Tag: TWLO (Page 2 of 2)

One of the bigger trends to emerge in software development over the past 5 years is the ability to outsource common software “plumbing” to third party providers through APIs. This has created big opportunities for the companies that provide these services, as the long tail of developers at enterprises going through digital transformation initiatives take advantage of this capability. I examine this trend towards API consumption and how it benefits the leading communications API provider, Twilio (TWLO).

On January 13th, Morgan Stanley analysts released a number of ratings for software stack companies in the communications software sector. This provided an update on opportunities for 2020. These highlighted continued strength in Twilio (TWLO), which we regard favorably.

As the new year has started, many analysts are publishing their “Top Pick” lists for 2020. This has favored well for several software stack companies so far this month, following the sell-off in many high growth cloud/software names we experienced in 2H2019. Coming out of this, on Jan 7th, two analysts named Twilio to their Top Pick lists for 2020. I have been long in Twilio and was happy to see this affirmation to start the year.

Twilio (TWLO) acheived a few accomplishments in the first half of December 2019 that are worth noting. I first recommended Twilio stock for long term investment in November. These accomplishments further emphasize the market-leading position that Twilio enjoys and reinforces the opportunity going into 2020.

Traditional software development is performed by software engineers with formal training in computer science. This involves writing volumes of customized code in a particular language and pushing that onto a software infrastructure stack. The code writing process is getting more efficient every year through improvements in higher-level languages and the creation of new open source libraries that can be easily imported to address almost any common function. However, even with these productivity improvements, application development output is still constrained by the number of software engineers.

Enter low code development tools, which allow non-engineers with some basic technical skills to produce reliable applications that address common, repeatable functions. This is accomplished through graphical user interfaces and configuration, versus programming. Several companies have emerged that have built their entire product offering and business around this trend. Low code development is a rapidly evolving space that has implications for our software stack investing strategy.

Date of Recommendation:  Nov 13, 2019
Closing Stock Price:     $98.34

Twilio (TWLO) stock should be considered for long term investment. Based on my characteristics for a successful software stack company, I expect Twilio to grow significantly over the next 5 years. This will be driven by their maniacal focus on developers and delivering solutions within a large and growing addressable market. Twilio is led by a technical founder who espouses customer-centric values. The company is continuously innovating its product offerings, often launching new products based on direct customer feedback. They run an annual conference that is developer-centric and choc full of hands-on, problem solving sessions.