Twilio has just announced that it will carry out a round of layoffs that will affect approximately 17% of the 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 has already conducted a round of layoffs in September 2022. At the time, the company announced it would lay off 11% of its staff.
According to Twilios latest earnings releasethe 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, approximately 1,400 people will be affected by this year’s layoffs.
“We need to spend less, streamline and become more efficient. To do that, we are forming two business units: Twilio Communications and Twilio Data & Applications. And today I sadly bring the news that we are parting ways with approximately 17% of our team,” said 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 example, Twilio acquired Segment to dig deeper into marketing data and customer engagement in general. According to the company’s CEO, these products have not reached the same level of maturity.
“We need to become more efficient in communication. We need to accelerate growth for Segment, Flex and Engage. These are clearly different tasks for our teams, and our current structure slows our progress toward both goals, which are critical to our growth, our bottom line 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 administrative resources. This clear line makes it easier to execute different strategies for each part of the business.
The communications side of the business in particular seems to be particularly affected by today’s layoffs. “Looking at these two business units separately, it is clear that we have become too big, especially in Communications. And that’s why we’re also letting some colleagues go today,” Lawson wrote.
Affected employees will receive 12 weeks of base salary plus one week for each year of service, as well as health insurance and career advancement opportunities. The company is also ending a number of benefits, such as book and welfare allowances, as well as Twilio Recharge — a four-week paid sabbatical that employees would receive every three years.
“We also decided to discontinue Twilio Recharge, which I believe in, but which (in hindsight) was not well timed given our profitability goals,” Lawson wrote.
Paperwork archived with the U.S. Securities and Exchange Commission shows that the board will cut Jeff Lawson’s annual base salary from $134,000 a year to $65,535. Twilio expects to spend $100 to $135 million in costs related to the headcount reduction. There are additional costs associated with office closures.
Twilio shares are currently trading 2.8% higher compared to Friday’s closing price. In a few days, the company will announce its fourth quarter figures.