Good afternoon, and welcome to Twilio's Q1 2020 Earnings Conference Call. My name is Michelle, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. I will now turn the call over to Andrew Zilli, Vice President of Investor Relations. Mr. Zilli, you may begin.

Thanks. Good afternoon, everyone, and thank you for joining us for Twilio's first quarter 2020 earnings conference call. This is our first time conducting our earnings call from separate locations, so we appreciate your understanding if we run into any technical glitches. Our earnings results press release, SEC filings and a replay of today’s call can be found on our IR website at investors.twilio.com. Joining me virtually today are Jeff Lawson, Co-Founder and CEO; George Hu, COO; and Khozema Shipchandler, CFO. As a reminder, some of our commentary today will be in non-GAAP terms. Reconciliations between our GAAP and non-GAAP results and guidance can be found in our earnings press release. Additionally, some of our discussion and responses may contain forward-looking statements, which are subject to risks, uncertainties and assumptions. In particular our expectations around the impact of the COVID-19 pandemic on our business, results of operations and financial conditions and that of our customers and partners is subject to change. Should any of these materialize or should our assumptions prove to be incorrect, actual company results could differ materially from our projections are those implied by these forward-looking statements. A description of these risks, uncertainties and assumptions and other factors that could affect our financial results are included in our SEC filings, including our most recent report on Form 10-K, and our remarks during today's discussion should be considered to incorporate this information by reference. Forward-looking statements represent our beliefs and assumptions only as of the date such statements are made. We undertake no obligation to update any forward-looking statements made during this call to reflect events or circumstances after today or to reflect new information or the occurrence of unanticipated events, except as required by law. With that, I’ll hand it over to you, Jeff.

Thanks, Zilli, and thank you everyone for joining us today. Before I begin discussing the quarter, I want to express that safety has been top of mind for us these past couple months. Our decisions are driven by a belief that the safety of our team, our customers in the world at large are what's most important. With that in mind, I hope that you all are faring well during this challenging time, and that you and your families and friends are safe and relatively comfortable as we ride this out. I also want to stress that safety of our employees has been top of mind during COVID-19 and we move to a fully distributed work model in early March. I want to thank our employees for their flexibility during this time and for their mutual support of each other, and of our customers. You all exhibited the Twilio magic, and I thank you. While we wouldn't have wished it this way, in many ways, Twilio was built for this. Our platform provides three things the world needs, digital engagement, software agility, and cloud scale. Technologies such as messaging, email, voice and video have enabled many parts of the economy to continue working, while keeping its participants safe. Moving quickly, building prototypes and iterating as our needs evolve has been critical for nearly every kind of organization. That's the essence of agility. And Twilio has enabled organizations to reimagine many of their communications workloads in days and weeks, not months and years. As you can tell from the numbers, Q1 was a strong quarter for the company, both before the COVID-19 impact again and as the impact is starting to be felt across society. Our diversified customer base currently consists of over 190,000 organizations, spanning many industries, countries and companies…

Thanks, Jeff. Our team delivered great results in the first quarter as our investments in go-to-market continued to expand our reach. Customer engagement continues to be top of mind for companies and we are helping them drive new ways of digital engagement. When we closed our offices in early March, the team did a great job continuing to engage with our customers. Our marketing team shifted several plan in person events to virtual, if more than 30 virtual events Q2 from the Twilio engagement center programs to roundtables to lunch and learns. And our first ever virtual engage events that we held in mid-April with more than 1500 registrants. Our Developer Relations team also did a great job engaging our extensive developer community online, through Twilio TV and Twilio Quest and more. In fact, our developer community spent 150,000 minutes plus watching our live video content this quarter 528,000 minutes watching on-demand video content and averaged a total of nearly 100,000 minutes learning on Twilio quest, thanks to the entire team for being there to support our customers and developers throughout the changing environment. I also want to thank our partner ecosystem for stepping up during this challenging time, providing needed implementation services and Twilio packages for mass alerts, remote agent contact centers, AI powered bots and more. As you heard from Jeff COVID-19 has drastically accelerated digital transformation projects across many industries. We are uniquely positioned to help with our complete customer engagement platform. In fact, we saw 25% increase in average daily signups from March 18 through April 30 compared to the first 11 weeks of the quarter. This is a great opportunity for us to introduce Twilio to new customers or expand with additional products with existing customers, whether it's adding video for telemedicine, voice for IVR,…

