Podcast 35: Truth in Telecoms, Good Grief Charlie Brown

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This week provided direct objective evidence that CPaaS is no longer the acronym to use with Wall Street. Twilio’s results exceeded most analysts’ expectations, but the outlook and Segment review sent the stock in decline, see below. Sinch who produced good results maintaining gross margin at 33.5% and revenue growth. Initially went up, and then down. Likely influenced by the leader in the category’s decline, Twilio.

Segment was expensive at $3.2B, but customer data platforms have become central to delivering accurate analytics, personalized customer experiences, and in training LLMs (Large Language Models) with accurate data, though as we learned in Podcast 34 with Pieter Luitjens of PrivateAI protecting PII (Personal Identifiable Information) is critical. The problem was the time to educate Twilio’s customers on the value of Segment and to build the business. At $290M in annual revenue Segment is a small part of Twilio’s business, so the review shouldn’t be that significant.

The decline was met with resistance as funds bought in while others sold, Anson bought in with $31M, Blackrock also bought in. Some funds see this as a buying opportunity.

In examining the results in a little more detail, after removing stock and intangibles expense, Twilio spent about $758M in real cash on marketing. But on what? There are no stadiums or Superbowl ads. Most of the Twilio advertising I see is online, and they’ve pulled back on that from my perspective. What is covered in this figure?

One interesting tidbit in their financial. There is a steady increase in “prepaid and other current assets” from $81M in 2020, to $186M in 2021, to $282M in 2022, to $329M in 2023. All of that (one third of a billion) needs to go into the P&L somewhere in the next 12 months. Twilio has no manufacturing or inventory. Even a massive Directors and Officers (D&O) insurance policy wouldn’t be that expensive!

This was giving Johnny flashbacks to Worldcom. Capitalize everything and bury it for later. Johnny asked some of the Wall Street experts to look into those figures and work out what the real gross margin could be.

Twilio is not going anywhere; and Microsoft, Amazon and Google can easily integrate Twilio’s dev community. So there still may be a surprise M&A, though I think unlikely it’s been such a surreal start to the year anything is possible.

We continue to be restricted on YouTube, it’s been 2 weeks of back and forth with no resolution on what’s going on.

We reviewed the amazing run of podcasts we’ve had over the past couple of weeks, heralding the future of programmable communications and showing robo-calling and SPAM SMS can be stopped using SSI (Self Sovereign Identity).

We finish on a piece of therapy Johnny needed to give himself, sharing a video from SNL that summarized Johnny’s experiences of CIPIO Partners and Tyntec.

Quoting Johnny so you can understand who’s who in the characters: “Thorsten Trapp is Lucy, Charlie Brown is Roland Dennert, Linus played by Hans Dieter Koch, Sally played by Nicola Wolfram. This is what the last 8 years with tyntec have been like. My imaginary therapist said it would be good for me to talk openly about it.”

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