01—Abstract
Summary
Summary of the 10-K filed February 26, 2021. Cited figures are marked; the original filing is the authoritative source.
Twilio Inc. reported 2020 revenue of $1.76 billiona, up from $1.13 billion in 2019, with total revenue growth of 55% and a Dollar-Based Net Expansion Rate of 137%.
The company remained loss-making, with a net loss of $491.0 millionb in 2020 compared with $307.1 million in 2019, and an accumulated deficit of $1.17 billion as of December 31, 2020. Active Customer Accounts reached over 221,000, up from 179,000 a year earlier. Gross margin declined to 52% from 54%, which the filing attributes to a re-acceleration in messaging growth, higher amortization of acquired intangibles, an increasing mix of international usage and higher network service provider fees in certain geographies.
The year was shaped by two major transactions. Twilio acquired Segment.io, Inc. in November 2020 for a total purchase price of $3.0 billionc, consisting of $2.5 billion in Class A common stock and $413.3 million in cash, and completed an equity offering in August 2020 that raised $1.4 billion in net proceeds. Operating cash flow was $32.7 million in 2020, and cash and cash equivalents plus marketable securities totaled roughly $3.0 billion at year-end.
The company also disclosed a February 2021 follow-on offering that raised $1.8 billiond in net proceeds, and the Notes became convertible in the first quarter of 2021 after the conditional conversion trigger was met. The filing highlights ongoing risks, including the COVID-19 pandemic's effect on customer usage, a history of losses, dependence on network service providers and Amazon Web Services, regulatory exposure under GDPR, CCPA and telecommunications rules, and a disputed sales tax assessment in one jurisdiction of $38.8 million, against which the company had accrued $11.5 million. Its dual-class structure gives Class B holders majority voting control.
02—Key points
Key Highlights
- Revenue rose 55% to $1.76 billion in 2020 from $1.13 billion in 2019, with the Dollar-Based Net Expansion Rate at 137%.
- Net loss widened to $491.0 million in 2020 from $307.1 million in 2019; accumulated deficit reached $1.17 billion.
- Gross margin fell to 52% from 54%, driven by messaging re-acceleration, acquired-intangible amortization, international mix and network provider fees.
- Acquired Segment.io, Inc. in November 2020 for a total purchase price of $3.0 billion, including $2.5 billion in Class A stock.
- Active Customer Accounts grew to over 221,000 from 179,000, and international revenue was 27% of total revenue in 2020.
- Raised $1.4 billion net in August 2020 and $1.8 billion net in a February 2021 follow-on offering.
- Holders of Class B common stock, with 10 votes per share, control a majority of combined voting power until June 28, 2023 or an earlier conversion event.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2020, Twilio lost $0.28.
- Revenue$1.76B100.0%
- Cost of revenue−$846.1M48.0%
- Gross profit$915.7M52.0%
- Operating costs−$1.41B80.0%
- Operating income−$492.9M28.0%
- Interest, other & tax$1.9M0.1%
- Net income−$491.0M27.9%
04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 26, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $1.76B$1.13B | +55.3% |
| Cost of Revenue | $846.12M$525.55M | +61.0% |
| Gross Profit | $915.66M$608.92M | +50.4% |
| R&D Expenses | $530.55M$391.36M | +35.6% |
| Operating Expenses | $1.41B$978.70M | +43.9% |
| Operating Income | -$492.90M-$369.79M | −33.3% |
| Net Income | -$490.98M-$307.06M | −59.9% |
| EPS (Basic) | $-3.35$-2.36 | −41.9% |
| EPS (Diluted) | $-3.35$-2.36 | −41.9% |
| Shares Outstanding (Basic) | 146.71M130.08M | +12.8% |
| Shares Outstanding (Diluted) | 146.71M130.08M | +12.8% |
05—Questions
Frequently Asked Questions
How profitable is Twilio, and is the loss narrowing?
No. Twilio reported a net loss of $491.0 million in 2020, compared with $307.1 million in 2019 and $121.9 million in 2018. Loss from operations was $492.9 million in 2020. The company states it expects its revenue growth rate to decline over time and that it may not achieve or sustain profitability.
What drove revenue growth in 2020?
The filing attributes the 55% increase primarily to higher usage of Programmable Messaging and Programmable Voice products, additional product adoption by existing customers, and the contribution from the Segment acquisition from November 2, 2020. Pricing decreases partly offset the growth.
What are the main balance sheet and financing considerations?
At December 31, 2020, Twilio had $933.9 million in cash and cash equivalents and $2.1 billion in marketable securities. Its 0.25% convertible senior notes due 2023 had a principal of $343.7 million outstanding after $206.3 million was converted in 2020, and the Notes became convertible from January 1 through March 31, 2021. The company may need to settle conversions in cash, which could affect liquidity.
What legal and regulatory risks does the filing emphasize?
The filing cites GDPR and the EU-U.S. Privacy Shield invalidation, the CCPA, telecommunications and FCC rules, and TCPA consent requirements. It also discloses a jurisdiction that assessed $38.8 million in taxes, including interest and penalties, against $11.5 million accrued for that assessment, which Twilio disputes. The Telesign patent litigation was concluded in 2020.
06—Continue