Q3 Total Revenue of $100.5 million, up 41%
year-over-year
Q3 Base Revenue of $92.0 million, up 43%
year-over-year
Q3 Dollar-Based Net Expansion Rate of 122%
Twilio Inc. (NYSE: TWLO), the leading Cloud Communications
Platform company, today reported financial results for its third
quarter ended September 30, 2017.
“We hit a number of exciting milestones in Q3, including our
first $100 million revenue quarter, our first enterprise license
agreement for our higher level software products, and the launch of
Twilio Studio,” said Jeff Lawson, Twilio’s Co-Founder and Chief
Executive Officer. “With Twilio Studio, the visual builder for
Twilio, we can accelerate our customers’ roadmaps and help an even
larger set of users build on our platform. We are excited by the
size, scale and diversity of what new and existing customers are
creating with Twilio.”
Third Quarter 2017 Financial Highlights
- Total revenue of $100.5 million for the
third quarter of 2017, up 41% from the third quarter of 2016 and 5%
sequentially from the second quarter of 2017.
- Base revenue of $92.0 million for the
third quarter of 2017, up 43% from the third quarter of 2016 and 5%
sequentially from the second quarter of 2017.
- GAAP loss from operations of $24.0
million for the third quarter of 2017, compared with GAAP loss from
operations of $11.3 million for the third quarter of 2016. Non-GAAP
loss from operations of $7.7 million for the third quarter of 2017,
compared with non-GAAP loss from operations of $3.4 million for the
third quarter of 2016.
- GAAP net loss per share attributable to
common stockholders of $0.25 based on 92.2 million weighted average
shares outstanding in the third quarter of 2017, compared with GAAP
net loss per share attributable to common stockholders of $0.13
based on 83.9 million weighted average shares outstanding in the
third quarter of 2016.
- Non-GAAP net loss per share
attributable to common stockholders of $0.08 based on 92.2 million
weighted average shares outstanding in the third quarter of 2017,
compared with non-GAAP net loss per share attributable to common
stockholders of $0.04 based on 83.9 million weighted average shares
outstanding in the third quarter of 2016.
Key Metrics and Recent Business Highlights
- 46,489 Active Customer Accounts as of
September 30, 2017, compared to 34,457 Active Customer Accounts as
of September 30, 2016.
- Dollar-Based Net Expansion Rate was
122% for the third quarter of 2017, compared to 155% for the third
quarter of 2016.
- Gathered developers, executives, and
partners from companies around the world to celebrate what they are
building on our platform at our second annual Signal London
event.
- Advanced the Twilio Engagement Cloud
through the launch of Twilio Studio in preview. Twilio Studio is a
drag and drop visual editor designed to both expand the universe of
people that can engage with our platform and accelerate their
development time.
- Announced our commitment to meet the
new GDPR (General Data Protection Regulation) requirements coming
from the EU, using this as an opportunity to raise the bar for data
protection worldwide for all of our customers.
- Expanded the reach of our Super Network
by announcing the availability of Twilio phone numbers in more than
100 countries.
Outlook
Twilio is providing guidance for the fourth quarter ending
December 31, 2017 and full year ending December 31, 2017 as
follows:
Quarter ending December 31,
2017: Total
Revenue (millions) $ 102.5 to $ 104.5 Base Revenue (millions) $
96.5 to $ 97.5 Non-GAAP loss from operations (millions) $ 6.5 to $
5.5 Non-GAAP net loss per share 0.06 to 0.05 Weighted average
shares outstanding 93.5
Full year ending December
31, 2017:
Total Revenue (millions) $ 386.5 to $ 388.5 Base Revenue (millions)
$ 356.5 to $ 357.5 Non-GAAP loss from operations (millions) $ 23.0
to $ 22.0 Non-GAAP net loss per share 0.23 to 0.22 Non-GAAP
weighted average shares outstanding 92.0
Conference Call Information
Twilio will host a conference call today, November 8, 2017, to
discuss third quarter 2017 financial results, as well as the fourth
quarter and full year 2017 outlook, at 2 p.m. Pacific Time, 5 p.m.
