Much to the relief of industry insiders, Twilio is keeping its Segment business. Some feared that Twilio would bow to investor pressure, and that would have had ripple effects across the industry. It would upend product roadmaps, increase job justification among its competitors and amplify the CPaaS doom-and-gloom narrative.
Yesterday’s wholesaler is today’s API. When Twilio emerged, telephony APIs at scale were novel and groundbreaking. Now everyone has an API. In fact, most MNOs are upgrading their networks to be “API ready.” It is a sign of technological maturity when major network operators decide it’s time to redo and rebuild a REST interface.
Not only is Twilio keeping its Segment business; it is also reintegrating its Flex and marketing campaign features back to its telecommunications platform. This shift acknowledges that a significant portion of voice revenue comes from IVR-like features, and that mass notifications represent the primary use case for text messaging.
Sticking to just the communications business would expose Twilio to the ruthlessness of commoditization. This is not their DNA. Twilio still incentivizes its sales force on gross margins. Its R&D budget, while down from its pre-pandemic high of 34%, is still at 22% of revenue. This while higher than Salesforce R&D spend (14.06%) is in line with the industry median of 25%. However, with a firm commitment to attain GAAP operating profitability by Q4 2025, Twilio’s leadership is clearly focused on ensuring that every dollar spent is impactful.