- October 14, 2020
- Posted by: Stratford Team
- Category: Markets
Twilio co-founder and CEO Jeff Lawson
- Cloud communications company Twilio announced Monday that it plans to acquire the startup Segment, which builds a platform to collect and analyze customer data.
- Analysts say this acquisition shows that Twilio wants to become a leader in customer engagement, and this could help it take on competitors like Microsoft, Adobe, SAP, and Salesforce.
- Twilio’s stock price rose 6% on the news, giving it a market cap of about $50 billion, adding to its gains during the pandemic: At the beginning of March its value was about $14 billion.
- Visit Business Insider’s homepage for more stories.
Analysts are crowing about Twilio’s plan, announced Monday, to acquire the customer data analytics company Segment for $3.2 billion, because they say it could help the cloud communications company take on giants like Microsoft, Adobe, SAP, and Salesforce.
Twilio has long been a hit with developers building apps that allow users to make phone calls or send text messages or emails within the app – for example, Uber and Lyft use Twilio to help drivers and passengers communicate. By buying Segment, the firm is diving into a the customer relationship management space.
“This will help Twilio grow further,” said Mizuho managing director Siti Panigrahi, who described the deal as “transformational.”
Overall, analysts agree that the acquisition, expected to close in the fourth quarter of the year, is a smart move for Twilio, because Segment would give it the ability to better understand its customers and make decisions based on this data. This would be Twilio’s largest acquisition to-date (it previously acquired the email marketing platform SendGrid for $2 billion) and its stock price rose 6% following the news, giving it a market cap of nearly $50 billion.
Segment collects and analyzes customer data from websites, mobile apps, and more to help businesses better understand and target customers. With Segment, Twilio is getting into an area where giants like Salesforce and SAP have long ruled, says Panigrahi.
“This is a very strategic acquisition,” Panigrahi told Business Insider. “It expands Twilio from a communication platform to a customer engagement platform.”
The acquisition will help Twilio grow over 30% in the next four years as it becomes a “leading customer engagement platform,” according to Panigrahi. Segment currently has over 20,000 businesses using its platform, including big name customers like Atlassian, Google, Instacart, and Peloton.
Matt Stotler, research analyst at William Blair, agreed that the deal would be beneficial for both companies.
Peter Reinhardt, cofounder and CEO of Segment
“We also think that the combination with Twilio will provide Segment with a unique breadth of customer engagement channels, particularly in messaging, which will serve as another differentiating factor relative to potential competitors,” Stotler wrote in a note to clients.
Like Twilio, Segment also builds APIs (application program interfaces), which help apps connect with and communicate with each other, although Segment’s APIs focus on analyzing customer data.
“That strategically really makes sense in terms of a cultural cadence strategy,” Panigrahi said.
Segment, on the other hand, has had a tougher few months. It laid off 10% of its staff in May in anticipation of a tougher IT spending environment during the coronavirus pandemic.
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