Hello, and welcome to the Twilio Fourth Quarter 2023 Earnings Conference Call. After the speakers' remarks, there will be a question-and-answer session. I will now turn the conference over to Bryan Vaniman, Senior Vice President of Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining us for Twilio's Fourth Quarter 2023 Earnings Conference Call. Our prepared remarks, earnings press release, investor presentation, SEC filings, and a replay of today's call can be found on our IR website at investors.twilio.com. Joining me today are Khozema Shipchandler, Chief Executive Officer; and Aidan Viggiano, Chief Financial 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 release and our prepared remarks posted on our IR website. 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-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 Q4 and full year results and then we'll open the call for Q&A.

Thank you, Bryan. Good afternoon, everyone, and thank you for joining us today. Twilio had a terrific fourth quarter to close out a strong 2023. We exceeded our revenue and non-GAAP income from operations targets for the quarter, delivering nearly $1.1 billion in revenue, $173 million in non-GAAP income from operations, and $211 million in free cash flow. Before jumping into the results of the quarter, I wanted to start this call, my first as Twilio's CEO, by sharing that it is a privilege to be leading this company into its next chapter. I believe there is an incredible opportunity to unlock increased value for customers and shareholders. As we continue to innovate, we're focused on combining the power of communications, data, and AI to make every interaction more personalized and intelligent. Our vision to become the leading customer engagement platform is unchanged, and we are executing on this from a solid operational foundation and a fundamentally strong competitive and financial position. We have a great set of products and hundreds of thousands of customers who are committed to Twilio, because we are bringing tremendous value to their businesses. Over the last year, we took significant steps to enhance our focus and execution, while optimizing our capital allocation strategy. We also took meaningful actions to streamline our cost structure, accelerate our path to profitability, and deliver durable growth. Our teams delivered on these objectives in 2023, and the numbers underscore this. During 2023, we generated $4.2 billion in revenue, improved our non-GAAP operating results from a non-GAAP operating loss of $4 million in 2022 to non-GAAP operating income of $533 million, delivered $364 million in free cash flow, and reduced our stock-based compensation excluding restructuring expense as a percent of revenue by 450 basis points year-over-year. All of this hard work enabled us to take significant strides on our path to GAAP profitability. Our product teams have worked to infuse AI capabilities into our CustomerAI solutions, enabling us to continue on our promise of more intelligent communications for our customers. Our Twilio Communications business continues to demonstrate meaningful leverage, which helped to drive the impressive financial performance that Twilio delivered for the year, and we will build upon this momentum in 2024. At the same time, Twilio Segment is not performing at the level it needs to and I've already begun to take a closer look at this business to see how we can deliver improved performance. I'll touch on this a bit later. Our Twilio Communications business, which drove 93% of Twilio's revenue in 2023, had a very strong fourth quarter with revenue of $1 billion, and for the full year, it generated revenue of $3.859 billion and grew 11% year-over-year on an organic basis. I had the privilege of leading Twilio Communications over the last year and I am extremely proud of what the team accomplished in terms of increasing both operational efficiency and product innovation. Throughout the year, we undertook a number of actions to drive increased operating leverage and further streamline our go-to-market activity. We continued these efforts in Q4, by moving both Flex and Marketing Campaigns into Communications and the results we are reporting today reflect this shift. With these changes, we're better aligning how our customers want to buy our products and are also taking advantage of natural upsell and cross-sell opportunities. We also delivered on aggressive product roadmaps and saw early signs of success with CustomerAI. In Q4, Twilio Voice Intelligence, an AI-powered capability that enables our customers to extract data insights from their call recordings, was released in beta and customers have already used it to analyze over 42 million call minutes. Our Traffic Optimization Engine and the Traffic Shaping algorithm are examples of innovations we introduced to drive greater flexibility and increased performance in our messaging products. Our products also set new records by sending over 4 billion messages and 64 billion emails during Cyber Week, with 100% uptime across core messaging and email, a testament to the scale and reliability of our platform. Our innovations are also getting recognized externally, as we maintained our position in the CPaaS industry as evidenced by the fact that Twilio is named a leader in the 2023 Gartner Magic Quadrant for CPaaS and a leader in the Omdia Universe: Customer Engagement Platforms 2023 to 2024. We're continuing to deliver impressive customer wins. In Q4, we signed our largest messaging deal