Twilio crossed into the $1 Billion ARR club, if not quite at record growth rates, then fairly close to it.  81% Year-over-Year growth at $1,000,000,000+ in ARR.

Now, the numbers are flattered a bit, really quite a bit, by Twilio’s acquisition of Sendgrid for $3 billion.  Organic growth was “just” 56%.  But as you can see from the previous post on The $1 Billion ARR Club, even without the acquisition, Twilio’s core growth hasn’t slowed.

So what can we learn from an outlier?  A few things:

  • Dollar-based net retention is still the key to almost all the winners in SaaS and remains at 140%.  Twilio’s net revenue retention was even up a smidge to 140%.  As we’ve seen previously with Zoom, PagerDuty, Slack, and more, this is what you need to aim for in SaaS.  Even SMB SaaS.
  • Big customers are dropping as a % of revenue.  A bit different than many of us, but Twilio’s Top 10 customer concentration risk has faded since the days it lost Uber.  They are down to 13% of total revenue, from 17% a year ago.
  • Gross margins remain at 59%.  Yes, Twilio is a service with real telecommunications costs.  But it’s managed to keep its margins high enough to “still” be a software company at almost 60%.
  • 2,369 employees, or about $250,000 in revenue per employee.  That’s a good yardstick for SaaS and B2D at scale.
  • The “average” customer account is “only” worth about $7,000 or so a year.  Twilio has 161,869 customers now comprising that $1b in ARR, so the average customer only pays about $7000 or so.  That average has been brought down by Sendgrid.  With 57,350 customers in June 30, 2018 (pre-Sendgrid), the company’s average customer value used to be a bit higher.  Still, Twilio remains solidly SMB by make-up.

As crazy as it may sound, at 56% “organic” growth at $1b in ARR and 80% total growth with Sendgrid, combined with 140% net revenue retention … Twilio will get to $10 billion in ARR.

It’s just a matter of when.


amazing summary image from AlphaStreet here

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