H2: Twilio Announces Layoffs

H2: Company’s Decision and Response

Twilio, a prominent software provider, declared that it would initiate layoffs affecting approximately 5% of its workforce. This decision comes in response to underachievement in the growth of a particular unit which activist investors have targeted. The company opted for this course of action despite the fact that its shares remained flat on the stock market.

H3: Impact and Disclosure

The cuts, as confirmed by Twilio, will result in restructuring charges ranging from $25 to $35 million. Although the company has reaffirmed its guidance for the upcoming fourth quarter and the entire year, it is expected that about 300 employees will feel the weight of the downsizing. This number is based on Twilio’s headcount in its recent regulatory filings.

H3: Broader Plan

In a letter from CEO Jeff Lawson, it was revealed that the layoffs are part of a larger plan to streamline Twilio’s offerings. The company is also sunsetting its Programmable Video product as part of this strategy. The cuts will have the greatest impact on Twilio’s Data and Applications unit, which is the same unit that activist investors at Legion Partners and Anson Funds are urging Twilio CEO Jeff Lawson to divest.

H3: Controversy and Actions

Twilio has now conducted three rounds of layoffs in slightly over a year. Despite the company’s previous layoffs, Legion believes more jobs can be cut. 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.

H3: Shareholder Pressure and Investment Outlook

Anson and Legion have both acquired individual stakes of around $50 million and are reportedly pushing for management changes at the company. The activists are also pushing for Twilio to sell the Data & Applications unit, if not the whole company.

H3: Conclusion

Twilio makes software that helps businesses contact customers and has also developed or acquired tools that help businesses analyze and improve their customer relationships. The company was founded in 2008 and saw its initial public offering in 2016. Despite the controversy and layoffs, Twilio’s stock remains up about 36% year-to-date.