Cloud communications company announces restructuring plan to improve profitability and efficiency
Twilio, a leading cloud communications platform that provides software tools for developers to build and integrate voice, video, messaging, and email applications, said on Tuesday that it plans to reduce its global workforce by about 5%, or around 400 employees, as part of a restructuring plan to improve its profitability and efficiency.
The company, which has more than 8,000 employees across 25 offices worldwide, said the move was necessary to align its resources with its long-term strategic priorities and to optimize its cost structure amid slowing revenue growth and rising operating expenses.
Twilio’s CEO and co-founder Jeff Lawson said in a blog post that the decision was “incredibly difficult” and that the company would provide “generous” severance packages and outplacement support to the affected employees.
“We are making these changes to position Twilio for long-term success and to ensure we remain a durable, profitable, and high-growth business for decades to come,” Lawson wrote.
Twilio faces challenges from competition, inflation, and cyberattack
Twilio’s announcement comes as the company faces several challenges in the highly competitive and fast-changing cloud communications market, where it competes with rivals such as Amazon Web Services, Microsoft, Google, and Zoom.
The company, which went public in 2016 and has a market value of about $40 billion, has seen its revenue growth rate decline from 65% in 2020 to 41% in the second quarter of 2022, the lowest since the fourth quarter of 2017.
The company also reported a net loss of $164 million in the second quarter, compared to a net income of $99 million in the same period a year ago, as its operating expenses surged by 58% year-over-year, mainly due to higher sales and marketing, research and development, and general and administrative costs.
Twilio also faced a cyberattack in August that compromised the data of about 163 customers, including names, email addresses, phone numbers, and billing information. The company said it notified the affected customers and authorities and launched an investigation into the incident.
In addition, Twilio has been impacted by the global inflationary pressures and the rising cost of capital, which have eroded its margins and profitability. The company said it expects its gross margin to decline by about 2 percentage points in the third quarter, partly due to the higher costs of cloud infrastructure and network services.
Twilio aims to boost growth and innovation with new products and acquisitions
Despite the challenges, Twilio remains optimistic about its future prospects and opportunities in the cloud communications market, which is expected to grow from $26 billion in 2020 to $72 billion in 2025, according to a report by MarketsandMarkets.
The company said it is focused on launching new products and features, expanding into new geographies and verticals, and acquiring complementary businesses to enhance its offerings and capabilities.
Some of the recent examples of Twilio’s product innovation and expansion include:
- Twilio Live, a new platform that enables developers to create, manage, and monetize live audio and video streaming experiences for web and mobile applications.
- Twilio Segment, a customer data platform that helps businesses collect, unify, and act on customer data across multiple channels and touchpoints.
- Twilio Flex, a fully programmable cloud contact center platform that allows businesses to customize and optimize their customer interactions and workflows.
- Twilio Frontline, a mobile app that connects frontline workers with customers and internal teams via chat, voice, and video.
- Twilio IoT, a platform that simplifies the development and deployment of Internet of Things (IoT) solutions that leverage cellular connectivity and cloud communications.
Twilio has also been active in acquiring other companies to bolster its portfolio and reach. In the past year, the company has acquired Zipwhip, a business texting platform; ValueFirst, an Indian SMS and voice communications provider; and Syniverse, a mobile network services company.
Twilio said it expects to generate revenue of between $740 million and $750 million in the third quarter of 2022, representing a year-over-year growth of 35% to 37%. The company also reiterated its full-year revenue guidance of between $2.9 billion and $2.93 billion, implying a growth of 38% to 39%.
