Legion Partners Sends Letter to Twilio Board of Directors

Urges Company to Sell Segment Business and Significantly Expand Stock Buyback Program

Legion Partners Asset Management, LLC, together with its affiliates (collectively, “Legion Partners”), which beneficially owns 601,050 shares, of Twilio Inc. (“Twilio” or the “Company”) (NYSE: TWLO) common stock, today sent a letter to the Company’s Board of Directors encouraging it to announce a strategic alternative process to sell the Segment business and immediately expand its stock buyback program by at least an additional $3 billion.

The full text of the letter follows:

February 26, 2024

Board of Directors

Twilio Inc.

101 Spear Street, First Floor

San Francisco, CA 94105

Dear Members of the Board:

Legion Partners Asset Management, LLC, together with its affiliates (collectively, “we” or “Legion Partners”) are stockholders of Twilio Inc. (“Twilio”, “TWLO”, or the “Company”), beneficially owning 601,050 shares of the Company’s outstanding stock. Legion Partners’ strategy entails highly concentrated equity positions, with a long-term investment horizon and active involvement with our portfolio companies. We are very focused on promoting strong operational and governance discipline at each of the companies in which we invest, as we believe this is essential in achieving sustained, superior long-term returns. We are writing to Twilio’s Board of Directors (the “Board”) as a follow up to our one-year long engagement with the Board to unlock shareholder value.

First, we would like to acknowledge the progress that has been made in the last year since we began our engagement:

  • Reducing costs by meaningfully rightsizing the employee count to the business during calendar year 2023;
  • Transitioning Jeff Lawson, Twilio’s founder and CEO, out of the Company;
  • Adding an independent director with significant software expertise;
  • Announcing the Company’s first-ever stock buyback program of $1 billion and executing $730 million on the buyback to date; and
  • Breaking out segment operating profitability for both the Communications and Segment businesses.

However, our view is that Twilio is not achieving anywhere close to an appropriate valuation in its current form, and therefore significant work remains to be done to unlock meaningful value. To illustrate this view, we believe Twilio’s Communication business (plus related corporate expense) is trading at a very low multiple of only 7.0x Legion Partners’ estimate of 2025 Adjusted EBITDA, as depicted below ($ in millions):

TWLO at $56.25/share - Current market cap.


Less: Cash


Plus: Debt


Less: Segment value


Net Communications + Corp. implied value


2025 Adj. EBITDA - Legion Partners’ estimate




After carefully studying Twilio for more than a year and digging into the numbers, we believe that the appropriate path forward for the Board to unlock shareholder value is as follows:

  1. Announce a strategic alternatives process to sell Segment. We believe this business is highly valuable (we estimate value at $1.0 billion) and could flourish under new ownership. Segment’s ownership under Twilio has been challenged and this business has been underachieving its potential as the leading Customer Data Platform.

  2. Immediately execute a stock buyback of at least an additional $3 billion. Over the last year, Twilio has generated nearly enough cash flow to entirely cover the previously referenced $1 billion stock buyback with almost no reduction in the level of cash on the balance sheet at December 31, 2023, as compared to a year earlier.

We believe these steps should unlock the fair value of Twilio’s stock, which we conservatively estimate is greater than $90 per share. As always, you can feel free to contact us to discuss these matters further.


Chris Kiper

Ted White

Managing Director

Managing Director

About Legion Partners

Legion Partners is an activist investment manager based in Los Angeles, CA, focused on U.S. small-cap companies. Legion Partners seeks to generate attractive long-term returns employing deep fundamental research, a concentrated portfolio and responsible, collaborative engagement as a catalyst for value creation. Founded in 2012, Legion Partners takes a value-driven approach to managing a high-conviction portfolio on behalf of sophisticated institutional and individual investors. Learn more at www.legionpartners.com.



Nathaniel Garnick/Liam Walsh

Gasthalter & Co.

(212) 257 - 4170

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