TWLO question for the board

I’m looking for a little help in interpreting Twilio’s recent $750M investment in Syniverse:….

One obvious benefit is gaining access to Syniverse’s carrier contacts and messaging rates. According to this article, it also gives TWLO better inroads into 4G, 5G and IoT (…).

The investment release also states Syniverse will take over the mechanics of application-to-person (A2P) messaging for Twilio customers. My question is does anyone know how this affects the financials? Will this let Twilio transfer any current pass through A2P carrier costs onto Syniverse? If so, we could see a drastic improvement in TWLO’s gross margins and profitability over the next few quarters. I’m curious if that might be the case.


My understanding is that this investment will not impact Twilio’s gross margins because Syniverse will not be consolidated in the financial statements of Twilio. Twilio did not buy out Syniverse but became “a significant minority owner of the Company”. Consolitation (i.e. including assets & liabilities and revenue & costs in the balance sheet and profit and loss statement of the parent company (Twilio)) only happens when the parent company has controlling power over the subsidiary (at least that’s how I remember it from university :slight_smile: ). What should happen is only effecting the asset side of the balance sheet: Twilio will have $750 mil less cash and $750 mil more as a financial asset.



Hi SN,

Thanks for sharing this update.

I dont claim to be an expert but on a cursory look, it seems that TWLO is Synivers’ customer and that should be primary mechanism by which TWLO reduces its network cost… because thats Synivers’ business.
Whether there is more cost reduction in near future, depends on if this relationship (customer / supplier) just starting or Syniverse’ has already helped TWLO reduce cost in the past…

In other words, investment in Synivers should not be needed / need not be the trigger for Syniverse to help save network cost for Twilio.

I would also not extend this investment as “getting access to carriers contact and pricing” unless it is expressly agreed between these two companies, as a part of investment or otherwise… why - because pricing is generally confidential and just because TWLO is investor, does not mean Syniverse can renegade on confidentiality agreement with its carrier customers and share prices with Twilio… also quite possible, Syniverse does not even have actual pricing, it is just a simulation tools / analytics tool provider to carriers…

And on contacts, may be but as Twilio is probably a customer to all major carriers around the world, so it does not matter.

IMO - this is simply a case where Jeff Lawson sees a great investment opportunity for now… and in potentially a take over target in the future…

Ofcourse, if Twilio acquires Syniverse, the picture dramatically changes… but thats too far and too much to speculate.


Thanks, Niki.

I understand it the same as you. The $750M is a straight investment and the companies won’t be merging financial statements. I guess my question is based more on this line from the 8K filed with the announcement:

“In connection with the closing of the Investment (the “Closing”), Twilio and Syniverse will enter into a wholesale agreement, pursuant to which Syniverse will process, route and deliver application-to-person (A2P) messages originating and/or terminating between Twilio customers and mobile network operators.”

Does this wholesale agreement mean Twilio has swapped its traditional pass-through carrier charges for a straight payment to Syniverse instead? If so, could that possibly benefit gross margins at all? Admittedly, this is beyond the scope of my financial knowledge. I’m just wondering if this routing deal means TWLO will no longer have to account for pass-though carrier charges and will simply record the contract expense instead. It might mean nothing, but I’m really curious. The Segment acquisition should already bring higher gross margins. If this deal gooses them even more, Twilio could look even more attractive in the not-too-distant future.

I’ve sent an email to IR to see if I can get further details but haven’t heard back yet. I’ll post the response if I do.


As I mentioned a few days ago, I emailed Twilio IR for details on the Syniverse wholesale deal. Here are the questions I sent:

Are there more details available on this wholesale agreement?

Does this replace any existing agreement with Syniverse? If so, does it result in changed or reduced rates?

What happens to Twilio’s traditional pass through carrier fees under the terms of this new deal?

Will any present or future fees be reduced if Twilio contracts with Syniverse to route calls rather than carriers directly?

And here is the response I received:

“We are not disclosing specifics with regards to the commercial agreement with Syniverse. Ultimately, we anticipate cost synergies based on the new agreement, but be mindful that the deal has not closed yet. We are also looking at GTM and Product synergies over time. This deal does not impact A2P pass through fees implemented by Verizon last year.”

Oh, well. I tried. And although I wouldn’t expect the Syniverse deal to impact any direct Verizon fees, it didn’t address any future carrier fees for A2P calls routed by Syniverse. Regardless, it doesn’t seem likely this deal will have a short-term impact on gross margins. I guess we’ll just have to wait for more details as we go.