2016 IPO Prospects: Twilio Expected To Go Public Soon

Summary

Twilio provides application programming interface services to allow developers to add voice, video, text and picture messaging to any app.

Twilio is privately held and keeps financials under cover. Reports suggest the company had earned $100 million in revenues in 2014 and was adding over $1 million in recurring revenues a week since then.

It has yet to turn a profit.

Twilio is venture funded so far with $234 million raised from investors.

A recent Research and Markets report on the Global Web-Based Real-Time communication market projects the industry will grow 36% annually over the period 2016 through 2020. While the the biggest vendors in the market are Cisco (NASDAQ:CSCO), Ericsson (NASDAQ:ERIC), Google (NASDAQ:GOOG) (NASDAQ:GOOGL) and Mozilla, other smaller vendors are making their presence felt. One such player is San Francisco-based Twilio (Private:TWILO).

Twilio's Financials

Twilio provides application programming interface (API) services to allow developers to add voice, video, text and picture messaging to any app. It was only last year that Twilio added video capability to their offerings. Twilio's platform relies on AWS infrastructure and offers telephony services in the cloud used in apps such as those offered by Hulu, Uber, Airbnb, and eBay, to name a few.

Twilio earns revenue by charging their customers a fee based on the pay-for-what-you-use model. Twilio's customers are able to pay low per-minute rates to connect and route voice calls to over 200 countries, communicate over VoIP to browser or mobile apps. Twilio is able to offer low rates due to their extensive partnerships with more than 100 telephony carriers globally. Besides voice calls, Twilio earns revenues by providing SMS and MMS capabilities and setting up VoIPs, IP infrastructure and connectivity and termination coverage-related services.

Twilio is privately held and keeps its financials under cover. Recent news reports suggest that the company had earned $100 million in revenues in 2014 and was adding over $1 million in recurring revenues a week since then. It is yet to turn in profits.

Twilio is venture funded so far with $234 million raised from investors including Fidelity, T. Rowe Price, Redpoint Ventures, Draper Fisher Jurvetson, Bessemer Venture Partners, Union Square Ventures, K9 Ventures, 500 Startups, SV Angel, Lowercase Capital, Mitchell Kapoor, David Cohen, and Founders Fund. Its last funding round was held in July last year when Twilio raised $130 million in a round led by Fidelity and T. Rowe Price at a valuation of $1.1 billion. An earlier round in 2013 had valued them at $500 million.

Market rumors suggest that Twilio has now filed for an IPO under the JOBS Act. The Act allows companies with revenues of less than $1 billion to file for an IPO confidentially. It would be expected to submit detailed financials and other filings closer to the date of the IPO road show.

Twilio's Competition

Bigger vendors aside, Twilio has enough competition from other smaller players in the industry. Among smaller vendors, Twilio's closest rivals include Sinch, Nexmo, and Plivo, all of whom offer similar services at marginally different price points.

To help keep these vendors at bay, Twilio has been expanding its offerings. Last year, Twilio announced the acquisition of Authy for an undisclosed sum. A Y Combinator backed start-up, Authy provided two-factor authentication services to end users, developers and enterprises. At the time of the acquisition, Authy had a listing of over 6,000 sites that used its services to protect their users. The acquisition will help Twilio in simplifying the authentication and verification experience for its customers.

By Sramana Mitra

Source:http://seekingalpha.com/article/3898876-2016-ipo-prospects-twilio-expected-go-public-soon 

TransUnion - How It's Fared Since the 2015 IPO (TRU)

TransUnion (NYSE: TRU) is a risk services and financial information provider to businesses and consumers. It is a household name and one of the three largest credit reporting agencies in the United States along with Experian and Equifax. The company has a growing presence in overseas markets, which include South Africa, Brazil, Canada, Hong Kong and India. TransUnion is based in Chicago, and it launched its initial public offering (IPO) on June 25, 2015, by selling about 30 million common shares for a price of $22.50 a share.

Business Overview

TransUnion mostly makes money by selling consumers' data to companies that want aggregated or individual consumer reports, risk scores and other information deemed important in determining credit risk of a particular person. TransUnion furnishes credit information and other information products to thousands of businesses and millions of consumers worldwide.

Health care, insurance and banking industries frequently use TransUnion's services to access accurate credit information to make various business decisions, primarily the extension of credit. Landlords and cellphone companies ask for credit reports from TransUnion to judge their potential customers' willingness to pay bills based on prior credit history. The company operates in a segment of the financial services industry highly concentrated with high barriers to entry due to the effort and time it takes to create a large proprietary database on consumers.

Financial Performance

TransUnion demonstrated an annual growth rate of 10.3% from 2013 to 2014. The most recent 12-month trailing data as of Sept. 30, 2015, indicates the company is likely to post another 10% increase in revenues for 2015. TransUnion is in a growth mode, as there are still plenty of organic growth opportunities due to the health demand for its consumer credit reports, and analytical and risk management services from financial and health care companies. The rise of peer-to-peer lending companies and marketplace lenders, such as Lending Club and Social Finance Inc., provides an additional boost to the company's revenues.

Despite growth in its top line, TransUnion's operating income remained stagnant in 2013-2015. As of January 2016, it recently completed major acquisitions, which increased its operating and integration costs of acquired companies. The company is still growing and increasing its head count and marketing efforts to stay ahead of the curve.

TransUnion's Stock Performance

After debuting on the New York Stock Exchange with a closing price of $25.40, TransUnion showed a one-year high of $27.98 and a one-year low of $23.19. December 2015 and January 2016 were very volatile months for the U.S. stock market. The company's stock declined from its one-year high and was trading in the range of $25 to $26 in January 2016. If investors had purchased TransUnion's stock on June 30, 2015, the stock's fourth day of trading, at a closing price of $25.10, they would have made a very negligible cumulative profit in the range of 1 to 2%.