Twilio, the San Francisco-based corporate communications firm, has conducted its second layoff round of 2023—an end-of-year belt-tightening that appears to be hitting the technology industry with brute force.
In a letter to the company’s employees, or Twilions, sent Monday and made public in a U.S. Securities and Exchange Commission filing, CEO Jeff Lawson wrote that the company would cut 5% of its current staff of about 6,000 people as part of a broader “December Plan.” That amounts to nearly 300 employees.
“While I know it’s hard to undergo so much change, it’s all part of the necessary transition to profitable growth,” Lawson wrote. “Despite, and because of, these changes—I believe we are increasingly set up to balance the needs of profit and growth.”
The news may come as a bit of a surprise following what Lawson described as a “strong third quarter” with “a foundation for profitable growth” in its third-quarter earnings report last month—and the company’s share price rising by more than 25% over the past year to just under $67 a share.
Lawson wrote in the letter that Twilio’s data and applications division—which was spun out as a separate part of the company amid a layoff round last year—has “underachieved on growth.” The division has also drawn the ire of activist investors, which the Information reported last week have been pushing for Twilio to divest from data and applications and put more resources into its more lucrative communications side. One of those activist investors, Legion Partners, reportedly believes the company could trim even more people from its headcount, according to CNBC.
Twilio—which has a market cap of more than $12 billion—has fallen from its pandemic-era highs, when its stock was valued at nearly $435. The company laid off 17% of its staff in February; as part of that cutback, it ended wellness and sabbatical benefits and shuttered office locations.
Affected employees will receive a minimum of 12 weeks of base pay—and an additional week for every year of employment. The company anticipates that it will incur up to $35 million in expenses connected to the layoffs.
Also on Monday, Spotify laid off 17% of its staff, a cut that CEO Daniel Ek attributed to employing “too many people dedicated to supporting work and even doing work around the work.” Posts on LinkedIn indicate that the cuts have affected product designers and managers, as well as members of its trust and safety team.