Eastern Time. A live webcast of the conference call, as well as a
replay of the call, will be available at
https://investors.twilio.com. The conference call can also be
accessed by dialing (844) 453-4207, or +1 (647) 253-8638 (outside
the U.S. and Canada). The conference ID is 89077229. Following the
completion of the call through 11:59 PM Eastern Time on November
15, 2017, a replay will be available by dialing (800) 585-8367 or
+1 (416) 621-4642 (outside the U.S. and Canada) and entering
passcode 89077229. Twilio has used, and intends to continue to use,
its investor relations website as a means of disclosing material
non-public information and for complying with its disclosure
obligations under Regulation FD.
About Twilio Inc.
Twilio's mission is to fuel the future of communications.
Developers and businesses use Twilio to make
communications relevant and contextual by embedding messaging,
voice, and video capabilities directly into their software
applications. Founded in 2008, Twilio has over 900 employees,
with headquarters in San Francisco and other offices in
Bogotá, Dublin, Hong Kong, London, Madrid, Malm�,
Mountain View, Munich, New York
City, Singapore and Tallinn.
Forward-Looking Statements
This press release and the accompanying conference call contains
forward-looking statements within the meaning of the federal
securities laws, which statements involve substantial risks and
uncertainties. Forward-looking statements generally relate to
future events or our future financial or operating performance. In
some cases, you can identify forward-looking statements because
they contain words such as “may,” “will,” “should,” “expects,”
“plans,” “anticipates,” “could,” “intends,” “target,” “projects,”
“contemplates,” “believes,” “estimates,” “predicts,” “potential” or
“continue” or the negative of these words or other similar terms or
expressions that concern our expectations, strategy, plans or
intentions. Forward-looking statements contained in this press
release include, but are not limited to, statements about: Twilio’s
outlook for the quarter ending December 31, 2017 and full year
ending December 31, 2017; Twilio’s commitment to comply with the
new EU General Data Protection Regulation going into effect in
2018; and Twilio’s expectations regarding its products and
solutions. You should not rely upon forward-looking statements as
predictions of future events.
The outcome of the events described in these forward-looking
statements is subject to known and unknown risks, uncertainties,
and other factors that may cause Twilio’s actual results,
performance, or achievements to differ materially from those
described in the forward-looking statements, including, among other
things: adverse changes in general economic or market conditions;
changes in the market for communications; Twilio’s ability to adapt
its products to meet evolving market and customer demands and rapid
technological change; Twilio’s ability to generate sufficient
revenues to achieve or sustain profitability; Twilio’s ability to
retain customers and attract new customers; Twilio’s limited
operating history, which makes it difficult to evaluate its
prospects and future operating results; Twilio’s ability to
effectively manage its growth; and Twilio’s ability to compete
effectively in an intensely competitive market.
The forward-looking statements contained in this press release
are also subject to additional risks, uncertainties, and factors,
including those more fully described in Twilio’s most recent
filings with the Securities and Exchange Commission, including its
Form 10-Q for the quarter ended June 30, 2017 filed on August 10,
2017. Further information on potential risks that could affect
actual results will be included in the subsequent periodic and
current reports and other filings that Twilio makes with the
Securities and Exchange Commission from time to time. Moreover,
Twilio operates in a very competitive and rapidly changing
environment, and new risks and uncertainties may emerge that could
have an impact on the forward-looking statements contained in this
press release.
Forward-looking statements represent Twilio’s management’s
beliefs and assumptions only as of the date such statements are
made. Twilio undertakes no obligation to update any forward-looking
statements made in this press release to reflect events or
circumstances after the date of this press release or to reflect
new information or the occurrence of unanticipated events, except
as required by law.
Use of Non-GAAP Financial Measures
To provide investors and others with additional information
regarding Twilio’s results, the following non-GAAP financial
measures are disclosed: non-GAAP gross profit and gross margin,
non-GAAP operating expenses, non-GAAP loss from operations and
operating margin, non-GAAP net loss attributable to common
stockholders, and non-GAAP net loss per share attributable to
common stockholders, basic and diluted.
Non-GAAP Gross Profit and Non-GAAP Gross Margin. For the
periods presented, Twilio defines non-GAAP gross profit and
non-GAAP gross margin as GAAP gross profit and GAAP gross margin,
respectively, adjusted to exclude stock-based compensation and
amortization of acquired intangibles.
