Twilio Announces Communications Solutions for COVID-19

Investors are probably familiar with the latest trend among stock-picking sites and analysts to publish a list of technology stocks that will likely benefit from the COVID-19 situation. While obvious picks like ZM, WORK and TDOC are usually mentioned, I haven’t seen Twilio included. This is understandable, as the Twilio brand is usually suppressed in end-user applications that utilize its services. Yet, as the leading provider of programmable communications, many of these types of solutions for social distancing (video collaboration, messaging, chat, email, etc.) could be built on Twilio’s platform. Over the last couple of weeks, Twilio (TWLO) has announced several product extensions and ready-made templates that provide solutions for connecting and notifying people in a COVID-19 impacted environment. In this post, I’ll highlight some of the recent announcements from Twilio and implications for incremental use of their platform.

On March 26th, Goldman Sachs analyst Heather Bellini downgraded Twilio from Buy to Neutral and lowered her price target from $140 to $105. This was largely driven by anticipated impact from the COVID-19 situation. The commentary provided was the following.

Goldman Sachs analyst Heather Bellini downgraded Twilio to Neutral from Buy with a price target of $105, down from $140. The company’s revenues are more at risk from COVID-19 since they are mostly transactional and are reliant on usage, Bellini tells investors in a research note. The analyst expects organizations to reduce their usage of Twilio’s communication capabilities as services and/or store fronts are closing down.

The Fly, March 26, 2020

TWLO stock closed just over $100 that day, so her 12 month price target of $105 doesn’t leave much room for growth. At a macro level, the analyst’s perspective is probably accurate. With large portions of revenue generated by transactional interactions from activities like ride-sharing, flight updates and restaurant reservations, Twilio will be impacted in the near term as these industry segments have ground to a halt. Of course, this will be somewhat counter-balanced by an increase in activity for other services seeing a surge in usage, like meal delivery, customer service and health care appointments. Twilio’s CEO even alluded to this at the Morgan Stanley TMT Conference on March 2nd. Regardless, for a short term price target in this environment, it is prudent to be conservative.

At the same time, an underlying theme in most of the obvious stock picks as beneficiaries of the COVID-19 era is facilitating communication and notification between physically separated people. Without the convenience of shared proximity, digital services have emerged as necessities for employee collaboration and end user communication. This has driven rapid price appreciation in associated company stocks, as investors shift funds to capitalize on this momentum.

• Zoom (ZM): Leading provider of video conferencing solutions
• Slack (WORK): Messaging and communications between distributed teams
• Teledoc (TDOC): Tele-medicine
• Ring Central (RNG): Cloud-based call centers and phone systems

I don’t disagree with the expected benefit for these companies. Putting aside valuation in some cases (ZM), these are safe picks for near and long term benefit. However, I would also recognize that these are generally end user applications. They sit on top of communication services either built by these companies or leased from others. These applications are targeted at end users. Some expose APIs to facilitate third-party software integration or creation of adjacent “apps” that operate within the provider’s ecosystem, but they are not intended for developers to consume the core communications services and create brand new stand-alone applications. This isn’t a criticism, as the general end user just wants to sign up and start using the service.

Twilio provides a developer-focused platform of programmable communications services, including video, voice, text, chat and email. Through well documented and open APIs, developers can harness these communications services to create their own unique software solutions. These solutions can either be built to address opportunities within enterprises or emerge as a new product from a stand-alone company. Twilio does provide some pre-packaged solutions, like their contact center (Flex) and email marketing (Marketing Campaigns), but the underlying intent is always that developers can customize and extend all aspects of the solution through code.

Twilio makes the mission of enabling developers clear on the site’s About page.

Millions of developers around the world have used Twilio to unlock the magic of communications to improve any human experience.

Twilio has democratized communications channels like voice, text, chat, video, and email by virtualizing the world’s communications infrastructure through APIs that are simple enough for any developer to use, yet robust enough to power the world’s most demanding applications.

By making communications a part of every software developer’s toolkit, Twilio is enabling innovators across every industry — from emerging leaders to the world’s largest organizations — to reinvent how companies engage with their customers.

