Shares of Twilio Inc. TWLO, +2.35% rallied 2.8% in morning trading Monday, after the communications software company disclosed that it will lay off 17% of its employees as part of a plan to cut costs, streamline its business and become more efficient. Based on 7,867 employees as of the end of 2021, according to the company’s latest annual report, that would imply more than 1,300 employees will be laid off. The company also said it was forming two business units, Twilio Communications and Twilio Data & Applications. “When we look at these two business units on their own, it’s clear that we’ve gotten too big, especially in Communications. And that’s why we’re also letting go of some colleagues today,” Chief Executive Jeff Lawson wrote in a letter to employees. The company expects to record charges of $100 million to $135 million related to the layoffs, mostly in the first quarter of 2023. Twilio also said it expects to report fourth-quarter results “at or above” the guidance ranges provided in November, when it said it expects adjusted per-share losses of 11 cents to 16 cents and revenue of $995 million to $1.005 billion. The FactSet consensus is for a per-share loss of 8 cents and revenue of $1.002 billion. The stock has rallied 11.7% over the past three months while the S&P 500 SPX, +0.65% has gained 3.0%.
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