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Twilio - Fantastic Growth
Impressive numbers from this strong software company
Hey, I’m James and welcome to the free version of SCALE 89. My goal is to help people understand technology, software, and high growth investing. I’m sharing my ideas, insights and perspective on Tech so readers all over can learn from me. Thank you for reading and supporting my work!
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Twilio is one of my top 5 holdings and is considered a best in class software company. They are based in San Francisco and have around 4,100 employees around the world. I checked their jobs postings and they have over 600 open roles for hire. Not only are they doing well, but they have room to expand and grow as they drive change in the communications and API space. Millions of Tech developers rely on Twilio to power communications channels like video, voice, text, chat, and email. These channels are in high demand as people work from home and communicate with people all over the world — they are relying on Twilio.
Recent Twilio Q4
Q4 total revenue was $548 million, up 65% year-over-year
DBNER of 139% (This is very high for SaaS)
FY20 total revenue of $1.76 billion, up 55% year-over-year
More than 221,000 active customer accounts, as of December 31, 2020
Initiates Q1’21 guidance for Total revenue of $526 million to $536 million, including Segment, up 44% to 47% year-over-year
Twilio Revenue Growth
2016: $277 million
2017: $399 million (+43% YoY)
2018: $650 million (+62% YoY)
2019: $1.13 billion (+74% YoY)
2020: $1.76 billion (+55% YoY)
Revenue growth is a key indicator to predict the future growth of the stock. Companies with high revenue growth rates, typically do well in the stock market. Twilio has had very high growth rates over the last 5 years which enables them to hire, grow, merge, and acquire smaller Tech companies like Segment. This will contribute to their ability to do well over the next 3-5 years and I’m confident that Segment will drive value for many years.
Twilio acquires Segment
“Our team at Twilio spent the last 10+ years building the leading cloud communication platform. However, our vision is about more than communication: it's about end-to-end customer engagement, ultimately providing businesses with the holy grail – a single view of the customer journey. Segment provides the data platform to add intelligence to Twilio’s digital engagement channels, which currently power 1 trillion interactions per year.” — Twilio Press Release
Twilio recently acquired a rock star team that was building Segment — a data platform and intelligence software solution. This will further accelerate their ability to expand and offer customers more solutions (via cross selling). This also helps Twilio add new talent with the 600 Segment employees. This is much easier than trying to hire 600 new employees.
Over the last 12 months, Twilio stock has delivered a 246% return to investors. Over the last 5 years, Twilio stock has delivered a 1,586% return to investors. It is impossible to predict what Twilio will do over the next 5 years, but I am confident that they will do well. They are growing rapidly, hiring hundreds of new people, and acquiring other companies like Segment. This will help fuel their future growth over the next 5 years as they build new and innovative products for their 200,000+ customers.
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Disclosure: Not Financial Advice / Not Investing Advice
James Carter, SCALE 89, and The Author does NOT provide financial, investment, legal or tax advice. None of my content can be construed as advice. The author is not advising you to buy or sell a security. This newsletter, article and my tweets are for informational and educational purposes only. By reading my content, you are acknowledging that this is not advice. Please note that my positions can change at any time.
I currently own shares of Twilio (TWLO).