Uber Gives Twilio a Ride for its Money
Communications infrastructure company, Twilio, has taken a beating after reporting quarterly results earlier this week, thanks to Uber. Uber has made it clear that it will be shifting away from Twilio as it's backend provider for things like phone calls and SMS. This comes as a devastating surprise as 12% of Twilio's revenue came from Uber.
Perhaps this will cause other companies to switch or develop their own solutions as well. Facebook's Whatsapp is also a heavy user of Twilio, but has not announced any plans to move away from the platform. Amazon also uses Twilio's services which ironically are hosted on Amazon - a sort of chicken and egg partnership. Beyond Whatsapp and Uber, Twilio is well diversified with the next largest customer accounting for only 2% of Twilio's business.
TWLO stock may also be pricing on further declines from Uber as there is still a huge portion of its business that showed up as revenue from the quarter that will soon disappear.
Uber made it clear that it was moving away to cut costs as Twilio is becoming an expensive part of running its business. Though given Twilio's scale and focus, Uber may find it difficult to match Twilio's service capabilities. That said, given how much Uber spends on Twilio licenses, it might pay for them to partner with a competitor or to in-house some of their own services.