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Twilio ’s chief operating officer and co - founder , Jeff Lawson , is stepping down from his role and his seat on the society ’s board , following month of pressure from activistic investors and several quarters of slowing revenue growth . Khozema Shipchandler , Twilio ’s president and a former GE denizen , is taking over as CEO .
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investor seem to be cheer the determination , with shares of Twilio up about 7 % this morning , though they could also be happy that the troupe articulate it would cover its quaternary - quarter tax income , adjusted income and full - year adjusted income above its old forecast .
While the timing of the move was a surprise , it ’s not a massive shock to see Lawson heading for the exits . investor havelong made exonerated their discontent with Twilio ’s late functioning , and at some point , either the final result meliorate or something change at the top . And while the companionship did enkindle its very pocket-sized forecast , this move may imply that its growth story did not better as much as the board or militant want during the 4th quarter .
How is the company performing ? In itsthird quarter , Twilio ’s revenue increase 5 % to $ 1.03 billion from a year before , and at the time , Lawson give the results a electropositive hang-up in his official commentary , touting “ another record stern of non - GAAP income from operations and free immediate payment flow . ” Investors did not view the shape as favorably , though , and were seemingly more focused on the party ’s anaemic and slowing rate of revenue growth .
For the 4th quarter of 2023 , Twilio project that growth would slow even further , falling to 1 % to 2 % , though now with the company anticipate better results than expect , we ’ll have to wait and see what it really care as the year come to a close .
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What does Lawson’s exit tell us?
A few things . First , activistic press on companies is not something that can always be improve by a board shakeup or little changes to procedure . secondly , we instruct that while some technical school companies haverecently survived their meter in the activist barrelwith their CEO in position , that wo n’t always be the case .
I expect that the investors leaning on Twilio for change wo n’t take the leaders change , and the ensuing grocery reaction , as impetus to dolesssimilar work in the future . tardily - grow software companies that remain unprofitable on a generally accepted accounting principles basis , take banknote : Here there be activists .
The company ’s stock peaked at more than $ 345 back in early 2021 , but the downswing see it start last year at around $ 50 per part . Today , Twilio stock is worth about $ 74 per plowshare , accounting for the recent spindle .
part drive those declines was a firm angle of dip in revenue growth :
And that , in turn , was part predicated on the next trend :
We can see that Twilio ’s tax revenue maturation has slow down in line with its dollar - based net expanding upon charge per unit . In essence , Twilio ’s rapid increase was heavily predicated on its customer foot spending more on its products over time , but when that well ran juiceless — similar to how nearly every software fellowship has been dealing with customers tightening disbursal — the companionship ’s growth charge per unit fell .
brute .
Still , I do n’t recall that we should consider these termination to be Lawson ’s legacy . Sure , the company has had a problematic time lately , but that was just the final chapter of a very tenacious record . Twilio did what it set out to do : Build a immense business , make its investors a mint , and breed its worth after going public . That ’s a grand barb in the creation of startups .
I am also not convince that the strategic moves that some of its activist investors want to see — more on that here — make much sense . So when we debate Lawson ’s incumbency , I believe that the mass of what ’s happened is the real chronicle , and the last few years are more a result of a hot company suffering in a suddenly colder economy .
That ’s not to say that mistake were not made . The company overhired , which led tosuccessive staffing cutsthat were painful , regular reminder of its struggles . You could also brabble about its cost base more mostly , among other thing . Still , this company enjoys run - rate receipts of $ 4 billion and generates lots of cash . That ’s impressive , stop .
Perhaps the example here is that the adept a software business model is for client , the more variable result will prove as the economy evolves . When the market was hot , Twilio spring up like the proverbial weed and was handsomely rewarded by the stock market . But when the economic system slow up , that picture turned upside down . A business model that charges for what you need is keen when customers ask and require more , but when initiative clients are trying to find deliverance , your line will be less protected from those cost cuts than , say , a traditional SaaS fellowship .
