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While the fundamentals across the cohort companies held steady, yet with the exception of Twilio and CM.com, valuation multiples were down across the board. It’s a sign that the market is punishing any company facing growth, pricing, or margin pressures. While Twilio and CM.com were the only two that improved their quarter-over-quarter (QoQ) valuation, they did so for very different reasons.
A Simple Signal from a Noisy Market
What is the market willing to pay for these companies, and why? While each company attracts a different investor base, how their investors answer that question reveals just as much about the sector as it does the stock. That’s what I care about.
Disclaimer: This is not stock advice. Everything about the messaging business interests me, including asset pricing. Use your judgment to invest your money.
People vote with their pocketbook, and that pocketbook is blunt, ruthless, and mercurial. It reflects how the investor feels about the economy and where the company fits in their portfolio at that moment.
I can’t control the macro factors, but I can try to correct for some of the emotional bias in the moment. I wait a few days after earnings so the market has time to absorb the earnings report. By then, the good, the bad, and the unknowns are digested, and the stock price sits closer to asset value.
Valuation Methodology: Unless otherwise stated, the multiple referred to throughout this update is the Market Cap to Trailing Twelve Months (TTM) Revenue multiple.
The snapshot reflects closing prices as of November 13, after every company (except Braze) had reported earnings. It’s a lagging indicator—less about the quarter itself and more about how investors recalibrate confidence once the dust settles. Think of it as sentiment aftertaste.
This time, I’m not awaiting Braze’s results. The December release date is just too late in the year. Should Braze move up its earnings date just for me? A boy can dream. In the meantime, we can put an asterisk next to its valuation and still have a substantive conversation.
The Year-End Gameboard
Twilio got rewarded for keeping up its say/do ratio. Its multiple increased 12% to 4.0x, and its market cap rose 16%, a reminder that markets reward predictability. Klaviyo dropped to an 8.0x multiple, down 10% from last quarter and 14% from Q1, as investors reset expectations after a year of elevated growth. It still has the highest valuation multiple in the group, proving that high growth is still rewarded, but a drop in growth rate is asymmetrically punished. Braze tracks to Klaviyo and the broader martech sector. It too saw a 11% decline.
Twilio, Klaviyo, and Braze are also members of the BVP Nasdaq Emerging Cloud Index, which itself is down 6.8% for the year. In that light, Twilio’s performance is even more impressive.
CM.com is subject to an unfriendly acquisition offer from Bird, which offered a 20% premium on the company’s November 4 close price. Naturally, a premium offer results in a price bump.
Before that offer however, CM.com stock saw a 20% post-earnings drop. Management has reiterated that the company is not for sale, and there is also conjecture about how serious Bird’s offer is, but as this snapshot stands, the stock is still up, and not because of anything CM.com did.
Moving past the one-off M&A catalyst, the remaining CPaaS cohort shows the consistent application of market punishment.
Sinch, Bandwidth, and Tanla all declined between 7% and 8%. Sinch held at a 0.9x multiple on 2.8B in revenue, Bandwidth remained at 0.6x despite 756M in revenue, and Tanla settled at 1.9x after an 8% contraction. Tanla took a hit early in the year, but it looks like it has found its footing again. These three show the same pattern we’ve seen all year: steady operators with clear discipline who continue to trade near or below 1x revenue. The penalty tied to debt and NDR softness remains outsized compared with the operating progress they’ve made. For example, Bandwidth’s double-digit growth and raised rest-of-year forecast still weren’t enough to change the revenue discount the market applies. Ouch.
The sharpest pullbacks came from LINK and Route Mobile. LINK’s multiple fell 18% after its Q2 surge, and Route declined 18% with a 20% drop in market cap. Both companies ran into the same problem: pricing pressure abroad and thinner margins at home, which is enough to turn sentiment fast.
Finally: What Makes Twilio Special?
As it stands, Twilio is the only one that increased its valuation this quarter. Is it growth? That prize goes to Klaviyo with north of 30%. Is it profitability? Sinch, LINK, Tanla, and Route all reported GAAP operating profits higher than Twilio. In fact, LINK had the largest at ~16%. Is it predictability? Perhaps. Twilio has committed to double-digit organic growth for the next two to three years.
And I think that’s the key differentiator when it comes to managing the market. You have to manage expectations. Promise too much and you risk disappointing and getting whipped. Overdeliver by too much and you get accused of sandbagging. The market raises its consensus, and you get punished for not meeting its self-generated targets. It requires steadfast long-term vision but also superb tactical judgment. When it comes to the stock price, for example, Twilio’s buyback is the most aggressive and expansive in the cohort. It’s a strong declaration of its confidence in its own future but also a hedge against shareholder pressure.
Of course, all this can change quickly. It wasn’t long ago that Twilio got pummeled and had to go through several painful reorgs, not to mention a CEO change. But based on this snapshot, and at the time of this writing, it does look like it’s turned the corner, learned its lesson, and is proving to the market that it’s a premium-worthy investment. In that sense, valuation isn’t a price or a scorecard as much as it is a confidence index in both the company’s and the sector’s future.