Thanks, George. [Audio Gap] compared to 29%, both last quarter, and in Q1 2019. WhatsApp contributed approximately 7% of revenue. Verizon's ADP or application to person messaging fee was implemented on February 1 and contributed approximately 4 million to revenue. As a reminder, this was a direct pass through to customers and did not impact gross profit dollars. First quarter non-GAAP gross margin was 57% and was negatively impacted by 70 basis points from ADP fees. We will continue to provide the financial impacts of ADP fees throughout the remainder of 2020. Non-GAAP operating profit came in at $6 million stronger than originally forecast. This outperformance was primarily driven by revenue favorability as well as reduced travel and office expenses plus slower than planned hiring. Now, let me discuss guidance. While we continue to see strength in our business, the macroeconomic environment remains dynamic, and we feel it best to employ prudence in our guidance philosophy. As such, we are withdrawing guidance for the full year. However, we're providing guidance for the second quarter and expect revenue of 365 million to 370 million including ADP fees for growth of 35% year-over-year at the high end. To-date in Q2, we've continued to see a net increase in usage relative to our expectations and strong growth in the overall business, a testament to our resilient model and broadly diversified customer base. As Jeff said earlier, we believe we were built for this kind of environment. We've performed a variety of scenario analyses across used cases, industry verticals and geographic mix to better understand possible impacts to our revenue. And while we're not going to get into the specifics of these scenarios a revenue guidance naturally takes into consideration headwinds from the more heavily impacted industries like travel, hospitality and ride sharing, as…

[Operator Instructions] Your first question comes from Nikolay Beliov from Bank of America. Your line is open.

Hi, thanks. Thanks for taking my questions. Nice results here guys. And I hope everybody's safe and healthy. Just wanted to dig into the used cases. When I think about Twilio, I think about three main used cases marketing, operations and customer support. Maybe you can help us give us puts and takes in each of those and how those laid out for you during the quarter, and what trends are you seeing in the used case that what you saw in the month of April? Thank you. That's it for me.

Thank you, Nikolay. This is Jeff. Khozema, you want to take it, sorry I have the coordination problem on this call like usual. Does anybody want to get?

I think some of the elevated used cases that we've seen so far Nikolay are really in categories I would say. So, we talked about some of the headwinds, for example. But I think on the other side in terms of like some offsetting benefits that we've seen or used cases in education, healthcare, retail, which is more vertical look, relative to some of the areas that you called out. And I think what we're seeing is, is that through the first quarter, it's certainly on the back end of that and then as well, as we begin to start Q2, we've continued to see a slight net increase in usage relative to our expectations in part because of new used cases in some of those areas, and I think all of that just kind of goes to the broad overall strength in the business. The business is broadly diversified. We have a very resilient model and customer base it spans, geos, industries and in verticals, and so I wouldn't necessarily call out a specific used case, but I think we're seeing elevated activities in some of those areas, obviously, offset by some of the others that we called out.

Yes. This is George, I'd add on to that. I agree with Khozema, most of the trends we're seeing are by history. That said, we are seeing six used cases that are opportunistically coming forward for us in under COVID. And the six are remote contact centre, self service, contact list delivery, distance learning, telehealth and mass notifications. And those are some of the emerging use cases that we're seeing under COVID. Certainly not, we saw the core used cases that are going strong, but those are some new ones that we're excited about.

Your next question comes from Derrick Wood from Cowen. Your line is open.

Great, thanks. And congrats on impressive acceleration in growth and take a big jump into new customer accounts in the quarter. I wanted to touch on the sales strategy here. Obviously, there's a lot of disruption with how people are communicating. You guys are talking about acceleration and digital transformation. I'm curious, are you seeing sales engagements move out of just the developer and more into the C suite. And I guess, given this opportunity, what are you doing to lean in from a from a sales strategy standpoint?

