According to a Juniper Research report, the enterprise spend on Communications Platform as a Service (CPaaS) is set to quadruple to $6.7 billion by the year 2022. Twilio (NYSE:TWLO) is a leading player in the segment that is benefitting from the strong growth trends in the industry.
For the recently reported second quarter, Twilio’s revenues grew 86% over the year to $275 million, ahead of the market’s forecast of $260 million. Non-GAAP earnings were $0.03 per share, ahead of the Street’s forecast of $0.02 per share.
Among key metrics, its top 10 active customer accounts contributed to 13% of its total revenues, compared with 17% a year-ago. Its dollar-based net expansion rate rose to 140% from 137% reported a year ago. Its active customer accounts increased to 161,869 as of the end of the quarter from 57,350 a year ago. During the quarter, Twilio added more than 7,070 active customer accounts.
For the current quarter, Twilio forecast revenues of $286-$289 million with an EPS of $0.01-$0.02. It expects to end the year with revenues of $1.113-$1.119 billion and an EPS of $0.17-$0.18. The Street was looking for an EPS of $0.01 for the quarter and $0.17 for the year.
Twilio’s Growth Focus
Earlier this year, Twilio had acquired the email specialist SendGrid, for an estimated $3 billion. During the quarter, it continued to integrate the acquisition. It recently introduced new automation and email testing features within the Twilio SendGrid marketing campaigns product that provide easy-to-use workflows and integrated tools. Twilio is building products that will help advertisers deliver more focused emails across both one-time campaigns and transactional campaigns.
It recently also announced the beta launch of Twilio SendGrid Ads, a feature that will help advertisers extend their current email campaigns to more channels and invite clients to sign up for emails directly from a lead ad on other social media sites. Twilio has enhanced the Ads service to improve ad customization by helping understand email data. Marketers will be able to run multichannel display ad campaigns on Facebook, Google, and Instagram, all through their SendGrid accounts.
It also announced the launch of Twilio Conversations, a communication platform that will allow clients to synchronize communications from multiple channels into a single stream. The service is expected to be especially useful for organizations whose customers use multiple communication channels.
Twilio continues to attract customers through its gaming-focused offerings. Earlier this year, it announced TwilioQuest 3, a new version of its interactive self-paced online learning game. The product is being launched soon and through its role-playing features, it will help both developers and non-developers learn how to easily build apps with Twilio. TwilioQuest has received strong reviews since its launch. It has more than 44,000 users who have completed over 70,000 objectives.
Twilio is now targeting the healthcare industry for the next wave of growth. Its management realizes that given the privacy concerns in the sector, it is a tough market to crack. But next year, Twilio will sign on as a HIPAA Business Associate, which will enable certain privileged patient communications to be sent using Twilio’s APIs. At present, Twilio’s platform has very limited uses in the healthcare industry as it is mostly used only for sending appointment reminders. Twilio hopes to change that by offering the ability to build personalized digital customer experiences using Twilio’s APIs across multiple channels.
Twilio’s stock is trading at $129.31 with a market capitalization of $17.6 billion. It had climbed to a 52-week high of $151 in July this year. It hit a 52-week low of $62.43 in October last year.
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