to date, a nine-figure commitment with a leading cloud communications software company. We're also leveraging our network of ISVs and partners to accelerate our ability to reach new customers and expand our geographic footprint. For example, we signed a three-year, eight-figure deal with Airship. Airship's mobile app experience platform powers trillions of interactions for thousands of global brands, and they will become an important partner where our customers will be able to leverage a fully integrated cross-channel orchestration solution for both messaging and email channels. Our partner channel is certainly proving to be an area of opportunity for us, and one we will continue to focus on this year. Our Twilio Segment business, formerly Twilio Data & Applications, while still strategically important to Twilio, continues to underperform. Although we drove sequential bookings improvement in Q4, growth is not yet accelerating up to our expectations. We need to execute better and I believe that we can. Over the past five weeks, I've been working with the team to conduct an extensive operational review of Segment, and this work is ongoing. We plan to do a read-out of these results in March at which time I'll be ready to share our findings, path forward, and any changes to Twilio's financial framework as a result. That said, the Segment product teams are laser-focused on shipping updates to customers and we're seeing a great response to our CustomerAI innovations. Since becoming publicly available in Q3 2023, CustomerAI Predictions has been adopted by over 150 customers. And, our CustomerAI Recommendations tool, which helps determine the products that are most likely to drive purchases and engagement for each unique customer, went live in a private beta in Q4. Staples Canada, a leading provider of services, tech and other merchandise solutions for work and school life was able to leverage CustomerAI Recommendations in its effort to provide more personalized recommendations to sell excess inventory and improve their cross-selling efforts. It's abundantly clear that Segment is a powerful product that is driving meaningful value for customers and demonstrating market leadership, as evidenced by IDC's most recent reports where Twilio is in the Leaders category in the 2023 IDC MarketScape on customer data platforms for the financial services industry and the number one CDP for 2022 market share. We continue to see strong traction with customers recognizing the unique value proposition of combining our communications and data capabilities. In the fourth quarter, we signed a competitive, multi-year, eight-figure deal with a leading US financial services company whose usage of our platform spans both Communications and Segment. They chose Twilio to meet their needs both internally and externally with their customers. Internally, they're deploying Segment so they can get a real-time and personalized view of their end users across multiple business units. They will leverage Segment's Zero Copy Architecture to query their data warehouse directly, to efficiently and securely enrich Segment profiles. Externally, they're deploying Verify so that the millions of customers who rely on them get a seamless and secure authentication process when logging in. We also signed a seven-figure deal with an international salon management software company. With Twilio, this company moved away from the incumbent providers and now relies solely on Twilio Messaging for all of its one-to-one messaging with customers. And the company already deployed Segment for its B2B business so that they are able to have a better customer view of those purchasing beauty products directly from them. These customers are leveraging Twilio to not just bring their communications and data together, but to help them personalize and build lasting loyalty with their customers. Our team enters 2024 focused on making balanced and intentional decisions that will help us to deliver durable, profitable growth. Our priorities for the year are clear. First, we need to continue running our business with better sales execution and we will continue to look for areas where we can accelerate growth. Second, we need to wrap up our business review of Segment and determine the best path forward that will position Twilio for long-term success while advancing our objective of optimizing profitable growth. And third, we remain extremely bullish on AI and our ability to innovate across our portfolio, with several incredible examples in both our product roadmaps and in private beta. For the past 15 years, our Co-Founder Jeff Lawson did a remarkable job of leading this company from a disruptive startup to the admired company that it is today. I truly believe that we're set up for success to build for the next phase of our journey and I'm grateful to follow in Jeff's footsteps. I also want to express my gratitude for the thousands of Twilions who make this company such a special place. Our employees have undergone a lot of change this past year, yet through it all they've remained committed to building a great company that's focused on delivering for our customers. We will continue to run a financially sound and extremely innovative business. I'm continually impressed with the progress the team has made and how we've positioned the business to optimize for profitable growth moving forward. That said, we have more work to do and I look forward to leading Twilio in this next phase. And with that, I'll turn it over to Aidan.

