2016 IPO Prospects: Twilio Expected to go Public Soon

A recent Research and Markets report on the Global Web-Based Real-Time communication market projects the industry to grow 36% annually over the period 2016 through 2020. While the biggest vendors in the market are Cisco, Ericsson, Google, and Mozilla, other smaller vendors are also making their presence felt. One such player is San Francisco-based Twilio.

Twilio’s Financials

Twilio provides application programming interface (API) services to allow developers to add voice, video, text, and picture messaging to any app. It was only last year that Twilio added video capability to their offerings. Twilio’s platform relies on AWS infrastructure and offers telephony services in the cloud used in apps such as those offered by Hulu, Uber, Airbnb, and eBay, to name a few.

Twilio earns revenues by charging their customers a fee based on the pay-for-what-you-use model. Twilio’s customers are able to pay low per-minute rates to connect and route voice calls to over 200 countries, communicate over VoIP to browser or mobile apps. Twilio is able to offer low rates due to their extensive partnerships with more than 100 telephony carriers globally. Besides voice calls, Twilio earns revenues by providing SMS and MMS capabilities and setting up VoIPs, IP infrastructure, and connectivity and termination coverage related services.

Twilio is privately held and keeps its financials under cover. Recent news reports suggest that the company had earned $100 million in revenues in 2014 and was adding over $1 million in recurring revenues a week since then. It is yet to turn in profits.

Twilio is venture funded so far with $234 million raised from investors including Fidelity, T. Rowe Price, Redpoint Ventures, Draper Fisher Jurvetson, Bessemer Venture Partners, Union Square Ventures, K9 Ventures, 500 Startups, SV Angel, Lowercase Capital, Mitchell Kapoor, David Cohen, and Founders Fund. Its last funding round was held in July last year when Twilio raised $130 million in a round led by Fidelity and T. Rowe Price at a valuation of $1.1 billion. An earlier round in 2013 had valued them at $500 million.

Market rumors suggest that Twilio has now filed for an IPO under the JOBS Act. The Act allows companies with revenues of less than $1 billion to file for an IPO confidentially. It would be expected to submit detailed financials and other filings closer to the date of the IPO road show.

Twilio’s Competition

Bigger vendors aside, Twilio has enough competition from other smaller players in the industry. Among smaller vendors, Twilio’s closest rivals include Sinch, Nexmo, and Plivo, all of whom offer similar services at marginally different price points. To help keep these vendors at bay, Twilio has been expanding its offerings. Last year, Twilio announced the acquisition of Authy for an undisclosed sum. A Y Combinator backed start-up, Authy provided two-factor authentication services to end users, developers, and enterprises. At the time of the acquisition, Authy had a listing of over 6,000 sites that used its services to protect their users. The acquisition will help Twilio in simplifying the authentication and verification experience for its customers.

This segment is a part in the series : 2016 IPO Prospects