This is George. Yes, I'm really glad that we really made the investments over last few years now to both have the distribution as well as the programs -- the executive engagement programs so that we've built relationships with companies, so that we can be able to take advantage of the situation. And what we're seeing is a growth really, across these industries that I've talked about, we are engaging at a higher level than before, because now what we're seeing is executive decisions coming down to, we've got to transform our contact center in 60 days in some cases, or what have you. But I would say this is really just much more building on the strategy we've had now for a long time, which is to go into enterprise, sell higher, sell more strategically. And so we're continuing to, I think more execute the playbook that we've been preparing for several years, then fundamentally alter the playbook except for really focusing on these new used cases, which I think I'm very excited about. And we've really done a good job of training and arming our sales force to go prosecute these six new used cases as well.

Your next question comes from Michael Turrin from Wells Fargo. Your line is open. Mr. Turrin, your line is open. Are you on mute?

You talked about Flex in terms of the addition of some of the new features here and then the uptick in remote contact center demand also came up. Is there anything else you can add just in terms of how you've been able to react given the contact center market in particular seems to be undergoing a pretty big transformation in terms of what's happening and it certainly seems to us like Flex is well suited to capture some of that.

Yes. This is George. So in addition, I think having really a great product and platform in terms of being able to have flexibility and the ability to deploy quickly, which is I think, perfect for this moment, the ability to support work at home agents, remote agents. I mean, I think that this time was really tailor made for the Flex value proposition. We've augmented that by really beefing up some of our capabilities -- our services capabilities and our partner capabilities. So internally, we've created a program that we're calling the Twilio Lightning program, which is a set of services to help Flex customers get deployed very, very quickly. In some cases, we're able to turn around somebody's emergency cases in just a few days on the platform, which is incredibly exciting. And we're also seeing, our partner ecosystem step up to help us and the Twilio build program is starting to pay off, as we saw in Q1 north of 40% of our Flex deployments involved a partner, which I think is a real testament to the work we've done to build not just the product in the platform and the engagement team on the sales side, but also our partner ecosystem. And we're excited about continuing our progress there.

Your next question will come from Matt Stotler from William Blair. Your line is open.

Just a couple quick ones for me. So one, obviously strong results in Q1 sounds like usage, as you said is above expectations and so far in Q2, when you look at a guidance for Q2 and think about what you're seeing with customer behaviors, how much of your growth do you see coming from continued increase in usage at existing customers versus the behaviors that you're seeing in terms of continuing to onboard new customers as we move into Q2?

Yes. Matt, thanks for the question. I think it's a mix of both honestly. We're certainly seeing additional tailwind from education, from healthcare, from retail and some of the others that that we talked about. I think at some point, those are going to moderate a little bit. But at the same time, I think what is also going to happen is, is that we're going to have some of the other use cases come back that have been down a little bit. And so I think, there are some puts and takes in the mix. But, as we said in our earlier remarks, like, what we've overall seen is that there's sort of been a tailwind here. I think in terms of the back half of the year, we're still cautiously optimistic about the way that things are going to play out there. We felt it was prudent to withdraw our guidance for that period, just given how dynamic things are, but we do remain cautiously optimistic. And I would say, certainly for the long-term. We're as excited as we've ever been, if not more excited.

Right, right. Yes, that's great. And I just want more quickly on SendGrid or email in the quarter, just wondering how that performed in Q1 and what you're seeing there, given the environment and given all the COVID related emails that we're all seeing coming into our inboxes.

Yes. We don't break out this SendGrid business anymore, but it did continue to perform well, in Q1. It's specific to COVID-19 email as well experienced similarly, higher usage, relative to what we talked about across the entirety of the business. Also just kind of bear in mind that the email business is predominantly sold as buckets and so the revenue for that product doesn't fluctuate as much based on usage.

Next question will come from Pat Walravens from JMP Securities. Your line is open.

Hi, this is Mark [indiscernible]. Thank you so much for taking my question. I'm just wondering, in terms of the -- if you guys have any flexible payment, kind of for the SMB and if they request for Flex model payment, what's the policy there?

