Annual Report 2020 Key Metrics Revenue ($M)1 Active Customer Accounts (K)2 2000 250 200 1500 150 1000 100 500 50 0 0 Dollar-Based Net Expansion Rate3 147% 127% 143% 135% 137% 2016 2017 2018 2019 2020 1 Represents revenue for the twelve months ended December 31. 2 Represents Active Customer Accounts as of December 31. Active Customer Accounts include the contribution from previously closed acquisitions. Effective December 31, 2019, we round down the number to the nearest thousand. 3 Represents data for the twelve months ended December 31. As previously disclosed in Twilio's Annual Report on Form 10-K filed with the SEC on March 2, 2020, beginning with the three-month period ended March 31, 2020, we calculate our Dollar-Based Net Expansion Rate by comparing total revenue from a cohort of Active Customer Accounts in a period to the same period in the prior year. To facilitate comparison between the periods presented, Dollar-Based Net Expansion Rate as presented above has been calculated as if this calculation had been in effect during that period. 2020 includes the impact from Twilio SendGrid, but excludes the impact from Twilio Segment, the acquisition of which closed on November 2, 2020. Please refer to Twilio’s most recent Annual Report on Form 10-K for details on the methodology for calculating Active Customer Accounts and Dollar-Based Net Expansion Rate. Dear Twilio Stonkholders, One of Twilio’s best known and most loved values is “Draw the Owl.” This oddly named corporate value comes from an old Internet meme - How to Draw an Owl: Step 1, draw some circles. Step 2: Draw the rest of the [expletive] owl. This meme inspires a spirit at Twilio - our job is to build, even when there’s no instruction book. However, the inverse is even more true: when there’s no instruction book, it’s even more critical to build. You’re at the forefront of humanity, solving problems nobody else has. The past year showed just how true this is. Nobody had the instructions for how to respond to a modern pandemic, so the builders of the world responded, with agility at their core and software as their tool. In corporations, non-profits, governments, and even dorm rooms, software developers picked up their tools to build solutions to problems the world didn’t have days before. If you believe, as I do, that necessity is the mother of invention… then massive, and existential, changes in society spawn a burst of invention. At Twilio, I’ve always cherished our front row seat to the builders of the world. With a spirit of awe and appreciation for those builders, the healthcare professionals, the retail staff, the agricultural workers, and the essential workers of every kind, it’s my honor to pen our fifth annual Twilio stockholder letter. *** Amid the anxiety and personal challenges of 2020, Twilions around the world came together with a purpose: to help our customers through the pandemic. I couldn’t be more proud of what Team Twilio accomplished together last year, so let me share a few of the highlights. In 2020, we... • Reported revenue of $1.76 billion for the full year, up 55% year-over-year, including revenue from Segment and a full year revenue Dollar-Based Net Expansion Rate of 137%. We also crossed the $2 billion revenue run rate milestone in Q4 2020. • Completed the acquisition of Segment, the market-leading customer data platform, for $3.2 billion. This acquisition allows our customers to break down their data silos in order to fully understand their customer and engage with them digitally - the two major components of building great digital experiences. • Added over 42,000 new active customer accounts, including those from our acquisition of Segment, ending the year with over 221,000 active customer accounts. Companies like Nike, Delta, Comcast, Epic, Philips, ZocDoc, and others across all industries, turned to Twilio because we provide the three things every business needs: digital engagement, software agility, and cloud scale. • Entered into or expanded our relationships with several great enterprises, including J.P. Morgan Chase, the largest bank in the U.S., who chose Twilio to enhance their customer service offering. In 2020, the number of transactions with Global 2000 customers was up 76% year over year, and the number of seven-figure deals overall was up 93% from 2019. • Powered over 1 trillion interactions across the platform. On Twilio SendGrid, we hit a milestone of sending over 5B emails in one day: Black Friday! And then did it again on Cyber Monday (5.8B and 5.7B respectively). • Opened up our platform for HIPAA-eligible workloads, including Twilio Voice, Messaging, Video, Chat and more. The product of more than a year of work, this announcement came just in time for the myriad healthcare applications accelerated by COVID. • Continued to grow the adoption of our contact center platform, Twilio Flex. At SIGNAL 2020, we announced the expansion of the Twilio Flex Ecosystem, giving organizations access to more than 30 validated partner solutions from partners like Google, Salesforce, Zendesk, and Calabrio to help businesses accelerate their contact center