After Twilio (NYSE:TWLO) reported 81% year-over-year, first-quarter revenue growth on April 30, the stock fell about 6%. The message? As impressive as the newly acquired SendGrid email marketing business can be -- and it's certainly a growth driver for Twilio -- it could take a few quarters for investors to be impressed enough to drive the stock price materially higher.

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Nothing in the results should scare long-term investors. After all, Twilio once again topped forecasts for quarterly revenue (reporting $233.14 million vs. $223.43 million estimated) and adjusted profits ($0.05 a share vs. $0.01 a share estimated). The company also projected more than $1.1 billion in full-year revenue, topping the Street's consensus forecast.

People entering the doors to the show floor for Signal 2019, Twilio's annual developer conference.

Over 5 million developers have registered to use Twilio products. Image source: Twilio.

So why did the stock drop? In situations like this, it's easy to blame traders for "taking profits" on buys made earlier in the year. (As of this writing, Twilio stock is up over 46% year to date, crushing the S&P 500's 17.5% return over the same period.) Some investors may have been hoping for more optimistic guidance with SendGrid now fully embedded into Twilio. Either way, at over 20 times trailing sales, Twilio trades for the sort of premium that encourages volatility. Traders get in, get scared, take profits or limit losses, and then start the cycle again. All that churning can lead to wild swings in the stock price.

Special delivery

As a shareholder, I'm pleased to see the volatility. To me, it signals the market still doesn't understand the full value of Twilio's competitive advantages. With SendGrid, the company appears to be widening its lead while diversifying its sources of revenue. Here's how Chief Financial Officer Khozema Shipchandler put it during the Q1 earnings call:

We ended the quarter with 154,797 active customer accounts, with Twilio SendGrid contributing more than 84,000 to the count. Our top 10 active customer accounts contributed 14% of total revenue in Q1 compared to 20% in Q4 of 2018, and 18% in Q1 of 2018.

With this data and a little math we can see the scale of the opportunity Twilio is chasing. Let's start with the purchase price.

In October 2018, Twilio agreed to pay roughly $2 billion for those 84,000 customers and the underlying SendGrid technology. That amounts to about $24,000 per account. How good a deal is that? Strip out the 14% of Twilio's Q1 revenue contributed by its top 10 accounts -- about $32.6 million -- and you're left with $200.5 million in revenue from 154,787 total customer accounts. That's $1,295 per customer in one quarter, or $5,180 annualized.

Divide $24,000 by $5,180 and you're left with 4.6. In acquiring SendGrid, Twilio paid just 4.6 times its sales run rate to more than double its customer base. For context, Twilio's peer group trades for 20.5 times sales at the median, according to S&P Global Market Intelligence.

The Foolish bottom line

To be fair, my thesis depends on Twilio selling its newest clients more elements of its communications platform. History favors that happening. From Q4 to Q1, the company's net dollar revenue expansion rate ticked down 1 percentage point to a still-stratospheric 146%. Customers who'd been signed up for at least one year were paying 46% more in Q1 than when they started with Twilio. It's fair to forecast that the company will be at least modestly successful upselling SendGrid clients.

And if Twilio is wildly successful in its conversion efforts? It won't be long before those who passed on this so-called expensive stock will look back, longing for the days when it traded so cheaply.