Communications and customer engagement software provider Twilio Inc. said today that its co-founder and Chief Executive Officer Jeff Lawson is stepping down from his role with immediate effect.

He’ll be replaced by longtime company executive Khozema Shipchandler, who also assumes a seat on the board. The surprise move follows a longstanding battle between Lawson (pictured) and two activist investors who have been pushing for the company to make significant changes to its business operations.

Twilio announced Lawson’s departure in a regulatory filing, where it revealed it expects its fourth-quarter earnings, revenue and income to come in ahead of prior guidance. The markets reacted positively to the news, with Twilio’s stock up more than 6% after the bell.

“The time has come for me to pass the reins of this extraordinary company to a new CEO to lead Twilio through its next chapter,” Lawson said in a statement.

In addition to giving up the top job, Lawson will also step down from Twilio’s board of directors, where he had served as its chairman. Jeff Epstein, an existing board member and operating partner at Bessemer Venture Partners, one of the company’s biggest shareholders, will step up to take on the chairman role.

Shipchandler has more than 25 years experience of working in publicly listed companies. “As I step into the CEO role, I am focused on continuing to build on the considerable growth and operating improvements we’ve made across the board, plus taking a fresh look at the areas of the business that are underperforming to realize the full potential of our business,” he said.

The new CEO has a deep understanding of Twilio’s business, having most recently held the role of president of Twilio Communications. Prior to that, he served stints as the company’s chief operating officer and chief financial officer.

Despite today’s move, the activist investors at Anson Funds LLC and Legion Partners LLC, who have both taken sizable stakes in the company, are unlikely to be satisfied with the changes. They have been pushing for the company to sell itself completely, or divest its data and applications business unit, claiming that it’s underperforming.

Twilio claims more than 306,000 customers across the world and most recently reported annualized revenue of more than $4 billion. It’s best known for selling developer tools that make it possible to embed capabilities such as voice, text messages and video into software applications. The company’s software also streamlines communications for cloud-based apps. In addition, it has a growing business selling tools for customer engagement, such as its Twilio Engage growth automation platform that’s used by marketers to improve their customer relationships by creating more personalized experiences.

However, the once fast-growing Twilio has seen its revenue growth slow to a crawl in recent months as the company grapples with a weak global economy. In its most recent financial results, it revealed that its revenue rose by just 5%, a far cry from the days when it was regularly growing by more than 20%.

Holger Mueller of Constellation Research Inc. said Lawson did a great job in growing Twilio from its small beginnings into a communications platform-as-a-service powerhouse, outpacing its competitors. However, now that the company has become established, the focus for investors is firmly on building up its profitability, and “many of them felt it’s time for a change of leadership and a new modus operandi,” the analyst added.

With his impressive track record in finances, Schipchandler is likely to be a good choice of CEO, Mueller contended. “He recently turned around Twilio’s communications business and got it back into profitability, and this is exactly what investors want to see. However, there could still be more changes afoot, with divestitures and other options still on the table.” he added.

In an effort to steady the ship, Twilio has made thousands of job cuts over the last 16 months. The first came back in September 2022, when it revealed it will lay off almost 1,000 staff in a move intended to increase profits and core priorities. Then in February 2023, it laid off an additional 1,400 employees. Most recently, in December, it said it will cut 5% of its workforce, or about 300 workers, citing underperformance in its data and applications business.

Anson Funds and Legion Partners have refused to let up, however, pushing for more significant changes to be made, and they appear to have gotten their way after several months of pressuring the company.

While Twilio grew remarkably well in earlier years, its recent voyage into the doldrums has made it an easy target for activist investors looking for a quick payday, said Charles King of Pund-IT Inc. “Given his long business history and recent leadership of Twilio’s communications business, Shipchandler should provide a steady hand to steer the company into fresher waters,” the analyst added. “Whether or not he can fend off the sharks following in the company’s wake is anyone’s guess.”

Indeed, the activist investors are unlikely to let up. Anson Funds portfolio manager Sagar Gupta said Lawson’s departure from the company is a “step in the right direction,” but signaled that he’s not prepared to ease the pressure on it anytime soon. “We believe that more actions are needed to maximize value for shareholders,” Gupta said. “We look forward to continuing to engage with Twilio’s Board and management team going forward.”

Gupta is said to be one of the primary movers and shakers behind the activist investors’ campaign. He previously represented Legion Partners and helped to build its stake in the company, before joining Anson Funds in the fall and amassing a fresh stake.

Photo: Fortune Brainstorm TECH/Flickr