Twilio, a cloud communications platform for apps and websites, is acquiring API-centric email platform SendGrid in an all-stock deal valued around $2 billion. The deal is expected to close in the first half of 2019.
On a conference call discussing the purchase with investors, Twilio co-founder and CEO Jeff Lawson said that SendGrid is a “natural extension” of its strategy. SendGrid’s capabilities will be integrated with Twilio’s platform and enable collaboration between product lines as well as enable cross-selling between both customer bases. Twilio claims the combined customer base of SendGrid and Twilio is greater than 100,000, with very little overlap.
Twilio’s cloud communications platform started with the ability to manage real-time communications such as voice before adding SMS, video, web, and mobile chat. “We’ve listened to customers and extended our platform in natural ways,” said Lawson. “Customers want to bring all their strategic communications under one platform and one company.” Adding an email communications channel was the next step.
Twilio has cloud-based APIs for messaging, voice, video, and authentication that enable developers to build communications capabilities into their web and mobile applications. It has a distributed software layer that allows developers to access its global network of carriers.
Denver-based SendGrid sells an email marketing platform to businesses. The platform enables its customers via APIs to send newsletters, marketing, and email confirmations. SendGrid claims it can deliver 45 billion emails per month to inbox service providers by placing its machine learning systems on the edge of its customers networks.
According to Lawson there are a number of synergies between the two companies that made the deal a no-brainer. The biggest was that both companies are developer focused in their go-to-market strategies.
SendGrid CEO Sameer Dholakia explained in the call that by starting work with a customer with the customer’s developers, it can more easily scale its offering. He said that by working with the developers, the developers act as an internal advocate for SendGrid and Twilio. Then, either SendGrid or Twilio can offer prototypes that fit that specific customer’s need, enabling the developer to show it off internally and “de-risk the decision” for a company.
Both Twilio and SendGrid in the call maintained that the deal will enable the combined company to aggressively compete in the cloud communications market.
The $2 billion valuation had a few analysts on the call questioning why Twilio couldn’t build the email channel into its platform itself. Lawson responded that aside from its technology already being fully fleshed out, “there’s already the customer base and momentum that SendGrid has that makes this combination powerful.”
SendGrid went public in November 2017 on the New York Stock Exchange (NYSE) with a valuation around $725 million. At market close on Monday after the acquisition was announced, it was valued around $1.43 billion.
SendGrid will operate as an independent unit within Twilio. Its management team will remain intact with SendGrid CEO Dholakia at the helm.