When Khozema Shipchandler took the helm as CEO of the cloud communications company Twilio in early 2024, activist investors were demanding cost cuts. Its stock had declined sharply since its pandemic high in 2021.
The company has worked to turn itself around, and its bets on AI may be paying off. Twilio stock soared by more than 19% in out-of-hours trading — hitting its highest level in four years — after a strong earnings report on Thursday.
Twilio builds tools that help companies make calls or send texts from apps. For example, if you’ve ever made a call from the Uber or Lyft app to get in touch with your driver, that’s powered by Twilio. Twilio was one of the big beneficiaries during the pandemic cloud boom as its stock more than quadrupled between 2020 and 2021, peaking in early 2021.
Its stock has never fully recovered to that high, after slumps in 2023 and 2024 when Twilio was viewed as an acquisition target. Now it’s picking back up. On Thursday, Twilio reported that its revenue grew 20% year over year — its fastest growth rate in three years.
Along with several changes to how Twilio operates, Shipchandler says its bet on integrating AI and data into its product has helped it grow.
“Every single one of these companies needs some way to communicate with these customers. They need context to power their interactions,” Shipchandler told Business Insider.
Last year, Twilio also had its first full year of GAAP profitability, with nearly $1 billion in free cash flow.
Twilio’s AI strategy
Prior to replacing cofounder Jeff Lawson as CEO, Shipchandler served as the company’s CFO, and activists were demanding that Twilio make changes and cut costs as its growth stalled and it burned through cash.
“I wouldn’t say that we caved into the demands,” Shipchandler said. “We certainly listened to the investors, to the extent that there are a number of things worth considering. We had already considered how we would get smarter about the cost profile.”
In particular, activist investors wanted Twilio to sell Segment, a customer data business it had acquired for $3.2 billion, which was unprofitable.
Shipchandler calls this a “short-sighted call.” Ultimately, Twilio decided to keep Segment, and he says it became one of the most “consequential decisions we made.” Segment has helped Twilio with integrating data into AI models to improve customer engagement. Customers can then use Twilio’s communication and data capabilities to build their apps.
Twilio also sees a major opportunity in AI agents. IDC has projected that Twilio could be the underlying infrastructure for 80-100 million agents by 2029.
Twilio itself uses AI tools such as Gemini and Claude Code internally, and Shipchandler said employees have achieved a 15% productivity boost with AI. It uses AI to help with coding, as well as for customer support and inbound sales.
The company has made other changes to its operations besides betting on AI. Shipchandler said that the company is focusing on a few of its top products to get a higher return on investment for customers, rather than spreading itself “too thin.”
It also shook up its new leadership team, with new product, marketing, and revenue chiefs. Twilio saw an exodus of executives in 2023, along with layoffs, Business Insider previously reported.
“Adding in that new blood has created new ideas,” Shipchandler said.
Twilio isn’t worried about the SaaSpocalypse
Twilio, like many software-as-a-service (SaaS) companies, has seen its stock hit hard as investors fear the impact of AI on their businesses.
Shipchandler said Twilio sees AI as a catalyst because it’s more of an infrastructure company. What’s more, he said that people can’t vibe code much of what Twilio does because it meets regulatory requirements for telecommunications companies.
“While you see all these different pressures in the SaaS world, we see ourselves positioned nicely as the infrastructure that drives a lot of the activity you’re seeing,” Shipchandler said.
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