When Kosema Shipchandler took over as CEO of cloud communications company Twilio in early 2024, activist investors were demanding cost cuts. The company’s stock price has fallen significantly since its pandemic highs in 2021.
The company is trying to turn around, and its bet on AI may be paying off. Following Thursday’s strong earnings report, Twilio’s stock price soared more than 19% in after-hours trading to a four-year high.
Twilio builds tools that help businesses make calls and send texts from their apps. For example, if you ever make a call from the Uber or Lyft app to contact a driver, that call is powered by Twilio. Twilio was one of the big beneficiaries of the pandemic cloud boom, with its stock price more than quadrupling from 2020 to 2021, peaking in early 2021.
The stock has not fully recovered to its highs since its lows in 2023 and 2024, when Twilio was considered an acquisition target. He is now recovering. On Thursday, Twilio reported a 20% year-over-year increase in revenue. This is the highest growth rate in three years.
In addition to some changes to how Twilio operates, Shipchandler said a bet to integrate AI and data into its products has helped Twilio grow.
“All of these companies need some way to communicate with these customers. They need context to enhance the dialogue,” Shipchandler told Business Insider before the earnings call.
Last year, Twilio also achieved its first full year of profit on a GAAP basis, with free cash flow of nearly $1 billion.
Twilio’s AI Strategy
Shipchandler was the company’s chief financial officer before replacing co-founder Jeff Lawson as CEO, but activists have been demanding that Twilio make changes and cut costs as its growth stalls and funding dries up.
“I can’t say we complied with the request,” Shipchandler said. “We certainly listened to our investors in that there are a lot of things worth considering. We were already looking at ways to be smarter about our cost profile.”
Activist investors in particular had wanted Twilio to sell Segment, the customer data business it acquired for $3.2 billion, without making a profit.
Shipchandler calls this a “short-sighted decision.” Ultimately, Twilio decided to keep Segment, which he said was one of the “most significant decisions we made.” Segment helped Twilio integrate data into AI models to improve customer engagement. Customers can then build apps using Twilio’s communications and data capabilities.
Twilio also sees big opportunities for AI agents. IDC predicts that Twilio could become the underlying infrastructure for 80 million to 100 million agents by 2029.
Twilio itself uses AI tools like Gemini and Claude Code internally, and Shipchandler says its employees have seen a 15% increase in productivity with AI. We use AI to not only assist with coding, but also customer support and inbound sales.
Beyond betting on AI, the company has also made changes to its business operations. Shipchandler said the company is focusing on a few top products to increase customer return on investment, rather than spreading it out “too thin.”
The company also has a new leadership team, including new product, marketing and revenue executives. Business Insider previously reported that Twilio would experience a leadership exodus in 2023 due to layoffs.
“With new blood comes new ideas,” Shipchandler said.
Twilio isn’t worried about SaaSpocalypse
Twilio, like many software-as-a-service (SaaS) companies, has seen its stock take a big hit as investors worry about the impact of AI on their business.
Shipchandler said Twilio is more of an infrastructure company, so it sees AI as a catalyst. Additionally, Twilio meets regulatory requirements for telecommunications companies, so people can’t vibrate the cord, he said.
“We see a lot of pressure in the SaaS world, and we think we’re well-positioned to be the infrastructure that powers a lot of the activity that you’re seeing,” Shipchandler said.
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