TWLO - rapidly increasing share count?

Investment Analysis Clubs Saul’s Investing Discussions
1

Hi all,

further to my previous playing about 30% increases, I noticed that Twilio had a rapidly increasing share count, particularly in the last quarter.


Quarter   | Basic shares   | Increase YoY        |
2016Q2    | 82.20m         | NaN                 |
2016Q3    | 84.57m         | NaN                 |
2016Q4    | 87.13m         | NaN                 |
2017Q1    | 87.53m         | NaN                 |
2017Q2    | 90.48m         | 10.1%               |
2017Q3    | 91.92m         | 8.7%                |
2017Q4    | 93.03m         | 6.8%                |
2018Q1    | 94.23m         | 7.7%                |
2018Q2    | 95.78m         | 5.9%                |
2018Q3    | 97.45m         | 6.0%                |
2018Q4    | 98.86m         | 6.3%                |
2019Q1    | 123.58m        | 31.1%

In the latest 10Q (Note 13. Stockholders’ Equity), they state they have another 50.6m shares outstanding…


Stock options issued and outstanding                    10,045,155

Nonvested restricted stock units issued and outstanding 8,813,737

Class A common stock reserved for [Twilio.org](http://Twilio.org)            776,334

Stock-based awards available for grant under 2016 Plan  16,496,032

Stock-based awards available for grant under 2016 ESPP  4,093,581

Class A common stock reserved for the convertible sen...10,472,165

Total
50,697,004

Can someone help me understand this? Twilio is performing really well (AFAIK) but another 50% increase in stock count must be a significant drag on share appreciation.

Am I missing something? Is Twilio performing well enough to mean we can ignore the increase in stock?

cheers
Greg

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2

Prolly the send grid purchase

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3

Spot on for the last quarter:

“In February 2019, the Company acquired all outstanding shares of SendGrid, Inc. (“SendGrid”), the leading email API platform, by issuing 23.6 million shares of its Class A common stock with a total value of $2,658.9 million.”

However, theres still 50m outstanding (ie, they definitely will be issued), and (I think) the recent 7m stock offering.

cheers
Greg

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4

Twilio has been selling shares.

https://investors.twilio.com/all-news/press-release-details/…

SAN FRANCISCO–(BUSINESS WIRE)-- Twilio Inc. (NYSE: TWLO), the leading cloud communications platform, today announced that it has commenced an underwritten public offering of $750 million of shares of its Class A common stock. All of the shares of Class A common stock to be sold in the offering will be offered by Twilio. In addition, Twilio expects to grant the underwriters a 30-day option to purchase up to an additional $112.5 million of shares of its Class A common stock at the public offering price, less underwriting discounts and commissions. The offering is subject to market conditions, and there can be no assurance as to whether or when the offering may be completed, or as to the actual size or terms of the offering.
Twilio intends to use the net proceeds from this offering for general corporate purposes, which may include the acquisition of other companies or businesses, the refinancing or repayment of debt, capital expenditures, working capital and share repurchases.

You don’t have to always look at this as a negative thing. This can sometimes hamper the stock price due to dilution, but this tells me that Twilio is finding things to spend money on to make even more money. Though the idea of selling shares to do stock repurchases doesn’t quite make sense to me.

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5

Though the idea of selling shares to do stock repurchases doesn’t quite make sense to me.

I was thinking their legal department just used a standard clause which covers as many uses for the proceeds from the stock offering as possible.

But I can be wrong, of course.

1 Like
6

Too much dilution. I am concerned.

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