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Annual Report 2017 KEY METRICS REVENUE ($M)1 ACTIVE CUSTOMER ACCOUNTS (K)2 399.0 49.0 365.5 Base Total 36.6 277.3 245.5 25.3 166.9 136.9 16.6 75.7 88.8 11.0 41.8 49.9 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 DOLLAR-BASED NET EXPANSION RATE 3 170% 153 % 155% 161% 128% 2013 2014 2015 2016 2017 1 Revenue ($M) – For the twelve months ended December 31 2 Active Customer Accounts (K) – As of December 31 3 Dollar-Based Net Expansion Rate – For the twelve months ended December 31 Dear Fellow Stockholders, Every two weeks, we hold an all-hands meeting where we gather our employees live and via video to discuss our business. Since the beginning, I’ve opened that meeting by showing several of the most interesting tweets from our community that week celebrating the novel ideas we’re helping to bring to life. It’s a constant reminder that although we’ve been doing this for 10 years, every month there are thousands of developers and companies discovering Twilio for the first time, having the ‘‘a-ha’’ moments, realizing new things they can build with Twilio. After hundreds of these all-hands meetings, I’m still awed by the creativity, ingenuity, and drive of our customers and I love sharing these tweets with the company. With that constantly renewed enthusiasm for Twilio’s customers, employees and opportunity, it’s my honor to pen our second annual stockholder letter as a public company. *** 2017 Recap *** During 2017, we hit a number of order of magnitude milestones for the business that I could scarcely imagine 10 years ago - our first $100 million dollar revenue quarter, 100 million messages sent in a day, 1,000 employees (Twilions!), and 100 countries where we provide phone numbers. We saw continued strong growth on many fronts in 2017. Year over year, Total Revenue grew by 44% and Base Revenue - the key customer metric we focus on - grew by 49%. We expanded the breadth and depth of our product line, added more fuel to our sales engine, and added hundreds of thousands of developers around the world to our platform. And we accomplished this growth while increasing the diversification of our business. The contribution from our top 10 customer accounts dropped to 19% in 2017 from 30% in 2016. While diversifying our revenue was not without pain, it has helped us build a stronger, more resilient company. The headline from the past year was the launch of the Engagement Cloud - a higher-level application platform that encompasses best practices and accelerates our customers’ ability to adopt Twilio while retaining the key platform flexibility. Products such as Studio (our drag-and-drop development environment) and our most recent addition, Flex (our contact center application platform), make it faster for customers to adopt Twilio. While C-level execs may not be intimately familiar with the details of our APIs (or care to be!), they certainly care about the value we can bring to their customer engagement, at a rapid pace, with the higher level benefits Twilio provides. The Engagement Cloud is a great vehicle to describe that value, and deliver on it with new products. At the Programmable Communications Cloud layer, we added further breadth and depth to our core voice and messaging offerings, and at the same time we launched new products aimed at helping our customers add more intelligence to their communications. We announced important new products like our Speech Recognition API, which leverages Google’s platform and capabilities in 119 languages, and Twilio Understand, our natural language understanding engine to power Interactive Voice Response (IVR) automation and bots in our customers’ communication flows. Twilio Wireless - our new platform for IoT innovation - began to deliver on its promise of powering innovation of connected devices. Although still in beta in 2017, we saw early stages of adoption by a broad set of customers. In fact, the last week in December saw our largest deployment of Twilio Wireless SIM cards to date. Although in its early stages, customers are validating our approach to the sizable IoT market. We also made big advancements in our Super Network - the base layer of our product stack with a mission to catalog, orchestrate, and deliver the world’s connectivity. We’re continually expanding our global footprint to open new opportunities for our customers, and in the past year we reached a significant milestone - we now have over 100 countries in our phone number catalog. This catalog now covers more than 90% of the world’s GDP and over 6 billion people. A momentous achievement by the team. Our developer-first go-to-market approach is a powerful one, and in 2017 we strengthened it considerably. I mentioned in last year’s letter the hiring of George Hu as Chief Operating Officer. George has helped us take