Twilio (NYSE:TWLO) announced in early October that it planned to acquire Segment, a cloud-based start-up that helps businesses capture customer information and move it between apps. This is just the latest in a string of recent acquisitions for Twilio. A look back provides insight into what else investors can expect.
In this Earnings Review that aired on Fool Live on Oct. 28, Fool.com contributors Danny Vena and Asit Sharma discuss Twilio's acquisition of SendGrid and why it bodes well for the future.
Danny Vena: You mentioned the SendGrid acquisition. I wanted to share my screen here for just a minute. This is from management's presentation, that came out with earnings and it looks at the SendGrid acquisition. When it acquired SendGrid back in the first quarter of 2019, you'll notice that in this bar chart here from Q1 '19, it shows $29 million in revenue from that. Over the course of the coming four quarters, that revenue grew to $54 million, so almost double in just a stretch of from Q1 to Q4. I really like the fact that this illustrates that management has been really diligent not only when they acquire a company, but then turning around and monetizing off of that, they're not letting it languish in the corner somewhere. They're really getting a good return on their investment from this. I'm sorry, go ahead.
Asit Sharma: I want to make sure before you get off the screen, let me know because I just want to make one comment. To clear up something for viewers who might have a question on it.
Vena: No. Go ahead. Why don't you do that now?
Sharma: Yes, sure. Just to say, and I know this looks confusing if you're looking at those four, atop the bar chart, rectangles that Danny showed us, why they disappear after Q4 2019. And that's simply because the company has lapped four quarters after the acquisition, so now it's part of organic growth. They don't break it out anymore. This is often you'll see that after an acquisition a company may break out, we got this much additional revenue from our new acquisition, but after a year, you folded into your other results and that's why it's not showing up in Q1, Q2, Q3 of 2020, but you can bet that that number is still growing. Would you assume that Danny? I would think so.
Vena: I absolutely think that's a safe assumption, and just because they're not breaking it out in the chart any longer. Management has been really good about, like I said, increasing the revenue from that acquisition, and I expect that we will see similar solid growth from the acquisition of Segment in the coming quarters.