Prepared remarks
Good day, and thank you for standing by. Welcome to Twilio Inc.'s Second Quarter 2026 Earnings Conference Call. Operator Instructions: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Rodney Nelson, Vice President of Investor Relations. Please go ahead.
Good afternoon, everyone, and thank you for joining us for Twilio's Second Quarter 2026 Earnings Conference Call. Joining me today are Khozema Shipchandler, Chief Executive Officer; Aidan Viggiano, Chief Financial Officer; and Thomas Wyatt, Chief Revenue Officer. As a reminder, we will disclose non-GAAP financial measures on this call. Definitions and reconciliations between our GAAP and non-GAAP results can be found in our earnings presentation posted on our IR website at investors.twilio.com. We will also make forward-looking statements on this call, including statements about our future outlook and goals. Such statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those described. Many of those risks and uncertainties are described in our SEC filings, including our most recent Form 10-K and our forthcoming Form 10-Q. Forward-looking statements represent our beliefs and assumptions only as of the date such statements are made. We disclaim any obligation to update any forward-looking statements, except as required by law. With that, I'll hand it over to Khozema and Aidan, who will discuss our Q2 results, and we'll then open the call for Q&A.
Thank you, Rodney. Good afternoon, everyone, and thank you for joining us today. Twilio had an exceptional second quarter. We delivered $1.5 billion in revenue, accelerating organic growth to 17% year-over-year while non-GAAP gross profit growth also accelerated to 18% year-over-year. We generated $285 million in non-GAAP income from operations and $353 million in free cash flow. Twilio's momentum is strong. We're executing with precision and innovating across the board to power customer conversations in the age of AI. During the quarter, we hosted our annual user conference, SIGNAL, which is always the highlight of my year. I love connecting with customers one-on-one and hearing firsthand why these brands choose Twilio as their foundational infrastructure. We are proud to have had brands like AWS, Centerfield, Cobalt, Deepgram, IBM, Nestle, PGA of America, Rivian, Sierra and Stripe take the stage to share how Twilio is driving ROI for their businesses as they build for the next era of customer engagement. This year's SIGNAL was especially memorable because we announced the general availability of Twilio's next-generation platform. Our conversations layer, which includes Conversation Memory, Conversation Orchestrator, Conversation Intelligence, Conversation Relay and Agent Connect provide the building blocks customers need to deliver context-rich conversations over a consumer's lifetime. As an example, to drive conversion and scale revenue, leading automotive fintech company, Car Finance 247, joined our private beta program, a move that quickly evolved into a 7-figure deal to implement the new Twilio conversations layer. Their AI assistant, Carla, has already handled nearly 300,000 customer conversations. Customers who engage with Carla convert to approved leads 1.6x faster, delivering a multimillion dollar annual revenue uplift across their core commission and ancillary offerings. While our new products have only been in the hands of customers since May, these early stories validate that businesses need Twilio's conversational infrastructure that both serves humans and agents as they navigate a hybrid agentic era. The newly redesigned Twilio Console also launched in May, giving customers a single command center to manage all of their Twilio workloads. It has an intuitive UX, frictionless trials to encourage experimentation, AI-guided onboarding and one central billing experience. This is all in service of making it easier to build with Twilio, and the refreshed console bolsters our acceleration in self-serve and will make multiproduct adoption more seamless. Since the launch, a majority of existing customers have migrated to the new console, and we are seeing a 90% plus uplift in conversions when compared to the old console. We continue to see strength across the business, highlighted by robust messaging growth even as carriers have raised their fees on our customers. While these pass-through costs carry no direct impact on Twilio's profitability, we do recognize the pressure it creates for our customers, specifically small businesses. Our Twilio platform strategy equips our customers with complete access to a variety of channels, empowering our customers to diversify their engagement strategies, maintain cost efficiency and reliably reach their own customers. Our go-to-market focus on multiproduct adoption is working well, and we saw continued strength across our platform, including messaging, voice and software add-ons during the quarter. The team