✒ Twilio: Zipwhip Acquisition Boost?

Berkshire sells three-decade holding! Apellis zooms on drug nod.


Hey Global Investor, here’s what you need to know before the US markets open.

Market Snapshot 📈

S&P 500 (Monday’s Close) 4,163.29 -10.56 (0.25%)

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📝 Twilio: Zipwhip Acquisition Boost?

Leading cloud communications platform Twilio (TWLO) will acquire Zipwhip in an $850M cash and stock deal. This is Twilio’s third acquisition in as many years. While this isn’t Twilio’s largest acquisition, it is certainly at a significant premium to Zipwhip’s market value. (Tweet This)

Growing Importance of Messaging

San Francisco-based Twilio, established in 2008, is an Application Programming Interface (API) used to send and receive SMS, MMS, and OTT messages globally. The global telecom API market was valued at $126.8B in 2019. It is expected to grow at a Compounded Annual Growth Rate (CAGR) of 21.9% starting 2020 until 2027.

Twilio has positioned itself as one of the leading players in this space. Its presence and reach are evident as it sends and receives over 105B messages each year and has sent and received over 592M messages in a single day.

On the other hand, Zipwhip, founded in 2007, intended to become the ‘Facebook of text messaging.’ A pivot in 2013 led to the company working with wireless carriers to enable business landlines to send and receive text messages. Zipwhip raised $51.5M in its Series D round led by players like Goldman Sachs, OpenView, M12 among others valuing the company at $261.5M.

As of date, Zipwhip has over 30K customers globally and has grown over 400% in the last three years.

Another Feather to Twilio’s Cap?

Twilio has made a series of acquisitions since 2015 to expand in the telecom API market. While the $850M for the acquisition is substantial, it is not Twilio’s largest acquisition. It had acquired email API platform SendGrid for $3B in 2019 and customer data platform Segment for $3.2B last year.

The acquisitions are certainly paying dividends for Twilio.

In Q1 2021, Twilio reported revenue growth of 62% Year-on-Year. The Segment acquisition, completed in 2020, fetched $44.6M during the quarter. It had 235K active customer accounts as of March 31 this year.

In Q2 2021, Twilio expects revenue to range between $591M to $601M, implying year-on-year growth of 47-50%. However, the QoQ growth projection is flat.

The guidance though does not include any impact owing to this acquisition. The Zipwhip acquisition is likely to close by the end of 2021. Post the deal, Zipwhip will become a part of Twilio’s Messaging Business Unit.

Twilio’s business positioning and a series of acquisitions have boosted shareholder appetite for the stock. From its IPO price of $15 in June 2016, shares currently trade near the $300 mark, a ~19x growth! Prices are up 62% over the last year. If these acquisitions continue to add to Twilio’s growth story, its investors are surely a happy bunch!

Market Reaction
TWLO ended the day at $297.2, down 0.73%.

Company Snapshot 📈

TWLO $297.20 -2.20 (0.73%)

Analyst Ratings (28 Analysts) BUY 89%  HOLD 11%  SELL 0%

 


Newsworthy 📰

Exit: Berkshire Sheds Nearly All Of Wells Fargo, A Holding Since 1989 (WFC +2.00%)

A Step Ahead: Generac CEO Says 5G Rollout Increases Demand For Backup Power Generation (GNRC -2.36%)

New Contract: Genius Sports Wins Data Partnership With NBA’s Basketball Africa League (GENI +4.48%)

 


Later Today 🕒

  • Walmart Earnings (WMT)
  • The Home Depot Inc. Earnings (HD)
  • JPMorgan Chase & Co. Annual General Meeting (JPM)
  • 6:00 PM IST – Building Permits Data

Fun Fact of The Day 🌞

There are coffee houses in Russia where food and drink are free but you pay for time


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