(CTN News) – Twilio, a software provider, announced on Monday that it will be reducing its workforce by approximately 5% due to the underperformance of a targeted unit by activist investors. The company’s shares remained unchanged during afternoon trading.
Twilio anticipates incurring restructuring costs between $25 and $35 million. However, it has reiterated its guidance for the fourth quarter and the entire year. The layoffs will affect around 300 employees, based on the company’s recent regulatory filings.
In a letter attached to a regulatory filing, CEO Jeff Lawson stated that these job cuts are part of a broader strategy to streamline offerings. As part of this plan, the company will also discontinue its Programmable Video product.
The most significant impact of the layoffs will be felt in Twilio’s Data and Applications unit, the same unit that activist investors at Legion Partners and Anson Funds are urging CEO Jeff Lawson to divest. A spokesperson for Anson Funds declined to provide any comments.
Within slightly over a year, Twilio has undergone three rounds of layoffs.
In February, the company reduced its workforce by 17%, which equated to approximately 15% of its employees. Despite this, Legion, a fund associated with Twilio, believes that further job cuts are possible, according to a source familiar with the fund’s stance.
When asked for comment on the restructuring plan’s shareholder input, a Twilio spokesperson declined to provide any information. The company referred to the restructuring plan as the “December Plan” in its filing with the Securities and Exchange Commission.
Additionally, Lawson, a representative from Twilio, stated in a letter that the company will be changing the sales approach for its Flex digital engagement product.
The layoffs will result in the elimination of “many” Flex sales positions, with their responsibilities being integrated into the existing Communications sales team.
In 2020, Acquired Segment in an all-stock deal worth $3.2 billion. However, there are reports that activists Anson and Legion are pushing for the sale of the Data & Applications unit or even the entire company.
These activists have significant individual stakes in the company and are also advocating for management changes. Twilio provides software that enables businesses to communicate with their customers and has developed tools to help improve customer relationships.
Although the company’s share price has not reached its 2021 highs, it has still increased by approximately 36% year-to-date.