Twilio Inc. CEO Jeff Lawson announced that the software provider would be laying off approximately 5% of its workforce due to underachievement in the growth of a targeted unit by activist investors. The news caused the company’s shares to fall by about 0.5%.
The company expects restructuring charges ranging from $25 to $35 million. The layoffs will affect roughly 300 employees, and the company reaffirmed its guidance for the upcoming fourth quarter and the full year.
According to a letter from CEO Jeff Lawson, the layoffs are part of a broader plan to streamline Twilio’s offerings, including sunsetting its Programmable Video product. The cuts will mainly impact Twilio’s Data and Applications unit, which activist investors are pushing the company to divest. This marks the third round of layoffs in just over a year for Twilio.
Lawson also announced that Twilio would change how it sells its Flex digital engagement product. The company made significant investments in go-to-market for Segment last year, but the bet did not lead to the growth outcome they hoped for.
Activist investors Anson Funds and Legion Partners have amassed individual stakes in Twilio of around $50 million and are reportedly pushing for management changes and potentially the sale of the Data & Applications unit or the whole company.
Twilio, founded in 2008, provides software that helps businesses contact customers and analyze customer relationships. The company has seen its share price remain below 2021 highs, despite a 36% year-to-date increase in its stock.
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