Shares of the cloud communications firm Twilio Inc. nosedived in extended trading today after it issued a soft earnings and revenue outlook for the coming quarter.

The company did OK in the quarter just gone, reporting a third-quarter loss before certain costs such as stock compensation of 27 cents per share, ahead of Wall Street’s forecast of a 36-cent loss. Revenue for the period came to $983 million, beating the consensus estimate of $972.2 million. Overall, Twilio reported a net loss of $482.2 million, much bigger than the $224.1 million loss it delivered in the same period last year.

With respect to guidance for the fourth quarter, Twilio said it’s looking at a loss of six to 11 cents per share, with revenue of $995 million to $1.005 billion. Wall Street is looking for a loss of 12 cents on much higher revenue of $1.07 billion. The report set off alarm bells for investors, and Twilio’s stock fell more than 23% in extended trading, having already declined more than 3% earlier in the day.

Twilio co-founder and Chief Executive Jeff Lawson (pictured) said the company is facing “short-term headwinds” but insisted that the long-term opportunity in front of it “remains strong as companies continue building their customer engagement strategies, become more efficient, and aim to build better and more personalized relationships with their customers.”

Twilio is 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 recent years, Twilio has expanded into other markets too, with its biggest push coming the customer engagement sector. In the wake of its $3.2 billion acquisition of Segment Inc. in 2020, it launched its Twilio Engage growth automation platform, which is used by marketers to improve their customer relationships by creating more personalized experiences.

Though Twilio’s expansion into other markets is encouraging, investors are clearly concerned about the company’s slowing growth rate. Twilio’s revenue grew 33% year-over-year in the quarter just gone, slower than the 41% growth it recorded in the previous quarter.

It’s at least continuing to grow its customer base. At the end of the quarter it said it had more than 280,000 active customer accounts, up from 250,000 one year ago.

Twilio is at least taking steps to weather the macroeconomic storm. In September it announced that it will cut 11% of its employees, and today it said more than 800 of them will leave the company during the current quarter.

Constellation Research Inc. analyst Holger Mueller told SiliconANGLE that Twilio did well in the quarter, coming up just short of the $1 billion revenue milestone. The problem, according to Mueller, is that the company cannot seem to get its costs under control.

“Twilio’s costs almost doubled compared to the same quarter last year, and as a consequence its overall loss per share more than doubled,” Mueller explained. “The strategy to deal with this involves letting go 10% of the company’s overall staff. Yet Twilio is guiding to deliver more or less the same revenue as in the previous quarter. Doing so with one in 10 of its employees gone will be no small feat, and if it does achieve this, investors may well ask, why bring all these employees on in the first place? So all eyes are on the next quarter, which is looking like it will be a key one.”

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