Twilio (TWLO 81.00, +5.41, +7.16%) is bouncing back a bit today following a big fall in
recent weeks. The stock went from $100 to $75.59 on Monday. Today it is back near $80.
Twilio develops APIs that allow customers' software developers to add voice communications like phone calls, text messaging via SMS, video, and a wide variety of other types of communications into their software applications. When software developers need those apps to communicate with an end user, Twilio is how they do it.
You probably use Twilio all the time but just don't know it. Some uses include calling a Lyft or Uber driver from inside the app, two-factor authentication, and making dinner reservations through an app like OpenTable. Its largest base customer is Uber
In October, the company announced it will acquire SendGrid (SEND 38.99, +2.22, +6.04%) for approximately $2 bln (deal expected to close in 1H19). SendGrid is a developer of APIs that customers use to deliver emails to customers.
About 17% of revenue comes from promotional email or marketing campaigns. While about 80% of revenue comes from API Email, which is a user generated email or triggered email. Examples of triggered email are confirmations, reminders, receipts, or a survey.
So why do this deal? Increasingly, customers are asking TWLO to solve all their strategic communications challenges, regardless of channel. TWLO hopes adding the leading email API platform to the leading cloud communications platform will drive tremendous value to the combined customer bases. The resulting company would offer developers a single platform to manage all of their important communication channels: voice, messaging, video, and now email as well. Together the companies currently drive more than half a trillion customer interactions annualized.
In sum, TWLO operates in an attractive market niche that is growing with strength. With tech stocks under pressure in recent months, TWLO has seen a pretty harsh pullback. However, TWLO has held up better than most with its nice November. Hopefully, 2019 provides an opportunity for tech stocks to recover some losses. TWLO is a name to keep on the radar.
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