Twilio will acquire Segment for $3.2B

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Twilio is acquiring Segment for $3.2 billion.
Image: Twilio

Cloud computing companies have benefitted greatly from the COVID-19 pandemic. With businesses and schools shifting to remote models, demand for cloud resources and solutions has skyrocketed in recent months.

Twilio is one of the companies that has been able to capitalize on that increase in demand. The API-focused cloud communications company made a major move on Monday, flexing its industry power in the process. Twilio announced that it will acquire Segment, a customer data infrastructure firm, for $3.2 billion. The deal is made up of Twilio stock and is the company’s largest acquisition to date.

Capitalizing on Growth

It doesn’t take an industry expert to see that Twilio and Segment work well together. The two companies offer services that play off of the other’s strengths. With access to Segment’s trove of customer data, Twilio will be able to expand its platform and offerings. It also gives Twilio a new way to improve its customer experience.

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“More customers are realizing that delivering a great customer experience is key to survive through this pandemic, and thriving as the economy recovers—and are willing to spend to do this even in uncertain times,” Laurie McCabe, co-founder and partner at SMB Group told TechCrunch.

Segment’s co-founder and CEO, Peter Reinhardt, echoed that sentiment. He says, “Together, Twilio and Segment have an incredible opportunity to build the customer engagement platform of the future.”

“We created Segment to help businesses set themselves apart in the digital age and deliver rich, connected customer experiences built on high-quality data. By joining forces and applying our customer data platform to Twilio’s engagement cloud, we’ll be able to make the entire customer experience seamless from end-to-end,” Reinhardt adds.

Upon news of Twilio’s acquisition, the company’s stock jumped by more than eight percent. The stock also topped its previous all-time high by reaching $331.99 per share. That’s impressive for a stock that has already had an eventful year. It reached a 52-week high on Friday before its news-driven jump on Monday afternoon. Twilio’s stock has risen by more than 211 percent so far this year.

Earlier in October, the company announced that its third-quarter revenues will top the $406 million figure it originally provided. That helped drive even more growth earlier this month.

Making Moves

The deal between Twilio and Segment is expected to close prior to the end of 2020. There should be few, if any, regulatory hurdles for the two companies to overcome.

It’s worth noting that this is the second major acquisition for Twilio. The company acquired SendGrid, a platform that makes it easy for companies to send emails en masse, for $2 billion in February 2018. However, it has been relatively quiet in the acquisition space since then, instead opting to focus on building its own platform.

The Segment acquisition, along with its purchase of SendGrid, puts Twilio in a great position moving forward. As more companies seek ways to understand and connect with their customers, the pair of acquisitions could become a valuable part of Twilio’s business model. It will be interesting to see where the company goes from here. Twilio is definitely a firm to keep an eye on throughout the end of 2020 and into next year.

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