
Twilio opens trading at $23.99 per share - doppp
https://techcrunch.com/2016/06/23/twilio-opens-trading/
======
rm999
Stock prices aren't very useful, I prefer to look at total marketcap.

They IPO'd at 15 dollars with a valuation of 1.23 billion dollars, which means
they're now about 1.97 billion dollars.

[https://techcrunch.com/2016/06/22/twilio-prices-its-ipo-
at-1...](https://techcrunch.com/2016/06/22/twilio-prices-its-ipo-at-15-per-
share-above-its-previous-target/)

~~~
tomp
It's useful in comparison to the IPO price, which was $15. This means they
left _a lot_ of money on the table.

~~~
edutechnion
So if they sold at their true price via the Google-style reverse auction, they
would have $9 * 10 million more to use for business growth. Instead lots of
hedge funds and high net-worth individuals that are big clients of GS and JPM
made an easy $100k this morning.

~~~
jonknee
Or they would have pissed everyone off by having an auction instead of a
regular IPO and they wouldn't have had nearly as much interest in their
shares. Google was a very special company and even then nearly managed to
screw up their IPO.

~~~
tomp
No need for an auction. I don't know about this specific IPO, but often there
are predictions of what the _true_ stock price is (i.e. the "first trading
day" stock price) floating around before the stock starts trading. E.g. for
Facebook, the expected share price was about 37, the IPO was at 37, and the
trading opened at 37. Facebook got the "premium", instead of the hedge funds
and banks.

~~~
jonknee
Facebook may be the worst example of an IPO done right you could have picked.
NASDAQ bungled it so badly they got sued:

[http://www.reuters.com/article/us-nasdaq-omx-facebook-
litiga...](http://www.reuters.com/article/us-nasdaq-omx-facebook-litigation-
idUSKBN0NE1FD20150423)

~~~
arjie
The article says it was technical issues. That has nothing to do with the
discussion.

~~~
whatok
It absolutely has to do with the discussion. The reason for the tightness of
the IPO and first day closing price of Facebook was because of those technical
issues. Trading was disastrous and had Facebook not been a household name,
it's easily believable that it would have traded even lower.

~~~
itchyouch
Actually, the news prior to the IPO about FB's advertising not being quite as
effective made people lose a lot of confidence in FB and want to pull out.

This exposed a race condition within the IPO process that bungled it up. The
post mortem talks about "order modifications" which are actually order cancels
right up to the point of the cross was supposed to take place.

[http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2012-20](http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2012-20)

Pricing the IPO lower would have had people not feeling that the IPO was
overpriced. The overpriced feeling people got caused them to want to tap out
and brought out the particular race condition that Nasdaq hit. Normally, IPOs
get lots of buying interest. The all-in, then folding behavior was
unprecedented as people who didn't believe in the company IPO would never have
put in bids in the first place.

~~~
whatok
How are you tying efficacy of advertising with busted exchange? I don't see
it.

This deal was upsized very close to the IPO date and completely oversubscribed
with huge retail interest. Everyone wanted this deal to succeed and news
behind it was extremely positive. Don't see how random chatter about
advertising causes a stock exchange to blow up.

To piggyback on the weird comparisons, why didn't Square encounter any issues
on their IPO? News was extremely negative and it was said that they were
forced to IPO to cash out investors.

------
GnarlyWhale
Side note, some of the Twilio dev team is currently running a "code jam" from
the NYSE trading floor and broadcasting it via Twitch.
[https://www.twitch.tv/twilio](https://www.twitch.tv/twilio)

[Now Over]

~~~
throwaway6497
Can some one explain the purpose of this other than marketing? I feel, we take
it too far these days. This thing seems straight out of Silicon Valley HBO
show. It is difficult to tell reality from fiction. Why code jam from NYC
trade floor? What is the intrinsic value of this code jam to Twilio other than
marketing. May be I am a bit being harsh. May be I am old school when I think
we should all be rolling like Wozniak's (apple co-founder) not flashy
brogrammers who would do anything for marketing.

~~~
eldavido
Honestly? I think this is Twilio's "we told you so"/fuck you" to wall street.

Investor sentiment around developer tools in Silicon Valley is still broadly
negative. I worked for 3yrs at a company funded by prominent valley VCs and,
unequivocally, they were trying to get us out of the "developer tools"
business and "sell more to the enterprise market". The subtext being,
"developers don't control budget in _real_ companies".

And I think there's a grain of truth to that sentiment. You have to realize
how much Twilio is a company built against the prevailing Silicon Valley
wisdom of "how companies are built". These guys have a bit of a counterculture
narrative, of "we're a developer tools company, we're growing, we're having a
successful IPO, see, it can be done".

I, for one, think it's a great, harmless PR stunt. :)

~~~
grb423
> Twilio is a company built against the prevailing Silicon Valley wisdom of
> "how companies are built"

Sell NYSE:TWLO!

~~~
toomuchtodo
Puts my friend, puts are where its at.

