Twilio has announced a third round of layoffs in 15 months, which will impact five percent of its workforce – equating to around 295 employees.
Those affected employees – who have now received the news – work in Twilio’s Flex and Segment go-to-market (GTM) teams – alongside some of their supporting functions.
According to Jeff Lawson, Co-Founder and CEO of Twilio, the support functions primarily impacted will be marketing and finance.
Lawson made the revelation in a letter attached to a regulatory filing, noting that the cuts are part of a continued effort to streamline Twilio’s offering.
That aligns with the reasoning behind the previous round of job cuts in February when the vendor laid off 17 percent of “Twilions”.
Those followed an 11 percent staff reduction in September 2022.
Digging deeper into the cause of the latest round of layoffs, Lawson wrote:
Last year, we made the decision to invest, ahead of growth, in go-to-market for Segment. Unfortunately, that bet hasn’t led to the growth outcome we’d hoped for. As a result, we’re simply spending too much.
Recent Twilio earnings support these claims, with the vendor recording a GAAP loss from operations of $108.9MN in Q3 of 2023.
While that is down from $457.0MN in the same quarter of 2022, it’s still far from sustainable. As such, further layoffs appear almost unavoidable.
That said, Twilio has taken several other cost-cutting measures in the past 15 months.
For instance, it ditched Zipwhip, sold its IoT arm, and – in July – divested its ValueFirst business.
However, all these actions haven’t pulled Twilio back to profitability, provoking further layoffs – alongside the decision to end-of-life Twilio’s Programmable Video as a standalone product, which Lawson claims is too “niche”.
Those impacted by the layoffs will receive 12 weeks of base pay plus an additional week for every year of completed service.
Twilio to Change How It Sells Flex
Twilio fell into its third round of layoffs after Segment and Flex failed to drum up business en-masse.
Again, this is evident in Twilio’s latest earnings release.
Indeed, its communications business contributed $906.7MN to overall Q3 revenues. Meanwhile, its data & applications business – which includes Flex, Segment, and more – added $127.0MN.
Those results underline Twilio’s difficulty in expanding on the business it consistently lands and luring existing communications customers into investing in its data & applications offerings too.
To change that, Lawson let loose his plan to change how Twilio sells Flex – its CCaaS platform – pulling it into the fold of its more successful communications business.
“We’ve seen an overlap between our Flex sales motion and many of our Communications products,” said Lawson.
“Given the similar buyer personas and product synergies between voice, IVR, and Flex, we want to simplify the experience for our customers.”
So, we’re consolidating Flex GTM into Communications and eliminating many Flex GTM roles.
Now, account executives in communications may sell Flex, alongside Twilio’s other contact center products in prepackaged bundles – “aligned with how customers want to buy”.
Lawson continued: “Flex R&D will also move intact to communications to keep product development close to our customer-facing teams.”
Such a move may help Twilio connect its CX applications and introduce additional products to existing customers in a more compelling way.
Twilio’s recent CustomerAI innovation is another example of how the vendor is starting to do this – and the change in strategy with Flex is another necessary move to connect the dots in its portfolio.
However, some may take a more sinister view and suggest that the move is an opportunity to divest much of its data & applications portfolio – as activist investors recently encouraged.
Lawson, though, seems confident in his game plan. “I believe we are increasingly set up to balance the needs of profit and growth and enabled to execute on the CustomerAI opportunity ahead of us,” he concluded.
