Twilio to Lay Off 5% of Workforce, Under Pressure from Activist Investors
Software provider Twilio announced Monday that it would be laying off roughly 5% of its workforce, amounting to about 300 employees, due to the underperformance of a unit that activist investors have targeted. The news led to a .5% drop in the company’s shares. Twilio is expecting to incur restructuring charges ranging from $25 to $35 million.
Jeff Lawson, the CEO of Twilio, explained that the layoffs are part of a broader effort to streamline the company’s offerings. This will also involve sunsetting Twilio’s Programmable Video product. The cuts will particularly impact Twilio’s Data and Applications unit, the same unit that activist investors at Legion Partners and Anson Funds have been pushing the company to divest. Anson Funds declined to comment on the matter.
This is not the first time Twilio has made such a move. It has executed three rounds of layoffs in just over a year, including a 17% cut in February, which involved approximately 15% of its workforce. However, according to Legion, more job cuts could be in the cards.
The company also plans to change how it sells its Flex digital engagement product, by eliminating “many” Flex sales positions and integrating those responsibilities into the existing Communications sales team. Lawson mentioned that the decision to invest, ahead of growth, in go-to-market for Segment had not led to the desired growth outcome.
Twilio acquired Segment in a $3.2 billion all-stock deal in 2020. Anson and Legion, with individual stakes of around $50 million each, are urging Twilio to sell the Data & Applications unit, if not the entire company. They are also reportedly pushing for management changes at the company.
Twilio, founded in 2008, helps businesses to contact, analyze, and improve customer relationships. The company went public under Lawson’s leadership in 2016. Although Twilio’s share price has surged 36% year-to-date, it still remains well below its 2021 highs. It is worth noting that in the face of growing pressure from activist investors, Twilio remains confident in its guidance for the upcoming fourth quarter and the full year.
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