the luxury of capacity planning, server racking, or buying seats - they need to build a solution, and have it scale up immediately to meet their needs. In many cases, such as telemedicine and distance learning, nobody even knows how much scale is needed, as there are no precedents to draw from. Therefore, the value of our transparent cloud scaling is more apparent than ever.

Digital engagement, software agility, and cloud scale are value propositions we’ve long built our company around. Now more than ever, I’m proud that we’ve been able to serve our customers and society with them.

** Look to the Builders **

We started Twilio with a belief in the power of builders. That no matter what the problem, builders could pick up their tools and solve the world’s problems. In business, in government, in non-profits, and sometimes just for fun - builders see things that need fixing and get to work. That’s why every press release says “We can’t wait to see what you build.” That’s why our billboard says “Ask your Developer.” That’s why we publish our documentation, pricing, and prominently feature a “Get Started” button on our website - the call of the cursor is real. That blinking cursor beckons a developer to start building.

Blink. Blink. Blink. The blinking cursor is raw potential - a computer ASKING, nay begging, to be used to make the world different and better in some small way today. That’s what drew me and many developers to computers in the first place - I fondly remember starting with my Apple IIe. It’s what gets us out of bed in the morning and keeps us up at all hours of the night. Answering that call. Fulfilling on the potential.

So when COVID-19 hit society, it’s no surprise that the builders of the world got to work, doing what they do best - answering the call.

For example, the Consumer Digital Team at Mount Sinai Health System, led by Chief Product Officer David Kerwar, built a messaging solution allowing patients to chat live with clinicians, guiding potentially COVID-infected patients into care or remote monitoring to recover at home, virtualizing the healthcare system to enable care continuity for the patient who may not be able to access care in person. It’s already experienced a 10x increase in volume. In one case, the live chat identified an elderly patient who needed immediate help and they were able to dispatch an ambulance in a matter of minutes. In another case, an infected patient in a group home was identified, which led to swift notification of the home and isolation of the patient to mitigate the spread of the virus in the facility.

Twilio’s ability to help onboard a patient via SMS and followed by a referral to a video visit has dramatically increased adoption and engagement with hundreds of consumers a day through this channel. A patient simply texts a six-digit short code to start using the platform and the ease of use and efficiency has resulted in expanded access to care for New Yorkers throughout this crisis.

Developers in governments, from cities to states to countries, began figuring out how to keep their population informed of rapidly changing advice, rules, and guidelines to keep people distanced, support them during isolation, and get them economic help. One example that comes to mind: developers at the City of Pittsburgh used Flex to upgrade, overnight, their 311 system to enable their agents to work from home - allowing their agents to remain safe while providing information to residents at a time when information is more important than ever.

Developers at non-profits on the front lines of healthcare, mental health, and poverty reduction started reconfiguring their programs for a new COVID reality, realizing their services would become even more important - sometimes growing 10x in scale practically overnight. In one example, I’m thinking about the team at United Way Worldwide. United Way Worldwide, one of the primary non-profit operators of 211 call and text services across the United States, estimates the network handles more than 11 million calls a year from people in need of information about social services. That was before the COVID-19 pandemic - their volumes in some markets grew nearly 10x as a result. Quickly, they developed a streamlined routing system with a front-end interactive voice response (IVR) using Twilio Studio and Autopilot. Now, to support agencies that need extra help, an artificial intelligence AI-assisted IVR bot helps answer commonly asked questions about COVID-19, and for callers who still require human help, the system routes the caller to a specialist sitting safely at home using Flex. They built this in a few days.

Or City Harvest, which provides New Yorkers with emergency food relief by delivering food they rescue to community food programs. Many of those programs rely on Plentiful, an SMS reservation system built in partnership by City Harvest and United Way for New York City on Twilio, to ensure food reaches the people who need it safely and efficiently. And now, with 62% more clients scheduling appointments and a 474% growth in volume of messages from partners, they are helping more people access food safely during this critical time.

And countless independent developers, working from home, reading the news, and itching to pitch in however they could, started answering the call. I’m reminded of the “PPE Coalition”, a group of developers and technology companies, led by developers Joe Wilson and Eric Ries (author of the Lean Startup), who created an ad-hoc non-profit to connect supply of Personal Protective Equipment with hospitals on the front lines of the COVID-19 response. Their hotline, powered by Flex and staffed by volunteers, has routed millions of masks, gowns, respirators and more to the people who need it most.

And nearly every corporation had to respond to new realities. As social distancing took hold in the United States, protecting customers and employees from unnecessary in-person contact became a top priority for Comcast. Over the course of just a few weeks, developers at Comcast integrated Twilio Voice into their homegrown customer database, enabling technicians and customer care to contact customers for service requests remotely. Additionally, developers at Comcast recently initiated a pilot to incorporate Twilio Video into the same database, which could enable a customer to use the camera on their phone to show a Comcast technician their setup, and the technician can walk them through a self-diagnosis and repair without ever stepping foot in the home. Comcast designed, prototyped and built this capability over the course of less than a month. It has potential as a means of protecting customers and technicians during COVID-19, and also as a way to provide faster resolution to customers when their TV or Internet isn’t functioning properly.

