Targets Break-Even Non-GAAP Income from
Operations for Segment Business by Q2 2025
Accelerates Plan to Achieve Consolidated GAAP
Operating Profitability to Q4 2025
Announces Appointment of Thomas Wyatt as
President of Twilio Segment
Twilio (NYSE: TWLO), the customer engagement platform that
drives real-time, personalized experiences for today’s leading
brands, today announced the results of its operational review of
its Segment business. The company also provided targets for FY 2024
and FY 2025, and announced an additional $2 billion share
repurchase authorization that it is targeting to complete during FY
2024.
In consideration of the recent underperformance of the Segment
business, and upon Khozema Shipchandler’s appointment as CEO in
January 2024, the Twilio Board of Directors and management team
initiated an operational review of Segment to determine the best
path forward. Over the course of eight weeks, the company engaged
extensively with customers and key internal stakeholders to
determine the root causes of the business’s challenges and assess
its ability to address these issues. As part of this process, the
Board and management team also considered various hypothetical
non-operational alternatives for Segment, including a sale of the
business, with input from independent strategic and financial
advisors. After a thorough evaluation, the Board and management
team determined that implementing and executing tangible near-term
operational changes to accelerate Segment’s path to break-even
non-GAAP income from operations by Q2 2025 and non-GAAP operating
profitability thereafter, ultimately is expected to create the most
value for shareholders compared to all alternatives considered.
“Our top priority is creating long-term value for our
shareholders by driving Twilio towards durable, profitable growth,”
said Khozema Shipchandler, CEO of Twilio. “In connection with this
priority, myself, the Twilio management team, and the Board
evaluated an extensive range of alternatives for Segment’s path
forward. We unanimously came to the same conclusion: retaining
Segment and taking aggressive action to accelerate the path to
profitability is the best opportunity available to enhance value
for our customers and shareholders. We also believe that Segment
will further strengthen our Communications product offerings and
allow us to capitalize on expanded opportunities presented by AI.
We will execute against a clear set of priorities to achieve
break-even non-GAAP income from operations for Segment by Q2 2025,
exercising operational rigor to right-size our investments,
accelerate time to value, and drive more disciplined execution. In
addition, the Twilio Board has authorized an additional $2 billion
in share repurchases, which reflects our improved free cash flow
profile, our confidence in our strategy, and the tremendous
opportunity we see ahead.”
Segment, which represented 7% of Twilio’s 2023 revenue, drives
significant differentiation for its existing customers and has the
potential to do the same for Communications customers. At present,
more than 8,000 customers deploy Segment’s platform to drive
richer, data-driven experiences for their customers powered by
real-time insights collected in Segment’s Golden Profiles. The
convergence of Segment’s data capabilities combined with
Communications creates opportunities to deliver outsized outcomes
for customers, particularly as Twilio’s AI developments introduce
more effective and personalized engagement capabilities. While
Segment has recently underperformed expectations, it remains a
leading product with the potential to drive strong future upside
for Twilio's Communications business, and the company is committed
to creating meaningful value through more disciplined and focused
execution.
To address Segment’s recent challenges and help both Segment and
the company achieve their financial and operational targets, Twilio
will prioritize:
- Operational rigor and cost discipline by rationalizing
investments to right-size Segment’s cost base and focusing on areas
expected to drive the highest impact;
- Dedicating focus to areas that improve time to value for
customers including improving onboarding through AI and automation
and delivering additional features to enhance data warehouse
interoperability; and
- Innovation velocity by delivering three products in 2024
that natively embed Segment into Communications, while also
capitalizing on CustomerAI momentum.
In connection with this announcement, Twilio has appointed
Thomas Wyatt to the position of President of Segment, effective
March 11, 2024.
Wyatt is a business, product and GTM leader with deep knowledge
of data analytics and AI, and a track record of building and
scaling businesses. Wyatt joins from People.ai, where he served as
Chief Product and Strategy Officer, overseeing strategy, product
management, design and business development. Prior to People.ai,
Wyatt served as Chief Marketing and Strategy Officer at
AppDynamics. He also served in multiple leadership positions at
Cisco, including as Vice President and General Manager of the Cloud
Analytics Group.
Shipchandler continued, “We are thrilled to welcome Thomas to
our leadership team as President of Segment. Thomas brings a
passion for innovation that we value highly at Twilio, as well as a
proven ability to grow and scale businesses. With Thomas at the
helm, we believe that Segment will be well-positioned to embrace a
leaner, more focused approach to achieve its financial and
operational goals, capitalize on the opportunities presented by AI
and continue delivering best-in-class services to our
customers.”
Capital Allocation and Financial Targets
Concurrent with the conclusion of the operational review of
Segment, Twilio announced that its Board of Directors has
authorized an additional $2 billion share repurchase program
expiring on December 31, 2024, which is in addition to the $1
billion program previously authorized by the Board in 2023. To
date, Twilio has completed almost $800 million of repurchases from
the initial program and is targeting to complete both programs,
representing further share repurchases of approximately $2.2
billion, between now and the end of 2024.1
Twilio affirms its guidance for the first quarter of 2024 that
it originally provided on February 14, 2024. The company is also
providing targets for FY 2024 and FY 2025:2
2024
Organic Y/Y Revenue Growth
5%-10%3
Non-GAAP Income from Operations
$550M - $600M4
2025
GAAP Operating Profitability
Achieve by Q4 2025
Segment BU Non-GAAP Income from
Operations
Achieve break-even by Q2 2025
- Subject to legal requirements, price, and economic market
conditions.