transformations. • Announced our first global systems integrator partnership with Deloitte Digital and closed several joint deals together. • Added 1,724 new employees, bringing us to 4,629 global Twilions. We expanded our leadership team with the additions of Chief People Officer Christy Lake, Chief Information Officer Michelle Grover, Chief Technology Officer Jeremiah Brazeau, Chief Security Officer Steve Pugh, and our first Chief Diversity, Inclusion, and Belonging Officer Lybra Clemons. In early 2021, Twilio also welcomed Deval Patrick to our Board of Directors. • Were recognized as a great place to work! Amid the historic shift to remote work, Twilio was awarded the Best Workplaces for Parents in 2020, Fortune’s Best Large Workplaces in the Bay Area, Fast Company’s Best Workplaces for Innovators (#1 for enterprise companies), and Financial Times’ Fastest Growing Companies of 2020, among others. • Hosted our first ever virtual SIGNAL, built on Twilio products, with more than 32,000 registrants from around the world. We launched new products at the event including Microvisor, Video Web RTC Go, Twilio Flex Ecosystem, Frontline, and Event Streams. • Grew Twilio.org by 268% YoY, ending 2020 serving over 6,000 social impact customers - including the Norwegian Refugee Council, American Red Cross, and others. These organizations touched more than 266 million people worldwide with their Twilio-powered solutions. Twilio.org also released its first Impact Report, highlighting efforts in social impact and environmental, social, and corporate governance areas. Notably, Twilio has provided $57M to impact organizations in grants, credits, and discounts since inception - with more than half provided in 2020. • Opened up WePledge - our program to enable our employees to give 1% of their time, money, or company equity to charities of their choosing. In 2020, we expanded WePledge beyond our walls, creating a model for other companies to follow, and welcomed Zoom, Atlassian, and Okta to the movement. Since WePledge launched in 2019, Twilions have donated $1.1M to charitable causes through the program. • Made progress towards building a more diverse, equitable company: by the end of 2020, 38.7% of Twilio’s workforce identified as female, up six points from 2019. In the United States, 26.4% of our workforce identified as Asian (a two point decrease from 2019), 5.5% as Black (a two point increase from 2019), and 6.5% LatinX (a one point increase from 2019). • Created our first set of company-wide racial justice and equity business priorities and measures (BPMs), and adopted an Anti-Racist stance as a company. We expanded BetterUp Coaching offerings to all Black and LatinX Twilions, with a focus on career planning and development, launched RiseUp, a cohort-based, targeted leadership development program for new Black and LatinX Twilions, and introduced our Be Inclusive curriculum to build a common language around inclusion and potential biases for all Twilions. We continue to have Employee Resource Groups (ERGs), which are voluntary, employee-led, and Twilio sponsored groups created to support and celebrate the shared identities and life experiences of communities within Twilio. Twilio ERGs active in 2020 included: Black Twilions, Latinx @ Twilio, Remoties, Asians @ Twilio, Spectrum, The Family Nest, Twarriors, Twilipinos, Women @ Twilio, and Wonder. I’m proud of the continued progress our company has made, but acknowledge that there is always more work to be done. There’s no substitute for hard work and we are actively committed to building a more diverse and inclusive team. ** Digital Acceleration ** There’s no question that 2020 was the digital accelerant of the decade. Decade-long digital transformation roadmaps got compressed into days and weeks and businesses in every industry had to adapt overnight to reach their customers. Companies who had been investing in digital customer engagement all along were best equipped to adapt to the challenges of the pandemic. They didn’t begin their digital roadmaps in 2020, but they did accelerate them. We heard from customers that projects slated to take many quarters, were compressed into months or even weeks. The digital enablement of these customer-facing workflows was already coming, driven by the need to increase convenience for customers and improve operating efficiencies for companies. Mid-year, we surveyed 2,500+ enterprise leaders to quantify what we were qualitatively seeing across our customer-base - how COVID had changed their roadmaps. Unsurprisingly, 97% said COVID accelerated their digital transformation, and 96% reported that the pandemic accelerated how they communicate digitally, with nearly half (46%) saying it was a “drastic” acceleration. What struck me was that business leaders said COVID-19 accelerated their companies’ digital communications strategy by an average of six years! I thought I’d share a few examples of companies who executed well on their digital roadmaps, both before and during COVID-19, enabling them to serve their customers and their employees incredibly well, despite the challenges.