Twilio.com, Company Page

And this represents the long term opportunity for investors in TWLO. While Twilio stock may take a near term hit as the current consumers of its platform experience business slowdown, I think a much larger second wave of innovation will be unlocked, as thousands of developers conceive of new ways to communicate, connect and notify people in the era of social distancing.

Video Services

On March 12, Twilio released open source projects of ready-made video collaboration apps for web, iOS and Android. The code is available on GitHub using the Apache 2.0 license, which provides for liberal re-use. The web app is written in ReactJS, a popular javascript framework. The iOS and Android apps similarly provide usable source code relevant for the target device environment (ObjectiveC/Swift and Java). These can all be easily imported into a developer’s environment and serve as bootstrap code for any video collaboration application. The apps work out of the box for basic group video conferencing, but allow for full extensibility by developers.

These apps are already wired to make use of the Twilio Programmable Video APIs, so developers can focus on customizing the user experience and functionality to meet their use case. From Twilio “Whether you are building a healthcare, education, or general video collaboration solution, these apps can accelerate development by providing you with a fully functioning video app that can be deployed to the cloud in minutes.” In fact, along with these apps, Twilio published a video tutorial showing how to deploy the base video conferencing apps in five minutes and conduct a functioning multi-party video call.

The base set of features are fairly robust, mirroring what you would expect for comparable video collaboration end user applications.

• Enable/disable camera
• Mute/unmute participants
• Screen sharing
• Dominant speaker sensing
• Network quality indicator
• Layout and media customization
• HIPAA compliant

Once built, there is no cost to deploy and host the application. Hosting is provided by Twilio’s serverless environment. Users are simply charged on a usage basis. Pricing starts at $0.0015 per minute for a peer-to-peer connection. For groups, pricing ranges from $0.004 per minute per participate for a small room (4 people or less) to $0.01 per minute per participant for a large room (up to 50 people). Add-ons are available for group messaging, recording and media storage/download. Discounts apply for monthly commitments.

One customer example for the Twilio video collaboration service is Doctor on Demand. Doctor on Demand provides 24/7 access to licensed physicians and psychiatrists for urgent care, ongoing chronic care and behavioral health. They work with major insurance providers or on a flat fee. Doctors are part of independent practices across the U.S., collectively making up the physicians network. Their app is available for iOS and Android devices. Their solution built on top of the Twilio platform.

There are some limitations to the Twilio video collaboration service. For example, the large room can accommodate up to 50 participants currently. However, like the service provided by Doctors on Demand, one can conceive of a whole bevy of use cases which involve a customized video collaboration experience for one-on-one or small group interactions.

Contact Center

RingCentral (RNG) has been a beneficiary of the work from home and distancing trend. Their stock is approaching all time highs, as investors anticipate benefit for their packaged communication and collaboration solutions as businesses scramble to accommodate remote work and low touch customer service. RingCentral provides cloud-based solutions for contact centers, online meetings, team messaging and phone.

In a similar vein, Twilio provides a fully programmable contact center solution through its Flex offering. Flex supports standard contact center use cases out of the box, but also allows full developer customization of the UI, call routing and workflows. Customers can bootstrap their solution with a range of pre-packaged user interfaces for agents and pre-configured routing logic. It also supports full integration with other communications services, like messaging, social channels, chat, email and video, or third party CRM’s like Salesforce or Zendesk.

Once the base functionality is set up, developers can customize all aspects of the solution through a set of open APIs and UI code templates. APIs provide access to single sign-on, call routing, queues, chat and messaging. The UI is rendered through a component library built in React (a popular Javascript framework), allowing full control over styling, layout and components. Custom UI functionality can be built using plug-ins. The referenced example adds a custom search capability to call center interaction content.

In a blog post on March 26, Twilio highlighted how a company could deploy the Flex contact center solution in 30 minutes or less. This might be necessary if a company needed to facilitate employee or customer service communication quickly. In the future, unique requirements could further be enabled with developer customization. The solution allows immediate set up for voice calls, web chat and SMS. An online wizard enables quick configuration for task routing and workflows. Agents can be invited using the company’s preferred single sign-on service (Okta, Google SSO, etc.). Once the company is ready to go live, they can convert to a paid plan. Costs are flexible and scale based on usage, either per agent seat per month or just on an hourly usage basis.