Thank you, Khozema. Twilio finished the year with a strong fourth quarter. We exceeded our guidance and delivered another record quarter of revenue, non-GAAP income from operations, and free cash flow. For the full year, we generated $4.154 billion in revenue, 10% organic revenue growth, $533 million in non-GAAP income from operations, and $364 million in free cash flow. These results demonstrate the significant progress we've made over the last year from a business that was roughly breakeven on a non-GAAP basis and generated negative free cash flow in 2022 to one that is now generating meaningful levels of non-GAAP income from operations and free cash flow while delivering double-digit organic growth. We came into 2023 committed to this outcome and we exceeded what we said we were going to do. Fourth quarter revenue was $1.076 billion, up 5% reported and 8% organic year-over-year. Communications revenue was $1 billion, up 5% reported and 8% organic year-over-year. Segment revenue was $75 million, up 4% year-over-year. As a result of the operational changes Khozema highlighted regarding Flex and Marketing Campaigns, these products are now reported as part of our Communications business. For Q4, this represented $54 million of revenue that would have previously been allocated to Data & Applications. We have also renamed Data & Applications to Twilio Segment, which includes both our Segment and Engage products. As a result of these changes, all segment-level results and metrics have been recast accordingly. We continued to see stabilization in volumes across our usage-based products throughout the quarter, as well as strong seasonal activity around the holidays, which helped to drive our revenue beat in Q4. Similar to the last two quarters, our Q4 revenue growth rate was negatively impacted by headwinds from customers in the crypto industry. Total Q4 organic revenue growth excluding crypto customers was 10% year-over-year and for the full year 2023, total organic revenue growth excluding crypto customers was 13% year-over-year. We expect Q1 headwinds from crypto to be roughly in line with Q4, after which we will have lapped the vast majority of the crypto impact. Our Q4 Dollar-Based Net Expansion Rate was 102%. Our Dollar-Based Net Expansion Rate for Communications was 102%, or 104% excluding crypto customers. Dollar-Based Net Expansion Rate for Segment was 96%, driven primarily by elevated churn and contraction, though we did see a modest improvement in churn and contraction versus Q3. We delivered Q4 non-GAAP gross profit of $564 million, growing 9% year-over-year and representing a non-GAAP gross margin of 52.4%. This was up 180 basis points year-over-year and down 110 basis points quarter-over-quarter. The decline quarter-over-quarter was primarily driven by lower 10DLC campaign registration fees and international messaging. Q4 non-GAAP gross margins for our Communications and Segment business units were 50.7% and 74.4%, respectively. Q4 non-GAAP income from operations came in meaningfully ahead of expectations at $173 million, representing a non-GAAP operating margin of 16%. This was primarily driven by better-than-expected revenue and ongoing cost discipline, though we also benefited from savings related to our December restructuring and recognized a one-time $6 million gain from our settlement with the City of San Francisco. As we continue to evolve our disclosures in support of our commitment to provide greater transparency on business performance and in response to investor feedback, going forward we intend to report quarterly non-GAAP income and loss from operations by business unit. Q4 non-GAAP income from operations for our Communications business was $248 million, and Q4 non-GAAP loss from operations for our Segment business was $18 million. As Khozema mentioned, we are undergoing an operational review of the Segment business in order to identify the appropriate path forward for improved execution and profitable growth. We'll provide more details on the outcome of this review upon its completion in March. As a result of Segment's business performance, we completed an impairment test on the intangible assets we acquired as part of our Segment acquisition. The test resulted in a $286 million impairment of our developed technology and customer relationship intangible assets. No impairment of our Segment reporting unit goodwill was identified. Segment carried approximately $300 million in goodwill at year-end. Q4 non-GAAP loss from operations was $362 million, which includes $25 million of expenses associated with restructuring charges and the aforementioned $286 million intangible asset impairment charge related to Segment. Stock-based compensation as a percentage of revenue was 15.3% in Q4, excluding approximately $1.9 million of restructuring costs, down 260 basis points quarter-over-quarter and 360 basis points year-over-year. In Q4, we generated free cash flow of $211 million, driven primarily by strong non-GAAP profitability, as well as heightened collections and an $18 million one-time cash benefit related to our settlement with the City of San Francisco. While we expect free cash flow to vary quarter-to-quarter, free cash flow remains a focus for us as we drive greater profitability in the business. Lastly, we continued to execute against the $1 billion share repurchase program that we announced in February 2023, and have now completed over $730 million of repurchases to date. Moving to guidance, for Q1 we're initiating a revenue target of $1.025 billion to $1.035 billion, representing year-over-year growth of 2% to 3% on a reported basis and 5% to 6% on an organic basis. The expected sequential decline in revenue is due in part to elevated seasonal activity on our platform in Q4, which we do not expect to recur in Q1. This is a similar dynamic to what we saw last year. We continue to see volume stabilization across our Communications products, though we're planning prudently given the usage-based nature of our business. We do expect year-over-year growth through the balance of the year. Turning to our profitability outlook for Q1. We expect non-GAAP income from operations of $120 million to $130 million, down sequentially quarter-over-quarter primarily due to our lower revenue guide and an estimated $20 million of incremental expenses associated with a new cash bonus program. This new program will allow us to reduce go-forward equity grants as a proportion of total compensation and is part of our continued efforts to transition employee compensation from equity towards cash in order to reduce stock-based compensation expenses. We're continuing to focus on driving operating leverage, and we remain committed to reducing stock-based compensation on our path to GAAP profitability. Given the Segment operational review currently underway, it's premature to provide full year 2024 non-GAAP income from operations guidance at this stage, but at a minimum, we expect to exceed our 2023 non-GAAP income from operations even after taking into account an estimated $90 million of incremental annual expenses for the new cash bonus program. We intend to provide a full year 2024 non-GAAP income from operations outlook and any updates to our financial framework following the completion of the Segment operational review in March. We've made significant strides over the last year in driving meaningful non-GAAP profitability and free cash flow generation in our business. We have strengthened our financial foundation and set ourselves up well to deliver durable, efficient growth in 2024 and beyond. I'm proud of everything our teams have accomplished in 2023, and I'm excited for the opportunities ahead. With that, we'll open it up for questions.

