Twilio has amassed $1.03BN in Q3 earnings, with year-over-year (YoY) revenues up five percent.
Those earnings exceeded analyst estimates, but Twilio’s continued ability to win new customer accounts en masse is most impressive.
Indeed, as of Q3’s end, the vendor has 306,000 active customer accounts. This time last year, it had 280,000, highlighting significant sales growth.
However, many would expect even higher revenue growth with such strong sales.
So, why is that not the case? Well, it seems Twilio is struggling to expand on its existing business despite its broad portfolio.
Twilio’s dollar-based net expansion rate of 101 percent (YoY) reflects this.
That percentage highlights how – if Twilio had not added any net new customers in the last year – its revenue would have only grown by one perfect.
As such, Twilio seems to have an issue in engaging its core communications install base with its other customer experience solutions.
Consider how its communications business contributed $906.7MN – the lion’s share – to overall Q3 revenues.
Meanwhile, its data & applications business – comprised of Engage, Flex, Segment, and more – contributed $127.0MN.
Although the latter has a higher growth rate – at nine percent, compared to five percent – the disparity perhaps highlights how Twilio hasn’t yet mastered a cross-sell strategy.
Can Twilio Connect the Dots?
A cross-sell strategy is likely tricky for Twilio to stitch together, as its tech stack somewhat resembles a CX Swiss army knife.
Yet, there is hope that Twilio can run more of a thread through the business and align more of its solutions with a central vision.
Thankfully, Twilio’s latest CustomerAI innovation seems to take the business a step forward in pulling this together, using GenAI to yank service, sales, and marketing applications closer.
Moreover, Jeff Lawson, Co-Founder and CEO of Twilio, hints that this is the start of a longer-term vision to drive new customer outcomes. He stated:
We are building a foundation for profitable growth that enables us to invest in our CustomerAI vision to deliver even more compelling outcomes for our customers and our shareholders in the long-term.
Nevertheless, those losses likely also acted as a wake-up call for Twilio to rethink its strategy and for Lawson to lead the business in a more directed manner.
As he has done so – and made more tough cutbacks – Twilio has come much closer to profitability, with its Q3 GAAP loss from operations falling to $108.9MN.
While that may still seem high, the figure stood at $457.0MN this time last year.
To go further, Twilio must continue to connect its CX applications in a more compelling way.
That is an almighty task, as understanding, aligning, and executing across all those facets of CX requires significant mind power, which is tricky for a brand prioritizing profitable growth to muster.
As such, the overarching vision must come into place.
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