Legion Partners Sends Letter to Twilio Board of Directors
The full text of the letter follows:
Board of Directors
Dear Members of the Board:
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
TWLO at |
|
Less: Cash |
(4,012) |
Plus: Debt |
988 |
Less: Segment value |
(1,000) |
|
|
2025 Adj. EBITDA - Legion Partners’ estimate |
|
Multiple |
7.0x |
After carefully studying
-
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 underTwilio has been challenged and this business has been underachieving its potential as the leading Customer Data Platform. -
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 atDecember 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
Sincerely,
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|
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Managing Director |
Managing Director |
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