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Twilio cuts around 300 jobs in struggling unit activists want to sell

Twilio building in Tallinn

Software provider Twilio has announced a five percent staff reduction, affecting around 300 employees. 

The move is in response to the underperformance of a unit that activist investors, including Legion Partners and Anson Funds, have urged the company to divest. 

The layoffs, expected to incur restructuring charges between $25 million and $35 million, mark the third round of job cuts in just over a year. 

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The affected unit, Data and Applications, is at the center of activist pressure, with Anson Funds and Legion Partners advocating for its divestment. 

Twilio's CEO, Jeff Lawson, outlined the cuts as part of a broader plan to streamline the company's offerings, including discontinuing the Programmable Video product. 

Despite executing the previous 17 percent layoffs in February, activists, particularly Legion Partners, believe further job cuts are feasible.

Twilio's restructuring plan, referred to as the "December Plan" in regulatory filings, remains opaque regarding shareholder input. 

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The company's share prices closed slightly over one percent higher on Monday, with reassurances that the layoffs won't impact fourth-quarter and full-year guidance.c

"Bet hasn’t led to the growth outcome we’d hoped for”

Lawson detailed changes to the sales strategy for the Flex digital engagement product.

It involves the elimination of "many" Flex sales positions and their integration into the existing Communications sales team.

Lawson said: “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.”

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Activists Anson and Legion hold individual stakes of around $50 million.

They advocate for selling the Data and Applications unit or the entire company, pushing for management changes. 

Twilio was founded in 2008 and led by Lawson since its 2016 IPO.

It specializes in software aiding businesses in customer communication and relationship improvement. 

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