Yes. Let me just make sure that I understood the question. Have there been requests for flexible payment terms? Or have we seen any kind of deviations for SMB customers? Is that right?

Correct? Yes.

Okay. We've received requests from a small number of customers around changes to payment terms or minimum commitments, and we're evaluating those on a case by case basis. But so far, we've not seen an impact on the business from those requests. And we've not seen a material increase in delinquencies and our good DSO is pretty stable, and there's no change in that really in Q1 relative to where it was at in Q4 '19 or other quarters.

And your next question will come from Meta Marshall from Morgan Stanley. Your line is open.

Just wanted to dive into the Epic deal kind of the telehealth market. I think Epic, or at least from some news reports have been using a different video solution previously. So just what was it that they were looking for? That kind of made them transition to a Twilio platform and just level of engagement with kind of other telehealth providers would be helpful. Thanks.

Hey. This is George. Now, I think that, one of the nice, I think benefits of the tailwind that we've seen is in our video product. It's a product that is I think really tailor-made for this period of time in terms of being able to be a) deployed very quickly, like all of our products, it's consumption base so people can get started and try it without any barriers to entry. And it's also a fantastic product that can scale incredibly well and deliver excellent quality. And so I think that combination plus the fact that Twilio is now HIPAA compliant, supports HIPAA and able to find DDAs, I think the timing worked out incredibly well. And so, intriguing part of that story, is that, again, they started through the power of our developer community where, a developer at Epic, had a friend who was a huge Twilio enthusiast who actually used Twilio video and recommended us to help address some of their challenges. And they were able to through the power of our platform, get up and running quickly try it for themselves, see the power of it. And that cycle end up being, I think, for us a relatively rapid cycle, because I think of the fundamental power of our business model and the power of this platform model worked hand in hand with the investments we've made an enterprise side with the DDAs. So I think, again, this deal really speaks to the power of our model, the strength of our strategy of having a multi channel or omni-channel strategy, and the incredible combination of developer motion, plus the enterprise investments we've made, I speak to all those and we're really thrilled to be able to support an amazing organization like Epic during this type of time period.

Your next question will come from Siti Panigrahi from Mizuho. Your line is open.

Thanks for taking my question. Glad you all are doing well. George just getting into your go-to-market motion given the changes, can talk about how the changes happening and we talked about opportunity mostly in the cloud contact center market. Could you talk, give some color what kind of discussion you're having with customer, I can understand, at this point, some of the opportunity there to supplement the existing contact center. And what are the long-term opportunity you have there and the pipeline look like?

Yes. So, great, great question. Look, I would take a step back and say that, overall, as Jeff said, this environment is showing companies that they need to really double down and accelerate on their digital transformation. But they need to be -- we all need to be communicating with our customers and digital channels more than ever. And that could be messaging that could be WhatsApp, that could be video. And that could also be voice and in the contact center. All of these channels are incredibly important this period of time. And the strength that we're seeing is really across multiple products, not just the contact center. And what's really fantastic about this opportunity for us is that certainly while it's challenging for our sales team, they can't go visit customers. They're having, obviously all of us are having our personal challenge with stay at home, that our sales team is doing an amazing job of engaging our customers, engaging executives. In this age, you're doing video calls with your customers in each other's homes, you're building deeper rapport, I think there's some really interesting opportunities being opened up to build deeper connection with customers during this period of time and our sales force is taking advantage of that. Now, one of those opportunities absolutely is, is the contact center. And what we're seeing is that, not across the board, but certainly for many companies that this, this current situation is causing them to rethink many aspects of our contact centre, I was talking to, one of our customers who in their contact center, they were using a BPO. And suddenly they had to figure out, okay, how do we make sure that our BPO is socially distance, for their agents and their agents. How do we support work at home agents as part of this, so there's a huge transformation happening in the contact center. And there's no doubt that this is going to accelerate the overall migration of contact centers to the cloud. And, I think that we're benefiting from that, hopefully as much as anyone, because of our business model and because of our technology model. So we're excited about these use cases. We're excited about the transformation happening. And we are engaging and I think that this is definitely an area that admits a lot of challenges in certain industries we're excited about.