our go-to-market effort to the next level in 2017. As evidenced by the new logos we’ve discussed throughout 2017, developers are bringing us into companies large and small, new and old, as their prominence within organizations rises. Establishing and maintaining an authentic presence in the developer community has been an important priority since the founding of Twilio - and we recently crossed the mark of 2 million developer accounts created on our platform. Throughout 2017, we added more resources and more coverage across our sales organization, and I’m very pleased with the results. We’re finding new opportunities in our existing customer base, as evidenced by our first enterprise license agreement this year (a three-year contract with nearly eight figures of total committed revenue), and we’re making continued inroads into traditional enterprises like Morgan Stanley, the General Services Administration (GSA), and National Debt Relief to name a few. In fact, we ended the year with nearly 10% of the Global 2000 as part of our active customer count. One of the joys of a platform is seeing customers solve problems you never knew existed! I’d like to make a habit of highlighting some of the unique ways customers used our platform in the last year, to showcase not just the known logos and big deals, but also the raw creative power of our customers. In 2017, we saw Age UK - the UK’s largest charity working with older people - launch an innovative program to fight chronic loneliness among the elderly population. Many elderly people can go days or weeks without somebody to talk with. Age UK uses Twilio Programmable Voice to connect volunteers who want to brighten somebody’s day with elderly people who need a companion, if only for a few minutes on the phone each week. I’ve seen the video testimonials, and Age UK is really helping to lift the spirits of the lonely, and we’re proud to do our small part to help. Some long-time community members are just prolific, and Lee Martin is such a person. Lee was working with artist Dan Tyminski (‘‘Man of Constant Sorrow’’ and singing voice of George Clooney from O’ Brother!) on the launch of his album Southern Gothic. Inspired by the community feel of in-person listening parties, Lee had the idea to use Twilio Video and create online listening parties to celebrate the launch of this album. Also, in 2017, David Gouldin used Twilio to help potty train his three year old son by combining an Amazon Internet button and Twilio Programmable SMS. When his son needs to use the bathroom in the middle of the night, he hits the button which sends a text to this clever father, who can (sleepily, for sure) help his son to the bathroom. Can’t say we envisioned that when we built Programmable SMS! From cheering up the elderly to preventing a midnight ‘‘accident’’, our community didn’t disappoint in 2017, again reinforcing the line we never fail to invoke when launching new developer products: ‘‘We can’t wait to see what you build!’’ *** FAQ *** Investors often ask me how we choose which products to build, so I thought I’d take a moment to walk through the trends we see that inform our investments. First, as companies undergo ‘‘Digital Transformation’’ and migrate their workflows and customer touchpoints from in-person to digital, their communications must migrate to digital as well. Developers are at the forefront of this transformation, and tackle the challenges that arise in migrating countless businesses to digital. Our APIs are an ideal platform to help developers realize the ideas that might otherwise have sat idle in their heads. This migration of workloads from in-person to digital, for example, drove our investment in video as a key building block of our Programmable Communications Cloud. We’ve seen this in customers like ING Bank, who now are able to fulfill the ‘‘Know Your Customer’’ banking requirement to verify a customer’s identity – over in-app mobile video instead of in-person at a branch. This alone has enabled them to expand into new markets where they don’t currently operate branches. This analog to digital conversion of every variety of business processes, and communications in particular, is a secular wave that Twilio is riding (and likely accelerating.) Most companies have barely scratched the surface of what is possible with modern communications, especially the vast majority of companies still tethered to the legacy, monolithic applications they deployed in the Client-Server era a decade ago. Our job is to help every organization become an expert in digital communications. Second, we believe that communications are becoming more plentiful, but also increasingly fragmented and harder to make sense of - which is creating big challenges for companies trying to reach their customers.

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