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Twilio's Under the Radar Competition: Bandwidth

David Bartosiak

If you missed my video on “Twilio: What Twilio is and Why Twilio is a HOT IPO Stock” you should be ashamed. Watch that immediately and come back. I’ll wait.

The company just issued its first quarterly earnings report since its IPO. The company introduced us to a couple of metrics it uses to measure growth. You know tech companies love their fantasy metrics like Monthly Active Users. Theirs makes sense though. They have one number giving total sales and another giving base sales. The total sales number is the revenue number everyone gives. The base sales number shows customers that have already made minimum 12-month revenue commitments. Like every day, I’m good for like 900 calories at lunch. Some days, I go for the win and get the large coke with the fries. Base revenue is more predictable and the variable component is, well, variable. Either way you slice it, Twilio’s (TWLO) revenue was up 77.9% year over year.

With the company beating EPS estimates by 7 cents per share I expect analysts to come out and increase their estimates for next quarter. That should bump the stock off our Zacks Rank #3 (Hold) it’s stuck on now. The stock has gone from a $15 IPO in late June to over $45. A very successful offering that happened to be the first tech unicorn of the year.

Behind the scenes Twilio competitor Bandwidth helps companies build business grade communications into their applications. It’s quietly the largest VOIP carrier in the US with 50 million active phone numbers and over 7,600 rate centers. They help fill the gap between the quality of large carriers like AT&T (T) with the speed to market of much smaller providers. When you think Bandwidth you should think Level 3 (LVLT), Twilio, AT&T and Vonage (VG). With a compounded annual growth rate of 25% between 2010 and 2015, Bandwidth is evolving into a very large player in this business. But don’t look for Bandwidth to go public anytime soon.

So if you’re looking to invest in this space, you have to dig around between the four publicly traded companies I just referred to. Unfortunately right now they’re all Zacks Rank #3 (Hold) stocks. But Vonage has both Value and Growth Style Scores of B, in an industry that ranks in the Top 23% of our Zacks Industry Rank. They entered the arena as a major Twilio competitor when they acquired Nexmo.

Every time you share this video, I get another phone number to avoid bill collectors and ex-girlfriends. Chime in the comments section below, subscribe to the YouTube channel, Twitter @bartosiastics and come back to check out all the Trending Stocks with Zacks.com, I’m Dave Bartosiak.


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