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The stock price has been lackluster unfortunately. I’m not sure as to why.

by pylua 3y ago

robertlagrant 3y ago
One issue might be that Microsoft (as ever) launched a milquetoast competitor that sounds the same to a purchasing department in 2020[0]. [0] https://www.fool.com/investing/2020/09/25/microsoft-declares-war-twilio-new-cloud-service https://www.fool.com/investing/2020/09/25/microsoft-declares...
- CharlesW 3y ago
  > One issue might be that Microsoft (as ever) launched a milquetoast competitor that sounds the same to a purchasing department in 2020. AWS (and presumably Google) also provides a suite of telephony services with Chime, SNS, Connect, etc. I assume the strategy now is to sell to/merge with a smaller CSP to provide a competitive portfolio of services.
nine_zeros 3y ago
> The stock price has been lackluster unfortunately. I’m not sure as to why. Stagnant revenue and declining free cash flow means that the company doesn't have many tools in the toolbox to be valued higher.
Nextgrid 3y ago
Stock price isn’t a great indicator of product quality though. Stock price requires endless growth which is unsustainable.
- bwilliams18 3y ago
  But it is ultimately what will result in a CEO departure.
- maerF0x0 3y ago
  No. Stock price requires higher per share values. One can continuously grow a stock if they reduce the shares outstanding. That being said iirc buy backs have notoriously all gone to executives. Essentially they buy back, and then award themselves options to re-dilute, but cannot readily find a source for that. So maybe incorrect.
  - lotsofpulp 3y ago
    When a business does a stock buyback, the business receives the stock, not any executive(s). The business might pay the executive with stock per the board approved compensation package, but a CEO does not wake up and say “I want to give myself 5M shares so let’s do a 5M share buyback”. A buyback benefits all shareholders equally by reducing supply of the stock and therefore increasing its price.
    - maerF0x0 3y ago
      > the business receives the stock correct. Hence my wording > and then award themselves options to re-dilute It's not that executives receive the bought back stock, but that their stock based compensation plans result in no net decrease in the amount of outstanding shares.
yawgmoth 3y ago
My take: They're too expensive at volume (and they have competitors, just not famous ones) and not specialized enough / not best in class compared to tools like Klaviyo.
- teitoklien 3y ago
  They own a lot of those regional competitors that are less well known. They play in both market categories, they sell it at higher margins with twilio brand. Then sell it again, at lower prices from more regional less known brands.
- drchopchop 3y ago
  This. They're great for small/mid-sized developers, but they price themselves out once you're doing billions of messages a month. At that point companies start looking at aggregators one level down (i.e. closer to the carriers or raw SMTP).
maerF0x0 3y ago
I'm somewhat on top of the stock, here's my not financial advice take: 1. Growth rate slowed such that valuations had to come down (went from inevitable overtaking of Salesforce in size, to decades of growth required) 2. Environment -- Cashflow negative meaning another raise was required without fiscal controls and in a high interest environment that's really tough. A return to office end of covid anxiety meant the Covid bubbled stocks are returning to mean. (eg compare zoom has done relatively similar over past 5 yrs) 3. IMO a few execs were absurdly over compensated whilst investor pressure against dillution was targeted to rank and file employees. eg: Eyal Manor earned a reported $42M in compensation (and a $2.5M retention bonus that reading between the lines sounds like hush money), meanwhile ICs were often given below cost of living raises and no refreshers. 1-2 means outside investors had to lower the valuation and 3 meant a combination of dilution and morale hits.
- umeshunni 3y ago
  https://contracts.justia.com/companies/twilio-inc-3579/contract/223166/ https://contracts.justia.com/companies/twilio-inc-3579/contr... Looks like Eyal's compensation was more like 9-10M?
  - mikeryan 3y ago
    https://www.execpay.org/executive/eyal-manor-42374/r-186733 https://www.execpay.org/executive/eyal-manor-42374/r-186733 He got 33M in stock grants in 2021 You’re both pretty much right it looks like he vested all the RSUs in one year so he while he took it all home in 2021 it had probably vested over 4 years, the first 3 when it wasn’t reflected as comp.
- gkoberger 3y ago
  A few other things that could contribute to a slowing growth rate: 1. People build software differently now. There's not as much reliance on text messages (fewer phone apps build built, 2fa via phone is considered dangerous, etc) 2. Gig economy is stabilizing. There was a huge increase in new companies for years, but at this point it feels like we've stalled on new innovations in that space (while a lot of VC-subsidized ones have faded out) 3. There's way more regulations on spam (good for us, bad for Twilio). I think Twilio did as good a job of avoiding spam as anyone could reasonably expect, but the barrier to entry to using Twilio for even reasonable projects now involves the government. Plus with the crackdown on spam (good!), a portion of their business has likely been affected.
pastor_bob 3y ago
https://www.macrotrends.net/stocks/charts/TWLO/twilio/shares-outstanding https://www.macrotrends.net/stocks/charts/TWLO/twilio/shares...
deleted 3y ago
[deleted]
x0x0 3y ago
I think the common thread with Twilio the sms/sip product and Twilio the CDP / nee Segment is this: businesses outgrow them. Both of them work well for smb and lower midmarket, but as companies grow, become horrendously expensive and essentially strongly encourage migration off. A public company is not a failure, but when your product has a ceiling with your customers, that's painful. I also had a really annoying experience with Sendgrid post acquisition. I'd used Sendgrid for my first company (as in I personally made the purchase, implemented the apis, and for a long time, was the sole and then admin account). I went to use it for my next company pre website launch and they froze my new account and their customer service was a pita. To be fair, the site wasn't up, but I needed the ability to send emails to publish the site (it's a crucial part of new account flow.) They wouldn't allow me to use sendgrid even though I was happy to share my linkedin, my previous history with their company, etc. We're happy sendinblue customers.
- falconcoder 3y ago
  I also facing the same issue, for my new site. end up I'm moving to azure communication service. One of the worse CustomerService for SaaS Provider.
kelnos 3y ago
My take: ignore the pandemic. The stock price was around $90 before the pandemic hit, which isn't much higher than it is right now. Twilio was basically the perfect remote-work-enabling pandemic company. And the market piled on and thought Twilio was a great place to put money during a global pandemic, when so many other places seemed risky or disastrous. After mid-2021, that $400+ stock price started looking a little silly. And the broader market downturn in 2022 hit Twilio even harder than it hit the broader market. And, meanwhile, Twilio's growth numbers -- while still being an unprofitable company! -- look worse than they did at the beginning of 2020. $75 might be generous for how the company is actually doing. (Full disclosure: former employee for ~10 years, and I still have a few shares left.)

