Twilio, Inc. (PENDING: TWLO) filed an S-1/A with the Securities and Exchange Commission for its upcoming IPO. It plans to be listed on the New York Stock Exchange and hopes to raise $100 million in its offering. Twilio is a cloud communications company that allows its customers to pay as they go for the company's telephonic web services. The company has announced its expected price range of $12 to $14 for its 10 million shares. It will also offer an overallotment option of an additional 1.5 million shares. The underwriters for the IPO include Allen & Company LLC, Canaccord Genuity, Goldman, Sachs & Co., J.P. Morgan, JMP Securities, Pacific Crest Securities and William Blair.
Summary of Cloud Communications Strategy
Using a pay-as-you-go model for pricing, Twilio, Inc. is a cloud communications company that offers cloud communications platforms that allow developers to build and scale communications in real time. Founded in 2008, the company is based in San Francisco, California.
Executive management with deep industry, financial expertise
Jeff Lawson is the founder, CEO and chairman of Twilio. He has more than 15 years of industry experience and previously founded Versity and NineStar and was the founding CTO of Stubhub.com. He completed his Bachelor of Science in Computer Science and film and video at the University of Michigan.
Roy NG is the COO of Twilio. He previously served as the COO of SAP's Cloud Business and as a vice president at Goldman Sachs and for the global business operations of SuccessFactors. Mr. NG holds a Bachelor of Science in business administration and a Bachelor of Arts of political science from the University of California, Berkeley.
Financial highlights and potential risks
The company has more than 900,000 developer accounts and more than 28,600 active customers, according to its filings. It operates in 180 countries. At the end of 2015, the company reports it had $166.9 million in revenue, a 87% over the prior year. It also reported $59.3 million in revenue for the first 3 months of 2016 ending on March 31, 2016, a 77% increase over the same quarter the prior year. The company has been able to raise $234 million in venture capital, giving it a valuation of more than $1 billion. The company states that it has a history of losses, and the market for its software product is one that is relatively new and unproven. It also indicates that it has experienced substantial and fast growth and if its growth is not managed well, it could adversely impact the company.
Conclusion: Consider Buying In
The company has strong financials and solid valuations. It has consistently shown strong growth and appears poised to continue doing so. We believe the company's share prices are likely to trade up following its IPO, potentially generating strong returns for investors.
The strong underwriting team, seasoned management, and overallotment option for 1.5 million additional shares are all positive indicators and could bolster the success of this deal.
With fears of a Brexit subsiding, the markets are calmer than they have been in past weeks.
We recommend that investors consider buying shares in the Twilio IPO.
Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in TWLO over the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.