One would think, given 43,000 active accounts (doesn’t mean much as I think they define it as $1 or $5 spend per quarter) that one account would not cause growth to be cut in half.
Yes, they count a customer an active account if they spend at least $5 in the last month of the quarter. Agreed this is a low bar but we have enough info to look at other metrics. We can calculate at average recurring revenue per active customer. Here are the figures for the past
$1,339
$1,446
$1,541
$1,716
$1,738
$1,832
$1,860
$2,054
$1,981
$2,017
The trend looks like it’s going in the right direction. Even with their biggest customer cutting back it looks somewhat stable, and it should again improve in 2018 when Uber’s cuts are done, Uber’s business to TWLO begins to grow again, and the other customers make up a larger and larger portion of revenue each successive quarter.
To say that their growth has been cut in been cut in half is simply not true. First, you’re looking at guidance which will most likely be exceeded. Second, you should be looking at base revenue (the recurring revenue growth) not total revenue growth. Here is recurring revenue growth. Here is year over year base revenue growth for the past 5 quarters:
Q2'16 83.7%
Q3'16 74.7%
Q4'16 72.9%
Q1'17 61.8%
Q2'17 55.3%
It grew 55% in spite of their largest customer being flat y/y. If Uber is removed the recurring revenue grew 65%.
The reduction in growth of one client has this dramatic of an affect on Twilio in a market growing this fast?!?
Yes, finding the oath rate outside of Uber will be interesting. But it is like MULE when 20% of their revenues are 0% gross margins. You cannot really count that as revenues that count, even though they do.
The ex-Uber recurring revenue growth is 65% as stated above. How is this in any way like MULE??? The Uber revenue has nice margins. So how big is the Uber business to TWLO?
Total Rev Uber Rev % of total
6/30/16 $64.5M $8.4M 13%
3/31/17 $87.4M $10.5M 12%
6/30/17 $95.9M $8.6M 9%
Anyway, I am just skeptical here. I would expect the rest of their business to step up and start to make up for the loss of Uber. Uber business is just going to decline more over the coming quarters. The rest of the business needs to make up for it. It is telling if the rest of the business cannot do so. I of course can be wrong, but in a market growing this fast (as projections show) for Twilio to grow so far below the projected market growth is concerning.
When looking at the numbers above, I really don’t see what you’re seeing. Uber revenue was essentially flat and total revenue was up only on non-Uber customers. So revenue for non-Uber business was up 55.6%. Also, Dollar-based net expansion rate was 131% with Uber included and 137% without Uber considered. Sure seems to me like the rest of the customers are continue to use and spend on TWLO more each quarter.
Here’s some additional commentary on Uber made during the earnings call:
”Before turning it over to your question, I did want to spend a moment discussing Uber’s impact to our guidance. The situation has played out largely as we expected it as we outlined on the last call. We did lose some of the lower value book messaging used cases and readjusted pricing in other areas based on their rapidly growing volumes. Most of these changes are implemented in the latter part of Q2 and are therefore partially reflected in this quarter’s results.
Embedded in our third quarter guidance is a full quarter of impact of these changes. This will translate into a larger sequential decline in revenue from Uber in Q3 than what occurred in the second quarter.
We currently forecast a more modest sequential decline in the fourth quarter. This revenue forecast is consistent with our prior expectations and guidance. We expect that Uber will remain a significant customer for us going forward as we partner with them to support their needs globally for both existing and new initiatives.”
Here are some other interesting nuggets from the call:
• New feature or new product released every 3.5 days
• Number of Twilio developers grew from 1 million a year ago to 1.6 million now