The stock price has been lackluster unfortunately. I’m not sure as to why.

by pylua 3y ago

The stock price has been lackluster unfortunately. I’m not sure as to why.

One issue might be that Microsoft (as ever) launched a milquetoast competitor that sounds the same to a purchasing department in 2020[0]. [0] https://www.fool.com/investing/2020/09/25/microsoft-declares-war-twilio-new-cloud-service https://www.fool.com/investing/2020/09/25/microsoft-declares...

CharlesW 3y ago
> One issue might be that Microsoft (as ever) launched a milquetoast competitor that sounds the same to a purchasing department in 2020. AWS (and presumably Google) also provides a suite of telephony services with Chime, SNS, Connect, etc. I assume the strategy now is to sell to/merge with a smaller CSP to provide a competitive portfolio of services.

nine_zeros 3y ago

> The stock price has been lackluster unfortunately. I’m not sure as to why. Stagnant revenue and declining free cash flow means that the company doesn't have many tools in the toolbox to be valued higher.

Nextgrid 3y ago

Stock price isn’t a great indicator of product quality though. Stock price requires endless growth which is unsustainable.

bwilliams18 3y ago
But it is ultimately what will result in a CEO departure.
maerF0x0 3y ago
No. Stock price requires higher per share values. One can continuously grow a stock if they reduce the shares outstanding. That being said iirc buy backs have notoriously all gone to executives. Essentially they buy back, and then award themselves options to re-dilute, but cannot readily find a source for that. So maybe incorrect.
- lotsofpulp 3y ago
  When a business does a stock buyback, the business receives the stock, not any executive(s). The business might pay the executive with stock per the board approved compensation package, but a CEO does not wake up and say “I want to give myself 5M shares so let’s do a 5M share buyback”. A buyback benefits all shareholders equally by reducing supply of the stock and therefore increasing its price.
  - maerF0x0 3y ago
    > the business receives the stock correct. Hence my wording > and then award themselves options to re-dilute It's not that executives receive the bought back stock, but that their stock based compensation plans result in no net decrease in the amount of outstanding shares.

yawgmoth 3y ago

My take: They're too expensive at volume (and they have competitors, just not famous ones) and not specialized enough / not best in class compared to tools like Klaviyo.

