Twilio just announced that it will be conducting a round of layoffs that will impact around 17% of its global workforce. The company will also restructure its internal organization and create two business units — Twilio Communications and Twilio Data & Applications.
Today’s news must be particularly difficult for Twilio employees as the company already conducted a round of layoffs in September, 2022. At the time, the company announced that it would lay off 11% of its staff.
According to Twilio’s latest earnings release, the company had 8,992 employees as of September 30, 2022 and expected to lay off 816 employees for the 2022 round of layoffs. Based on these figures, around 1,400 people will be impacted by this year’s layoffs.
“We have to spend less, streamline, and become more efficient. To do that, we’re forming two business units: Twilio Communications and Twilio Data & Applications. And today, I’m unfortunately bearing the news that we’re parting ways with approximately 17% of our team,” Twilio co-founder and CEO Jeff Lawson wrote in an email sent to all Twilio employees.
While Twilio started with application programming interfaces (APIs) that let you send and receive phone calls and text messages, the company has expanded its product portfolio through several acquisitions and product developments. For instance, Twilio acquired Segment to move deeper into marketing data and customer engagement services in general. According to the company’s CEO, these products haven’t reached the same maturity level.
“In Communications, we have to get more efficient. For Segment, Flex, and Engage, we must accelerate growth. These are distinctly different tasks for our teams, and our current structure is slowing our progress toward both these goals, which are critical to our growth, our profit, and our Customer Engagement Platform ambitions,” Lawson wrote.
Each business unit will have its own CEO — Elena Donio for Data & Applications, and Khozema Shipchandler for Communications. Each division will also have its own sales, R&D and admin resources. With this clear line, it becomes easier to conduct different strategies for each part of the business.
In particular, the Communications side of the business seems to be particularly affected by today’s layoffs. “When we look at these two business units on their own, it’s clear that we’ve gotten too big, especially in Communications. And that’s why we’re also letting go of some colleagues today,” Lawson wrote.
Affected employees will receive 12 weeks of base pay plus one week for every year of service, as well as health coverage and career resources. The company is also ending some benefits, such as book and wellness allowances as well as Twilio Recharge — a four-week paid sabbatical that employees would get every three years.
“We’ve also decided to sunset Twilio Recharge, which I believe in, but which (in retrospect) was ill-timed given our profitability goals,” Lawson wrote.
Paperwork filed with the U.S. Securities and Exchange Commission shows that the board will lower Jeff Lawson’s annual base salary from $134,000 per year to $65,535. Twilio expects to spend $100 to $135 million in charges related to the workforce reduction. There will be additional costs associated with office closures.
Twilio shares are currently trading up 2.8% compared to Friday’s closing price. The company is going to announce its fourth quarter earnings in a couple of days.