~~~
joshdickson
Newly listed IPO stocks do not have options for a while.

~~~
toomuchtodo
You're correct, it takes a bit for an options market to form around a new
security.

------
a13n
While that sounds great for Twilio (and in some ways it is), it's actually a
bit of a bummer because this means they left around $90M on the table.

This is because of how IPOs work:

In an IPO, the company (eg. Twilio) sells the issued shares to an underwriter
(eg. JP Morgan) at an agreed amount (eg. $15) and then the underwriter turns
around and sells those on the market for whatever people will pay for them
(eg. $24).

If those first shares get bought for less than the offering price ($15) the
company got a good deal on their shares and the underwriter _loses_ money. If
the shares get bought for more than the offering price, the company loses
money and the underwriter profits.

This is one way underwriters make money, by being able to turn around and sell
those shares to the public market for more than they bought them for.

Twilio issued $10m shares at $15 and the market opened up 60%, so they raised
$150M and left $90M on the table.

10m shares * (24 - 15) $/share = $90M

~~~
dnadler
A big (and important) reason IPOs are frequently priced below where they open
is that the underwriter is try to ensure that the IPO is fully subscribed. If
the IPO opens below the IPO price, then the new shareholders won't be too
pleased, and will be less likely to purchase shares of the next IPO.

Too many investors losing money on IPOs --> less demand for IPO shares -->
less capital available to (generally) smaller companies.

On the other hand, if investors are constantly making money from IPOs, there
will be much more demand in the future, and capital will be much easier for
these companies to access.

~~~
pilom
But why should Twilio care about the next guy in line? Their job is to get the
best deal on capital they can get and giving some of that available capital to
the underwriters is a bad idea from a shareholders perspective.

~~~
akgerber
These days, the purpose of an IPO is as much or more to provide liquidity to
insiders as it is to actually raise capital.

------
bedhead
Can someone explain one aspect of their business model to me? Their cost of
goods sold is rather high at 45% and hasn't shown much operating leverage - no
bueno. They explain that this is mostly payments to "network service
providers"...would this mean the carriers? If so, what options are available
to Twilio to lower these costs as a percent of revenue? This is the only
aspect of the business model that concerns me. I read that Bandwidth.com
actually owns a CLEC in order to lower these costs, might Twilio be able to do
the same? Any help much appreciated.

~~~
rtpg
There are a lot of industries with a much higher COGS that do fine. To me it
sounds like they're selling goods at 122% markup.

~~~
eldavido
This is my read exactly.

Investors need to understand that internet application service providers
aren't software companies, and that it isn't reasonable to expect software-
company margins (selling CDs for hundreds of dollars) from services providers.

Companies like New Relic, Twilio, etc. have real costs to operate their
infrastructure, especially so in Twilio's case where they likely have to make
payments to the downstream network operators (not sure on that last point, I
assume, but would love to be corrected if I'm wrong)

~~~
nexxer
One thing they do is send out international bulk SMS to their users, probably
through large SMS aggregators. This has a cost per SMS that's pretty hard to
get around.

------
eldavido
Anyone local in SF who wants to meet and go through the fundamentals on this?
I've gotten through about 40 pages of the S-1 (of about 160) and want to
compare notes.

In no particular order, a few thoughts:

\- I'm not sure how defensible this is against AWS or another infrastructure
provider cross-selling to existing customers. AWS/Azure already has lots of
relationships with buyers and both have the engineering muscle to build a
competitive product. Maybe the existing knowledge of the API and general head
start will cause people not to switch?

\- How large is the addressable market? Can Twilio grow it? Are they planning
to do anything beyond their existing "bringing telephony to the Internet"
product line?

\- Dual-class share structure a concern for any? Interesting that it ceases to
exist after a few years.

I'm thinking about buying a few hundred shares as a long-term hold (3+ years
at least) but the first-day pop is making me rethink, maybe it'll cool after a
few days, who knows?

