Ten years after its inception, cloud communications provider Twilio is showing strong momentum. In August it reported Q2 total revenue of $147.8m, up 54% year-over-year. Earlier this year, it reported $399m for the full year 2017, up 44% from 2016. The previous year, it reported total revenue of $277.3m, up 66% from 2015. The company is well positioned with the developer community, with more than two million developers around the world. A key challenge will be maintaining its dominant position as the market opportunity expands beyond developers and digital-native companies and into the enterprise segment. It also faces intense competition from incumbent and emerging communications providers aggressively targeting the enterprise segment.
The 451 Take
451 Research projects the CPaaS market opportunity will continue to grow at a CAGR of 31% over the next five years. Key trends driving market growth include the transition to IP and cloud-based communications, and the growing popularity of embedded communications to improve the end-user experience. Twilio is well positioned to benefit from this opportunity but faces an increasingly competitive landscape. In the last three years, we have seen a surge in M&A activity in the cloud communications space, including several CPaaS-related transactions. These include the acquisition of TokBox by Vonage and Kaleyra's acquisition of Hook Mobile, both announced in August; the acquisition of Flowroute by West Corporation in July; the acquisition of Sipwise by Alcatel-Lucent Enterprise in May; and CLX Communications' acquisition of Unwire Communication in March.
StrategyTwilio's growth has been largely tied to digital-native companies such as Uber and WhatsApp. In 2015, its 10 largest customers accounted for 32% of revenue. The company has managed to turn this around, diversifying its sources of revenue. Despite the
In the last two years, Twilio has expanded its focus on the enterprise segment. In September 2016, it announced new capabilities designed to support security, access management and admin requirements for enterprises that are building cloud communications solutions. The Twilio Enterprise Plan includes capabilities such as single sign-on, customizable role-based access control, and segmented billing and platform usage.
Its enterprise strategy also includes revamping its partner program and growing its executive team with enterprise software veterans. Last year, it brought in former Salesforce executive George Hu as COO, and in January it hired CMO Sara Varni, former Salesforce marketing SVP. In June Twilio announced the launch of Twilio Build, its new partner program. Build aims to expand the services in its existing partner program – launched in 2014 – with go-to-market support, certification and training programs. Launch partners in the consulting area include Blacc Spot Media, DVELP,
ProductsTwilio has expanded its offering beyond its initial programmable voice and SMS APIs and continues to innovate, having layered in deeper intelligence around its API services, more specific support around customer journeys and additional infrastructure around its global connectivity. Its comprehensive portfolio remains a key strength and differentiator. In March it launched Flex, a cloud-based contact center application platform, and in April it announced
Twilio's portfolio includes a wide range of products in three key areas. The Communications Cloud provides communications APIs with built-in global intelligence, including programmable SMS, video, voice, chat, fax
The competitive landscape includes IntelePeer, a cloud communications provider founded in 2003 and based in San Mateo, California; Raleigh, North Carolina-based Bandwidth, which went public a year ago; Stockholm-based CLX Communications, which acquired CPaaS provider Sinch in 2016; London-based Infobip, which last year announced plans to open offices in San Francisco and New York to further expand its presence in the US; and
Twilio also competes with providers of cloud-based contact center solutions including Five9, NICE's inContact
Raúl Castañón-Martínez is a senior analyst based in Boston focusing on business communications and collaboration technologies such as enterprise messaging, voice, bots, speech recognition and unified communications. Before 451 Research, he was a product manager at EMOSpeech, analyzing emotion recognition technology.
Jeremy Korn is a Research Associate at 451 Research. He graduated from Brown University with a BA in Biology and East Asian Studies and received
Aaron Sherrill is a Senior Analyst for 451 Research covering emerging trends, innovation