Given that I run an API first software business myself and follow the other software names in this space very closely, I cannot overlook TWLO’s latest stock dive. Twilio is a developer platform for communication, offering companies to use its APIs for adding capabilities like voice, video, messaging, and lately, with their acquisition of SendGrid, also mail into their applications. Twilio’s client portfolio includes WhatsApp, Uber, Lyft, Netflix and many others.
The coronavirus outbreak and the quarantine effects around the globe are causing troubles to businesses. Some of them are even going as far as to temporarily shut down operations. Surely some of these businesses are also Twilio’s customers, which will probably lower their usage. But that might not be the case for all its customers. Some of them may even increase their usage. These businesses are, for example, Hulu, Twitch, Netflix, etc. Therefore, investors that believe the usage of Twilio’s services will drop across the board might be wrong. Twilio’s customers have prevailing online business models. These industries are least affected right now, and the services that Twilio offers (indirect communication) are precisely the services that companies need right in these troubled times. Communicating with your client and partners in an indirect way either through phone, email or video conference is a must in these conditions.
Understanding the pricing of SaaS
When it comes to SaaS, an important thing to understand is the pricing. As with a lot of SaaS businesses, Twilio offers a Pay As You Go payment package. In such a payment package, the payment is directly tied to the current usage of the APIs. If the consumption drops, the payment amount drops as well. However, Twilio is also offering its customers a “volume commitment” pricing package. This means that clients buy a fixed volume upfront, which is not dependant on their consumption. Larger clients mostly use this package due to
