Jeff Lawson, CEO of Twilio, in the course of the Singapore FinTech Festival in Singapore on Nov. 17, 2023.
Lionel Ng | Bloomberg | Getty Images
Software provider Twilio said Monday it might lay off roughly 5% of its workforce citing underachievement in the expansion of a unit that activist investors have targeted.
Shares closed up somewhat greater than 1% Monday. The corporate expects to take restructuring charges ranging between $25 million and $35 million. It reaffirmed its guidance for the upcoming fourth quarter and the complete 12 months. The cuts will affect about 300 employees, based on Twilio’s headcount in its recent regulatory filings.
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 corporate can be sunsetting its Programmable Video product as part of the plan.
The cuts will strike deepest in Twilio’s Data and Applications unit, the identical unit activist investors at Legion Partners and Anson Funds are pushing Lawson to divest. A spokesperson for Anson Funds declined to comment.
Twilio has now executed three rounds of layoffs in barely greater than a 12 months. Twilio cut 17% of its workforce, or about 15% of its employees, in February. Still, Legion believes the corporate can cut more jobs, an individual accustomed to the fund’s position told CNBC.
A Twilio spokesperson declined to comment on shareholder input within the restructuring plan, which the corporate called the “December Plan” in a Securities and Exchange Commission filing.
Lawson said in his letter that Twilio will even change the way it sells its Flex digital engagement product. The layoffs will eliminate “many” Flex sales positions and fold those responsibilities into the present Communications sales team, Lawson said.
“Last 12 months, we made the choice 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 a component of its Data and Applications group. “Unfortunately, that bet hasn’t led to the expansion consequence we would 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 and Applications unit, if not the entire company. Anson and Legion have each amassed individual stakes of around $50 million, according to people accustomed to the matter and regulatory filings.
The activists are also reportedly pushing for management changes at the corporate.
Twilio makes software that helps businesses contact customers. The corporate 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 corporate’s share price stays well off 2021 highs, when it soared with the broader tech industry. Twilio stock is up about 36% 12 months to date.
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