~~~
niftich
Their biggest threats aren't AWS/Azure. AWS just hosts their stuff, the same
way they host Netflix. This is no different than Samsung building smartphones,
but selling memory chips to everyone else, even Apple.

Twilio's biggest worry is every incumbent IM provider trying to court
businesses with replacing telephony.

Their future competitors are therefore Facebook Messenger, WhatsApp (hey, also
Facebook!), and anyone else who wants to push their messaging/call platform to
replace more and more of what people used to use business-to-consumer and
consumer-to-business phone calls and texts.

~~~
mbesto
> AWS just hosts their stuff, the same way they host Netflix.

Uh, AWS already has a competing web services product, it's functionality is
just severely lacking when you compare to Twilio:
[https://aws.amazon.com/sns/](https://aws.amazon.com/sns/)

> Their future competitors are therefore Facebook Messenger, WhatsApp (hey,
> also Facebook!)

Funny enough, Twilio's largest customer is actually WhatsApp. If Facebook
wants to increase some margin and can do it more cost effectively than using
Twilio as a provider (I don't see why not) then this is a huge threat to
Twilio commercially speaking.

~~~
niftich
Good point on SNS, but AWS' approach is to offer a kitchen-sink menagerie of
services. I stand by my accidental analogy that they're the Samsung of the web
services world: have one product for every possible need, but only focus on a
handful.

With regard to Facebook, I'm talking about initiatives like these [1] [2] [3]
which leverage Facebook's ubiquity and better discoverability tools than PTSN
to de-emphasize it for B2C and C2B communication.

[1] [https://www.facebook.com/business/news/find-and-contact-
busi...](https://www.facebook.com/business/news/find-and-contact-businesses-
on-messenger)

[2] [https://www.facebook.com/business/news/new-tools-for-
managin...](https://www.facebook.com/business/news/new-tools-for-managing-
communication-on-your-page)

[3] [https://developers.facebook.com/docs/messenger-
platform](https://developers.facebook.com/docs/messenger-platform)

------
wslh
Just read here [1] the Twilio net profits are these:

2013: -$26.9m

2014: -$26.8m

2015: -$35.5m

1/1-3/31/2016: -$6.5m

[1]
[https://twitter.com/jammasternate/status/737314901572616193](https://twitter.com/jammasternate/status/737314901572616193)

Edit: removed note against HN policies.

~~~
nieksand
The net profit numbers by themselves don't tell you much about the health and
prospects of the company.

One big issue is that customer acquisition cost tends to be upfront whereas
the life time value lags behind. E.g. you have to hire sales people now, it
takes X months for them to become productive, and another Y months for those
new customers to fully onboard.

So to put those numbers in to context, you would have to look at revenue
growth, margins, customer churn, cac, ltv, etc.

~~~
wslh
> The net profit numbers by themselves don't tell you much about the health
> and prospects of the company.

I am not saying they do but they help to discuss the IPO.

------
wslh
It is weird that Google Finance [1] is not displaying the stock while Yahoo
does [2].

[1]
[https://www.google.com/finance?q=NYSE%3ATWLO&ei=WRRsV5j0KtD9...](https://www.google.com/finance?q=NYSE%3ATWLO&ei=WRRsV5j0KtD9eo2FqvgB)

[2]
[http://finance.yahoo.com/q?s=TWLO&ql=0](http://finance.yahoo.com/q?s=TWLO&ql=0)

~~~
cookiecaper
Yahoo! Finance is probably the last respected Yahoo product on the market. The
serious investors I know always use Yahoo Finance as their free data source
(they also have expensive private data sources, of course).

~~~
nradov
Plus Yahoo Finance makes it super easy to download historical closing price
data in CSV format to do your own analysis.

~~~
Grazester
So does google actually.

~~~
nradov
No the Google Finance download feature is far worse, and effectively useless
for many types of analysis. The data only goes back to 2000, whereas Yahoo
goes back to 1986. And the Google closing prices aren't adjusted for dividends
which makes it impossible to calculate actual returns unless you pull that
data in from another source. Yahoo includes a separate column which has that
built in.

