How Important Is Twilio’s Acquisition of Segment?

Can Twilio’s most recent acquisition help in its ultimate goal of becoming the leading software in developer and customer engagement?

Oct. 15, 2020

Twilio (NYSE: TWLO) is on a mission to become the greatest customer engagement platform used by developers and organizations around the world. Earlier this week, Twilio announced that it was buying the tech startup Segment in an all-stock deal worth $3.2 billion. How is Segment going to help it get there? 

Segment helps businesses provide excellent customer experiences by using high-quality data and will provide Twilio with a customer data platform allowing it to pull users’ data from one app to another using APIs.  

A common issue for organizations is that of valuable customer insights being lost as data is transferred across different systems and functions channels. To address this problem, Twilio has bought Segment, to alleviate this worry for business by offering developers a single view of their customers’ engagements. 

Twilio has around 200,000 customers, with big names like Zoom Communications using its email functions as they experience growth. However, the available market for Twilio is currently $79 billion meaning the purchase of Segment will only accelerate this predicted growth and client list.

Why is Twilio buying Segment so important? 

The deal will allow Twilio, a cloud communications platform-as-a-service, to be connected to every touchpoint customer’s experience with Twilio’s end users. Segment’s technology will give Twilio a customer data platform which will give businesses more control over the movement of customers’ data throughout organizations’ different channels. The plan is to then turn the customer experience data into actionable insights using intelligence about communications and touchpoints, for marketing, analytical tools, and data warehousing.

Twilio’s CEO Jeff Lawson stated that with the help of Segment, it can ”create more personalized, timely and impactful engagement across customer service, marketing, analytics, product, and sales.” He added that great customer engagement is the end goal.

Breaches in consumer data is a hot topic right now for companies, given that Segment guarantees enhanced tools to better protect users data, Twilio is now in a stronger position to offer solutions for this issue as well.

Twilio’s plan for growth 

The purchasing of Segment is a natural progression of how Twilio has advanced over the last decade. In 2018, Twilio purchased SendGrid for $2 billion, in its biggest acquisition to date. Buying smaller technology companies that excel in their niche is a go-to strategy for larger organizations looking to increase growth, it looks like that’s exactly what Twilio is doing.

The two companies already have some intriguing synergies, there are even ex-Twilio employees working at Segment. Both are also built around using APIs to accommodate other services and integration between the two companies is already being used.

By offering relevant interactions with clients users, it’s predicted Twilio’s stock will only rise as the two expand and address new challenges. 

Is now the time to buy?

Twilio shares soared by 8% after the announcement, with the stock also reaching a record high of $331.71 per share. Investors predict that this company will grow significantly, now just might be the time to buy. Segment and Twilio now have a great opportunity to create the number one customer engagement platform of the future, with Salesforce and Adobe being dominant players in this field. In a battle to be crowned the ultimate channel between customer data and information technology resources, who will triumph?

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