From 2022 to 2024, Twilio had a rough ride.
Ultimately, its monster $3.2BN acquisition of Segment sidetracked the businesses from its communications and telephony heritage.
As it did so, Twilio aimed to transform itself into a marketing tool, a sales tool, and more, taking on grand, ambitious ideas that received significant investment.
Eventually, it became the Swiss Army Knife of CX that nobody asked for.
However, as it planted money into these projects, the world adjusted to its post-pandemic new normal, the SaaS market slipped, and it just wasn’t the time to be non-profitable.
The result? Twilio got pummelled.
In May 2023, it recorded $1.38BN in annual net losses. Later, it announced numerous rounds of layoffs and sold off multiple business units, including its IoT arm.
Activist pressure eventually consumed the business, and – in January 2024 – Jeff Lawson, Founder & Former CEO of Twilio, left in a shroud of gloom.
Picking up the pieces, Khozema Shipchandler, CEO of Twilio, had to make a choice: do we sell Segment or make it part of a stronger, more cohesive platform?
Realizing this, he kickstarted a review into its future.
Ultimately, Shipchandler & Co. decided to retain Segment but create more of a bridge between the customer data platform (CDP) and its core communications product offerings.
As such, Twilio started leveraging AI to better align its core product sets and developed playbooks for customers to ensure they achieve value when blending Twilio’s portfolio.
In doing so, Shipchandler believes the company has now carved out a differentiative value proposition.
“We’re uniquely positioned in terms of our core assets,” he told Fortt Knox of CNBC.
There’s really nobody that’s got a leading communications capability and a leading data capability. Our ability to then use AI to augment those things is what is going to set us apart.
“We try to take signals from our customers, consider where they are leading us, and create a compelling set of plays that we can put in front of them.”
Twilio won’t necessarily land more customers following this path, but it can expand on its existing enterprise base.
With its Swiss Army Knife approach, that’d been a key issue for Twilio.
Consider how it recorded a year-over-year (YoY) net expansion rate of 101 percent in 2023.
Essentially, this indicates that if Twilio hadn’t added any customers over 12 months, its revenues would have only grown one percent.
As of last quarter, that rate stands at 105 percent, highlighting how Twilio is now – thanks to its change of approach – doing much better at expanding its existing business with customers.
Meanwhile, its customer base has continued to rise steadily, with Twilio now boasting 320,000+ customer accounts, up 14,000 from last year.
By executing this land and expand combination, the vendor achieved double-digit growth last quarter.
Such figures have provided a great sense of optimism at the company and beyond, with its stock price up over 141 percent over the last six months.
Moreover, its bank balance looks much healthier, with Twilio “achieving nearly $700 million in profits and generating an equivalent amount in cash flow,” according to Shipchandler.
Now, the vendor is ready to rev up its innovation engine. “Last year, we delivered 251 unique products to our customers,” he said. “This year, we need to do even better.
We’ve got the right team, the right strategy, and a disciplined focus on being both innovative and well-run.
With this newfound focus, a deep customer base to expand on, and a pledge to accelerate its innovation curve, Twilio will be one to watch in 2025.
