Twilio Buying Segment for Improved Customer Engagement

Twilio is buying Segment, a startup that helps businesses track and manage customer data, for $3.2 billion.

By combining the two companies, Twilio says it can deliver a single, unified view of customers’ insights. That helps companies better understand their customers to engage more effectively.

The transaction, which boards of both companies have approved, should close this quarter. Segment will become a division of Twilio.

Glenn Weinstein is Twilio‘s chief customer officer.

Twilio’s Glenn Weinstein

“By building the customer engagement platform of the future, Twilio will help our customers gain insights into interactions with their own end customers,” he said. “We expect Twilio partners to participate in building this future, by bringing their expertise and technology to the table.”

Segment will form the data that fuels Twilio’s Engagement Cloud, Weinstein said.

“This will give Twilio and our partners a significant competitive advantage in building solutions that provide insight into every aspect of customer engagement,” he said.

Accelerated Growth

The transaction will accelerate Twilio’s growth with a total addressable market (TAM) of $79 billion. This brings the company one step closer to becoming the “world’s leading customer engagement platform.”

“Segment has built a thriving community of integration partners that power its Connections product,” Weinstein said. “Twilio partners now have an unprecedented opportunity to grow and contribute to this ecosystem.”

Many of Twilio’s partners focus on helping businesses communicate with their customers, he said.

“We expect our partners to now focus on making those communications even more personalized, timely and impactful by taking advantage of the Twilio Engagement Cloud,” Weinstein said.

New Partner Opportunities

Through the acquisition, Twilio plans to integrate data intelligence into all of its offers, including Twilio Flex. Customers then can better personalize interactions with their customers.

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

Raul Castanon is senior research analyst with 451 Research, part of S&P Global Market Intelligence.

451 Research’s Raul Castanon

“Reducing friction to improve the user experience has been a key component in Twilio’s vision from its early days,” he said. “However, in the past two years the company has placed an increased emphasis in the customer experience. This was evident with the launch of Twilio Flex in 2018 and the subsequent acquisition of email API platform SendGrid.”

This acquisition further reinforces this approach, Castanon said. Moreover, the next stage for Twilio will be largely defined by innovations centered on deeper customer engagement and conversational interactions.

Twilio “pioneered” CPaaS and remains a gold standard, Castanon said. In fact, this could have a ripple effect across the industry. Other vendors will look to expand their capabilities for measuring and analyzing the customer experience.

Earlier this month, Twilio told the Securities and Exchange Commission that its outlook for third-quarter revenue will be higher than the original forecast of $401 million-$406 million that it had offered back in August.