Email API Platforms Gather Steam: VG, TWLO And AMZN In View

The cloud communications market is rapidly evolving and becoming increasingly competitive with players striving hard to gain an edge.

Per IDC, worldwide voice and text messaging communications platform-as-a-service (CPaaS) market is likely to reach a value of $10.9 billion by 2022 from $2 billion in 2017.

As a result, cloud communication providers like Vonage (NYSE:VG) and Twilio (NYSE:TWLO) among others are undertaking key partnerships and also resorting to acquisitions to bring a bouquet of various marketing channels to attract customers.

Notably, despite the growing popularity of video, voice and chat communications, demand for transactional email services is also shooting up. Significantly, email still remains an imperative conduit for businesses to communicate with customers as it aids in more prudently addressing the respective client's engagement strategy.

Given these, demand for email application program interfaces (API) providers like SendinBlue, SendGrid, Amazon’s (NASDAQ:AMZN) Simple Email Service (SES) and Mailgun is shoring up.

Vonage Partners Sendinblue

Recently, Vonage in its bid to bolster the number of communication channels it offers, partnered Sendinblue to add email capabilities to its API platform, Nexmo.

Reportedly, the collaboration with Sendinblue email platform will enable Nexmo to provide businesses with the force to apply programmable capabilities to springboard the email marketing campaigns. Further, it will allow direct exchanges with customers for emergency data or time-sensitive offers. Moreover, Nexmo will deliver as the sole SMS provider for Sendinblue.

In the last reported quarter, Vonage’s API platform delivered adjusted revenue growth of 42%, driven by higher value APIs like voice and video. The import of Sendinblue’s expertise to its portfolio is likely to lend a further stimulus.

Twilio’s Acquisition of Sendgrid — A Key Catalyst

In February 2019, Twilio completed the buyout of SendGrid, the leading email API platform. With this transaction, Twilio’s onmichannel communications capabilities are likely to be strengthened by enhancing its Programmable Communications Cloud software, which allows developers to embed voice, messaging, video and authentication skills.

Through the integration of SendGrid’s services, Twilio expects to add more than half a trillion customer interactions annually to its communications platform.

Notably, Twilio ended the last reported quarter boasting 154,797 active customer accounts with SendGrid contributing more than 84,000 to the count. Moreover, SendGrid boosted gross margins by 300 basis points sequentially.

Thomas Bravo Purchases Mailgun

In April, private equity firm Thoma Bravo purchased a majority stake in Mailgun Technologies, which provides API services for developing email functionality to more than 150,000 customers.

Amazon SES — Smart Warhorse

In 2011, Amazon launched a cloud-based email sending service — Amazon SES — designed to help digital marketers and application developers send marketing, notification and transactional emails.

Amazon SES is a cost-effective service for businesses of all scales that use email to connect with customers. The company boasts clientele like Vodafone (LON:VOD), SIEMENS, HBO and Allergan (NYSE:AGN) among others, per its website.

Amazon’s financial forte coupled with its technical knowhow helps it respond more promptly and adeptly to variable opportunities, technologies, standards or customer needs, which is an alarm bell for players like Vonage and Twilio.

Year-to-Date Price Performance

Twilio, Amazon and Vonage carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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