signed an 8-figure deal with a leading AI company and other key wins with All Nippon Airways, Atlassian, Eltropy, Kixie, Lirio, Medibank, Olo, OpenEvidence, Orionai Solutions, Vozzi and Xplor Technologies. Revenue growth from multiproduct customers is accelerating, illustrating that our customers are continuing to use multiple products within the Twilio platform to power personal multichannel communications. Let me walk you through a few examples. Olo, a digital commerce platform for restaurants, signed a cross-sell deal to expand their utilization of messaging and voice. Olo is leveraging Twilio's communications infrastructure to power real-time order notifications and seamless delivery updates across its restaurant network. We also landed a 7-figure deal with Eltropy, an agentic AI platform for credit unions and community banks to leverage Messaging, RCS, Voice and Branded Calling across the platform. Eltropy also built its AI voice agent using Conversation Relay to help financial institutions deliver better consumer experiences, accelerate resolutions, reduce operating costs and create a scalable AI-powered contact center from day 1. Another win was with a leading home improvement retailer who signed a 7-figure deal to utilize Messaging, Voice and Branded Calling. By consolidating its legacy communication traffic onto Twilio, the company is now able to streamline North American delivery logistics, leveraging trusted voice capabilities and rich RCS 2-way interactions to optimize transactional order notifications and appointment scheduling. Another great win from the quarter was with a leading HR and payroll technology platform, which signed a 7-figure deal to leverage Twilio Messaging and Verify to scale their unified employee engagement infrastructure. They are embedding messaging directly into their mobile application to power secure 2-way employee communications and batch-workforce text alerts while using Verify to deliver seamless 2-factor authentication for payroll access. And Atlassian, a leading provider of AI-powered collaboration and team productivity software, utilizes Twilio's communications infrastructure to deliver contextual, AI-powered, omnichannel support within its new Customer Service Management app. This partnership helps Atlassian reimagine customer experiences with complete context while scaling global channel coverage via Twilio's Flex SDK and Super Network. So that's the power of Twilio. Just as we've abstracted the complexities of global telecom for 18 years, we're now helping our customers abstract the complexities that come with creating omnichannel agentic conversations. And these innovations continue to earn praise from leading industry analysts. During the quarter, Twilio was named a Leader by Gartner in the 2026 Magic Quadrant CPaaS Report, scoring the highest in ability to execute. Additionally, Twilio was also named a Leader in the 2026 IDC MarketScape for AI-enabled CDP. In summary, there is tremendous momentum building across our business from landmark enterprise wins to an 8-figure deal with an AI company. Twilio is empowering the next generation of companies with our world-class infrastructure that's delivering measurable ROI in the AI era. Our next-generation conversational platform is live. Our refreshed console is accelerating adoption and our customer momentum has never been stronger. We remain focused on strong execution while building the future of customer engagement. And with that, I'll turn it over to Aidan.
Thank you, Khozema, and good afternoon, everyone. Twilio had an exceptional Q2, delivering record revenue of $1.5 billion, up 22% year-over-year on a reported basis and 17% year-over-year on an organic basis, which excludes incremental U.S. carrier pass-through fees. Non-GAAP gross profit growth accelerated to 18% year-over-year. We also generated record non-GAAP income from operations of $285 million and record free cash flow of $353 million. Top line performance was driven by strong volumes and solid go-to-market execution, resulting in another quarter of organic revenue growth acceleration. We saw strong customer additions in the quarter, aided by the release of our new Conversations Layer and Twilio Console. Our self-serve channel delivered revenue growth of 30% plus, while ISV revenue grew 25% plus. We are also seeing continued strength across the product portfolio. Messaging revenue growth was 28%, driven primarily by strong volumes and aided by growth in WhatsApp and RCS. Incremental carrier fees contributed roughly 10 points to Messaging's growth. Voice growth accelerated above 20% year-over-year, driven by a balance of volume growth and software add-ons, including triple-digit growth in Branded Calling and Conversational Intelligence. Finally, total software add-on revenue grew 25% plus, led by Verify, which accelerated to 30% plus growth. Our Q2 dollar-based net expansion rate was 116%, reflecting the