Your next question comes from Mark Murphy from JPMorgan. Your line is open.

This is Pinjalim on behalf of Mark. Congrats on the quarter and thanks for the question. Khozema one question for you is, is there any way to disaggregate the upside versus your guidance between portfolio base and portfolio based SendGrid and the variable portion? Because I mean, just trying to figure out was there any material change in the contribution from variable revenue versus what you had expected before?

Yes. We're not disclosing those different buckets. I mean, I would say it this way that to reiterate a point that I made earlier that I think what we saw in Q1 was simply a reflection of a broadly diversified customer base that had a strong performance overall. And, we noted a few of the areas that were more economically challenged and then some of the areas that had tailwind, but we don't break out those segments anymore.

Okay, understood. And one quick one for Jeff, if I may, Jeff any thoughts on the Sinch acquiring the digital interconnect business for SAP? How could that shape the competitive environment in messaging going forward, if at all?

Yes. As a company, we typically focus on the needs our customers have and building software that helps some of our customers to engage with their customers across a wide variety of touch points. And I think that when you look at our business, the strength of our business as far as the size that we're at, and the pace at which we're growing at our scale, and the diversification of all the different products we offer to our customers, I think that we're in a very good position here in United States as well as globally to serve our customers needs. And that's what really focused on, is following our customers and where they take us.

Your next question comes from Heather Bellini from Goldman Sachs. Your line is open.

I had two questions. I guess, Jeff, the fun would be for you or maybe for George, just what do you think -- how do you think about what we're going through kind of making people even more cognizant of the need for kind of that those omni-channel touch points? And do you have a sense of kind of where you would have pegged penetration of a pure of a real omni-channel strategy before and how much that might be coming up in conversations with people now? And then the follow up for Khozema is just the ADP impact for the quarter, I think you said was 4 million. And I think you said it went into effect in February. Does that mean we should be expecting a $6 million benefit that's embedded in guidance for the second quarter? Thank you.

Let me just take the second piece and I'll let Jeff elaborate on the first piece. The second piece, we didn't specifically call it out for Q2, but you're in the ballpark.

Thanks Khozema. So Heather, for the first part of your question, I mean, I think what you see going on right now, is Twilio is becoming even more relevant to businesses in light of COVID. And it takes many shapes based on the type of company that it is for the industry that they're in or where they're at in their digital transformation. But I think one thing is kind of clear that for companies who are engaged in a day transformation that oftentimes these projects were slated for, quarters or years that we're going to undertake, many of us got done in weeks. And so this is going to be seen as a great digital acceleration. And in many ways, Twilio was built for this moment, we offer the three things that companies need as they are accelerating their digital plans. Yes, that is digital engagement, all the channels, whether it's voice or messaging, or video or chat or WhatsApp or Facebook Messenger, like all these channels, digital engagement, as we've moved, so many, in person face-to-face workloads to digital workloads, we have the digital engagement that costs companies need agility, so the ability to build quickly and to answer to changing conditions. That's obviously then, one of the biggest things that's going on in Q1 and Twilio provides the ability for organizations to be agile, to build iteratively as they as the nature of what they need to build and how they need to address the changing circumstances continues to evolve. And the third thing we offer is cloud scale. Now, this isn't the moment where you can spend, months planning your capacity requirements and we are racking up the data centre to plan for your peak, you need to build something you need to deploy it. And you need it to work pretty much instantly. And that's true of the cost scale, but also geographically to scale around. And so Twilio brings that to the table as well and so, all-in-all, Twilio was built for this. And whether it's the digital engagement, agility, and cloud scale, these are things that every company is needed, whether, regardless of the type of used case that is top of mind for them right now. And I believe the investments that companies are making are going to be durable, like the changes that are occurring in our society right now, are going to persist in many ways. I think that many doctors' visits for example, are going to stay as telehealth visits after COVID is over. And I think that many more ecommerce or food delivery or curbside pickup like a lot of these things that are getting normalized right now will start to become even more normal. And so it is the social distancing that is going on right now is changing our behaviors, and I think many of those behaviors will change permanently and we can help companies to address those opportunities.