Thank you. Your first question comes from the line of Meta Marshall with Morgan Stanley. Your line is open.

Thank you. For my first question, what indicators are you looking at to measure traction in the Segment business? Previously, you mentioned improvements in pipelines and sales efficiency, but you didn't provide those statistics this time. How can we benchmark performance improvements? Additionally, I'd like to ask about gross margins. We typically see a rise in Q4 gross margins for the Communication sector due to increased North America traffic. However, I've noticed a decline sequentially. Any insights on gross margins would be appreciated. Thank you.

Yeah, sure. Hey, Meta, I'll start with the Segment part of it and Aidan can answer the gross margin part of it. So on Segment, I mean, some of the indicators that we're looking at is sequential bookings, and we did see improvement in Q4, but as we alluded to, it's not exactly where we'd like it to be. And I think just the overall pace of the improvements that we were anticipating and that we would expect of ourselves, they're just kind of not meeting our expectations. I think we've also seen consistent win rates over the course of the year. And again, we did see a modest improvement in the win rate in Q4. And notably, Q4 was sort of our best new logo bookings performance as well, actually since 2021. And so, we feel pretty good about that, at least in terms of trajectory, but again, have work to do. And then just finally, it's the number one CDP, at least based on the most recent report by Market Share as determined by IDC. And we think that just based on what we've been able to do with it and customer AI and how we can expand it across our Segment product portfolio that there's just more that we can do there. But as we said, it's strategically important, but we definitely do think we can do a better job in terms of running that part of the business.

Hey, Meta, I'll take the gross margin question on Comm. So it was down quarter-over-quarter. We did see Q3 bump up quite a bit. So Q4 is still higher than what we saw in the first half of the year. The drop quarter-over-quarter was driven by lower US 10DLC registration fees quarter-over-quarter. If you remember, last quarter we made a push to get customers using 10DLC in the US registered that resulted in additional fees. And we are seeing some of that margin pressure kind of quarter-over-quarter driven by that. And in addition to that, within international messaging, we saw a little bit of margin pressure as well, primarily a function of just where messages are going within different countries in the international market. So those are the two big drivers. But when you look at margins overall for the business, pretty good performance year-over-year. Communications is up 230 basis points quarter-over-quarter in Q4, for the year up 190 basis points. So generally a positive margin trend in the year, although down a bit versus Q3.

Great. Thanks.

Thank you. Khozema, I believe you mentioned a nine-figure messaging win and largest messaging deal that you've won to date. Can you just shed any light on how that came together? Anything on contract duration so we can annualize it? And then just perhaps when you think that might start contributing revenue? Not clear to me whether that could click in immediately or perhaps sometime later in the year. Then I have a quick follow-up.