Non-GAAP Operating Expenses. For the periods presented,
Twilio defines non-GAAP operating expenses (including categories of
operating expenses) as GAAP operating expenses (and categories of
operating expenses) adjusted to exclude, as applicable, stock-based
compensation, amortization of acquired intangibles,
acquisition-related expenses, and payroll taxes related to
stock-based compensation.
Non-GAAP Loss from Operations and Non-GAAP Operating
Margin. For the periods presented, Twilio defines non-GAAP loss
from operations and non-GAAP operating margin as GAAP loss from
operations and GAAP operating margin, respectively, adjusted to
exclude stock-based compensation, amortization of acquired
intangibles, acquisition-related expenses, and payroll taxes
related to stock-based compensation.
Non-GAAP Net Loss Attributable to Common Stockholders and
Non-GAAP Net Loss Per Share Attributable to Common Stockholders,
Basic and Diluted. For the periods presented, Twilio defines
non-GAAP net loss attributable to common stockholders and non-GAAP
net loss per share attributable to common stockholders, basic and
diluted, as GAAP net loss attributable to common stockholders and
GAAP net loss per share attributable to common stockholders, basic
and diluted, respectively, adjusted to exclude stock-based
compensation, amortization of acquired intangibles,
acquisition-related expenses, and payroll taxes related to
stock-based compensation.
Twilio’s management uses the foregoing non-GAAP financial
information, collectively, to evaluate its ongoing operations and
for internal planning and forecasting purposes. Twilio’s management
believes that non-GAAP financial information, when taken
collectively, may be helpful to investors because it provides
consistency and comparability with past financial performance,
facilitates period-to-period comparisons of results of operations,
and assists in comparisons with other companies, many of which use
similar non-GAAP financial information to supplement their GAAP
results. Non-GAAP financial information is presented for
supplemental informational purposes only, and should not be
considered a substitute for financial information presented in
accordance with GAAP, and may be different from similarly-titled
non-GAAP measures used by other companies. Whenever Twilio uses a
non-GAAP financial measure, a reconciliation is provided to the
most directly comparable financial measure stated in accordance
with GAAP. Investors are encouraged to review the related GAAP
financial measures and the reconciliation of these non-GAAP
financial measures to their most directly comparable GAAP financial
measures.
With respect to Twilio’s guidance as provided under “Outlook”
above, Twilio has not reconciled its expectations as to non-GAAP
loss from operations to GAAP loss from operations or non-GAAP net
loss per share to GAAP net loss per share because stock-based
compensation expense cannot be reasonably calculated or predicted
at this time. Accordingly, a reconciliation is not available
without unreasonable effort.
Operating Metrics
Twilio reviews a number of operating metrics to evaluate its
business, measure performance, identify trends, formulate business
plans, and make strategic decisions. These include the number of
Active Customer Accounts, Base Revenue, and Dollar-Based Net
Expansion Rate.
Number of Active Customer Accounts. Twilio believes that
the number of Active Customer Accounts is an important indicator of
the growth of its business, the market acceptance of its platform
and future revenue trends. Twilio defines an Active Customer
Account at the end of any period as an individual account, as
identified by a unique account identifier, for which Twilio has
recognized at least $5 of revenue in the last month of the period.
Twilio believes that use of its platform by customers at or above
the $5 per month threshold is a stronger indicator of potential
future engagement than trial usage of its platform or usage at
levels below $5 per month. A single organization may constitute
multiple unique Active Customer Accounts if it has multiple account
identifiers, each of which is treated as a separate Active Customer
Account.
Base Revenue. Twilio monitors Base Revenue as one of the
more reliable indicators of future revenue trends. Base Revenue
consists of all revenue other than revenue from large Active
Customer Accounts that have never entered into 12-month minimum
revenue commitment contracts with Twilio, which the Company refers
to as Variable Customer Accounts. While almost all of Twilio’s
customers exhibit some level of variability in the usage of its
products, based on the experience of Twilio’s management, Twilio
believes that Variable Customer Accounts are more likely to have
significant fluctuations in usage of its products from period to
period, and therefore that revenue from Variable Customer Accounts
may also fluctuate significantly from period to period. This
behavior is best evidenced by the decision of such customers not to
enter into contracts with Twilio that contain minimum revenue
commitments, even though they may spend significant amounts on the
use of the Company’s products and they may be foregoing more
favorable terms often available to customers that enter into
committed contracts with Twilio. This variability adversely affects
Twilio’s ability to rely upon revenue from Variable Customer
Accounts when analyzing expected trends in future revenue.