Your next question comes from Alex Zukin from RBC Capital. Your line is open.

Two for me, maybe first Jeff, if we step back, you called out a number of growth vectors on this call attaching way more channels acceleration and new customer signups entry into new verticals, what sounds like from George a bunch of new mini Flex like used case categories. So I just want to ask you where is the biggest focus organizationally and which incremental growth sector is most either exciting to you or you most enthusiastic about?

First and foremost, actually our focus for the business has been the health and safety of our employees and our customers and our communities. And so I just want to really emphasize that that's been priority number one for us through this crisis. Then as we think through, priority number two is, how do we serve our customers? And how do we help our customers to emerge stronger through this crisis? We see a number of areas to address, whether it is the new verticals that are arising. So, it wasn't actually because of COVID. But it was a really a coincidence that was fortuitous that we announced HIPAA support and the ability to sign DDAs in the first week in February, and that had been worked that we long planned and planned to announce in that time period. And so obviously, the timing was good for us to see a very rapid rise in the number of medical oriented used cases that we could serve during this time. But, as you as George outlined before, right, we do see really the six used cases that are driving a lot of opportunities right now. And I see it as opportunities for Twilio. And I see it as opportunities to serve our customers, because they are under immense pressure to reconfigure their businesses and their organizations in order to serve their customers and to continue employing their people during this time. And so that opportunity to serve our customers in those six used cases is, is both good business and it's also a good way for us to serve our customers ensuring their success during this time. And so, think about healthcare, I think about distance learning, I think about automation. But really, our core products have stood up very well as far as messaging, as far as voice, as far as email as the ways in which companies need to engage with their customers during these times and so we continue invest in those and obviously George just talked a bit about Flex and some of the Flex wins that you saw in the quarter which is some of the examples of organizations having to reinvent their contact center to accelerate their plans to move those contact centers into the cloud and into software, in order to allow their people to work from home to open up new channels to scale up, many organizations saw a lot of scale that was unprecedented while at the same time they're having to reconfigure where everybody's working. And so we're able to run all those things to customers.

Got it. And then, maybe just a follow up for Khozema, if we think about the overall revenue exposure to industries that may be facing some headwinds versus industries that are seeing some tailwinds? How should we think about that backdrop, if there's any kind of high level percentages of exposure that you can provide? And then, new versus existing bookings trajectory, meaning from new customers versus existing, kind of the way we think about that, and then anything around seasonality for DB&E books for next quarter in the second half, and apologies in advance for the multi-multi part questions.

That's okay. Thanks, Alex. I mean, I guess I would start by saying that I think that we're very well diversified across industries. And so that helps to have a business model that's like that. And that's what I think creates the kind of performance that you saw us in Q1. In terms of some of the impacted industries, we called out in our earlier remarks that as it relates specifically to ride share travel and hospitality, which I think have been more significantly impacted than others. They're on a revenue basis, less than 10% of our overall revenue over the last several quarters, actually not just in Q1, and that's excluding email. So I think in terms of that, we feel pretty good about the diversity in the business. And as we also noted, if you look at some of the newer used cases that came on, typically in education, healthcare, retail, even in our .org those have offset and then some of the downside exposure that we saw in some of those impacted areas. And so I think generally we feel pretty good. And then finally, I would just add, I guess into Q2, I mean, that trend is largely continued, at least to-date. In terms of DB&E, which I think is what you're getting at in terms of like seasonality and stuff like that. We're not really providing any guidance on DB&E that's not been our practice historically. Again, we feel great about the overall diversity in the business and what that was able to drive in terms of DB&E and we'll stay focused there.

Your next question will come from Richard Valera from Needham. Your line is open.

Hi, guys. This is [indiscernible] for Rich. Thanks for taking our question. And I'll echo [indiscernible] remarks on the strong results in the quarter. So looking specifically at the geographic breakdown, it looks like a reversal in recent trend where domestic grew faster than international in the quarter and really wondering what dynamics are at play maybe from a product perspective, specifically maybe calling out email or SendGrid. If you could provide any color there would be much appreciated.

