EDITORIAL

Twilio Prices At $15, Ahead Of Expectations

tl;dr: Let’s make some numbers together.

giphy (31)

In the pre-Twilio era, only dogs were allowed to use telecom services.

Twilio priced its IPO at $15 per share this evening, ahead of its initially proposed range of $12 to $14 per share. The price point itself, and that the company ended with a higher-than-range figure were both unsurprising.

What does the pricing mean for the company? Twilio’s IPO involves 10 million shares, with an option for 1.5 million more as part of the underwriters’ option. That means Twilio will raise at least $150 million in its flotation. That figure could rise depending on the structure of its underwriter’s discount, and if the 1.5 million shares are exercised in either full or part.

What does the final price make the company worth? A fine question. Including the 10 million offered IPO shares, Twilio will have 82,200,793 total shares outstanding. That figure goes up, as noted before, if the underwriting firms decide to pull the trigger on the 1.5 million share option. That gives us two valuation points:

  • Twilio’s valuation at $15 per share, no option exercise: $1.23 billion
  • Twilio’s valuation at $15 per share, full option exercise: $1.25 billion

Both figures are up a few hundred million dollars from the firm’s last private valuation of just over $1 billion.

The company remains conservatively priced. Using the information from its most recently reported quarter, the company is valued at around 5.2 times its annual run rate. The ratio is slightly tighter if you include the 1.5 million potential shares in the calculations.

For comparison, Twitter’s valuation-to-annual-run-rate was around four times higher than what Twilio will command, observing its S-1A filing and valuation figures reported at the time. That rapid deleveraging of the value of revenue is notable. Twitter, incidentally, not only trades far under its initial IPO price, but also — and this was something that I had forgotten — under the very lowest range it first proposed for its IPO, $17. That figure was revised several times before the offering.

Twilio’s premium to its initial range feels modest in comparison. Different times.

What else do you need to know? Twilio will be quite well capitalized after its offering. The company had just over $103 million in cash before its flotation, according to its SEC filings. Presuming no underwriter option exercise, Twilio will have $253 million in the bank following its IPO. Given that Twilio burned just $5.5 million in its most recent quarter between operational and investing activities, it has oodles of runway. Unless its market falls apart, naturally, but that caveat applies to every offering and public company.

Regardless, the cocktail and coffee hour beckons. Tomorrow will be fun. Scram!

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Top Gif Via Giphy.
© Mattermark 2017. Sources: Mattermark Research, Crunchbase, AngelList.
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