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Twilio S-1

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Re: Twilio S-1

#101

Post by jeffmould »

ShaneBonich wrote: post #92

Worst of all, lots of free Twilio alternatives are popping up, like https://www.bitrix24.com/alternatives/free-twilio-alternativ... Twilio is great but it's hard to compete with free.

There have always been competitors in this space. There used to be bunch of companies, and there are still several, that offered various levels of telephony integration, especially in the SMS/MMS space. I kind of view Twilio as the Stripe of the telephony world. Twilio came along and made a developer-friendly API around a bundle of services, where before you may have to use one service for one thing and another for something else. Or one provider may only reach some carriers and not others. Twilio kept it basic, not really building anything on top of their API, just selling the API itself. Other companies tried to compete against their own clients. For example, many SMS/MMS providers would offer an API, but then compete against their clients by also selling campaign management platforms or mobile marketing services.

Re: Twilio S-1

#102

Post by mbesto »

Animats wrote: post #75

There's a lot there not to like: Revenue: $166,919,000 Net Loss: $38,896,000 So they're still not profitable. This is surprising, since they don't have any big capital investments. They're not doing anything that takes a lot of R&D. The thing runs on Amazon AWS. They've been operating for years and should be profitable by now. Yes, they're growing fast, but the costs don't rise in advance of the growth. You don't hav…

Let's play the devil's advocate for a second.

                       FY13     FY14     FY15 
  Sales and marketing: 21,931	33,322	 49,308
Just turn it off and now you have a $11M profit. NetSuite and SuccessFactors did it in 2008 and they're both profitable, or at least were in NetSuite's case (NetSuite has recently pushed hard on S&M, hence a decline in profit in the last few years, probably because the market is dictating to do so and money is cheap).

EDIT: Grammar.

Re: Twilio S-1

#103

Post by rpedela »

pavs wrote: post #47
stanmancan wrote: post #8

This is the first time I've ever looked through an S-1 before, but in the Risks section they say: We have a history of losses and we are uncertain about our future profitability Is it normal to go public when being uncertain if you'll ever be profitable?

I don't have much knowledge here, but I always thought one of the main reasons to go public because you want to raise money to either expand or you are strapped for money. If anything I would be suspect of companies who are extremely profitable and doesn't need to raise money at all but going public.

Companies must go public if they have a certain number of shareholders. I think the number is 500 or more, but don't quote me on that.

Re: Twilio S-1

#104

Post by runako »

toomuchtodo wrote: post #98
runako wrote: post #96

Earlier quoted context omitted.

This is a great comment because it is almost verbatim what was said about Amazon. Actually, this is still frequently said about Amazon's retail operations. I remember talk that eBay was a better business than Amazon because they had network effects and were thus more defensible. Oops. Also worth noting: Amazon wasn't the 800lb gorilla when they filed their S-1 (valuation: $438mm).

Want to make a long bet? I bet you Twilio doesn't turn into that gorilla. AWS is a far cry different than Twilio.

1) AWS != Amazon. Amazon went public 10+ years before AWS launched. AWS is a tiny part of Amazon's revenue today. You moved the goal posts! We were discussing a money-losing Internet retail pure-play; you're comparing to a heavily-subsidized (via start-up capital etc.) tech services pure-play.

2) Which is another key point: the prospects of the company at IPO are very different from the company today. A bet on AMZN today is largely a bet on AWS, which is very different than a bet on AMZN in 1997. If Twilio continues to succeed, it will be because they can use this investment to grow into a stronger long-term position.

I don't know Twilio well enough to take a bet either way. I'm just pointing out that most smart people (you, even, perhaps?) didn't think Amazon would be that gorilla, either. And that was the correct bet, which just happened to turn out wrong.

So if forced to bet, I bet with statistics (against Twilio). But only because building that gorilla is insanely hard (and depends on luck) and not for any of the reasons you've cited.

Re: Twilio S-1

#105

Post by nostrademons »

hamana wrote: post #82
evanpw wrote: post #70

Earlier quoted context omitted.

From a 1986 Fortune article: "With pretax profits running as high as 34% of revenues, Microsoft needed no outside money to expand." [1] http://fortune.com/2011/03/13/inside-the-deal-that-made-bill...

Why doesn't Twilio have 34% profit margin? Because their price is low and their costs are high. If they increase the price of their product and cut certain costs, they would have similar profit margin to Microsoft.

The big question is the elasticity of their market. Microsoft could charge high prices because they were pretty much the only game in town first for microcomputer programming languages and then for PC-compatible operating systems. If they raised their prices, what would their customers do? Not write software? Write for a platform that has no users?