improving growth trends we've seen in our business over the last several quarters. Incremental carrier fees contributed roughly 5 points to DBNE. We delivered record non-GAAP gross profit of $736 million with growth accelerating to 18% year-over-year, our fifth consecutive quarter of accelerating non-GAAP gross profit growth. This was driven by continued momentum in our higher-margin products in addition to our proactive efforts to deliver meaningful cost efficiencies. Non-GAAP gross margin was 49.1%, down 160 basis points year-over-year and 50 basis points quarter-over-quarter. We incurred incremental U.S. carrier pass-through fees of $71 million, which drove the year-over-year and quarter-over-quarter declines. Without these incremental fees, non-GAAP gross margins would have been up 60 basis points year-over-year and up 30 basis points quarter-over-quarter. Q2 non-GAAP income from operations came in ahead of expectations at $285 million, up 29% year-over-year, driven by strong gross profit dollar growth and continued cost leverage. Non-GAAP operating margin was 19%, up 100 basis points year-over-year and down 80 basis points quarter-over-quarter. Our Q2 non-GAAP operating margin includes a roughly 90 basis point headwind from incremental U.S. carrier fees. We generated $85 million in GAAP income from operations. This was impacted by a prepaid asset impairment of $33 million. This write-down did not impact our Q2 non-GAAP results or free cash flow and will not impact future results. Additionally, GAAP net income was positively impacted by a one-time noncash benefit of $944 million due to a valuation allowance release against certain U.S. federal and U.S. state deferred tax assets. The release did not have an impact on our non-GAAP results. Q2 stock-based compensation as a percentage of revenue was 9.5%, down 270 basis points year-over-year and 20 basis points quarter-over-quarter. We generated record free cash flow of $353 million in the quarter. Additionally, we completed $66 million in share repurchases in Q2 and have roughly $800 million remaining on our current authorization. Turning to guidance. For Q3, we're initiating a revenue target of $1.505 billion to $1.515 billion, representing 16% to 16.5% reported growth and 11% to 12% organic growth. Our Q3 reported revenue guidance assumes $56 million in incremental U.S. carrier fees. As a reminder, our organic revenue excludes the contribution from incremental increases to U.S. carrier fees. Moving to the full year. We're encouraged by the broad-based trends we saw in the first half. For the full year, we're raising our organic revenue growth range to 13% to 13.5%, up from 9.5% to 10.5% previously. We are raising our reported revenue growth range to 18% to 18.5%, up from 14% to 15% previously. In addition, we continue to expect full year non-GAAP gross profit growth to be similar to our organic revenue growth rate. Our full year revenue guidance assumes approximately $250 million in incremental pass-through revenue from U.S. carrier fees. As a reminder, while the pass-through fees have no impact on our gross profit, income from operations or free cash flow dollars, they do impact our margin rates. For modeling purposes, we would expect the incremental fees to reduce our full year 2026 non-GAAP gross margin by roughly 210 basis points when compared with our full year 2025 non-GAAP gross margin, all else equal. Turning to our profit outlook. For Q3, we expect non-GAAP income from operations of $285 million to $295 million. We are raising our full year 2026 non-GAAP income from operations range to $1.135 billion to $1.155 billion, up from $1.08 billion to $1.1 billion previously. Similarly, we are raising our full year free cash flow guidance to $1.135 billion to $1.155 billion. I'm very pleased with the accelerated revenue and gross profit growth we delivered in the second quarter as well as our ongoing financial discipline that is driving strong profitability and free cash flow. We remain focused on our key go-to-market initiatives and delivering the essential infrastructure that will help our customers win in the AI era. And with that, we'll now open it up for questions.
Questions and answers
Operator Instructions: Our first question comes from the line of Alex Zukin of Wolfe Research.
Truly congrats on the quarter. I guess if last quarter, there was a lot of questions of whether or not AI is creating durable tailwinds for your business, it doesn't feel like that's a question anymore. But I guess if I think about where you're seeing it most pronounced, whether in the Messaging and the Voice really across the business, what is happening in the messaging business? Because it seems like it's coming in ahead of expectations now kind of a second straight quarter. So what's driving that? And longer term, what did you see differently this quarter from Voice, the Voice AI cohort specifically versus your expectations?
