Earlier this week, Twilio reported F3Q (Sep) revenue of $740.2M (+65.2% y/y vs +66.9% last q) vs cons $681.1M, and guided F4Q (Dec) revenue to $760M-$770M ($765M at midpoint, or +39.6% y/y) vs cons $745.3M. Despite beating consensus, the earnings and guidance did not quite meet investor expectations, leading to a significant stock reaction of more than 20% the following day. The question for investors now becomes one of buying the dip or cashing in on the gains that are left remaining from the stock's impressive longer-term run higher. Fortunately for our customers, ETR has plenty of forward-looking data to help formulate an answer to that question. In this article, we will take a look at just a few of those data points at our disposal; including our recent OCT21 TSIS report on Twilio, our proprietary Drill Down survey on the vendor, and ultimately our proprietary regression forecast analysis designed to help predict revenue for the company.
We are going to start by reviewing the OCT21 data set and vendor report on Twilio. Published just last week, the ETR Research team maintained a Positive outlook on Twilio's data set. The report states:
Among All Respondents, overall spending intentions on Twilio are accelerating from already strong data captured last year; market share remains stable. Driving the acceleration in Net score (i.e., spend velocity) are growing expansion rates among virtually all customer types. Mid & Small, Fortune 500/1000 organizations, and Global 1000 organizations indicate the most material growth vs. last year.
In the prepared remarks published prior to Twilio’s Q2 earnings call, management mentioned it began its co-selling efforts between the Twilio platform and Segment, acquired last November. Attach rates between Twilio and Segment have already doubled within our sample from the JUL21 to OCT21 surveys, while Segment is simultaneously seeing a strong uptick in spending intentions.
Overall, trends for Twilio remain positive and inline with strong data captured over the past two years. Lack of Adoptions among large index organizations and within the Contact Center sector do warrant concern, but Twilio continues to see a very impressive proportion of its customer base continuing to Increase spending with the vendor.
Next up, we are excited to take a look at some highlights from our Twilio drill-down study.
In this short, flash survey we surveyed 53 IT decision-makers about...
- Their interaction with different Twilio products.
- Their Customer Data Management spending.
What is driving that spend?
Access the: Interactive Model | Full Report Available Upon Request
[1] Almost no respondents intend to decrease spending on Customer Data Platforms and/or Customer Experience Management vendors over the next twelve months vs. the prior twelve months. Most respondents expect their spending to stay flat or increase between +6% to +25%, whereas few anticipate increasing spending greater than +25%. New evaluations/deployments also account for a relatively low portion of respondents.
[2] Specific to Twilio, our survey shows that Messaging is by far the most utilized Twilio product, followed by Email/SendGrid and then Voice by another sizeable margin.
By customer demand, we drilled deeper into Twilio's Segment product where just 11% of respondents had indicated they were currently utilizing Segment, with an equal portion indicating they had evaluated the product but decided not to utilize it further. New evaluations of the product account for just 8% of respondents, whereas 30% had indicated they had no plans to even evaluate the product and another 36% indicated a lack of awareness of the product.
Last up, let's review ETR's proprietary regression forecast model, which attempts to predict topline revenue for the vendors in our coverage universe by leveraging our underlying data. In this analysis, we see that our model predicts a more than an 80% chance that Twilio will beat consensus by more than 2% for the fiscal quarter ending 12/31/21. The model is predicting nearly 60% y/y growth for that reported quarter with revenue coming in at $873 million.
ETR doesn't have a crystal ball and we don't have opinions, but we do have data and our data is looking very strong for Twilio. If you liked this analysis, please sign up for a Free Trial and get access to our full breadth of research coverage and products. No one has the enterprise technology landscape covered like ETR; come check us out!