Yes. This is Khozema, I mean, I wouldn't read too much into it. Honestly, it was off about 100 bps relative to prior periods, I would say it's in the ballpark of, what we would have expected it to be. I don't think there was any particular trend relative to any of our categories there, just lots of moving pieces, and that can drive it one way or the other. I think the fact that we saw strong growth in our U.S. businesses on the back of some of the areas that we highlighted, particularly education and healthcare is a good thing and I just wouldn't read much into geographic mix beyond that.

Your next question will come from Brent Bracelin from Piper Sandler. Your line is open.

Jeff, really encouraging to see the vision laid out at the IPO and the diversity diversification strategy paying off in spades here this quarter. If you'd asked me in 2016, if a large operator via a customer i.e., Comcast, I probably would have said, no. My question for you is given we're seeing kind of this COVID induced acceleration in the digital opportunity. Would you consider accelerating your build by strategy? Why or why not there and then again, one quick follow up for Khozema.

Yes. Thank you, Brent. I mean, I think build by the tools together means everything and yes, we are accelerating our build versus buying and we're celebrating the business as you can see. Yes, we're continuing to invest in the long-term and I think it's the right thing to do, because we see a lot of investments that we can make both in terms of product and distribution, as well as building the core systems and processes of the business in order to continue scaling this company for a long period of time. And so as we think about what's going on right now and the current pandemic environment, but also the long-term, 5, 10 years from now, we see this, essentially as some point a entry point for many even more long-term opportunities, both new kinds of customer relationships, that we're going to build, new markets that we may be able to participate in, but also new products and you need this for all of our customers that are going to emerge. And we are in a position to be able to invest and that investment can be organic or can be inorganic, but with the balance sheet that we have. We see this as an opportunity to invest and to emerge from the COVID pandemic stronger.

And then Khozema, just if I got this right, it looked like WhatsApp was 7% of revenue in the quarter. I think it was up -- that's up from 4% in the prior year that would put WhatsApp materially higher year-over-year at $100 million plus run rate. So I guess my question is, what's happening at WhatsApp? What drove the strength there, if that is the right number, and are there some new video used cases driving that? Any color on what drove the outperformance at WhatsApp would be certainly helpful this quarter. Thanks.

Yes. So just in terms of the number that you cited, it was 7% of revenue. And that's what we called out in our earlier remarks. It's predominantly one used case around account verification. We have a strong relationship with that company. We work hard at it, obviously every day. I'd have to get back on some of the specific numbers that you cited. They sound directionally right to me, but again, I have to get back to you in terms of specifics. But I think, we just maintained a good relationship with that company. And as I said, we work hard at it every single day. Just one other thing I would add Jeff's remarks around bill-buy, on the buy side in particular, Jeff mentioned, we have $1.8 billion on our balance sheet, which puts us in a position of strength. We raised that money in part to be opportunistic for a time like this, obviously, we could never have anticipated a global pandemic when we did it, but I think that leaves us in a pretty strong spot to be opportunistic and we've got a lot of optionality going forward.

And your final question for today will be from Rishi Jaluria from D.A. Davidson. Your line is open.

This is actually Phil Rigby on for Rishi. Thanks for taking the question. Can you just talk about what impacts you're seeing related to political activity in this environment? Just trying to get a sense of how spend there is tracking relative to your expectations.

I'll give the high level, I think as anticipated in politics, especially in the United States, messaging is proving to be a pretty effective medium for candidates to engage with likely voters. So, like it was in 2016 and 2018, I think 2020 will be a year of elevated spend, by the political participants. We're not breaking out any predictions around that category of our business. But, I would say it's playing out as we expected quite well this year.

There are no further questions. I will turn the call back over to the presenters for closing remarks.

All right. Thanks everybody for joining today. And we hope you are all staying safe and healthy and look forward to catching up with you over the next quarter or so.

Thank you everyone. This will conclude today's conference call. You may now disconnect.