For historical periods through March 31, 2016, Twilio defined a
Variable Customer Account as an Active Customer Account that (i)
had never signed a minimum revenue commitment contract with the
Company for a term of at least 12 months and (ii) has met or
exceeded 1% of the Company’s revenue in any quarter in the periods
presented through March 31, 2016. To allow for consistent
period-to-period comparisons, in the event a customer qualified as
a Variable Customer Account as of March 31, 2016, or a previously
Variable Customer Account ceased to be an Active Customer Account
as of such date, Twilio included such customer as a Variable
Customer Account in all periods presented. For reporting periods
starting with the three months ended June 30, 2016, Twilio defines
a Variable Customer Account as a customer account that (a) has been
categorized as a Variable Customer Account in any prior quarter, as
well as (b) any new customer account that (i) has never signed a
minimum revenue commitment contract with Twilio for a term of at
least 12 months and (ii) meets or exceeds 1% of the Company’s
revenue in a quarter. Once a customer account is deemed to be a
Variable Customer Account in any period, they remain a Variable
Customer Account in subsequent periods unless they enter into a
minimum revenue commitment contract with Twilio for a term of at
least 12 months.
Dollar-Based Net Expansion Rate. Twilio’s ability to
drive growth and generate incremental revenue depends, in part, on
the Company’s ability to maintain and grow its relationships with
existing Active Customer Accounts and to increase their use of the
platform. An important way in which Twilio tracks its performance
in this area is by measuring the Dollar-Based Net Expansion Rate
for Active Customer Accounts, other than Variable Customer
Accounts. Twilio’s Dollar-Based Net Expansion Rate increases when
such Active Customer Accounts increase their usage of a product,
extend their usage of a product to new applications or adopt a new
product. Twilio’s Dollar-Based Net Expansion Rate decreases when
such Active Customer Accounts cease or reduce their usage of a
product or when the Company lowers usage prices on a product. As
our customers grow their businesses and extend the use of our
platform, they sometimes create multiple customer accounts with us
for operational or other reasons. As such, for reporting periods
starting with the three months ended December 31, 2016, when we
identify a significant customer organization (defined as a single
customer organization generating more than 1% of revenue in a
quarterly reporting period) that has created a new Active Customer
Account, this new Active Customer Account is tied to, and revenue
from this new Active Customer Account is included with, the
original Active Customer Account for the purposes of calculating
this metric. Twilio believes that measuring Dollar-Based Net
Expansion Rate on revenue generated from Active Customer Accounts,
other than Variable Customer Accounts, provides a more meaningful
indication of the performance of the Company’s efforts to increase
revenue from existing customer accounts.
Twilio’s Dollar-Based Net Expansion Rate compares the revenue
from Active Customer Accounts, other than Variable Customer
Accounts, in a quarter to the same quarter in the prior year. To
calculate the Dollar-Based Net Expansion Rate, the Company first
identifies the cohort of Active Customer Accounts, other than
Variable Customer Accounts, that were Active Customer Accounts in
the same quarter of the prior year. The Dollar-Based Net Expansion
Rate is the quotient obtained by dividing the revenue generated
from that cohort in a quarter, by the revenue generated from that
same cohort in the corresponding quarter in the prior year. When
Twilio calculates Dollar-Based Net Expansion Rate for periods
longer than one quarter, it uses the average of the applicable
quarterly Dollar-Based Net Expansion Rates for each of the quarters
in such period.
Source: Twilio Inc.
