Jeff Lawson’s legacy at Twilio is about more than a few rough quarters

Twilio’s CEO and co-founder, Jeff Lawson, is stepping down from his role and his seat on the company’s board, following months of pressure from activist investors and several quarters of slowing revenue growth. Khozema Shipchandler, Twilio’s president and a former GE denizen, is taking over as CEO.

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Investors seem to be cheering the decision, with shares of Twilio up nearly 7% this morning, though they could also be happy that the company said it would report its fourth-quarter revenue, adjusted income and full-year adjusted income above its previous forecast.

While the timing of the move was a surprise, it’s not a massive shock to see Lawson heading for the exits. Investors have long made clear their discontent with Twilio’s recent performance, and at some point, either the results improve or something changes at the top. And while the company did raise its very modest forecast, this move may imply that its growth story did not improve as much as the board or activists wanted during the fourth quarter.

How is the company performing? In its third quarter, Twilio’s revenue increased 5% to $1.03 billion from a year earlier, and at the time, Lawson gave the results a positive rub in his official commentary, touting “another record quarter of non-GAAP income from operations and free cash flow.” Investors did not view the figures as favorably, though, and were seemingly more focused on the company’s anemic and slowing rate of revenue growth.

For the fourth quarter of 2023, Twilio projected that growth would slow even further, falling to 1% to 2%, though now with the company promising better results than expected, we’ll have to wait and see what it really managed as the year came to a close.

What does Lawson’s exit tell us?

A few things. First, activist pressure on companies is not something that can always be ameliorated by a board shakeup or smaller changes to 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.