That other thread didn’t have a concise summary, and (as Dreamer said) is going nowhere bickering about TWLO’s organic (which conf call explicitly said was >60%)… so starting a new one.
TWLO - Q119
PR: http://d18rn0p25nwr6d.cloudfront.net/CIK-0001447669/951d35f8…
CC transcript: https://www.fool.com/earnings/call-transcripts/2019/05/01/tw…
- $NER been ~145% for 3Qs now. Impressive.
- SEND results included as of Feb 1, so YoY comparison is inflated by 2 months contribution from them.
Revenue 233.1M +81%
… TWLO >+60%
… SEND +30%
$NER 146%
EPS -0.31
Adj EPS 0.05
Gross Margins 58% (SEND added +300bps)
Custs 155K w/ SEND
- first full Q of Flex in GA, great feedback from early custs, planning add’l features
- new Expert Services give extra support, guidance, education, data/analytics
- launched Twilio for Salesforce on CRM AppExchange, easily add SMS to Salesforce CRM
- new auth type Transactional TOTP (time-based OTP) for new PSD2 requirements in EU
- new efforts to combat robo/spam calling, adding phone compliance program into platform
- entering Japan and LatinAm
- began efforts to cross-sell between TWLO and SEND
-muji
long TWLO
33 Likes
Folks,
Here’s the breakdown from management.
Breaking those two components apart, 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% in Q1. These results are a testament to not only the success we’re driving for our customers but the performance of George’s team driving deeper and more strategic relationships with our existing customers.
Darth
5 Likes
Breaking those two components apart, 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% in Q1. These results are a testament to not only the success we’re driving for our customers but the performance of George’s team driving deeper and more strategic relationships with our existing customers.
Thx Darth,
Enuf said backwards and forwards, but therein lies the answer and all I need to know…
I made a mistake in selling Shop too early but won’t do this here.
2 Likes
Some additional Q1 2019 cc notes I took, highlighting some of the risks to watch:
- Top 10 customers 14% of total rev, down from 20% last q and 18% yoy —> a great development; concentration risk is getting very small
- Retention rate will exclude Sendgrid until Q1 2020 —> should be watched bc it looks a bit like the company is cherry picking their metrics. On the other hand it’s probably difficult to combine retention rates at the moment, so I‘ll give them a pass.
- Verizon A to P will impact gross margin percentage bc it increases fees which twilio will pass on to customers; this will also increase 2019 revenue by $9 mil; they don’t expect negative backlashes from customers as a result of the increased fees —> hope they are right, but it shows some weakness in their business model that their suppliers can simply increase prices at will; will be interesting if their customers will simply swallow that; maybe Twilio is a bit naiive about it again (like they have been with Uber)
- they expect growth to decelerate in the future which is normal I guess for a company approaching a $1 bil rev runrate; I also got the feeling Flex adoption will probably take longer than many investors hoped; there certainly won’t be growth acceleration anytime soon bc of Flex
All in all it was a great quarter in my opinion. I didn‘t repeat the great headline numbers bc they were posted many times already. It seems like the SendGrid acquisition was a great move but I also got the feeling that they are very busy processing the merger. Also, I would have expected a slightly higher guidance raise, but I guess you can’t have everything. 
Best
Niki
10 Likes
Perhaps the difference for me between Shopify and Twilio is that while they are both valued around the same on a price to sales ratio, Twilio has a bigger addressable market as it’s entirely enterprise and will continue to scale (Net retention), whereas Shopify still has a majority of its subscriptions from SMB (businesses which can go through its own up and down cycles). The way Shopify subscriptions are structured, it’s hard to upsell unless if its customers are growing. The way Twilio products are structured, it’s easy to continue growing revenue with an existing customer since it’s nickles and dimes. I believe Twilio will continue to have higher growth rates where Shopify is toward the top of its S curve and must look to peripheral services (Square offerings, basically) and further expansion of web consumer activity to grow in the future. They could be successful at keeping up their revenue growth rate, but it’s hard to pivot and peripheral services are much lower margin than subscription (which currently is their only edge over Twilio).
A good analogy between the products might be candy (Twilio) vs a gym membership (Shopify). With a candy shop, you might not care about buying more because each additional package might only cost you a dollar or two. With gym memberships, most customers are probably good with the basic package, maybe add an individual training session here or there or buy a drink at the gym (peripheral service), but it’s hard for the gym to upsell to its existing customers without raising prices.
6 Likes