Twilio lets go 17% of employees in latest workforce reduction
Twilio Inc today announced that it will lay off 17% of its employees to cut costs.
The layoffs come four months after an earlier one round of downsizing As a result, the company reduced its workforce by 11%. The move left Twilio with approximately 8,176 employees disclosed in November. That suggests the latest layoffs announced today will affect about 1,400 employees.
NYSE-listed Twilio sells cloud services that allow developers to embed voice and video communications capabilities into their software. In recent years, the company has also expanded its focus to other markets. In addition to its core services, it now sells contact center management software, marketing analytics tools, and related products.
Strong demand for Twilio’s products helped the revenue beat consensus estimates third quarter. The company’s revenue increased 33% year over year to $983 million in the three months ended September 30. However, the revenue guidance fell short of expectations, causing the stock price to plummet 34% on the day of the earnings report.
“Over the past 15 years, we’ve built Twilio for growth, building a tremendous customer base, product line and revenue base,” Jeff Lawson, Twilio’s co-founder and chief executive officer, wrote in a memo to employees today. “We leave the last phase with a great market position and very strong cash reserves, but unfortunately this is not enough to take us through the next phase. We need to spend less, streamline and become more efficient.”
Lawson explained that Twilio’s newly announced downsizing comes with an update to its organizational structure.
The company will organize its products into two new business units: Twilio Communications and Twilio Data & Applications. The former entity will be responsible for the company’s communications services, while the latter will manage the Segment, Flex and Engage applications. Segment and Flex are used by marketing teams to develop personalized promotions, while Engage is a contact center management platform.
“As we have refined our strategy over the past few months, it has become clear that we need significant structural changes to better execute our strategy,” Lawson said. “That’s because the two parts of our business – communications and software – are at different lifecycle stages and have different operational needs. We have to become more efficient in communication. At Segment, Flex and Engage we need to accelerate growth.”
Twilio employees affected by the layoffs will receive 12 weeks of severance pay and an additional week of salary for each year they spend with the company. It will also provide ongoing healthcare, career resources and other support, as well as the full value of its February 15 stock transfer.
In addition to reducing headcount, Twilio is taking other steps to reduce costs. The company plans to phase out certain employee benefits and close some offices. According to Lawson, Twilio plans to have “at least a handful of global hubs and satellite offices” after the initiative is complete.
Twilio is expected to report its fourth-quarter financial results on Wednesday. The company’s guidance for the quarter, released in November, calls for an adjusted net loss of six to 11 cents a share on sales of between $995 million and $1.005 billion. Twilio specified in August that it hoped to become profitable by the end of 2023.