- Targets are representative of the changes Twilio implemented
over the last year and the plans laid out today. As a result, these
targets replace the previous medium-term financial framework that
was most recently provided by Twilio on May 9, 2023.
- Includes an estimated 150 basis points of headwinds associated
with the end of life of Twilio’s video product and the software
portion of its Zipwhip business.
- Includes an estimated $90M of incremental expenses associated
with a new employee cash bonus program aimed at reducing
stock-based compensation expense over time.
Investor Presentation and Conference Participation
Twilio posted an investor presentation regarding today’s
announcement at https://investors.twilio.com.
As previously announced, Khozema Shipchandler will be
participating in a fireside chat at the Morgan Stanley Technology,
Media and Telecom Conference on Thursday, March 7, 2024 at 8:00
a.m. (PT) / 11:00 a.m. (ET). A live webcast and replay will be
available on Twilio’s investor relations website at
https://investors.twilio.com.
About Twilio Inc.
Today’s leading companies trust Twilio’s Customer Engagement
Platform (CEP) to build direct, personalized relationships with
their customers everywhere in the world. Twilio enables companies
to use communications and data to add intelligence and security to
every step of the customer journey, from sales to marketing to
growth, customer service and many more engagement use cases in a
flexible, programmatic way. Across 180 countries and territories,
millions of developers and hundreds of thousands of businesses use
Twilio to create magical experiences for their customers. For more
information about Twilio (NYSE: TWLO) visit www.twilio.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the federal securities laws, which statements
involve risks and uncertainties. Forward-looking statements
generally relate to future events or Twilio’s future financial or
operating performance. In some cases, you can identify
forward-looking statements because they contain words such as
“may,” “can,” “will,” “would,” “should,” “expects,” “plans,”
“anticipates,” “could,” “intends,” “target,” “projects,”
“contemplates,” “believes,” “estimates,” “predicts,” “forecasts,”
“potential” or “continue” or the negative of these words or other
similar terms or expressions that concern Twilio’s expectations,
strategy, plans or intentions. Forward-looking statements contained
in this press release include, but are not limited to, statements
about: Twilio’s future financial performance, including its
expected financial results and guidance; Twilio’s expectations
regarding its Segment business, including its ability to reach its
financial and operational targets; Twilio’s expectations regarding
its Communications business; Twilio’s expectations regarding
profitability, including when it will become profitable on GAAP and
non-GAAP bases; Twilio’s anticipated strategies and business plans;
the effects of Twilio’s organizational and operational changes; the
effects of Twilio’s cost-saving measures; Twilio’s expectations
regarding compensation programs; Twilio’s ability to develop
products related to artificial intelligence and machine learning,
including CustomerAI and its use cases; Twilio’s ability to deliver
on its product roadmap; and Twilio’s expectations regarding share
repurchases. You should not rely upon forward-looking statements as
predictions of future events.
The outcome of the events described in these forward-looking
statements is subject to known and unknown risks, uncertainties,
and other factors that may cause Twilio’s actual results,
performance, or achievements to differ materially from those
described in the forward-looking statements, including, among other
things: Twilio’s ability to successfully implement its cost-saving
initiatives and to capture expected efficiencies; Twilio’s ability
to realize the anticipated benefits of changes to its operating
model and organizational structure; the impact of macroeconomic
uncertainties and market volatility; Twilio’s financial
performance, including expectations regarding its results of
operations and the assumptions underlying such expectations, and
ability to achieve and sustain profitability; Twilio’s ability to
attract and retain customers; Twilio’s ability to compete
effectively in an intensely competitive market; Twilio’s ability to
comply with modified or new industry standards, laws and
regulations applying to its business, and increased costs
associated with regulatory compliance; Twilio’s ability to manage
changes in network service provider fees and optimize its network
service provider coverage and connectivity; Twilio’s ability to
form and expand partnerships; and Twilio’s ability to successfully
enter into new markets and manage its international expansion.
The forward-looking statements contained in this press release
are also subject to additional risks, uncertainties, and factors,
including those more fully described in Twilio’s most recent
filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K and subsequent Quarterly Reports on Form
10-Q. Twilio operates in a very competitive and rapidly changing
environment, and new risks and uncertainties may emerge that could
have an impact on the forward-looking statements contained in this
press release.
Forward-looking statements represent Twilio’s management’s
beliefs and assumptions only as of the date such statements are
made. Twilio undertakes no obligation to update any forward-looking
statements made in this press release to reflect events or
circumstances after the date of this press release or to reflect
new information or the occurrence of unanticipated events, except
as required by law.
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version on businesswire.com: https://www.businesswire.com/news/home/20240304864958/en/
Investor Contact: Bryan Vaniman ir@Twilio.com
or
Media Contact: Caitlin Epstein press@Twilio.com
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