UPDATED 19:22 EDT / MAY 17 2021

CLOUD

Twilio buys business SMS text startup Zipwhip for $850M

Cloud communications firm Twilio Inc. is looking to boost its messaging capabilities when it closes on the $850 million acquisition of a company called Zipwhip Inc. that was announced today.

Seattle-based Zipwhip enables U.S. companies to send free SMS text messages to their customers from landline phones, VoIP services and toll-free numbers. Users simply enable their landline or VoIP service to send text using Zipwhip’s customizable application programming interfaces.

Zipwhip, which had raised almost $100 million in funding, including a $51.5 million Series D round in January 2019, also sells onboarding, gateway, registry and spam detection tools to wireless carriers. The company has a base of more than 30,000 global customers that includes resellers.

Zipwhip’s capabilities will help to strengthen the already considerable arsenal of communications channels that Twilio offers to its customers. Twilio’s APIs enable mobile application developers to build chat and video call features into their applications so they can better connect with their users. The company has enjoyed strong growth over the past year as more people work, shop and socialize online during the COVID-19 pandemic.

Zipwhip has also seen strong growth, and according to its 2021 State of Texting report, more businesses have turned to text messaging to connect with customers since the pandemic emerged. The company reckons it has seen revenue growth of more than 400% in the last three years.

Zipwhip Chief Executive John Lauer wrote in a blog post that Twilio had seen the “immense value” his company provides and its potential for further expansion.

“Messaging is becoming a preferred way for consumers to engage with brands, therefore it’s critical to provide multiple messaging options,” added Simon Khalaf, senior vice president and general manager of the Twilio Communications Platform. “By bringing together the world’s leading cloud communications platform and a trusted partner in the messaging ecosystem, we have the ability to deliver more secure, high-quality toll-free traffic at scale.

Twilio said Zipwhip will be merged into its Messaging Business Unit when the deal closes before the end of the year.

The acquisition shows that Twilio is as hungry as ever to grow its business. Last year, the company made a massive $3.2 billion acquisition of customer data platform provider Segment Inc. in a move that added important customer engagement capabilities to its platform.

More recently, Twilio has said that it’s splitting its research and development unit into three distinct segments in a move that analysts said would enable it to grow its products and innovate faster.

Analyst Holger Mueller of Constellation Research Inc. characterized today’s acquisition as a strategic market extension for Twilio.

“It’s good to see that Twillio is getting back to its roots with this acquisition, as the company that makes the phones ring with software,” Mueller said. “Zipwhip enables businesses to start communicating via SMS, and if it can encourage its existing customers to do so, it will mean more business for Twillio.”

Image: Twilio

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