TWLO is a juggernaut. I was just reviewing their latest earnings call. They are leading the way in this digital revolution and are the picks and shovels…the underlying telecommunication platform technology… that drive Lyft, AirBnB, Uber, Match, Coca Cola, and hundreds (if not thousands) of other companies that need to connect any two people geographically, financially, etc. Their technology is an almost indispensable part of the existence of these companies. Put simply, almost every company will need to have this technology to survive with those that already have it.
Just a few excerpts from their most recent earnings call in which they blew the socks off for the 10 straight quarter with accelerated 81% revenue growth.
CEO: “We have a once in a generation opportunity ahead of us to revolutionize one of the largest markets in all of IT communications, by moving it from its legacy and hardware to its future and software. It’s still day one of this journey and I couldn’t be more proud of our team and excited about the road ahead.
The organic growth for Twilio’s base revenue was above 60% year-over-year and Twilio SendGrid’s organic growth for the sub-period was 30% year-over-year.
Our dollar-based net expansion rate was 146%. This metric will not be impacted by the acquisition of SendGrid until we close Q1 of 2020, a year from now. Over time, it will decline a little bit, just given that these older cohorts are going to become a really large part of the mix.
Gross margins came in just above 58% up from 54% sequentially. The largest contributor by far was folding in higher margin revenue from SendGrid, which added about 3 points. On an organic basis, gross margins also increased a bit sequentially as the base variable mix improved.”
[Victor again]
TWLO will remain in my top 5 holdings for the foreseeable future. They have virtually no competition. Uber is trying to build their own platform, but right now TWLO has an incredible lead, thousands of customers (>64,000), and a moat around their technology; they also just partnered with Microsoft this month to add to their IoT connectivity offering. Nothing seems to stop this company’s continued revenue growth acceleration, offering and customer acquisition…while I would always caution that the company valuation is very high right now, it has been high for 8 quarters and every quarter that they continue to grow at this rate, reduces the EV/S almost in half. I started my position in TWLO over a year ago at $42/share. (Not a typo…more than 3x return already at $142 today). I have added to the position 9 times over the past year and it currently holds my second highest conviction at 14.2% of my portfolio, not including the long term call options I hold on TWLO also. If you do not own this company, I recommend you consider doing so. To repeat the CEO Jack Dorseys comment above:
… It’s still day one of this journey!!”
