The acquisition of Sendgrid has caused the revenue growth of Twilio to slow to about 53% YoY, according to my estimates. This is a huge decline from the 77% revenue growth announced last quarter, and is likely why TWLO closed 6% lower today.
Here’s how I calculated this. Last year,
1Q 2018: $129M Twilio revenue + $32M Sendgrid revenue = $161M combined revenue
This year, Sendgrid, if it grew 30%, would have contributed 32*1.3 = $42M if it had been acquired on Jan. 1. But it was acquired a month later, so I’m estimating it contributed 2/3 of $42M, which is $28M.
But to compare the 3-month period of 1Q 2019 to 1Q 2018, let’s add back the $14M that Sendgrid would have contributed in Jan. to the $233M total revenue that Twilio just reported. Then Twilio would have reported 233 + 14 = $247M revene. Subtracting, we get:
1Q 2019: $205M Twilio revenue + $42M Sendgrid revenue = $247M combined if Sendgrid had been bought on Jan. 1
So the revenue growth rate of the combined entity can be estimated to be 247/161 = 53%
If Sendgrid had not been acquired, Twilio by itself would have grown 205/129 = 59%.
Also, the latest report shows gross profit of $126M against revenue of $233M, which is a Gross Profit Margin of 54%. That’s not really that great, when we look at the GMs of our other SaaS companies. And, yes, that’s because it has to pay a telecom carrier for the phone and SMS charges.
Ron