Twilio to lay off roughly 5% of its workforce
Software provider Twilio said Monday it would lay off roughly 5% of its workforce citing underachievement in the growth of a unit that activist investors have targeted.
Shares are down about .5% on the news, and the company expects to take restructuring charges ranging from $25 to $35 million. It reaffirmed its guidance for the upcoming fourth quarter and the full year. The cuts will impact around 300 employees, a person familiar with the matter said.
**Restructuring Plan**
According to a letter from CEO Jeff Lawson attached to a regulatory filing, the cuts are part of a broader plan to streamline Twilio’s offerings. The company is also sunsetting its Programmable Video product as part of the plan.
The cuts will strike deepest in Twilio’s Data and Applications unit, the same unit activist investors at Legion Partners and Anson Funds are pushing Twilio CEO Jeff Lawson to divest. A spokesperson for Anson Funds declined to comment.
Twilio has now executed three rounds of layoffs in slightly more than a year. Twilio cut 17% of its workforce, or about 15% of its employees, in February. Still, Legion believes the company can cut more jobs, a person familiar with the fund’s position told CNBC.
**Changes in Offerings**
Lawson said in his letter that Twilio will also change how it sells its Flex digital engagement product. The layoffs will eliminate “many” Flex sales positions and fold those responsibilities into the existing Communications sales team, Lawson said.
“Last year, we made the decision to invest, ahead of growth, in go-to-market for Segment,” Lawson said in a letter to staff, referring to a Twilio offering that is part of its Data and Applications group. “Unfortunately, that bet hasn’t led to the growth outcome we’d hoped for.”
Twilio acquired Segment in a $3.2 billion, all-stock deal in 2020.
Anson and Legion have pushed Twilio to sell the Data & Applications unit, if not the whole company. Anson and Legion have both amassed individual stakes of around $50 million, according to people familiar with the matter and regulatory filings.
**Activist Campaign**
The activists are also reportedly pushing for management changes at the company.
Twilio makes software that helps businesses contact customers. The company has also built or acquired tools that help those businesses analyze and improve their customer relationships. It was founded in 2008 and went public under Lawson’s leadership in 2016.
The company’s share price remains well off 2021 highs, when it soared with the broader tech industry. Twilio stock is up about 36% year-to-date.
**Conclusion**
While Twilio remains confident in its future and has reaffirmed its guidance for the upcoming quarter and full year, the deepening activist campaign and ongoing struggles in certain business units are raising concerns in the market and among investors.
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