Alex, this is Khozema. Thanks for the question. A lot there. So I would say in general, we saw very good strength in Messaging and Voice. Messaging is still early days in terms of AI tailwinds starting to show up. They are happening, but most of the activity continues to be in Voice. You are familiar with a lot of the trends in Voice right now with various scaled companies as well as many Voice AI start-ups, and most of these companies are choosing Twilio as their Voice infrastructure. More broadly, if you go back to SIGNAL, the channel story has been good for us. The conversation suite we launched incorporates AI in different categories, and we're seeing traction. I would specifically point to Conversation Memory and Conversation Intelligence, which received a lot of attention from customers for their AI attributes. Several of our software add-ons that incorporate AI did well as well. To sum up, there is broad-based strength across both channels and some of the newer products. I'll turn it over to Thomas for more detail.
Alex, it's Thomas. I want to touch on the cohort part of your question and give two examples. The first is a horizontal conversational AI company that started with Twilio in Q1 of 2025. They began as a low six-figure quarterly spend with Twilio that largely started with Voice. Since then, their spend on connectivity has more than tripled and the spend on software add-ons has gone from effectively nothing at the start to over $0.5 million a quarter run rate. This is now a $6 million annual run rate customer growing 65% a year. That's one example of an AI native. Another is a verticalized conversational AI company that started with us in Q1 of 2024 at $200,000. Same pattern: Voice first, then Messaging expansion. Now they're a $9 million customer with software add-ons growing 100% a year. You can get a sense for the production scale that these customers are reaching.
That's excellent. Aidan, maybe just a quick one for you. Obviously, Dollar-Based Net Expansion, biggest run-up we've seen. Maybe just touch on that and gross profit dollar growth and gross margins continue to accelerate — is there any one-time there? Or should we expect that to continue through the back half of this year?
On Dollar-Based Net Expansion, fees did help that number. In full transparency, they contributed about 5 points to that number. But we did see DBNE accelerate even adjusting for the fees; it was about 1 point better quarter-over-quarter. What's driving it is healthy growth with our existing customers. ISVs had a very strong quarter where we're seeing meaningful expansion rates. In addition, revenue growth from multiproduct customers is accelerating, which is helping expansion within our installed base. Regarding gross profit, it's a couple of things. First, strength in our higher-margin products, like voice software add-ons such as Verify and some of our voice software products. Strength in our support and services organization also helps. In addition, we continue to focus on optimizing costs. Gross margins continue to improve as we lap the cloud migration project we undertook to optimize our hosting environment. We also pursue things like direct connections with different carriers around the world. We announced in late March that we became the first cloud communications provider to secure direct connections for 10DLC and toll-free messaging with all major U.S. carriers. Initiatives like that help drive efficiency in our Messaging business. So it's a combination of mix as well as cost efficiencies. Going forward, no change to what we've said: we expect gross profit to grow at a similar rate to organic revenue.
Our next question comes from the line of Taylor McGinnis of UBS.
Congrats on the quarter. Looking at the Q3 guide, it implies the strength you saw in the first half of the year will continue into the second despite some tougher compares. Could you touch on the drivers underpinning that guide? It seems like it assumes messaging growth can maintain levels seen, excluding A2P fees. You also mentioned things like 30% plus Verify growth and an acceleration in self-serve. Can you unpack how you're thinking about growth across different segments since you're seeing strength in many areas?
I'll start. We won't get into each piece for Q3, but here's how they performed in Q2. So 17% overall growth, and gross profit growth accelerated to 18%. On a sales channel basis, ISVs and self-serve continue to perform very well: ISVs were 25% plus and self-serve 30% plus. Products were strong: Messaging 28% — driven by volume and some newer channels like WhatsApp and RCS — and Voice above 20%, driven by volume and software add-ons. Software add-ons overall were very strong. Broad-based by industry: tech, financial services, health care, all very strong. We feel good about the setup for Q3 and are guiding 11% to 12% organic growth, the highest guidance we've offered in three years. That said, while we beat by 5% plus in Q1 and Q2, we don't expect that to be the new norm. We face more challenging comparisons in Q3 and Q4 in Voice and software add-ons because they started to accelerate in the back half of last year, so that impacts our outlook a bit.
