5 Interesting Learnings from Twilio at $3.4B in ARR | SaaStr

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Oh wow, Twilio.  We checked in at $1B ARR, and it was an epic company.  At $2B, it was even epic-er.  And now we’ll check in at $3.4B and just — wow.  The best in SaaS and Cloud really do scale just about forever.

At $3.4B in ARR, Twilio is still growing a stunning 54% year-over-year!

Let’s see how they do it.

5 Interesting Learnings:

#1. 130% NRR holding up — no decrease even at $3.4B ARR.  A reminder high NRR often doesn’t reach a ceiling.  It can seemingly scale forever.  While 140% at IPO, it’s still top decile today, even adding in the lower NRR from SendGrid.

#2.  $240m ARR now from Segment.  An acquisition well done.  Segment appears to be thriving under Twilio.

#3.  International Revenue up to 34%, from 29% in 2019.  Crossing borders with a communications product isn’t hard, but it is harder than a pure B2B product.  So it’s helpful to track how Twili is doing, and they are continuing to go more and more global.  A third of their revenue in now outside the U.S.

#4.  Messaging now just half their revenue.  We talked with CEO Jeff Lawson below way back in 2017 about how to go multi-product.  Fast forward to today, not only is Twilio multi-product, but its original core of Messaging is now just 50% of their revenue.

#5.  ACV continues to go up materially, but not dramatically.  With 256,000 customers today, Twilio’s ACV is about $12,000.  That’s up from $10,000 at $2B and $7,000 at IPO, so account size growth has been important fuel for Twilio.  ACVs are up 70% since IPO.  But at the same time, Twilio hasn’t gone radically upmarket overall, despite 30% of the Global 2000 being customers.

And a few other notes:

#6.  Customer concentration hasn’t gone up since IPO.  Twilio has both a broad base of customers (256,000) and a number of whales that really do matter.  But the whales aren’t increasing in customer concentration.

#7.  Twilio plans to be profitable next year — at $4B+ in ARR.  Say what you will about when SaaS and Cloud companies choose to go profitable, Twilio will be there at $4B in ARR.

#8.  51% Gross Margins.  With significant communication costs, Twilio has to be thoughtful about maintaining gross margins.  One recent acquisitiion (ZipWhip) has brought them down a bit, but gross margins remain above 50%.  Still, 60% is the ideal target for being considered a “software” company.

#9.  Twilio’s 2011 customers are worth 10x more today a decade later.  Probably more.  Just a reminder to really, really go long when you have 110%+ NRR:

Just wow Twilio!!  A hero company in Cloud and SaaS for us all to look up!

And take a look back at the early post-IPO days, how Twilio got there, and how they learned to love sales here in this classic SaaStr Annual session with CEO and co-founder Jeff Lawson:

Published on February 23, 2022

Go to Publisher: SaaStr
Author: Jason Lemkin