Twilio Should Provide Developer Marketplace Revenue Metrics

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Communications PaaS player Twilio (NYSE: TWLO) continues to see stellar results amid the current pandemic. The company continues to invest wisely in product development and even acquisitions.

Twilio’s Financials

For the third quarter, Twilio’s revenues grew an impressive 52% to $448 million, surging ahead of the market’s forecast by 10.74%. EPS was $0.04 per share, shattering the market’s expectations of a loss of $0.04 per share.

Among key metrics, its active customer accounts grew 21% to 208,000. The company ended the quarter with 3,664 employees. Dollar-Based Net Expansion Rate, which is calculated using total revenue, was 137% compared to 132% a year ago.

Twilio expects to end the fourth quarter with revenues of $450-$455 million which was significantly ahead of the Street’s forecast of $428 million.

Twilio’s Growing Product Portfolio

During the quarter, Twilio announced several new products. Earlier this quarter, it announced Twilio Flex ecosystem, a suite of services built around its programmable contact center offering that allows customers to access more than 30 validated solutions from partners such as Google, Salesforce, Zendesk, and Calabrio. The solutions are aimed at helping its customers accelerate contact center projects.

With the current global lockdown conditions, there has been an increased demand for video communication. To cater to this demand, Twilio released a free version of its product called Twilio Video. It also released Twilio Video WebRTC Go for peer to peer video communication. For the IoT segment, Twilio announced Twilio Microvisor, a device connectivity platform that simplifies the building for IoT. Microvisor runs on a connected device to create a secure service with the capability to connect to different types of networks, such as WiFi and cellular.

Twilio’s Acquisition

Besides product enhancements, Twilio also recently announced its intent to acquire San Francisco-based Segment, a customer data platform. Segment enables both developers and organizations to integrate customer data from every customer touchpoint and every record system, thus empowering marketing and sales and services leaders with meaningful information. The data it collates is analyzed to deliver insights needed to design and build relevant and impactful data-driven customer engagement.

Twilio plans to leverage the acquisition to deliver a solution that will allow businesses to make their customer engagement across all channels more personalized, timely, and impactful. Prior to the acquisition, Segment was privately held and had raised $283.7 million in funding from seven rounds. Its investors included e.ventures, Meritech Capital Partners, Thrive Capital, GV, Y Combinator, Accel, Sapphire Ventures, New Enterprise Associates, and Thrive Capital. Its last funding round was held in April last year when it raised $175 million at a valuation of $1.5 billion. Twilio is expected to have acquired Segment at $3.2 billion. Segment does not disclose its financial performance.

Twilio’s PaaS Strategy: Platform or API

As I have said earlier, Twilio is a classic example of how to successfully leverage the PaaS ecosystem to diversify revenues. It has always been supportive of developers building on its platform to help deliver enhanced communications offerings. It runs a marketplace that allows developers to not only sell their apps, but also Add-ons. Add-ons are pre-integrated modules that can be deployed for other applications.

Twilio’s PaaS Strategy: Developer Community

Twilio has been very focused on supporting its developer community. It helps the developer teams enhance their Twilio skills and leverage the platform to drive sales for their apps and integrations. Besides the usual commercial support, Twilio also supports the community through its Impact Corps group. The Impact Corps is a volunteer developer network where Twilio connects passionate developers with nonprofits and social enterprises that need their help to build high impact Twilio-powered solutions.

Twilio’s PaaS Strategy: Marketplace and Metrics

I had met its CEO, Jeff Lawson in 2014, and even back then, the company had over 400,000 developers building on its platform. In May 2019, that number had grown to over 5 million developer accounts who were building apps that managed use cases ranging from helping combat forest fires to building viral marketing campaigns for music superstars. A recent article suggests that the number is now over 10 million developers globally. Last year alone, the company had done over 180,000 production deployments and it continues to build on that. It, however, doesn’t provide the metrics for marketplace revenue or the commission it charges for its platform. It should.

Its stock is currently trading at $281.96 with a market cap of $45.21 billion. The stock had climbed to a 52-week high of $341.70 in October. It has recovered from the 52-week low of $68.06 that it had fallen to in March this year amid all the market turbulence.

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Photo credit: Ken Yeung/Flickr.com.