If Twilio raises their prices, will they make more money? Or will it cause people to not use Twilio, either opting for competing free services or using alternatives to SMS entirely? I don't know, and I don't think Twilio does either; hence the profitability risk.

Re: Twilio S-1

#106

Post by [deleted] »

runako wrote: post #104
toomuchtodo wrote: post #98

Earlier quoted context omitted.

Want to make a long bet? I bet you Twilio doesn't turn into that gorilla. AWS is a far cry different than Twilio.

1) AWS != Amazon. Amazon went public 10+ years before AWS launched. AWS is a tiny part of Amazon's revenue today. You moved the goal posts! We were discussing a money-losing Internet retail pure-play; you're comparing to a heavily-subsidized (via start-up capital etc.) tech services pure-play. 2) Which is another key point: the prospects of the company at IPO are very different from the company today. A bet on AMZN t…

[deleted]

Re: Twilio S-1

#107

Post by shaqbert »

Animats wrote: post #75

There's a lot there not to like: Revenue: $166,919,000 Net Loss: $38,896,000 So they're still not profitable. This is surprising, since they don't have any big capital investments. They're not doing anything that takes a lot of R&D. The thing runs on Amazon AWS. They've been operating for years and should be profitable by now. Yes, they're growing fast, but the costs don't rise in advance of the growth. You don't hav…

Net loss: Don't think that is a biggie. They expanded their cost base both in R&D, sales & marketing, and general and admin. With a little bit of cost discipline for one year, they are going to be profitable.

Voting rights: that is indeed yucky.

Competitive threat: Not really. The inertia for existing customers is high, especially since the average revenue per active account is about $580/month. For a big company, that is not worth optimizing. And switching to another (unproven) API from a running system... not likely.

Re: Twilio S-1

#108

Post by Systemic33 »

jeffmould wrote: post #101
ShaneBonich wrote: post #92

Worst of all, lots of free Twilio alternatives are popping up, like https://www.bitrix24.com/alternatives/free-twilio-alternativ... Twilio is great but it's hard to compete with free.

There have always been competitors in this space. There used to be bunch of companies, and there are still several, that offered various levels of telephony integration, especially in the SMS/MMS space. I kind of view Twilio as the Stripe of the telephony world. Twilio came along and made a developer-friendly API around a bundle of services, where before you may have to use one service for one thing and another for s…

The commercial SMS market is full of companies that are rivals but also customers.

This is happening because the actual network operators often require their customers to provide a volume of X SMS's per month, and they have to pay upfront. They are then selling their capacity downstream in a long distribution chain, finally ending up with regular businesses that wants to add SMS capability.

Regulation changes is the only thing that stirs the market tbh.

Re: Twilio S-1

#109

Post by Joeri »

Eridrus wrote: post #91
Animats wrote: post #75

There's a lot there not to like: Revenue: $166,919,000 Net Loss: $38,896,000 So they're still not profitable. This is surprising, since they don't have any big capital investments. They're not doing anything that takes a lot of R&D. The thing runs on Amazon AWS. They've been operating for years and should be profitable by now. Yes, they're growing fast, but the costs don't rise in advance of the growth. You don't hav…

> This is surprising, since they don't have any big capital investments. I haven't looked at the S-1 and I'm not sure if they even break this out, but user acquisition costs are all paid up front, while the value is realised over the life of the customer, depending on the average lifetime of a customer, this could be fine, if risky. And you often do prepay for AWS since it saves you money over the course of a few yea…

Sales & marketing is 49 million, R&D is 42 million. So, I guess the critical factor is the degree of user turnover. If they lose users too quickly, they need to keep spending big on sales & marketing. It doesn't seem like the sort of market where people jump ship quickly though, since once you've added the piece of code that integrates with their services, you'd only replace it if the other api is a lot cheaper or somehow more capable / reliable.

Re: Twilio S-1

#110

Post by hueving »

hawkice wrote: post #73
ProblemFactory wrote: post #32

Earlier quoted context omitted.

The Risks sections are always like that. Any advertisements for stocks must have disclaimers about a wide range of possible risks, and that despite promising historical data you could lose your entire investment. Otherwise they could face expensive lawsuits when future shareholders claim that they were misled and not informed of these risks. For example from Facebook's S-1: "Growth in use of Facebook through our mobi…

I cannot disagree with your attitude more. This company is saying they have an existing threat to their ongoing operations that _will_ be fatal, that they are unsure will ever be solved. This is fundamentally different than saying ad blockers could impact Google's business. In a way, their honesty is unexceptional because they are required by law to be honest about their risks. But the level of risk is not usual.

Wide spread ad blocking would be fatal or nearly fatal to Google. The loss of the vast majority of their income and the resulting contraction that comes with that would probably tear apart the company.
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