Twilio provides programmable communication tools for making and receiving phone calls, sending and receiving text messages, and performing other communication functions using its web service APl's.
Services
Programmable messaging
Programmable voice
Sendgrid Emails
Programmable video
WhatsAppBusiness APl
The Twilio Super Network consists of various other innovative services.
Why I’m bullish
Scalable business mode- APIs
High demand for services
Sticky product- Once a business uses Twilio, the switching cost is extremely high. Most of the businesses that I know,
including FinMeUp, use one of Twilio's services, especially Sendgrid. Once you have integrated their services, it does not make sense to switch to a competitor.
Share price had a massive pullback recently. Down 71% from July 2021.
Recurring revenue model
High net retention
High net expansion growth rate (131% in 2021)
Growth expected to continue
Guidance for Q1 2022:
Revenue of $855-$865
Representing Year-on-Year growth of 45-47%
Non-GAAP loss per share ($0.26-$0.22)
Insider overall net purchasers by 433 900 shares according to new Yahoo finance data in the past few months.
High organic growth (see chart)
CAGR growth of 59% since 2016
International revenue expanding
Revenues generated outside the US:
2019: 29%, 2020:27%, 2021: 34%
Land & Expand growth strategy working well.
Twilio API first platform is seen to be ahead of competitors constantly.
Usually acquisitions can go really well or really bad, Twilio has been executing really well. For example, their acquisition of Sendgrid was an amazing one (In my opinion).
Extremely high analyst ratings- according to various analysts on various platforms, Twilio is highly undervalued.
Risks
Unprofitable: It is still very difficult to price an unprofitable company. Especially with feats of a recession. Twilio is still unprofitable, but I can see how it will become profitable in the next 3 years. I believe that they can produce really good margins once profitable.
Losses are still rising
Macro environment
If businesses suffer, Twilio might be affected, but their products are to an extent recessions proof, as they will be required through good and bad.
Conclusion
I’ve watched Twilio since the beginning of the year and I’m pulling the trigger. I’m buying. This is a long-term investment for me. If the share price falls further, I will buy more.
*Please see the supporting documents from Twilio's latest 2022 Q1 Financial results.
