The News: SAN FRANCISCO – Twilio (NYSE: TWLO) today announced that it has entered into a definitive agreement to acquire Segment for approximately $3.2 billion in Twilio Class A common stock, on a fully diluted and cash free, debt free basis. The transaction is expected to close in the fourth quarter of 2020. Read the full press release on Twilio.
Analyst Take: In my early predictions of top digital transformation trends for 2021, I had pinned the growth and viability of the customer data platform (CDP) as an area to watch closely. Twilio, came in ahead of schedule with its announcement of the acquisition of Segment, a rapidly growing VC backed CDP upstart for the above mentioned $3.2 billion in an all stock deal.
The CDP itself is the next up-leveling of advanced customer analytics. Really, the idea of taking all data, from all sources and making it usable in as close to real-time as possible to put the right experience in front of the customer at the right time. Sounds easy enough, but it isn’t. This is precisely why software and tech leaders from Microsoft, Adobe, Oracle, Salesforce, Treasure Data and more are all investing heavily in building a simple to deploy CDP that meets the potential of customer engagement with vast data while also keeping careful consideration as to privacy, security, data sovereignty and ease of use.
For Twilio and Segment, the marriage seems pretty natural. With Segment as part of the Twilio’s Engagement Cloud, the company will be able to create more personalized, timely and impactful engagement across customer service, marketing, analytics, product and sales. The company indicated it sees the potential to build the customer engagement platform of the future–I would agree this partnership will certainly play a role in enabling next level customer engagement capabilities.
I also believe that Twilio’s massive customer reach will instantly extend Segment’s revenue streams adding viability and diversification revenue for both of the combined companies.
Overall Impressions of the Twilio Acquisition of Segment
Segment on its own was showing significant momentum as it was already competing successfully with a host of very large software providers. This can be attributed to the company’s strong leadership and vision as well as its simplicity that minimized dependence on many monolithic applications with hard to access data.
The Twilio acquisition will undoubtedly strengthen the company and expand its footprint significantly–With the biggest impact being its reach to more developers and customers.
The CDP category is hot. I’m expecting more consolidation in the coming year as this becomes a larger priority for B2B and B2C marketers. The ability to deliver on the promise of data has often been overstated and underwhelming for a variety of reasons. I’m eager to see how Twilio with Segment can better serve consumers and businesses with its ambitious vision of the future of customer engagement platforms.
Futurum Research provides industry research and analysis. These columns are for educational purposes only and should not be considered in any way investment advice.