Twilio recently 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.
And that’s a wrap on @twilio Q1 2019 earnings! $233M revenue, 81% y/y growth, and our first quarter including SendGrid results! Thank you to our customers, partners, and Twilions worldwide on another quarter of continued strong growth. Onward! pic.twitter.com/winStmw6bL
— Jeff Lawson (@jeffiel) May 1, 2019
amazing summary image from AlphaStreet here