Yes. I mean, I can't get too far into it because we can't disclose the customer names, but we're certainly proud of the fact that we're able to score both of those deals. They're each is a little bit unique just based on kind of the customer type that's involved in each one. I think that those are both kind of multi-year arrangements, and so there's an opportunity for that revenue to continue over a period of time. Like, that's kind of the typical contract duration length that we typically see, and we should see that revenue over the next quarter or two.

Got it. Aidan, as a quick follow-up, what accounts for the different spread for Q1, where I believe you're projecting fairly consistently or even slightly better organic growth compared to your guidance for Q4, yet this translates into a somewhat lower revenue growth rate that we need to model? Can you walk us through that? Is it related to the impact of crypto or something else?

Let me take it from here. There are a few key points to consider. We are guiding for 5% to 6% organic growth, down from 8% in Q4. One factor affecting our growth is the impact of cryptocurrency, which contributed a 200 basis point headwind in Q4 and is expected to be similar in Q1. Additionally, we are continuing to streamline our product portfolio to focus on delivering fewer things more effectively. This year, we will be phasing out our video product and the software component of our Zipwhip business, which will together contribute approximately a 150 basis point headwind to growth in Q1. We anticipate a similar impact on total growth for 2024. In total, that gives us about a 200 basis point headwind from crypto and another 150 basis points from the discontinuation of the video and software products. Lastly, we will continue to plan cautiously due to the usage-based nature of our business, which differs from the predictability of subscription models. We do expect to see year-over-year revenue growth for the remainder of the year.

Okay. Understood. Very clear. Thank you.

Your next question comes from the line of Jim Fish with Piper Sandler. Your line is open.

Hey, guys, this is Quinton on for Jim Fish. Thanks for taking our question. Maybe first, a narrative that's been out in the market has been competitors potentially getting more aggressive from a pricing standpoint, specifically in the core messaging segment. Is that something you're seeing already here in Q1 or anything you saw in Q4, and then anything you can point to in terms of changes from a competitive landscape positioning? Thank you.

Yes, this is Khozema. I'll take the question. In short, no. The way that I would characterize it is that, the success of the company is really built on the innovation and quality of our offering. And so I'm aware of what you're kind of referring to, and we never really comment on any specific competitor. I think the reality of what we do is that, we deliver a really broad and innovative set of solutions for our Communications customers and we charge a fair price for it. And so whether it's the breadth of our channels, the reliability of our super network, or the global scale, all of those factors are in the mix in terms of the way that we serve customers and serve them very, very well. We've made a lot of investments in compliance and fraud mitigation as well, to ensure users aren't stuck paying for fraudulent messages either. And we just want to ensure that we deliver great experiences. And fundamentally, we think that that's a better setup for Twilio and our customers. And we've had a long history, really, of maintaining price discipline. And so, we've been able to compete very, very successfully with folks that are on the lower end of the market and maintain, if not grow, our market share over time.

Thank you for your insights. As a follow-up, I recognize the challenges in the crypto market, but I've noticed a rebound in crypto pricing. Are you observing any quarter-over-quarter improvements in crypto-related activity? How do you anticipate this will trend in 2024 with a potential increase in pricing? Does the relationship hold that as crypto pricing rises, activity on Twilio also increases? Thank you.

From a crypto perspective, we discussed last year that the second and third quarters represented the peak of crypto volume on our platform. We have dealt with that headwind over the past several quarters. We anticipate that the headwind in the first quarter will be similar to what we experienced in the fourth quarter, after which we expect the pressures related to crypto growth to ease somewhat. Beyond this, I won't provide specific guidance regarding the industry, but we are beginning to move past those higher periods of crypto volume.

Great. Thanks. Appreciate you taking the question.

Yes, thank you for taking the question. So the first one for the Comms business, aside from creating the best possible product there, what should we expect? What do you expect to drive better revenue growth? Is it the Olympics later on the year? The election? Is it macro? What are your expectations for revenue growth drivers?

