California-headquartered Twilio (NYSE:TWLO), a customer engagement platform, is selling its ValueFirst Digital Media Private business to India-based Communications Platform as a Service (CPaaS) provider Tanla for an undisclosed sum. The deal is slated for July 2023 closure.
Rationale Behind the Sale
ValueFirst, a provider of businesses with multi-channel communication solutions and smart application programming interface (API), was acquired by Twilio in 2021 to rapidly expand into India and explore other products and services that ValueFirst has been delivering.
Twilio believes that ValueFirst’s acquisition by Tanla will better leverage the talent and business portfolio that ValueFirst has built and paves the best way to serve customers in India in the short and long term. The customer footprint of ValueFirst and Tanla are very complementary, with about 40% of ValueFirst’s revenue derived from customers that are “net new” to Tanla.
Though India continues to be a strategic market for Twilio, the company is selling ValueFirst to direct its resources toward other opportunities with better prospects. Twilio is undertaking these steps as activist investor Legion Partners is pushing the company for board changes and strategic options like divestitures. As of March 31, 2023, Legion reported a stake worth $40 million in Twilio.
In early June, Twilio completed the sale of its IoT business unit to Kore Group Holdings (KORE). Under the deal, Kore issued 10 million shares to Twilio, representing about 11.5% of Kore’s issued and outstanding shares.
Separately, on Wednesday, Twilio announced the expansion of its existing partnership with Google Cloud, owned by Alphabet (GOOGL) (GOOG), for bringing generative artificial intelligence (AI) solutions to its customer engagement products.
Is Twilio a Buy or Sell?
Twilio recently reported a softer-than-expected revenue outlook for Q2, reflecting the impact of persistent macro challenges. Last week, Stifel Nicolaus analyst J. Parker Lane reiterated a Hold rating on TWLO with a price target of $50.
Based on a mix of 10 Buys, 12 Holds, and 1 Sell, Twilio earns a Moderate Buy consensus rating.
The average price target stands at $64.89, indicating 2.97% upside potential. TWLO has risen 25% year-to-date.