Photo Credit: Gerd Altmann from Pixabay

According to a recent report, the Unified Communications as a Service (UCaaS) market is estimated to grow 10% CAGR to reach $44.7 billion by 2030 from $20.4 billion in 2022. Communications PaaS player Twilio (NYSE: TWLO) recently announced its third-quarter results that surpassed market expectations. But a weaker outlook has sent the stock tumbling.

Twilio’s Financials

For the third quarter, Twilio’s revenues grew 33% to $983 million, surging ahead of the market’s forecast of $972.2 million. Loss of $0.27 per share was also significantly better than the loss of $0.36 per share estimated by analysts.

Among key metrics, Twilio said it had over 280,000 active customer accounts, compared with 275,000 a quarter ago. Dollar-Based Net Expansion Rate was 122%, compared to 131% a year ago. Like others in the industry, Twilio also announced job cuts. It will release 11% of its employee count or more than 800 employees in the current quarter.

Twilio expects to end the fourth quarter with revenues of $995-$1,005 million with a loss of $0.23-$0.20 per share. The market forecast revenues of $1.07 billion and a loss of $0.12 per share.

Twilio’s Growth Focus

Twilio recently announced the general availability of Twilio Engage that is its first software application that natively brings Segment’s leading customer data infrastructure and Twilio’s communication APIs together into a single platform. Twilio believes that this native combination will differentiate it from anyone else in the market. Brands like Discovery Education, Harry Rosen, and EasyHealth are already building personalized marketing campaigns as part of the Twilio Engage Pilot. Twilio hopes to begin upselling Engage more broadly into its base of customers who already buy channels and data.

Twilio also announced the public beta of Verify Silent Network Authentication (SNA). It has partnered with over 50 mobile operators across more than 30 countries to verify the device and phone number with an operator without the need for additional authentication requirements like pin codes or visual tests. The security feature will help create a seamless user experience. Customers like Gojek, an Indonesia-based ride share service, have implemented SNA and reduced customer login time from 20 seconds to a mere 5 seconds, while ensuring increased security. By bundling SMS, WhatsApp, SNA, and Fraud protection into one software product, Verify is driving more value for its customers and more gross profit for Twilio.

It also built a new native integration between Twilio Voice and Google Dialogflow CX that can equip virtual agents with advanced AI capabilities in Flex and IVRs. This integration automates self-service use cases to better help customers and decrease frustrating IVR experiences that damage customer relationships and increase the cost per call. Machine learning-based agent coaching and self-service automation is becoming an essential service and by partnering with Google, Twilio can accelerate the penetration of Flex as a cloud solution for its customers’ legacy workloads.

Twilio’s product upgrades are helping customers manage costs and enhance their lifetime value. Companies can create audiences that offer a holistic view of a customer in real time. With Segment and Engage, they can activate this data and create golden profiles of a customer that will help them create targeted communication, thus enhancing the lifetime value of the customer. Also, post the onboarding of a customer, Twilio’s offerings of Verify and SNA are helping reduce customer login times. Finally, Twilio’s Flex can bring together this data into support, where an enhanced customer view will help support agents address customer issues quickly, and efficiently. Its partnership with Qualtrics will help it bring experience data into Segment to create a real-time sentiment view, thus helping deliver a more relevant customer experience.

Twilio’s stock is trading at $45.68 with a market cap of $7.83 billion. The stock hit a 52-week high of $317 a year ago and a 52-week low of $41 early this month.

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