Yeah, I wouldn't point to any one of those events as being items that we're looking at to provide a driver of growth. I also wouldn't point to kind of macro dynamics. I would say we're really in a position in which we want to be able to produce our own kind of durable growth. As I mentioned earlier, like some of the areas that we're really focused on is use case-based selling, self-serve and CustomerAI. I think one of the ways in which we've really tried to approach our customers through the lens of the problems that they're trying to solve versus just necessarily the products that we have in our bag. I mentioned a few examples of that a moment ago in terms of Verify as it relates to omnichannel authentication, Unify for personalized customer engagement, and then Voice Intelligence for richer customer conversations. And so those are all areas where we do anticipate that we'll be able to lift growth. I think AI in particular is a really exciting opportunity in which we have an opportunity to enrich Communications, also combine data, our data capabilities with Communications. And then finally, as it relates to Segment, again, as I mentioned a moment ago, I think it's really the priority is to mitigate churn and contraction. And I think if we can do all those things, then it's really much more around our control and doesn't actually have much to do with the election or the Olympics.

And then one more, if I could. Khozema, earlier you said that nothing is off the table for the strategic review of Segment. Does that include a sale? And then you mentioned change in financial framework. I apologize. Not exactly sure what that means. Does that potentially mean mothballing that business until the market comes to you with demand for CDP? Maybe some more clarity would be helpful.

Yes, I wouldn't necessarily read any of those things into it. However, what I will say is that on the one hand, Segment is strategically important to the company, but on the other hand, we are approaching the review that we talked about with an open mind. We know the business is underperforming. We definitely do believe that we can execute better, and we're just approaching the operational review with an open mind so that we can determine the best path forward. Our overall priority as a company, whether it's Comms or Segment, is durable, profitable growth. And as it relates to the March framework, what we said is that beyond the guidance that we obviously provided today, any other elements of our financials, whether it be capital allocation or kind of medium-term targets, etc., we would provide in March, in addition to any operational changes that we would make with respect to Segment.

Great. And March means at earnings, or would that come out prior to earnings?

We're kind of targeting early March.

Your next question comes from the line of Derrick Wood with TD Cowen. Your line is open. Oh, great. Thanks. Khozema, I just wanted to touch on the Flex side of the business. You guys made some cuts in Q4. You shifted that go-to-market to the Communication side. Just kind of curious how you're feeling about the level of growth capacity and Flex and if there's potentially some disruption in the first half because of the changes. And then just kind of what levers you're looking to lean into to drive more cross-selling with the new go-to-market structure?

I believe there's a significant opportunity for cross-selling across the company. For instance, we can transform a Communications deal into a Verify deal that utilizes omnichannel authentication. We also discussed Unify, which enhances personalized customer engagement by combining the strengths of Flex and Segment. Additionally, Voice Intelligence offers us the chance to leverage AI for our existing voice customers, providing them with richer, more actionable insights. These strategies present valuable ways for us to cross-sell within our existing business. Regarding Flex, I don’t see much change in the first half or for the remainder of the year. After our actions in December, we recognized that the buying personas for Voice, IVR, and Flex are quite similar. We aimed to simplify customer experience while gaining efficiencies in our operations. As a result, we consolidated some capabilities, allowing our Communications account executives to offer Flex and composable contact center capabilities to all customers in a way that aligns with their purchasing preferences. Consequently, there have been no significant negative impacts, and we are optimistic about future possibilities stemming from this realignment.

Your final question will come from the line of Matt VanVliet of BTIG. Your line is open. Yes. Hi. Thanks for taking the question. Maybe just following up on not only the Flex opportunity, but across Communications. I mean, how are you thinking about partner engagement and sort of reengaging with the channel, building that team back out and using that as a leverage point and additional distribution into larger enterprises?

Yes, I believe there are several opportunities here, and I wouldn't limit this to Flex alone. What we're observing more broadly is that regarding Flex, we have a partner ecosystem that has been growing alongside us. They have created various innovative capabilities that enhance our offerings within Flex and improve the overall customer experience. We are very enthusiastic about making further progress in this area. Given some changes we've made in our business, and echoing the previous question, we have the chance to break down or make Flex's components adaptable to meet customer purchasing needs in a way that differs from simply providing a complete contact center solution. Additionally, we see a significant opportunity with our independent software vendors (ISVs). We mentioned a substantial deal we established with a partner. The role of partners in our business is becoming more crucial, and our ability to support their growth with their customers while collaborating to bring solutions to market presents an exciting opportunity for our business and will definitely be a key focus area for us.

Thank you. That will conclude today's conference call. We thank you for joining. You may now disconnect your lines.