teitoklien 3y ago
They own a lot of those regional competitors that are less well known. They play in both market categories, they sell it at higher margins with twilio brand. Then sell it again, at lower prices from more regional less known brands.
drchopchop 3y ago
This. They're great for small/mid-sized developers, but they price themselves out once you're doing billions of messages a month. At that point companies start looking at aggregators one level down (i.e. closer to the carriers or raw SMTP).

maerF0x0 3y ago

I'm somewhat on top of the stock, here's my not financial advice take: 1. Growth rate slowed such that valuations had to come down (went from inevitable overtaking of Salesforce in size, to decades of growth required) 2. Environment -- Cashflow negative meaning another raise was required without fiscal controls and in a high interest environment that's really tough. A return to office end of covid anxiety meant the Covid bubbled stocks are returning to mean. (eg compare zoom has done relatively similar over past 5 yrs) 3. IMO a few execs were absurdly over compensated whilst investor pressure against dillution was targeted to rank and file employees. eg: Eyal Manor earned a reported $42M in compensation (and a $2.5M retention bonus that reading between the lines sounds like hush money), meanwhile ICs were often given below cost of living raises and no refreshers. 1-2 means outside investors had to lower the valuation and 3 meant a combination of dilution and morale hits.

umeshunni 3y ago
https://contracts.justia.com/companies/twilio-inc-3579/contract/223166/ https://contracts.justia.com/companies/twilio-inc-3579/contr... Looks like Eyal's compensation was more like 9-10M?
- mikeryan 3y ago
  https://www.execpay.org/executive/eyal-manor-42374/r-186733 https://www.execpay.org/executive/eyal-manor-42374/r-186733 He got 33M in stock grants in 2021 You’re both pretty much right it looks like he vested all the RSUs in one year so he while he took it all home in 2021 it had probably vested over 4 years, the first 3 when it wasn’t reflected as comp.
gkoberger 3y ago
A few other things that could contribute to a slowing growth rate: 1. People build software differently now. There's not as much reliance on text messages (fewer phone apps build built, 2fa via phone is considered dangerous, etc) 2. Gig economy is stabilizing. There was a huge increase in new companies for years, but at this point it feels like we've stalled on new innovations in that space (while a lot of VC-subsidized ones have faded out) 3. There's way more regulations on spam (good for us, bad for Twilio). I think Twilio did as good a job of avoiding spam as anyone could reasonably expect, but the barrier to entry to using Twilio for even reasonable projects now involves the government. Plus with the crackdown on spam (good!), a portion of their business has likely been affected.

pastor_bob 3y ago

https://www.macrotrends.net/stocks/charts/TWLO/twilio/shares-outstanding https://www.macrotrends.net/stocks/charts/TWLO/twilio/shares...

deleted 3y ago

[deleted]

x0x0 3y ago

I think the common thread with Twilio the sms/sip product and Twilio the CDP / nee Segment is this: businesses outgrow them. Both of them work well for smb and lower midmarket, but as companies grow, become horrendously expensive and essentially strongly encourage migration off. A public company is not a failure, but when your product has a ceiling with your customers, that's painful. I also had a really annoying experience with Sendgrid post acquisition. I'd used Sendgrid for my first company (as in I personally made the purchase, implemented the apis, and for a long time, was the sole and then admin account). I went to use it for my next company pre website launch and they froze my new account and their customer service was a pita. To be fair, the site wasn't up, but I needed the ability to send emails to publish the site (it's a crucial part of new account flow.) They wouldn't allow me to use sendgrid even though I was happy to share my linkedin, my previous history with their company, etc. We're happy sendinblue customers.

falconcoder 3y ago
I also facing the same issue, for my new site. end up I'm moving to azure communication service. One of the worse CustomerService for SaaS Provider.

kelnos 3y ago

My take: ignore the pandemic. The stock price was around $90 before the pandemic hit, which isn't much higher than it is right now. Twilio was basically the perfect remote-work-enabling pandemic company. And the market piled on and thought Twilio was a great place to put money during a global pandemic, when so many other places seemed risky or disastrous. After mid-2021, that $400+ stock price started looking a little silly. And the broader market downturn in 2022 hit Twilio even harder than it hit the broader market. And, meanwhile, Twilio's growth numbers -- while still being an unprofitable company! -- look worse than they did at the beginning of 2020. $75 might be generous for how the company is actually doing. (Full disclosure: former employee for ~10 years, and I still have a few shares left.)