Twilio hired Qatalyst to advise on its defense against an activist investor group

Both sources did not want to be named for confidentiality reasons. Twilio’s technology makes it easier for companies to communicate with customers and employees via mobile devices.

Legion Partners, a Los Angeles-based activist firm, took a stake in Twilio earlier this year and began pushing the company to overhaul its board and strategy. Legion’s investment was led by Sagar Gupta, who left the company in October to join Anson Funds, where he acquired a similar stake.

Twilio shares are up 45% this year, but that follows a miserable 2022 in which the company lost more than 80% of its value. The stock is 84% ​​below its record set at the beginning of 2021. Annual revenue growth fell to just 5% in the most recent quarter, compared to over 30% in the same period last year and over 60% in the third quarter of 2021.

The activist groups have told Twilio that it should sell at least one underperforming unit, its data and applications business, which includes Segment. Twilio CEO Jeff Lawson, who co-founded the company in 2008, said last week that the company would lay off 5% of its employees, with the biggest cuts coming in its data and applications division.

The workforce cuts followed a corporate restructuring earlier this year that included layoffs of 17% of Twilio’s employees.

Qatalyst is known more for its mergers and acquisitions practice than shareholder advocacy. One of the people familiar with the matter said the bank’s current stake in Twilio is not a precursor to a sale of the company.

A spokesperson for Twilio declined to comment. Qatalyst did not respond to a request for comment.

Qatalyst was founded in 2008 by Quattrone, who stepped down as CEO in 2016 but remains chairman of the board. The company has advised on some of Silicon Valley’s largest recent transactions, including Microsoft’s $28.1 billion acquisition of LinkedIn and Salesforce’s $29.2 billion purchase of Slack and in Block’s $22 billion acquisition of Afterpay. Qatalyst also worked on Cisco’s pending $29.6 billion acquisition of Splunk and Adobe’s acquisition of Figma, which is awaiting regulatory approval.

Qatalyst’s activist practice is led by Peter Michelsen, who was hired from Goldman Sachs’ activist advisory group in June 2020. Michelsen says on his LinkedIn page that he “advises Qatalyst’s clients across technology sectors on issues such as activism defense, proxy fights, contentious situations, defense preparation and complex ESG matters.” ESG stands for environmental, social and corporate governance.

—CNBC’s Alex Sherman contributed to this report.

REGARD: Twilio’s CEO says the company is focused on customers, not competitors