Notes from Twilio S-1 IPO Filing

Twilio just released their S-1 IPO filing to go public after a tech IPO drought for much of the year (except Atlanta-based SecureWorks). Twilio provides a cloud-based communications platform for phone, text messaging, video, and more (think of it as an easy API for communications). I remember first learning about Twilio back in 2010 when we integrated it into Pardot. We made a connector such that when a lead filled out a form on a site, Pardot would trigger Twilio to call the sales rep assigned to that new prospect, read out the prospect’s information, and say press 1 to connect to the person at which point Twilio would call the new lead with the sales rep on the phone. We used to pitch it as “sales reps hate dialing out but love answering the phone.”

Here are a few notes from Twilio’s S-1 IPO filing:

  • Our Programmable Communications Cloud software enables developers to embed voice, messaging, video and authentication capabilities into their applications via our simple-to-use Application Programming Interfaces, or APIs. (pg. 1)
  • As of March 31, 2016, over 900,000 developer accounts had been registered on our platform (pg. 2)
  • Revenue (pg. 3)
    2013 – $49.9 million
    2014 – $88.8 million
    2015 – $166.9 million
    2016 Q1 – $59.3 million
  • Losses (pg. 3)
    2013 – $26.9 million
    2014 – $26.8 million
    2015 – $35.5 million
    2016 Q1 – $6.5 million
  • Our platform has global reach, consisting of 22 cloud data centers in seven regions. (pg. 4)
  • We define an Active Customer Account at the end of any period as an individual account, as identified by a unique account identifier, for which we have recognized at least $5 of revenue in the last month of the period. (pg. 14)
  • In the three months ended March 31, 2016, we had nine Variable Customer Accounts, which represented 16% of our total revenue. (pg. 15)
  • Headcount has grown from 386 employees on March 31, 2015 to 567 employees on March 31, 2016 (pg. 17)
  • We believe that our corporate culture has been a critical component of our success. (pg. 17)
  • We also experienced increased expenses in the second quarter of 2015 due to our developer conference, SIGNAL, which we plan to host annually. (pg. 19)
  • We outsource substantially all of our cloud infrastructure to Amazon Web Services (pg. 22)
  • In 2013, 2014 and 2015 and the three months ended March 31, 2016, we derived 9%, 12%, 14% and 15% of our revenue, respectively, from customer accounts located outside the United States. (pg. 23)
  • In 2013, 2014 and 2015 and the three months ended March 31, 2016, WhatsApp accounted for 11%, 13%, 17% and 15% of our revenue, respectively. (pg. 25)
  • WhatsApp has no obligation to provide any notice to us if they elect to stop using our products entirely (pg. 25)
  • Accumulated deficit of $151.8 million (pg. 57)
  • Equity ownership (pg. 143)
    Founder/CEO – 11.9%
    Bessemer Venture Partners – 28.%
    Union Square Ventures – 13.6%
    Fidelity – 6.1%

With a $240+ million run-rate, Twilio is poised to have a great IPO. As there are telecom fees that lower gross margins and a fair amount of variable revenue, Twilio won’t be priced like a true SaaS company but will still get a healthy multiple due to the great growth rate.

What else? What are some more thoughts on Twilio’s S-1 IPO filing?

One thought on “Notes from Twilio S-1 IPO Filing

  1. While they don’t report customer churn (prob b/c tons of small customers come in and out), they have a revenue retention metric that seems quite impressive, Dollar-Based Net Expansion Rate, at 170% (up from 145% yoy). when combined with great top line growth and high sales/marketing efficiency, it makes me think this will fetch a high multiple (despite low gross margins and some customer concentration) in the Atlassian range.

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