Twilio Commits To Channel Strategy Amid 3rd Round Of Layoffs
Twilio ‘underachieved on growth’ and will take ‘some steps to create a more effective GTM motion for Flex and recalibrate our investments in Segment,’ CEO Jeff Lawson says.
Twilio plans to cut about 5 percent of its workforce, about 300 people, citing underperformance in its Data & Applications business.
In a letter to employees included with regulatory filings Monday, Jeff Lawson – CEO and co-founder of the San Francisco-based communication tools vendor – said Twilio “made tremendous progress in Communications, even overachieving on our goals.”
But in its TD&A segment, the vendor “underachieved on growth” and will take “some steps to create a more effective GTM motion for Flex and recalibrate our investments in Segment,” Lawson said. Segment is Twilio’s customer data platform (CDP) product. Flex is the vendor’s digital engagement offering.
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Twilio Layoffs
In a statement to CRN, a Twilio spokesperson said that despite the layoffs, “Our channel strategy does not change with today’s announcement.”
“Our partners play a critical role in the success of Twilio,” according to the statement. “And, we will continue to support growing our partner community.”
The spokesperson declined to say how many partners Twilio has.
In the letter, Lawson admitted that recent investment in Twilio Segment “hasn’t led to the growth outcome we’d hoped for.”
“As a result, we’re simply spending too much. So we’ve made the hard decision to eliminate some of our Segment GTM roles - right sizing the investment for the results we’re seeing,” he said.
The layoffs hit go-to-market (GTM), marketing and finance roles in Flex and Segment.
“The decision to eliminate these roles was a hard one, but we’re confident it’s in the best interest of our customers and the long-term health of our business,” Lawson said. “At the same time, we’re opening up more AE (account executive) roles inside of Communications and I encourage all sellers impacted by these changes to apply.”
Twilio expects to spend between $25 million and $35 million on the layoffs, according to a regulatory filing. Most of those charges will come in the fourth quarter of 2023 and finish the following quarter. The vendor maintained its forecasted performance for the fiscal year, which ends Dec. 31.
Twilio’s stock price of about $67 a share was about flat from Friday market close to Monday afternoon Eastern time.
Twilio GTM Changes
Lawson said he believes Segment is “a great product with amazing potential” and that the vendor’s “CustomerAI vision is resonating in the market.”
As part of the changes, Twilio will consolidate Flex’s go-to-market motion into its Communications segment and eliminate “many Flex GTM roles.” Account executives will sell Flex alongside other contact center products, and Flex research and development (R%D) will move into Communications.
This move comes because the vendor saw an overlap in Flex sales and Communications products. “We want to simplify the experience for our customers,” Lawson said.
The regulatory filing said that Twilio will also report Flex revenue as part of the Communications segment.
Twilio will also end-of-life (EOL) its Programmable Video as a standalone product.
“Given it’s such a niche area and a relatively small part of our portfolio, we believe partnering with video industry leaders is the best way to ensure long-term product innovation for our customers,” Lawson said. “Removing Programmable Video from our portfolio will also allow Communications to more effectively focus on our pillar products - Messaging, Voice, and Email.”
Activist investors including Anson Funds and Legion Partners have pushed the vendor to sell the entire company or divest the TD&A unit, according to CNBC.
Twilio most recently reported quarterly earnings on Nov. 8. The vendor saw about $1 billion in revenue during the quarter, up 5 percent year over year. It also increased expected full-year revenue to $475 million to $485 million, according to a statement from the time.
Communications revenue grew 5 percent year over year to $906.7 million during the quarter. TD&A grew 9 percent year over year to $127 million.
It reported $109 million in operations loss, a 76 percent improvement year over year. Twilio also announced the resignation of TD&A President Elena Donio effective Dec. 15, serving an advisory role until the first quarter of 2024, with Lawson himself running the unit until a replacement is found.
On the November earnings call, Lawson told listeners that a global system integrator (GSI) partner helped with winning a deal. He thought this was “a repeatable partner model and look forward to continuing to invest in our partner ecosystem around Segment,” according to a call transcript.
Third Round Of Twilio Layoffs
In February, the vendor laid off 17 percent of its workforce – about 1,400 employees – and Lawson cut his base salary by almost half – down to $65,535, effective March 1.
In September 2022, the vendor laid off about 11 percent of the workforce – as many as 900 employees – with Lawson saying the company grew “too fast.”
Twilio isn’t alone in turning to layoffs in a period of high inflation in the U.S. and measured customer tech purchasing since a high at the peak of the global pandemic, a trend that has hit vendors and solution providers. Exabeam, Hewlett Packard Enterprise (HPE) and VMware are among vendors that recently conducted layoffs.
On LinkedIn, multiple users posted about Twilio laying them off.
Some of those users include:
*A Flex AE with the company for about two years
*A Segment developer advocate with the company for about two years
*A Segment enterprise business developer with the company for about two years
*A level three technical support engineer