TWILIO INC. Condensed
Consolidated Statements of Operations (In thousands, except
share and per share amounts) (Unaudited) Three Months
Ended September 30, 2017 2016
Revenue $ 100,542 $ 71,533 Cost of revenue 48,254
31,285 Gross profit 52,288 40,248 Operating
expenses: Research and development 31,674 21,106 Sales and
marketing 25,778 15,873 General and administrative 18,867
14,545 Total operating expenses 76,319 51,524
Loss from operations (24,031 ) (11,276 ) Other income, net 1,000
138 Loss before provision for income taxes (23,031 )
(11,138 ) Provision for income taxes (422 ) (116 ) Net loss
attributable to common stockholders $ (23,453 ) $ (11,254 )
Net loss per share attributable to common stockholders, basic and
diluted $ (0.25 ) $ (0.13 ) Weighted-average shares used in
computing net loss per share attributable to common stockholders,
basic and diluted 92,156,768 83,887,901
TWILIO INC. Condensed Consolidated Balance Sheets
(In thousands) (Unaudited) As of As
of September 30, December 31, Assets
2017 2016 Current assets: Cash and cash equivalents $
91,906 $ 305,665 Short-term marketable securities 192,031 -
Accounts receivable, net 37,258 26,203 Prepaid expenses and other
current assets 26,420 21,512 Total current assets
347,615 353,380 Restricted cash 7,450 7,445 Property and equipment,
net 47,718 37,552 Intangible assets, net 21,274 10,268 Goodwill
17,407 3,565 Other long-term assets 2,084 484 Total
assets $ 443,548 $ 412,694
Liabilities and
Stockholders’ Equity Current liabilities: Accounts payable $
7,117 $ 4,174 Accrued expenses and other current liabilities 55,283
59,308 Deferred revenue 13,599 10,222 Total current
liabilities 75,999 73,704 Long-term liabilities 12,549 9,543
Total liabilities 88,548 83,247 Commitments
and contingencies Stockholders’ equity: Common stock 93 87
Additional paid-in capital 584,390 516,090 Accumulated other
comprehensive income 2,036 - Accumulated deficit (231,519 )
(186,730 ) Total stockholders’ equity 355,000 329,447
Total liabilities and stockholders’ equity $ 443,548 $
412,694
TWILIO INC. Condensed
Consolidated Statements of Cash Flow (In thousands)
(Unaudited) Nine Months Ended
September 30, 2017 2016
Operating Activities: Net loss $ (44,789 ) $ (28,716 )
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities: Depreciation and amortization 13,406 5,292
Amortization of bond premium 153 - Stock-based compensation 35,973
15,649 Provision for doubtful accounts 407 1,017 Gain on lease
termination (295 ) - Write-off of internally developed software 96
188 Changes in assets and liabilities: Accounts receivable (9,173 )
(11,275 ) Prepaid expenses and other current assets (4,947 )
(11,561 ) Other long-term assets (1,512 ) (59 ) Accounts payable
1,411 2,317 Accrued expenses and other current liabilities (1,454 )
18,625 Deferred revenue 3,364 3,346 Long-term liabilities 306
9,596 Net cash provided by (used in) operating
activities $ (7,054 ) $ 4,419
Investing
Activities: (Increase) decrease in restricted cash 1,170 (7,439
) Purchases of marketable securities (280,569 ) - Maturities of
marketable securities 87,325 - Capitalized software development
costs (12,281 ) (8,447 ) Purchases of property and equipment (8,613
) (5,282 ) Purchases of intangible assets (206 ) (646 )
Acquisition, net of cash acquired (22,621 ) - Net cash used
in investing activities $ (235,795 ) $ (21,814 )
Financing Activities: Proceeds from initial public offering,
net of underwriting discounts - 160,426 Payments of costs related
to public offerings (430 ) (3,936 ) Proceeds from exercises of
stock options 22,504 4,751 Proceeds from shares issued in ESPP
7,404 - Tax benefit related to stock-based compensation - 62 Value
of equity awards withheld for tax liabilities (476 ) (518 ) Net
cash provided by financing activities $ 29,002 $ 160,785
