The CEO of Twilio and co-founder, Jeff Lawson, is stepping down from his role and position on the company’s board of directors, after months of pressure from activist investors and several quarters of slowing revenue growth. Khozema Shipchandler, Twilio chairman and former GE owner, takes over as CEO.
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Investors appear to be cheering the decision, with Twilio shares up nearly 7% this morning, though they could also be happy that the company said it will report fourth-quarter earnings, adjusted earnings and adjusted earnings for the full year above its previous forecast.
While the timing of the move was a surprise, it’s not a huge shock to see Lawson heading for the exits. Investors have long made their displeasure with Twilio’s recent performance clear, and at some point either results improve or something changes at the top. And while the company did raise its very modest guidance, the move may mean its growth story didn’t improve as much as the board or activists wanted in the fourth quarter.
How is the company performing? Inside third quarter, Twilio’s revenue rose 5% to $1.03 billion from a year earlier, and at the time, Lawson gave positive results in his official comments, touting “another record quarter of non-GAAP income from operations and free cash flow ». However, investors did not see the data as favorably and were seemingly more focused on the company’s anemic and slowing revenue growth.
For the fourth quarter of 2023, Twilio predicted that growth would slow even further, falling to 1% to 2%, although now with the company promising better-than-expected results, we’ll have to wait and see what it actually achieved until the year came to an end.
What does Lawson’s exit tell us?
A few things. First, activist pressure on companies is not something that can always be ameliorated by board reshuffles or minor changes in operations. Second, we learned that while some tech companies have recently survived their time in the activist barrel with their CEO in place, that won’t always be the case.
