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Twilio (TWLO) Gains on Digital Transformation and Acquisitions

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Twilio TWLO has been gaining from accelerated digital transformation by companies amid the COVID-19 pandemic-led remote working and online learning wave. The company’s selective acquisitions, and strategic investments in businesses and technologies have been boosting its product portfolio and fortifying global presence.

With its sustained focus on launching new innovative products along with strategic acquisitions such as Sendgrid and Segment, the company has been able to rapidly add more customers and expand its global footprint.

The cloud-based communications platform-as-a-service provider currently has more than 240,000 active customer accounts (including that of Segment). It is worth mentioning that the company’s clientele includes Salesforce CRM, Facebook FB and Netflix NFLX among others.

Twilio continues to witness growing demand for its products and solutions from the health care, education, retail and crisis management organizations. Its efforts toward expanding global footprint are commendable. With the latest buyout of Zipwhip, the company intends to enhance its customer engagement capabilities and broaden global reach.

We believe that the company's new product line comprising Twilio Pay and Autopilot, which is seeing solid acceptance, will help it expand market share in the days ahead.

According to a recent TechNavio report, the global Application-to-person (“A2P”) SMS market is anticipated to reach $11.59 billion during 2021-2025, witnessing a CAGR of 4.9% in the forecast period. Thus, Twilio’s primary business of Programmable messaging is likely to witness tremendous growth in the days ahead. We are of the opinion that with sustained focus on developing products and global expansion plan, the company is well-poised to tap the prospects.

During the latest quarterly report, Twilio’s top-line growth was primarily driven by improving customer experiences across various product portfolios like SendGrid, Segment and Flex, which are its fastest-growing SaaS products at present.

However, Twilio’s profitability is likely to remain under pressure in the near term due to increased spending and investment toward enhancing product portfolio and expanding across newer markets. Also, elevated expenses, on account of improving sales capabilities, might hurt profits.


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