Twilio Inc. today announced that it will let go 17% of its employees in an effort to lower costs.
The layoffs come four months after an earlier round of job cuts that saw the company reduce its headcount by 11%. The move left Twilio with about 8,176 staffers, it disclosed in November. That suggests the latest layoffs announced today affect about 1,400 employees.
NYSE-listed Twilio sells cloud services that enable developers to embed voice and video communications features into their software. In recent years, the company has also expanded its focus to other markets. Alongside its core services, It now sells contact center management software, marketing analytics tools and related products.
Strong demand for Twilio’s products helped it top the consensus revenue estimate in the third quarter. The company’s sales grew 33% year-over-year, to $983 million, during the three months ended Sept. 30. But its revenue forecast fell short of expectations, which sent its stock price plummeting 34% on the day of its earnings report.
“For the last 15 years, we ran Twilio for growth, building a tremendous customer base, product set, and revenue base,” Twilio co-founder and Chief Executive Officer Jeff Lawson wrote in a memo to employees today. “We’re exiting the last phase with a great market position, and very strong cash reserves, but unfortunately that’s not enough to get us through the next phase. We have to spend less, streamline, and become more efficient.”
Lawson detailed that Twilio’s newly announced workforce reduction is connected 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 unit will be responsible for the company’s communications services, while the latter will manage its 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’ve refined our strategy over the past several months, it’s become apparent we need significant structural changes to better execute our strategy,” Lawson detailed. “This is because the two parts of our business – communications and software – are at different lifecycle stages and have different operating needs. In Communications, we have to get more efficient. For Segment, Flex, and Engage, we must accelerate growth.”
Twilio employees affected by the layoffs will receive 12 weeks of severance pay and one additional week of pay for every year spent at the company. It will also offer continued healthcare coverage, career resources and other support, as well as the full value of its Feb. 15 stock vesting.
In addition to reducing its headcount, Twilio is taking other steps to reduce costs. The company plans to phase out certain employee benefits as well as shutter some offices. According to Lawson, Twilio plans to maintain “at least a handful of global hubs and satellite offices” after completing the initiative.
Twilio is set to report its fourth-quarter financial results on Wednesday. The company’s forecast for the quarter, which was released in November, projects an adjusted net loss of six to 11 cents per share on between $995 million and $1.005 billion in revenue. Twilio stated in August that it was hoping to become profitable by the end of 2023.