Effect of exchange rate changes on cash and cash
equivalents 88 - Net increase (decrease) in cash and cash
equivalents (213,759 ) 143,390 Cash and cash equivalents at
beginning of period 305,665 108,835 Cash and cash
equivalents at end of period $ 91,906 $ 252,225
TWILIO INC. Reconciliation to
Non-GAAP Financial Measures (In thousands, except share and
per share amounts) (Unaudited) Three Months Ended
September 30, 2017 2016
Gross profit $ 52,288 $ 40,248 Non-GAAP adjustments:
Stock-based compensation 180 84 Amortization of acquired
intangibles 1,250 70 Non-GAAP gross profit $ 53,718
$ 40,402 Non-GAAP gross margin 53 % 56 %
Research and development $ 31,674 $ 21,106 Non-GAAP
adjustments: Stock-based compensation (6,493 ) (3,741 )
Amortization of acquired intangibles (25 ) (38 ) Payroll taxes
related to stock-based compensation (315 ) - Non-GAAP
research and development $ 24,841 $ 17,327
Non-GAAP research and development as % of revenue 25 % 24 %
Sales and marketing $ 25,778 $ 15,873 Non-GAAP adjustments:
Stock-based compensation (2,603 ) (1,432 ) Amortization of acquired
intangibles (220 ) - Payroll taxes related to stock-based
compensation (148 ) - Non-GAAP sales and marketing $ 22,807
$ 14,441 Non-GAAP sales and marketing as % of
revenue 23 % 20 %
General and administrative $ 18,867
$ 14,545 Non-GAAP adjustments: Stock-based compensation (4,912 )
(2,391 ) Amortization of acquired intangibles (20 ) (28 )
Acquisition related expenses (35 ) (137 ) Payroll taxes related to
stock-based compensation (132 ) - Non-GAAP general and
administrative $ 13,768 $ 11,989 Non-GAAP
general and administrative as % of revenue 14 % 17 %
Loss
from operations and margin $ (24,031 ) $ (11,276 ) Non-GAAP
adjustments: Stock-based compensation 14,188 7,648 Amortization of
acquired intangibles 1,515 136 Acquisition related expenses 35 137
Payroll taxes related to stock-based compensation 595 -
Non-GAAP loss from operations $ (7,698 ) $ (3,355 )
Non-GAAP operating margin (8 %) (5 %)
TWILIO INC.
Reconciliation to Non-GAAP Financial
Measures
(In thousands, except share and per
share amounts)
Three Months Ended
(Unaudited)
September 30,
2017
2016
Net loss attributable to common
stockholders
$
(23,453
)
$
(11,254
)
Non-GAAP adjustments: Stock-based compensation 14,188 7,648
Amortization of acquired intangibles 1,515 136 Acquisition related
expenses 35 137 Payroll taxes related to stock-based compensation
595 - Non-GAAP net loss attributable to common
stockholders $ (7,120 ) $ (3,333 )
Non-GAAP net loss attributable to common
stockholders as % of revenue
(7 %) (5 %)
Net loss per share attributable to
common stockholders, basic and diluted*
$ (0.25 ) $ (0.13 ) Non-GAAP adjustments: Stock-based compensation
0.15 0.09 Amortization of acquired intangibles 0.02 0.00
Acquisition related expenses 0.00 0.00 Payroll taxes related to
stock-based compensation 0.01 - Non-GAAP net loss per
share attributable to common stockholders, basic and diluted $
(0.08 ) $ (0.04 )
Weighted-average shares used to compute
Non-GAAP net loss per share attributable to common stockholders,
basic and diluted
92,156,768 83,887,901 * Some columns may not add due to
rounding
TWILIO INC.
Key Metrics (Unaudited) March 31,
June 30, Sept. 30, Dec. 31, March 31,
June 30, Sept. 30, 2016
2016 2016 2016
2017 2017
2017 Number of Active Customers (as of period
end date) 28,648 30,780 34,457 36,606 40,696 43,431 46,489 Base
Revenue (in thousands) $ 49,834 $ 56,370 $ 64,099 $ 75,245 $ 80,643
$ 87,583 $ 91,965 Base Revenue Growth Rate 92 % 84 % 75 % 73 % 62 %
55 % 43 % Dollar-Based Net Expansion Rate 170 % 164 % 155 % 155 %
141 % 131 % 122 %
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Twilio Inc.Investor Contact:Greg Kleinerir@Twilio.comorMedia
Contact:Caitlin Epsteinpress@Twilio.com
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