Report: WhatsApp Scaling Back TWLO Usage

This news just came out, thought I’d share. Definitely something fishy with TWLO these days…

Twilio’s (TWLO) Largest Customer WhatsApp Said to be Scaling Back Usage - Sources

A large, long-time customer of Twilio (NASDAQ: TWLO) is said to be scaling back on usage of its services in favor of other vendors, according to sources. WhatsApp, which accounted for 6 percent of Twilio’s revenue for the nine months ended September 30, 2019, is said to be significantly cutting down its use.

With its recent third-quarter report, Twilio made an important, but overlooked change to its revenue recognition practice, which some think may be related to the WhatsApp losses. According to the company, it will be doing away with breaking out ‘variable revenue’, beginning in the first quarter of 2020. Variable revenue is defined by the company as customers that have not entered into a 12-month minimum revenue commitment contract with Twilio. The company’s largest variable customer is WhatsApp, which represented the majority of the revenue in the category.

Another concern in the quarter was the fact that revenue was negatively impacted by $5 million of credits that were issued to several large customers due to a billing error that caused overages this year. The billing error also impacted fourth quarter 2019 guidance as the company included an undisclosed amount for further potential credits as it continues to audit its internal system. While the company didn’t disclose the name of the clients impacted by the billing error, sources suggested this was also in part related to WhatsApp.

Twilio’s WhatsApp revenue is not expected to immediately cease and the company said it expects to continue to disclose the contribution from WhatsApp through 2020. However, the WhatsApp revenue is expected to dry up over the next several quarters, according to sources.

Last year, WhatsApp accounted for 7 percent of Twilio’s total revenue. This is down from the 17 percent of total revenue in 2015, however, the dollar amount spent by WhatsApp at Twilio has still risen sharply – from approximately $28.4 million in 2015 to approximately $45.5 million in 2018. This suggests a 60% increase in WhatsApp total spend over the three-year period despite the decrease in the percentage of overall company revenue. While Twilio is relying less and less on WhatsApp revenue, the Facebook-owned messaging service has still been as a major and growing customer. The loss would be seen by investors as a big blow.

Meanwhile, as the reliance of Twilio decreases, WhatsApp has been ramping up services at other vendors, sources said. SAP is said to be taking a majority of the Twilio business at WhatsApp. However, smaller vendors like Tyntec and Vonage’s (NYSE: VG) Nexmo, are also said to have seen big boosts in their WhatsApp traffic.…


Maybe this will manifest into a major FUD thing like with Uber? And drive TWLO down to an overwhelmingly compelling opportunity?

Interesting. Although at 6% it doesn’t equate to where Uber was. And also we had that “non-Uber” growth rate that was much higher than overall. Wonder what the non-WhatsApp-non-Uber growth looks like?