Our next question comes from the line of Samad Samana of Jefferies.
I'll echo the congrats on the strong quarter. On Voice AI strength, how much of that is new customer acquisition and onboarding with them lighting it up versus existing customers expanding into Voice AI products? And how concentrated is that Voice AI strength? Or is it relatively broad-based? I have one follow-up after that.
Samad, it's Thomas. The strength in Voice AI is broad-based across all of our channels. Self-service Voice in particular was very strong, with over 50% year-over-year growth. Many customers originate as Voice customers in the self-service channel and then expand — Messaging, RCS, et cetera. We see both AI natives starting with Voice and larger, established ISVs adding Voice into more agentic autonomous customer engagement workflows. A great example is Atlassian embedding a lot of our Voice AI capabilities directly into their Customer Service Management platform. So it's broad-based across enterprise, ISV large as well as AI natives.
Our next question comes from the line of Elizabeth Porter of Morgan Stanley.
I wanted to follow up on the new console where you noted that the majority of existing customers have migrated and the conversion is more than 90% higher. What precisely is the conversion metric measuring? Since it is still new, should we think about second product attach starting to be an uplift to revenue in 2027? How do we think about the timing of the feature changes and when they start to benefit?
Elizabeth, as Khozema mentioned, the conversion rate on the new Console reflects reduced friction in signing up with Twilio, getting started, and setting up their first campaigns or messages. We're seeing strong top-of-funnel conversion from the May launch through Q2. Much of that is experimentation that results in production workloads going online. Those are leading indicators for future revenue realization as customers scale into volume. Reducing the friction upfront and having high conversion throughout the funnel is what we're focusing on, and the leading indicators are very positive.
Our next question comes from the line of Callie Valenti of Goldman Sachs.
Congrats on the quarter. When you look at your pipeline today versus a year ago, what inning do you think we're currently in with respect to uplift to the Voice ecosystem from AI, both with AI natives and as other businesses adopt AI? What factors do you consider when measuring the durability of this tailwind and Twilio's ability to benefit regardless of where value accrues in the stack?
Good question, Callie. This is Khozema. I'd say we're in very early innings. One way to conceptualize it is the number of Voice AI interactions an individual has had in the last year — likely fewer than five or six for most people. While we're seeing strong growth now, much of the volume is still to come. Customers choose these capabilities because they drive high ROI and they can reduce token spend by using relevant context via Memory and Intelligence, rather than scouring large data sets. As we think about durability, expect some ups and downs as the AI story unfolds, but the secular tailwind is clear. The ROI we're seeing — revenue uplift and cost reduction — suggests significant durability over multiple years, not just one or two.
Our next question comes from the line of Jackson Ader of KeyBanc Capital Markets.
Curious about the split between net new revenue and existing net retention. In recent quarters, you've grown organically around 15-16% while net retention is about 110-111%. As you add new channels and customer acquisition channels improve, should we expect the growth over and above net retention to widen relative to history?
Jackson, you're hard to hear, but we got the gist. You're asking about the difference between DBNE and overall growth when adjusting for fees. There are two things happening. First, same-store sales are improving; we saw quarter-on-quarter improvement with long-term customers continuing to grow. Second, we're adding many new customers. Thomas gave examples earlier, and those new paying customers will often turn into expansion customers over time. The customer that started with us one to two years ago at near zero spend and then added multiple products exemplifies the path to expansion and contributes to the delta between DBNE and overall organic growth.
I'll add one more data point: our largest customer cohort, the $1 million-plus customers, is growing over 20%, which is another example of the expansion we're seeing.
Our next question comes from the line of Nick Altmann of U.S. Bancorp.
I wanted to follow up on Elizabeth's question about the new console. First, how much of the acceleration in multiproduct revenue in the quarter would you attribute to the new Twilio Console? Second, how meaningful can the new console be to driving multiproduct revenue mix higher in the near term, especially for higher-margin offerings like software add-ons and Voice?
In terms of your first question, Nick, it contributed very little to multiproduct revenue in the quarter.
