Twilio Inc., a maker of customer communication and marketing software, said it will cut about 17% of workers just months after a previous major round of layoffs.
(Bloomberg) — Twilio Inc., a maker of customer communication and marketing software, said it will cut about 17% of workers just months after a previous major round of layoffs.
The company will also reduce some office space and pare back employee benefits as part of a focus on profitability, Chief Executive Jeff Lawson wrote in a blog post Monday.
The cuts make Twilio one of the first tech companies to announce a second major staffing reduction in the current economic downturn. In September, the software firm said it would cut 11% of workers after growing too fast. Together, the cuts amount to about 2,350 workers. Once completed, Twilio’s headcount will be about 6,642 employees, about the same as mid-2021 staffing levels.
“We have to spend less, streamline, and become more efficient,” Lawson wrote in the message which was sent to employees Monday. He added that the communications division had especially become “too big.” Compared with the September-announced layoffs, today’s reduction is more about reorganization, Lawson wrote.
In culling a total of about 26% of its staff, Twilio has gone deeper than nearly any other major publicly traded tech firm including Amazon.com Inc., Salesforce Inc., Microsoft Corp. or Workday Inc. Layoffs have roiled the sector as demand slows from pandemic boom-times and investors call for better profits.
Lawson will reduce his base pay by about half to $65,535, the company wrote in a filing. His base salary was less than 1% of his total compensation package of $14.6 million, including stock awards, in 2021, according to the company’s annual report. Last week, Zoom Video Communications Inc. said its Chief Executive Officer Eric Yuan would take a 98% salary reduction after announcing a 15% headcount reduction.
Shares jumped about 3% Monday. The stock has fallen 67% over the last year amid a broad market slump that has particularly impacted unprofitable software firms.
Twilio expects to report fourth-quarter results at or above guidance when it releases financial results on Wednesday, it said in the filing.
The magnitude of the job cuts suggests further business slowing, wrote Piper Sandler analyst James Fish in a note. The reductions may create stable or improving operating margins in the coming year, Bloomberg Intelligence analyst John Butler wrote.
Employee benefits like a sabbatical program and book allowances are being pared back, Lawson wrote. The company will also close offices over the next few months, targeting keeping “at least a handful of global hubs and satellite offices,” Lawson wrote. Office utilization has been very low, he wrote.
The company expects to incur $100 million to $135 million in costs, largely due to employee severance, Twilio said in the filing. Aidan Viggiano will serve as the company’s new Chief Financial Officer. She has been at the company since 2019, and previously served in “a variety of finance leadership positions” at General Electric Co., the company said.
(Updates throughout with further context from CEO letter.)
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