The world economy is rapidly changing as mobility increases in importance for individuals and businesses alike. Statistics provider Statista estimates that the 7 exabytes of global mobile data transmitted each month in 2016 will grow to 49 exabytes each month by 2021.
Mobility isn’t all about communicating via a smartphone, however. At the forefront of the boom in data are tech companies that are rethinking the way we participate within our environment and exchange data and ideas with each other. Three of these companies are Twilio (NYSE: TWLO), Atlassian (NASDAQ: TEAM), and Teladoc (NYSE: TDOC).
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Building blocks for new means of communication
First up is Twilio, a cloud-based toolkit for software developers to integrate customer-facing experiences into business websites and apps. While you may have never dealt with Twilio directly, lots of companies like Lyft, Nordstrom, Dell, and Yelp have tapped the tech outfit to stay in touch with consumers. Those solutions take the form of smarter call centers, automated text messages, and real-time communications via company-specific apps.
Between its initial public offering in 2016 and the beginning of 2018, Twilio didn’t have the greatest of stock runs. Shares are up nearly 170% year to date, however, closing in on the all-time highs reached shortly after the company’s debut. This year’s advance is all about revenue growth. First-quarter sales were up 48% year-over-year, and 12% sequentially from the final quarter of 2017.
New customer additions as well as expanded relationships with existing ones have helped Twilio grow, and the company continues to innovate and improve its offerings with services like artificial intelligence (AI) to keep that trend rolling. For example, Twilio recently announced integration with Alphabet‘s Google Cloud Contact Center AI. If Twilio can keep delivering new and improved ways for businesses to stay in touch with customers, the growth runway ahead looks quite long.
Teamwork takes a new form
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Atlassian’s focus on communication has been more interpersonal. In the contemporary digitally-focused workplace, it’s not uncommon for members of a team to work remotely from each. Atlassian builds software to help teams collaborate more efficiently. The company has service packages for all types of business teams and boasts thousands of apps to help those teams customize the experience to their preferences.
Digital collaboration tools have been in high demand, as Atlassian’s performance testifies. Since it went public at the end of 2015, the company’s stock is up 140%, and annual sales have doubled to over $800 million. During Atlassian’s last quarter, over 6,000 net new customers were added, bringing the total company customer count to just over 119,000.
Atlassian recently hit the road with a global tour of 11 cities to promote its teamwork-boosting software, and it’s reported that word-of-mouth sales have also been an important factor in its success. As the world goes digital, the company is helping solve problems like team isolation and loss of productivity. Such services resonate with customers, and the company looks like it will continue to deliver further expansion in the years ahead.
The doctor comes to you — but not the old-fashioned way
Visiting the doctor can be an unpleasant and inconvenient trip. Teladoc agrees, so it created a platform for people to visit a healthcare professional via phone, internet video, or mobile app. That’s a great service for patients, but it’s helping insurers save money, too.
Thus, Teladoc’s tailwinds are coming from two sources: consumers who demand more convenience, and insurance companies and businesses seeking to save some money from ballooning healthcare costs. The company achieved organic revenue growth of 47% in the first quarter of 2018, driven by organic paid membership growth of 37% year-over-year. Teladoc counted 20.8 million U.S. members within its service at the end of the quarter. Shares have nearly doubled in 2018 so far.
Teladoc has also been opportunistic in this digital-first health industry. Last year the company purchased peer Best Doctors, and more recently it acquired international healthcare provider Advance Medical. As a result, Teladoc is now the largest telehealth provider in the world, and it has plenty of room to expand as more patients and insurance companies make the switch from physical to virtual communication.
Investor takeaway
Twilio, Atlassian, and Teladoc are all delivering growth for investors, but it’s important to bear in mind that none of them are profitable yet. Instead, their bottom lines are being sacrificed to drive further growth. For Teladoc, operating margin has been slowly climbing out of the red, whereas Twilio and Atlassian have dipped further into their operating profits in recent years to fund more sales:
Eventually, additional sales should translate into more profits, once the management teams of these companies individually conclude that growth mode is complete. In the meantime, investors should be prepared for a volatile ride, and should keep their bets small on these innovators in communication services.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Nicholas Rossolillo owns shares of GOOGL, GOOG, and Teladoc. The Motley Fool owns shares of and recommends GOOGL, GOOG, Atlassian, and Twilio. The Motley Fool recommends JWN, Teladoc, and YELP. The Motley Fool has a disclosure policy.
