Twilio announces $130M series E round

"In February of this year, Twilio noted that it was adding $1 million in recurring revenue every seven days, having ended 2014 with a revenue run rate of $100 million. But like many quickly growing cloud startups, Twilio loses money.

In the first half of 2015, the company booked $71.74 million in sales, with cost of revenue of $32.32 million. Those figures leave a gross profit of $39.42 million for the period. Deducting operating expenses and other costs, Twilio had a net loss of $16.370 million in the first six months of 2015."

So the first half of the year was $71M in sales, and they are running at an operating loss.

They are adding $1M in recurring revenue a week. And we know that it costs them roughly $450K to in costs to service that revenue (cost of revenue).

If we add in $1M in recurring revenue a week, for 6 months that is and additional $26M in revenue, maybe $14.3M in additional income (subtracted off the $450K/million cost of revenue), their 'burn rate' or costs for the first half were 39M + 16M or $55M (that is $39M in gross margin and a $16M net loss), if they keep costs constant (don't add head count, same level of capital investment they had in the first half, etc) then we can guess that their costs for the full year would be about $110M, subtracted from their gross revenue (after paying cost of revenue) of $88M they end up losing about $22M for the year.

You have a hard time IPO'ing if your business isn't paying for itself. And if it isn't paying for itself, you can't IPO if you can't clearly explain why it eventually will be paying for itself.

So the multi-million dollar question which the CEO is no doubt mulling over, is that given the cost of revenue, and the company's costs to get that revenue, is there a point where they make money? In my napkin analysis I made a very charitable assumption that their additional revenue won't incur any additional costs, but that may be incorrect. They may (or may not) write off their equipment against revenue which is not unusual in accrual based accounting but their corp infrastructure and things like leased space come out of G&A. So either they have a story of how they reduce their costs to make money on existing revenue, or they have a story that new revenue adds more gross margin than costs it consumes, and plot an intercept path to operationally cash flow positive and then net cash flow positive. At THAT point they can IPO and stop thinking like a startup.

BVP did participate in this round - great team to work with.

[edit] typo.

64 total companies have seen this middle of the alphabet (there are certainly a few that have gone higher not included in this list). Honestly, I expect more companies to start pushing the round name higher and higher as private market preference is certainly trending in a big way.

Here's a screen grab:

http://i.imgur.com/V9gvpFs.jpg

This is not always the case.

Keen to hear more about the deliverability issues you are experiencing.

Lesson learned: Create a test case, then contact support with evidence. It's a lot more effort of course, but now I have a system which can flawlessly switch between services if one begins to fail, and Twilio were much more inclined to help!