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Business Operations Business Models

How Does Twilio Make Money (Business and Revenue Model)

The Twilio business model

Twilio logo
Here’s what you should know:
  • What is Twilio, and how does Twilio work?
  • How does Twilio make money?
  • Usage based fees
  • Subscription based fees
  • Twilio subsidiaries, acquisitions, and exits
  • Twilio profit and revenue
  • What is the Twilio business and revenue model?
  • Twilio funding, net worth, and market cap

How does Twilio make money? Here is a full, in depth, breakdown of their two (2) revenue streams and the different products and services they offer, as well as the Twilio business and revenue model, how much money Twilio makes per year, and how Twilio works.

What is Twilio, and how does Twilio work?

Twilio is a cloud communication company that provides programmable tools for developers to perform functions using their web service’s APIs.

Founded in 2008 by Jeff Lawson, Evan Cooke, and John Wolthuis, Twilio began trading on the New York Stock Exchange (NYSE) on June 23, 2016, under the ticker symbol “TWLO”.

Since that time, Twilio now has more than 250,000 active customer accounts across 180 countries and is used by over one-third of the world’s developers, according to Twilio.

So, how does Twilio work? To use Twilio, simply visit their website and choose from one or more of the various products they offer that fits your business’s needs.

How does Twilio make money?

According to Twilio, Twilio has more than 250,000 active customer accounts across 180 countries and has powered more than 1 trillion interactions in 2021 alone.

So how does Twilio make money off of all those customers and “interactions”?

Below is a breakdown of how much money Twilio makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 2 ways how Twilio makes money in 2022

Twilio has a revenue model that makes money in two (2) ways; by charging its customers on a pay-per-use basis and subscription fees depending on the product they are using.

#1. Usage based fees (from various pay-per-use products)

Twilio makes almost a third of its money from the usage-based fees earned from customers who are using their software products within their Channel APIs. In fact, $2.04 billion, or 72% of Twilio’s total revenue came from usage-based fees in 2021.

For each usage-based product, customers are charged on a pay-per-use basis and have different costs associated with them depending on what the action is.

For example, their Programmable Voice product charges customers based on the amount of call minutes used, and their Programmable Messaging product charges customers on the number of text messages sent or received.

Which starts at $0.0085/min to receive a call and $0.013/min to make a call when using Programmable Voice. While Programmable Messaging starts at $0.0075 to send or receive a message.

As noted above, Twilio has powered more than 1 trillion interactions in 2021 alone. Including over 25 billion calls, 127 billion messages, 1 trillion emails, and 10+ billion video minutes. Of these, Twilio is making money on each interaction – in ways like in the simplified examples described above.

Twilio app | Twilio Business Model | How Does Twilio Make Money? | How does Twilio work?
Source: Twilio

Note: Twilio powered more than 1 trillion interactions in 2021.

#2. Subscription based fees (from various fee-based products)

The other 28% of Twilio’s revenue comes from the subscription fees they charge customers who are using their fee-based products.

These fee-based products include offerings such as Twilio Flex, Twilio for Salesforce, Twilio Segment, and more. And just like their usage-based products, customers are charged different monthly costs depending on the type of fee-based product it is and are charged monthly flat fees.

For example, Twilio Flex is an out of the box cloud contact center platform that charges customers $1/active user hour or $150/named user per month. And Twilio for Salesforce is a way to easily add Twilio SMS to a customer’s Salesforce organization which charges customers starting at $15 USD per seat per month.

Note: Both, pay-per-use fees and subscription fees, have many Twilio products that fall into one of these two payment business models.

Twilio subsidiaries, acquisitions, and exits

To date, Twilio has made a total of 11 acquisitions, 21 investments, 4 lead investments, and 2 successful exits.

Twilio profit and revenue

In 2021, Twilio reported $2.84 billion USD in revenue.

Note: Because Twilio Inc. is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Twilio’s publicly released financial reports, including annual reports, through Twilio’s investor section on their website.

What is the Twilio business and revenue model?

Twilio makes money through a few revenue models that they combine within their company, they are:

  • Usage based revenue model
  • Subscription business model
  • À la carte business model
  • Business to business (B2B) business model
  • B2B2C (partnerships) business model
  • Mergers and acquisitions (M&A) business model

Twilio funding, net worth, and market cap

According to Twilio’s Crunchbase profile, Twilio has raised $614.4 million over 11 rounds and has a market cap of $14.78 billion as of September 2022.