Nick, we are optimistic about what the new Console will do as customers sign up and convert. We have credits available for customers to try multiple products as part of the one-console experience. As customers activate their first channel, they can start a second or third channel using those credits. We'll begin to see that play out. It's hard to predict exactly when and the revenue implications, but user feedback has been very positive.
Our next question comes from the line of Derrick Wood of TD Cowen.
Congrats from me. OpenAI recently announced a new product called Presence, and they mentioned an early focus was using their speech model for voice and text conversational interactions in customer support and customer experience settings. With this backdrop, how do you see OpenAI as a customer, a partner or a competitor? What new opportunities could you target with them given the innovation with their models and now at the application layer?
That's not unique to OpenAI; many companies in the ecosystem can be customers, partners or competitors depending on context. By and large, we view them as partners. Customers prefer working with a neutral party. Twilio positions itself as neutral — the 'Switzerland' — enabling integration with any LLM, data warehouse, context layer, or cloud. Customers will make and change choices rapidly, and Twilio being neutral best situates us. If a customer wants to use a particular tool, they can integrate with Twilio either way and get up and running.
At SIGNAL we announced integrations with several AI model providers and developer tools. We're focusing on bringing Twilio into the agent builder toolset so it's easier to build and integrate AI agents directly with Twilio Communications and Infrastructure. We're doing the same with Microsoft, AWS, and others. Ultimately, you must reach the end user on their device, and Twilio's Super Network connects very nicely into those AI frontier model infrastructures.
Our next question comes from the line of Siti Panigrahi of Mizuho.
You position Twilio as a neutral infrastructure provider integrating with LLMs and data warehouses. How do you view systems-of-record companies like Salesforce and ServiceNow trying to enter this space? Are they a competitive threat or complementary?
Being neutral has advantages. Those companies can be complements or coopetition, but by and large we see them as complementary. We have integrations with both Salesforce and ServiceNow. To drive intelligence you need context and a channel, and Twilio provides that. Whether a customer integrates with another system of record or uses a different AI toolset, Twilio can sit in the middle. The need for context and channel gives Twilio a strong position.
Our next question comes from the line of William Power of Baird.
Congratulations on the results and sustained gross profit growth. On the Q2 upside, matching Q1's upside, anything in particular you'd call out as an upside surprise? Also, can you provide color on the sources of Messaging strength and where RCS is playing out within that?
I wouldn't say there was a big surprise. We performed well across industries, products, and sales channels. We feel good about the setup for the back half. For Messaging, excluding fees it grew about 18%, with the fees contributing about 10 points. WhatsApp and RCS are growing quickly from a smaller base. By industry, tech, financial services, professional services, health care, retail and e-commerce all generated meaningful double-digit growth. By sales channel, ISVs and self-serve were very strong. From a use-case perspective, Verify grew 30% plus, addressing authentication use cases. So messaging strength was broad-based, with some growth from AI natives too, though AI companies' messaging volumes are more traditional use cases.
To add, with the new platform and conversations capabilities we launched, we're seeing a trend toward consolidating spend with Twilio. Enterprise and ISV customers that were multi-sourced are converging on our platform to take advantage of software add-ons we introduced. A good example is OpenEvidence, an AI decision platform for physicians, which chose Twilio for reliability, performance and global reach combined with our software orchestration layer.
Our next question comes from the line of Joshua Reilly of Needham.
For the Voice AI start-up customers, do you have a feel for how much of their traffic is on your platform versus their appetite to send traffic via competitors? As these start-ups mature, how do you expect their share of volume on your platform to evolve versus diversifying traffic?
We see the opposite of widespread diversification: consolidation. To take full advantage of our conversation suite, especially for AI natives that need context and orchestration, consolidation onto Twilio makes sense. While we don't have a specific measure of where every pocket of spend sits, to maximize ROI, consolidation is the likely path rather than diversification.
Our next question comes from the line of Arjun Bhatia of William Blair.
Where are we in the cross-sell motion? It seems growth in individual channels is coming through volume expansion and consolidation, but from a go-to-market perspective, are we starting to see cross-channel cross-sell, or is that still ahead?
