Twilio, the company you don’t see

You use it every day, it’s almost always in your pocket, but you don’t really notice who it is, or when you’re communicating with it. Discover Twilio, your invisible buddy.

What is Twilio, where is it hiding?

Twilio (TWLO) is an American cloud communication platform as a service which was recently valued at $47.93 billion. The solution allows software developers in all types of companies to programmatically make and receive phone calls, send and receive text messages and many other communication and marketing functions through their web services APIs.

For those of you who might not be familiar with the definition of APIs, it is the acronym for application programming interface, which are basically the pieces of the coding that allows software to be able to send and receive information with other entities. As an example, when you turn on your phone to check the weather, your phone system talks to your weather app, which in turn talks to an internet server to get the desired information. This all possible thanks to APIs. 

 

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In the case of Twilio, their solution allows the possibility for web applications to have access to phone and text functionalities to communicate with you. When you receive a text for your Uber eat delivery, that’s Twilio. When you get an email confirming your Airbnb reservation, that's Twilio too. They handle everything from text notifications to emails, account security, intelligent chatbots and support calls. In the end, it’s a support for pretty much every point of digital contact a company has with its customer. You never see Twilio, but it’s almost certain – unless you live in a cave – that you’re exposed to it every day.

 

Who are its customers?

Well, many, many companies. Twilio reported having over 150’000 customers on their website, but this data might be out of date as according to other resources, this number crossed the 200’000 bar this year.

Just to give you an idea, here is a quick summary of some of their most “famous” users. Lyft and Uber use it for SMS and phone support, Netflix uses it for notifications, Marks and Spencer for their phone support, eBay for their ticket automation. Other customers include Airbnb, Shopify, Deliveroo, Wix, Twitter, Zendesk, Spotify, Yelp, the American Red Cross, Foursquare, Morgan Stanley, ING, Xoom, Transferwise, Hulu, Instacart, Pay by Phone, Eatabit, and the list goes on. As I said, you’ve been using Twilio, you’re just not aware of it.

 

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What’s happening with the Twilio stock?

I didn’t want to spoil you but guess what: it’s a fantastic time to be in the remote communications business. Or, anything remote really. The BVP Nasdaq Emerging Cloud Index, which includes more than 50 publicly traded cloud software vendors, is up 82.8% this year. A profitable industry, that’s for sure.

Looking at their stock performance over the past year, we can only be impressed. The stock has been on a tear and reached a 52-week high a week ago, jumping to $325.90 dollars a share. Year to date, shares have surged 211%. That’s thanks to quarter sales that have tripled in a year and keep growing.

 

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Twilio Stock over a year (Source: Investing.com)

 

Talking about more numbers, we must mention that if Twilio now has over 200’000 customers, they had only a mere 50’000 in 2017: a nice quadruple in 3 years. Their expected sales for the last quarter were over 400’000, 115’000 more than the same quarter in 2017. However, great sales do not always mean great profits: the company is not yet profitable. But we’re getting used to such companies, aren’t we?

 

Buying segment

To avoid any confusion, I’m not talking about the segment in which Twilio is buying but saying that Twilio bought a company called Segment. Segment is a customer data infrastructure which they acquired for $3.2 billion. The deal is expected to be closed by the end of the year.

Segment is a technology start up that lets organizations pull customer data from one app to another by the way of APIs. It seems like Twilio is aiming to go even deeper in their customer service offer , digging both for marketing data and insights for its customers. There’s a great synergy between the two companies, as acquiring Segment can bring even more users to the Twilio platform, a great opportunity to upsell them with the many services offered by Twilio. Not only that, but as Segment is specialized in providing the tools to handle customer data more responsively – in an environment where awareness about the issue is growing –, it will also proved to be a fantastic tool for Twilio to strengthen is product offering.

 

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Jeff Lawson, co-founder and CEO of Twilio, said in a statement:

“Segment lets developers and companies break down those (data) silos and build a complete picture of their customer. Combined with Twilio’s Customer Engagement Platform, we can create more personalized, timely and impactful engagement across customer service, marketing, analytics, product and sales. We are thrilled to welcome Segment to the Twilio team.”

Peter Reinhardt, Segment’s co-founder and CEO answered:

“Together, Twilio and Segment have an incredible opportunity to build the customer engagement platform of the future. We created Segment to help businesses set themselves apart in the digital age and deliver rich, connected customer experiences built on high-quality data. By joining forces and applying our customer data platform to Twilio’s engagement cloud, we’ll be able to make the entire customer experience seamless from end-to-end.”

 

Conclusion

In the end, macro trends well explained the outstanding success of Twilio. Companies like Shopify, Netflix and Deliveroo are doing extremely well at a time where people have never spent so much time in the comfort of their home. As almost all of these companies use Twilio, it is only natural that their success transfers to it. It’s often much easier to pay someone for such a task instead of developing it inside, especially when they do it so well.

However, Microsoft just launched a set of functionalities in their Azure Communications Services to compete in this market. We have yet to see how the market shares will be divided once the giant steps in.

 

 

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Sources:

Twilio Inc. (TWLO)

Twilio website

Twilio stock jumps on $3.2 billion Segment acquisition, in CNBC

Twilio, the company that's secretly texting you, hits new highs on a $3B splurge, Robinhood Snacks

Microsoft challenges Twilio with the launch of Azure Communication Services, in TechCrunch

Twilio Surges As Acquisition Prepares It For Battle With Salesforce, Adobe, in Investor Business Daily

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