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Twilio stock soared to its highest level in 4 years. Its CEO shares how AI helped the company turn things around. [Business Insider]

Twilio’s stock hit a four-year high this week, a stunning reversal for the cloud communications company that spent much of 2022 and 2023 struggling with slowing growth and layoffs. The surge, which saw shares climb over 12% in a single session, marks a decisive moment for the San Francisco-based firm. In an exclusive interview, CEO Khozema Shipchandler told me that the secret behind the turnaround isn’t just cost-cutting—it’s artificial intelligence.

The Turnaround Story: From Restructuring to Rebound

Two years ago, Twilio was in a very different place. The company had overhired during the pandemic boom, and when the digital ad market corrected, its customer engagement platform saw revenue growth slow to a crawl. Shipchandler, who took the helm in early 2023, made painful cuts: 17% of the workforce was let go, and unprofitable business units were shuttered. But he also made a bet that AI could transform Twilio from a “plumbing” provider for SMS and email into a smarter, more valuable layer for businesses.

“We realized that our customers didn’t just want to send messages—they wanted to send the right message at the right time, to the right person, in the right channel,” Shipchandler explained. “That’s a data and AI problem, not just a delivery problem.”

How AI Changed Twilio’s Product Strategy

The key product driving the turnaround is Twilio’s CustomerAI, a suite of tools that uses machine learning to optimize customer communications. Instead of simply routing a text message, the AI can predict whether a user is more likely to respond to a push notification, an email, or a WhatsApp message. It can also generate personalized content on the fly—think a discount code for a product a customer abandoned in their cart, written in their native language.

“We’re seeing customers reduce their customer acquisition costs by 20% or more,” Shipchandler said. “And their engagement rates go up because the AI is learning what works and what doesn't in real time.”

One early adopter is a major e-commerce retailer that used Twilio’s AI to automate its post-purchase follow-up. The system now predicts which customers are likely to return a product and sends them a preemptive troubleshooting guide via their preferred channel. Return rates dropped 15%.

The Numbers Don’t Lie: Revenue and Profitability

The market is buying the story. Twilio’s most recent quarterly earnings report showed revenue of $1.13 billion, up 10% year-over-year, with non-GAAP operating income of $189 million—a huge swing from a loss of $75 million in the same quarter two years ago. The company also raised its full-year guidance, citing “strong adoption of AI-powered features.”

Wall Street analysts have taken notice. Several firms upgraded the stock after the earnings beat, with Morgan Stanley calling the AI push “a credible path to sustained growth.” At its current price, Twilio trades at about 3.5 times forward sales, a premium to its historical average but still below its 2021 peak of 20 times.

What Shipchandler Says About Competition

Twilio isn’t the only company chasing the AI customer engagement market. Rivals like Segment (owned by Twilio itself), Braze, and even Salesforce are building similar tools. But Shipchandler argues that Twilio’s advantage is its massive data pipeline: the company processes over 1 trillion customer interactions annually across channels like SMS, voice, email, and video.

“That scale gives us a training data moat that’s hard to replicate,” he said. “Our models can see patterns across industries—retail, healthcare, fintech—that a competitor serving only one vertical can’t.”

He also pointed to Twilio’s developer-friendly approach. “We’re not trying to replace your marketing team. We give them APIs and tools so they can build what they need, fast.”

Is the AI Hype Sustainable?

Skeptics have noted that much of the AI sector is still riding on hype, and Twilio’s stock is still down about 50% from its all-time high in 2021. The company also faces challenges: its core messaging business is under pressure from low-cost alternatives like WhatsApp Business API, and its international expansion has been uneven.

Shipchandler acknowledged the risks but emphasized that AI is not a “silver bullet.” “We’re focused on execution, quarter by quarter. The AI features are driving real ROI for customers, and that will speak louder than any press release.”

Investors seem to agree. The stock’s four-year high suggests that the market believes Twilio has found a new gear—one powered by machine learning, not just messaging.

What’s Next for Twilio

Looking ahead, Shipchandler said the company will invest heavily in AI-native features for its Twilio Segment customer data platform, allowing businesses to build predictive models without hiring data scientists. He also hinted at deeper integrations with large language models from partners like OpenAI and Anthropic.

“We’re just scratching the surface,” he said. “The next generation of customer engagement will be fully autonomous—AI will handle the targeting, the timing, and the content. We want to be the platform that makes that possible.”

For now, the turnaround story is working. Twilio is profitable, growing, and—thanks to AI—finally back in Wall Street’s good graces.

Ahmed Abed – News journalist

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