And developers at companies big and small got to work, reconfiguring the world for a work-from-home and a 100% e-commerce reality. Nearly every contact center needed to be reconfigured to support distributed workforces - nobody wants to be sitting in a cubicle during these times. As nearly every purchase moved to delivery at home or curbside, every retailer needed to scale their e-commerce initiatives, and enable their usually in-person, in-store salespeople to support customers electronically - while both are at home.

I heard from the leaders at QVC Italia, who realized the national lockdown in Italy would severely limit their ability to serve customers on the phone, because they had no way of enabling their customer service team to work from home. Rolling out an on-premises call center solution could take years, and a cloud contact center generally takes 3-6 months on the low end. But the developers at QVC Italia were able to roll out this solution and onboard their agents in a week. They also added SMS and WhatsApp capabilities to accept inbound traffic on those channels, allowing QVC Italia to continue to serve their customers during the crisis and keep their team up and running.

So many stories of developers answering the call, I wish I could share them all.

As developers, we have the luxury of sitting at home (or nearly anywhere), and doing our work by typing magical code into our text editors. But so many people are on the front lines of this pandemic that deserve our thanks - the medical professionals, the truck drivers, the food delivery workers, the grocery store workers, the manufacturing workers, and everyone else who is playing a role in slowing the spread or providing us with the stocked shelves at our local stores. Thank you. The software developers of the world humbly have your back.

These are just a few of the ways in which we saw the world reconfigure before our eyes, and through it, Twilio has been privileged to have a front row seat, as we provide three things the world needs: digital engagement, software agility, and cloud scale. And it’s been our privilege to serve the developers of the world, as they’ve served the medical system, their cities, states and countries, their non-profits - and their friends, family members, and communities. That’s why we’ve been building this company for 12 years - to be able to serve the builders in ordinary times, and even more so in extraordinary times.

** BPMs help us rise to the challenge **

Last year in my stockholder letter, I spoke about the BPM system we use to plan our business. BPM stands for Big Picture, Priorities & Measures (ok, maybe it should be BPPM, but no.) BPMs allow us to express what matters on several time scales, and how we know if we’re making the progress we want.

We use BPMs to plan our year and our quarters - as a company, as departments, and down to the team level. But we don’t just use BPMs for regular planning cycles. We also use them any time that we need to draw clarity from ambiguity. And as it turns out, it was the perfect tool to guide us as the COVID-19 crisis evolved. When it became apparent that 2020 would not be “business as usual,” as an executive team, we wrote a BPM to guide our decisions and our actions through the crisis. As usual, there was discussion and debate about the words and the order of the priorities, except for one thing: We all agreed that our people were the number one priority, and that caring for the now 3,000+ Twilions, and growing our culture during this period of time would be critical. I wanted to share our COVID-19 Response BPM with you, our stockholders, because I hope it’s useful to see how we operate and perhaps this document may be useful for others in this or other periods of uncertainty. (Note: I’ve omitted the measures.)

Twilio COVID-19 Response Big Picture:

Care for our team’s mental and physical health. Weather the crisis as a trusted advisor to employees, customers and our communities in their time of need. Invest and emerge from the crisis with our leadership strengthened as an employer, community member, and trusted provider in the market.

Priorities:

1.           Employee trust and welfare. Ensure we communicate well with employees, both in our outreach, and also in listening. Ensure we first and foremost are looking out for the personal welfare of our employees, and make them feel heard.

2.           Customer success through the crisis. Serve our customers during this crisis to help ensure their success, contributing to their ability to survive and thrive, thus building loyalty.

3.           Recover stronger. Leverage Twilio’s strong balance sheet to grow the business in an environment where others may be fearful.

4.           Capture emerging opportunities. Reach new customers and new use-cases in a trusted and scalable way, approach emerging needs for Twilio with the required urgency and build long term relationships.

5.           Community. Care for our communities during this crisis, showing up as a force of compassion and good.

** Onward **

As I noted before, Twilio was built for the challenges we’re facing with this crisis, but not only our products - our people and our culture were ready to serve when this crisis started. I’ve seen so many instances of Twilions moving mountains to serve our customers during this time of need. I’m thankful that five years ago, we took the 1% Pledge with the support of our investors and our board of directors, committing 1% of our equity to sustainably fund Twilio.org, enabling us to help even more organizations in this time of need. And, of course, I’ve also seen so many instances of Twilions supporting each other through this crisis. And it’s also you, our stockholders, that I’m proud to be working with through this crisis. I’ve had the opportunity to chat with many stockholders in the past year. Especially during the COVID-19 pandemic, I’m appreciative of the investor base we’ve assembled and for your support and encouragement.

So with a spirit of investing in our collective future, I say: “Onward.”

Sincerely,

Jeff Lawson

CEO, Co-founder and Chairman Twilio Inc.

(Note: this letter is part of the Twilio 2019 Annual Stockholder Letter)