A lot of the conference call discussed technical details that I don’t understand. This is the good stuff that I culled from the call (paraphrased in places).
We continue to support efforts in to combat the scourge of robo calling. I’m sure you get continual stream of calls from unknown numbers with pre-recorded messages promising a wide variety of wonderful things. It’s gotten so bad that you don’t answer the phone you don’t recognize the number.
So we design our platform to prevent this type of activity. We do not want this business and we never have. We continue to work actively to deter bad actors from our platform. Our terms of service expressly prohibit it. We believe transparency is also important. So we launched a free service to allow consumers to look up any number to see where a call is coming from and help report suspected global calling.
Looking into the future, we believe that the next step is to put consumer back in control of their phone through tools to allow them to receive only wanted communication from trusted partners. We see a world where every time your phone rings, you can see who’s calling, not just the phone number but the name of the personal business and trust in the accuracy of that information. And a software running on your behalf can decide what to do with the caller types. In this vision, everyone receives the communications they want and none of the ones they don’t. It’s your phone and your call. We want to help everyone take back their phone. (Saul – this is very important and removes a big question about Twilio)
We have a once in a generation opportunity ahead of us to revolutionize one of the largest markets in all of IT communications, by moving it from its legacy and hardware to its future and software. It’s still day one of this journey and I couldn’t be more proud of our team and excited about the road ahead.
The organic growth for Twilio’s base revenue was above 60% year-over-year and Twilio SendGrid’s organic growth for the sub-period was 30% year-over-year.
Our dollar-based net expansion rate was 146%. This metric will not be impacted by the acquisition of SendGrid until we close Q1 of 2020, a year from now. Over time, it will decline a little bit, just given that these older cohorts are going to become a really large part of the mix.
Gross margins came in just above 58% up from 54% sequentially. The largest contributor by far was folding in higher margin revenue from SendGrid, which added about 3 points. On an organic basis, gross margins also increased a bit sequentially as the base variable mix improved.
And on that note, we recently got some clarity on the Verizon A to P offering we outlined a few quarters ago. As a reminder, Verizon is establishing a new A to P (or application to person) channel for long code SMS messages that will add a quarter of a penny fee for message to all businesses with A to P SMS messaging use cases. Verizon will be implementing this new offering in mid-May, and we’ll be moving customers over to the new service accordingly. We’ll be passing this fee through to our customers so this won’t impact the gross profit dollar received per message, but it will add to reported revenue, and thus will make the gross margin percentage seem smaller. (Saul – It will be pass-through revenue)
Overall, with the strong results we are seeing, we plan to continue to invest in the growth of our business given the tremendous opportunity ahead of us.