Twilio lays off 11% staff for a profitable growth

Washington, Sep 15: In a bid to cut down on the cost, Twilio, an American company based in San Francisco, has announced that it will layoff 11% of its workforce. The compensation and talent management committee of the board of directors approved a restructuring plan aimed at reducing reduce operating costs, improve operating margins, and shift the company's selling capacity to accelerate software sales, according to an SEC filing published on Wednesday.

Twilio, as on December 31, 2021, had 7,867 employees and it is predicted that around 800 and 900 employees might lose their jobs due to the restructuring plan. The company estimates this exercise will incur approximately $70-$90 million in charges, consisting of cash expenditures for employee transition, notice period and severance payments, employee benefits, and related facilitation costs as well as non-cash expenditures related to vesting of share-based awards.

In a letter to employees, Twilio CEO Jeff Lawson said that layoff was the "last thing" that the company wanted to do, but it is "wise and necessary." "Twilio has grown at an astonishing rate over the past couple years. It was too fast, and without enough focus on our most important company priorities. I take responsibility for those decisions, as well as the difficult decision to do this layoff," he wrote.

The CEO explained that Twilio is committed to being a profitable growth company and it requires the company to ask more rigorously which activities and investments are working. "It forces us to ask where we have good alignment internally to amplify each of our efforts. This discipline requires us to ask if our investments are getting us where we need to go," he said.

According to him, the layoffs are about aligning its investments more squarely with its priorities, as well as running the company more efficiently overall.

Those impacted will get at least 12 weeks of pay, plus one week for every year of service at Twilio. "You'll also receive the full value of Twilio's next stock vest because the Twilions who are leaving us are shareholders too - which is important to us," he told the outgoing employees.

Lawson also assured the impacted employees in the US and most regions can search for other jobs while being on the company's payroll. "Our Talent Acquisition team will give high-touch service to impacted Twilions if there's an open internal role in one of our investment areas. We will create a list that impacted employees can opt into, which we'll share with other companies who may be hiring, as well as investors who know many such companies," he added.

Twilio, which was founded in 2008 by Jeff Lawson, Evan Cooke, and John Wolthui, saw sales growth was 41%, the lowest since the December quarter in 2017.