------
ProfChronos
Based on IPO stock price ($15) and market cap ($1.23Bn) and Twilio's revenue
run rate around $150M, so that's x8.2 for Revenue and x20.5 for EBITDA (40%
margin seems reasonable in the telcos industry). Pretty strong figures - AT&T
trades at 5xEBITDA - but not excessive. They might have chosen the bear/base
case for the IPO pricing given i) the IPOs of tech companies that got delayed
over the last months ii) their unique situation as a pure API player - they're
the only one out there with that positioning

~~~
mbesto
> and x20.5 for EBITDA (40% margin seems reasonable in the telcos industry)

There EBITDA appears to be negative. 40% margin is "Gross margin" and is
certainly _not_ a valid EBITDA figure.

~~~
ProfChronos
40% is a valid EBITDA margin for telcos. Twilio is indeed slightly negative in
terms of adjusted EBITDA (around -5%) but market cap of tech companies is
usually rather based on NTM EBITDA or industry average EBITDA - see prospectus
of IPOs

~~~
mbesto
> market cap of tech companies is usually rather based on NTM EBITDA

This is almost entirely false.

> 40% is a valid EBITDA margin for telcos

Uh what? I didn't state that 40% wasn't valid. I simply stated that gross
margin != EBITDA.

------
thecourier
For a company with a yearly gross profit of USD92 millions and net losses of
USD35 millinos, I cannot imagine who is buying shares at a USD1.8 billion
market cap.

Are we in the 2000 again?

~~~
dpc_pw
Of course not. This time it's different.

~~~
wbsun
"This time it's different." It is great to see how history is repeated.

------
desireco42
I think this is a deserving company with genuinely useful tools. On top of it,
it is super easy to use Twilio to automate telephony, so I am happy for them.

------
throwaway6497
Did anyone do a S1 summary of Twilio already? Will be great, if you can point
to it.

~~~
willejs
There was another HN thread about the S1 filing.
[https://news.ycombinator.com/item?id=11779453](https://news.ycombinator.com/item?id=11779453)
[https://www.sec.gov/Archives/edgar/data/1447669/000104746916...](https://www.sec.gov/Archives/edgar/data/1447669/000104746916013448/a2227414zs-1.htm)

~~~
api
Lots of haters there, which I don't get. Twilio seems to have a lot of
substance.

~~~
davidu
This post is an amusing summary of the six years of Twilio haters:
[https://kev.inburke.com/kevin/six-years-of-hacker-news-
comme...](https://kev.inburke.com/kevin/six-years-of-hacker-news-comments-
about-twilio/)

~~~
dublinben
It seems like a running that their primary competitor (Plivo) is ahead on
features, and has better prices. I think those are completely fair criticisms
of any company. It's a little strange that this compilation goes to great
lengths to never mention the competitor by name.

~~~
rgbrenner
you can click on the links and see they are each about a different competitor.

------
bankim
For employees sake, stock price should remain that high after 6 months...

~~~
mknocker
Actually, it might go up quickly once they start filling up their financial
results every 3 months. If they have a steady growth the market will react
positively and the employees owning shares will benefit from it.

------
erubin
I used Twilio to make a simple SMS wrapper around an app. It took maybe 30
minutes and I had never used it before. Very cool product.

------
jboydyhacker
One wonders what is the competitive threat here?

Is it that Apple and Google introduce their own messaging infrastructure for
developers?

~~~
FilterSweep
Nexmo or Plivo, but neither appear to be doing too well comparatively......
[0] although Plivo appears cheaper from other comments posted here.

[0] (paywall warning: "display:none;" the interstitial modal window)
[http://stackshare.io/stackups/twilio-vs-nexmo-vs-
plivo](http://stackshare.io/stackups/twilio-vs-nexmo-vs-plivo)

------
sakopov
Is anyone on here buying shares?

------
ajaimk
Exciting day indeed.

------
philip1209
[deleted]

~~~
rabidonrails
I don't think that Twilio is a YC company.

------
yueq
stock price on IPO day is not helpful. You should better check it out after
3months or after first ER.

------
kumarski
I wrote a blog post about their API - IPO.

At one point when I was building a SAAS sms app, I emailed 579 SMS providers
to find quotes on better pricing.

[https://medium.com/@datarade/twilio-ipo-
thoughts-997c36c9440...](https://medium.com/@datarade/twilio-ipo-
thoughts-997c36c9440c#.j8fn79aik)

One thing that I find incredibly surprising is that they often white-label and
sell on top of other providers like infobip/nexmo. They don't have tier 1
connections and as well they don't scale very well internationally.

