Twilio has taken a $286MN hit on Segment, the customer data platform (CDP) it acquired in November 2020.
At the time, Twilio plunged $3.2BN into the platform, which became the star attraction of its data & applications business.
There, it sat alongside Flex – the company’s CCaaS platform. However, Flex has since moved to its Communications business, which drives most of Twilio’s revenue.
That leaves Segment a little isolated – alongside only Twilio Engage – and its future under review.
Revealing the Segment’s drop in value, Aidan Viggiano, CFO at Twilio, said: “As a result of Segment’s business performance, we completed an impairment test on the intangible assets we acquired as part of our Segment acquisition.”
An impairment test evaluates the market value of an investment. Viggiano continued:
The test resulted in a $286MN impairment of our developed technology and customer relationship intangible assets.
Yet, alongside Segment, Engage is also underwhelming, and the transfer of Flex perhaps signals that a reckoning for the data & analytics business is coming close.
Already, that business has been renamed after the Segment platform – and any decision regarding its future will come after a formal review.
Sharing more about the review, Khozema Shipchandler, CEO of Twilio, stated: “Our Twilio Segment business, formerly Twilio Data and Applications… continues to underperform. Although we drove sequential bookings improvement in Q4, growth is not yet accelerating up to our expectations.
“Over the past five weeks, I’ve been working with the team to conduct an extensive operational review of Segment, and this work is ongoing.
“We plan to do a readout of these results in March, at which time I’ll be ready to share our findings, path forward, and any changes to Twilio’s financial framework as a result.
We need to wrap up our business review of Segment and determine the best path forward that will position Twilio for long-term success while advancing our objective of optimizing profitable growth.
One path forward could be a sale, with activist investors pushing for this in the past.
In doing so, these investors acknowledged the trend of Twilio struggling to cross-sell Segment to its impressive Communications customer base.
CX Today explored this trend in the article: “Twilio Lands Lots of New Customers But Struggles to Expand on Them”.
What Do the Analysts Think?
Zeus Kerravala, Principal Analyst at ZK Research, suggests that Segment has proved an acquisition too far for Twilio. In a recent Big CX News Update, he said:
The Segment acquisition seems to have distracted them from what they were trying to do with contact center.
Indeed, consider Twilio released Flex at the same time as AWS released Amazon Connect – now a Magic Quadrant leading solution – and it seems Twilio may have missed an opportunity.
However, under new leadership, the company has now accepted Segment’s underperformance and appears ready to change the narrative.
Summarizing that narrative, Liz Miller, VP & Principal Analyst at Constellation Research, told CX Today: “Over the past couple of years, they’ve really struggled to bring it all together and keep moving the ball forward… I want to see where the innovation is!
“At some point, there does have to be a massive shake-up and that giant reckoning. That moment of “we have to do something drastic” started with Jeff Lawson’s departure.”
When Shipchandler reveals the results of the internal review of Segment next month, that drastic action may rise to the fore.