As an example, the city of Pittsburg was able to upgrade its 311 information system in several days using Twilio Flex. They previously ran on a legacy, on-premise system, that required call operators to be physically in the office. By moving their roughly 20 staff members to the Twilio system, they are able to handle calls from any location. The city’s recent emergency declaration allowed the IT manager to fast-track the upgrade, which had originally been scheduled a few years out. Other cities are reaching out for similar support, according to Twilio.

Chatbot

Many consumers prefer to find an answer to a question or gather product decision information themselves, without talking to a human. This seems to be a stronger preference for younger audiences. An automated chat experience can be configured to answer common questions or provide advice through a familiar messaging interface. This can be deployed on multiple channels, like SMS/text, webchat, Facebook Messenger and even voice response. These chat interfaces are powered with NLP (Natural Language Processing), which allow them to interpret human language requests and infer intent across many language styles. Since this chat functionality can be automated, the feature is often referred to as a “chatbot”.

Twilio provides a chatbot solution through its Autopilot product. Autopilot allows customers to set up conversational chatbots across any channel – web and mobile chat, SMS, WhatsApp and voice (IVR). This interaction can be integrated with the customer’s contact center, like Flex, in the event that the chatbot can’t handle the customer’s issue and it needs to be escalated to a human. Autopilot has built-in speech recognition and a NLP engine to interpret the customer’s intent and accomplish specific tasks based on their goal. Tasks, like setting up an appointment or checking on delivery status, can be programmatically configured with simple scripts.

On March 19, Twilio released a set of chatbot templates for health organizations to handle COVID-19 frequently asked questions. As health care providers are being inundated with phone calls, these chatbots can be deployed to handle common requests, tasks and questions. This reduces the burden on human operators, allowing them to focus on the more complex interactions. Twilio built a chatbot template that is baselined with the World Health Organization’s COVID-19 FAQ’s. This provides a starting point for health and government organizations to create chatbots that answer common questions about COVID-19. Twilio’s native language understanding capability is woven into the solution to ensure that people get directed to the correct answer to their question, regardless of how they ask it. As with Autopilot, the health organization can deploy the chatbot on whatever communication channel is most convenient for its users, whether webchat, SMS, Facebook Messenger or voice.

Finally, the health care provider can go through a process of training the NLP model, by entering sample questions and then providing feedback on accuracy of the responses. This is all done in a human-friendly interface.

Other Twilio Example Uses for COVID-19

Here are some other examples of interesting use cases published by users on Twitter about solutions they created with Twilio to help address the situation with COVID-19:

• Find an open restaurant for take-out in the San Francisco area over SMS by texting your zip code to a phone number.
• Get basic COVID-19 training instructions for your employees via text message.
• Cipherhealth utilized Twilio IVR and SMS solutions to set up outbound COVID-19 screening for upcoming patient appointments and to automate notification of test results.
• A town in Somerset, UK set up an automated volunteer support and coordination service for elderly residents to request help with critical tasks, like getting groceries, medicine and mail. Residents could call or text a single number to request help and be guided through a series of automated steps to get them connected with a volunteer to handle the task.

Investor Take-aways

The COVID-19 situation is rapidly driving usage of many publicly facing digital applications which facilitate communication between physically separated users. The stocks of these companies are benefiting as investors try to capitalize on this trend. Obvious beneficiaries have been ZM, WORK, TDOC and RNG.

Twilio provides a communications platform that includes pre-built solutions for video collaboration, contact centers and automated chatbots. These can be rapidly deployed to customers through Twilio’s cloud-based, self-provisioning platform. Beyond these ready-made solutions, the programmability of the platform allows developers to build completely new, stand-alone applications and services that enable automated communication. This “second wave” of innovative solutions for enabling business and personal collaboration in a world of social distancing will accelerate the adoption of Twilio’s platform and drive incremental revenue. Investors with a long term horizon can take advantage of this opportunity in TWLO, while the stock is at the lower end of its 12 month range.