What Bandwidth Earnings, WhatsApp in India, and Cloudfare's Post Mortem Tell Us
Bandwidth kicks-off the final earnings reports of the year and proof WhatsApp is gunning for your lunch
Bandwidth Kicks off the Final Reporting Season of 2023
Bandwidth and Upland kicked off the final earnings report of the year.
Bandwidth reported:
Revenue and Profitability Beat: Exceeding revenue and profitability predictions despite “choppy macroeconomic conditions.”
Pass Thru Fees: In Q3, they paid $32 M Pass thru fees to the carriers, up almost 19% YoY. Given the heavy revenue reliance on long-code texting (now called 10 DLC), that’s a 19% increase the carriers didn’t have before.
Primary Use Cases: Primary use case drivers were ecommerce, conversational marketing, and financial services.
Spectacular Messaging Growth: While commercial messaging was 17% of revenue it grew 51% (47% if you take out political). This also means 2024 will be spectacularly good. The political customer is seasonal, but loyal and predictable. Once you get a reputation for delivering, they come back again and again and again.
Transactional Voice Under Pressure: The voice business is facing growth pressure, a trend that's industry-wide. Yet, it would be a mistake to equate volume with impact. The surge of initiatives around branded calling indicates that the phone call is receiving much-needed upgrades. While call volume may be decreasing, the value of, particularly, inbound calls is increasing.
Overall Bandwidth expects to end the year at $590M revenue with stable gross margins and predictable FCF. Not a bad way to end a tough year.
Proof WhatsApp is Eating Your Lunch
Speaking of big numbers, here's one: $360 million. That's what one trade group estimates the top three Indian cellular network operators have lost to WhatsApp when it comes to enterprise messaging.
The operators blame Amazon and others for bypassing so-called legal routes of messaging and going to OTT apps, and are asking the TRAI (the Indian equivalent of the FCC) to intervene.
With a combined revenue of $8.4 billion, Reliance Jio, Bharti Airtel, and Vodafone Idea are hardly struggling startups trying to eke out a living. So, when they ask the regulator to jump in and help with marketplace imbalance one has to take notice.
As I said last week, WhatsApp is coming for text messaging's lunch. Apparently, it's already stealing it in India.
A Must-Read Post Mortem
As COO, I’ve authored or approved many public post-mortem reports to explain why things went wrong. Cloudflare’s Control Plane and Analytics Outage post mortem is endorsed by none other than DevOps guru Gene Kim.
The document is not lacking for details and yet doesn’t overwhelm with minutiae. It is a 12 minute read, but the paragraphs are short and the sentences engaging. The structure is much like the “What—So What—Now What” model. It respects the reader’s time and yet takes the time to explain the issue. This is fundamentally hard for it requires patience, thoughtfulness, and teamwork.
The more catastrophic the failure the more complex the root cause. Storytelling is the best way to convey such complex-causal scenarios. The document is a good example of weaving a narrative, stating the facts, not throwing anyone under the bus, and not hiding behind platitudes. Well done.
My Best Advice — Huggy Rao
This week’s MBA comes from none other than Stanford’s Huggy Rao. When it comes to scaling organizations, Huggy taught me that it is entirely acceptable and necessary to treat every individual in an organization with empathy, dignity, and respect, while simultaneously applying a scientist’s rigor, discipline, and appetite for experimentation to building and scaling organizations.
Link to Advice: https://tjthinakaran.blog/my-best-advice-huggy-rao/
Link to latest book: https://www.amazon.com/dp/1250284414
Thank you for reading and have a great week!
TJ