Twilio begins operational review of activist-targeted business unit

Twilio announced alongside its fiscal fourth quarter earnings on Wednesday it would begin an operational review of an underperforming business unit that has been scrutinized by shareholder activists to “identify the appropriate path forward”

The company also said it had recorded a $286 million impairment related to the business unit, which it was also renaming back to Segment. It had formerly been known as Twilio Data & Applications, and was born out of Twilio’s $3.2 billion acquisition of the namesake Segment in 2020.

Twilio has been the subject of shareholder scrutiny over the performance of its Segment business, which it acquired at a large premium to its private-market valuation and has dragged on the performance of Twilio’s longer-standing communications business. Activist investors at Anson Funds and Legion Capital have both said they would like the company to sell off either the Segment unit or the whole company.

Twilio didn’t immediately return a request for comment.

The first activist campaign kicked off shortly after founder Jeff Lawson’s supervoting share block expired. Lawson was ultimately ousted as chair and CEO and replaced as CEO in January by Khozema Shipchandler.

Shipchandler at the time said the company would take a “fresh look at the areas of the business that are underperforming to realize” Twilio’s full potential.

Twilio, which makes tools to help businesses stay in contact with their customers, will also announce its full-year guidance alongside the results of the operational review sometime in March.

The company reported earnings per share, excluding items, of 86 cents, better than an LSEG, formerly Refinitiv, consensus estimate of 58 cents. Revenue also beat consensus estimate, coming in at $1.08 billion versus $1.04 billion. The company reported a loss of $365.4 million in its fourth quarter. Revenue rose 5% year over year.

Twilio’s shares sank more than 9% in after-hours trading after reporting lower-than-expected active customers. Analysts surveyed by StreetAccount had been expecting 311,000 active customers, but the company reported only 305,000 active customers.

Similarly, the company guided to revenue for the upcoming fiscal first quarter ranging from $1.025 billion to $1.035 billion, less than a LSEG consensus estimate of $1.049 billion.

Correction: Khozema Shipchandler is CEO of Twilio. An earlier version misspelled his name.

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