We're absolutely seeing cross-sell and upsell momentum. Examples shared earlier include customers starting with Messaging or Voice and adding additional channels to leverage Memory, Orchestration, and observability for sentiment and personalization. AI natives that started with Voice have added WhatsApp and other chat-based services. ISVs are rolling out Branded Calling after starting with Messaging or adding Flex embedded into core platforms. Channels and software upsells are happening — software add-ons grew 25% plus this quarter — so upsell momentum is strong.
Our next question comes from the line of James Fish of Piper Sandler.
How should we think about RCS at this point in terms of volumes and potential margin profile within Messaging? And within ISVs, can you comment on the underlying mix of your products?
RCS is growing very fast off a relatively small base. It's an attractive product but still small in the overall scheme, though growth is very strong.
From a margin perspective, assume RCS is roughly in line with the rest of Messaging. On product mix in ISVs, it's a broad mix of Messaging, Voice, and email use cases across many ISVs from the long tail to bigger enterprises. We're also seeing more ISVs adopt our software add-ons regularly.
Our next question comes from the line of Samik Chatterjee of JPMorgan.
For Orchestrator, Memory and Intelligence, is early adoption mainly from existing customers replacing orchestration and context layers they built in-house? Or is it coming from customers standing up entirely new AI workflows, and which motion is reaching production faster?
It's a mix. We saw initial conversation rollouts from customers who participated in our private beta program and have now gone into production at scale — Car Finance is an example with a 7-figure deal. That's an example of existing processes dramatically improved by Twilio capabilities. At the same time, some smaller AI-native companies are building new offerings on top of these capabilities for both customer support and AI sales outbound use cases. It's improving customer experience and reducing cost to serve, whether Voice-centric or Messaging-centric. We're seeing consolidation of traffic and volumes onto Twilio channels and software being rolled into production use cases.
Our next question comes from the line of Koji Ikeda of Bank of America.
One of the messages I hear is that the future involves humans and agents operating together. From checks and other management teams, agents are spooling up actions in workflows. Does Twilio's long-term opportunity scale more with AI agent-driven actions or traditional human-driven actions at a much higher monetization level?
It will be both. For the next couple of years it's mostly human-to-human interactions, but much of that will be augmented with AI. The future we build toward expects a large portion of interactions to flip to human-to-agent and agent-to-human. Fully agentic agent-to-agent interactions are farther out. High-value, high-stakes transactions in financial services and health care will often require a human in the loop for validation. We're starting to see this take off, but it's early days, which gives us confidence in long-term durability over several years.
Our next question comes from the line of Patrick Walravens of Citizens.
One question: any commentary on how to think about the timing of AI contributing more meaningfully to revenue or its current scale?
As I said earlier, it is early days broadly. We're starting to see indications that AI can be a meaningful contributor, particularly animating Voice AI trends we've discussed. It's early innings but we see a durable tailwind. We expect interactions to move from human-to-human to human-to-agent and agent-to-human, which provides durability. Many interactions today are Voice-centric, and we expect many of those to move to other channels over time, further supporting durability.
Our next question comes from the line of Parker Lane of Stifel.
Aidan, the AI data cohort is smaller and newer, but can you comment on the DBNE characteristics you're seeing for those companies and how that's rolling into your outlook for the year?
DBNE characteristics for AI companies are very strong. As Thomas discussed, AI companies typically come in on a channel, grow on that channel, expand into software products, and may adopt a second channel. DBNE for that cohort is well above the company average, and that is factored into our guidance for the back half of the year.
Our next question comes from the line of Andrew King of Rosenblatt.
Congrats on the strong quarter. Can you dive into free token usage progression and any products driving significant engagement from customers using those free tokens?
Do you mean usage of free credits by customers? The Console experience has exceeded our expectations since its SIGNAL launch. We've discussed conversion rates and migration to the new console. The free trials are one attractive Console feature; they allow customers to experiment across products. We guide customers through experiences based on their stated use cases. Over time, the Console architecture and guidance should enable better cross-sell and upsell adoption, and we expect that to happen.
I am showing no further questions at this time. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.