Why CRM Innovator Twilio Wants To Spend $3B On Segment

Cloud communications platform Twilio Inc. TWLO is set to buy data startup Segment for a price tag between $3 billion and $4 billion.

Why It Matters: The deal would bring together two API companies.

Per MuleSoft, API is an acronym for "Application Programming Interface" — a software intermediary that allows multiple applications to talk to each other. Segment's tech will bolster Twilio's, as the two companies source data on customers across multiple apps and compile it into a single platform for clients to peruse and connect.

Who Benefits? Segment is backed by big-name venture capital firms, including Accel, Thrive Capital and Google Ventures (GV). The company was founded in 2011 and raised over $283 million. Its valuation is believed to be roughly $1.5 billion.

Twilio shareholders saw a boost in stock price of about 2.39% when the company closed at $306.24 per share on Oct. 9, when Forbes first broke the news.

See Also: Analysts On Twilio Investor Day: 'More Confidence In Owning TWLO For The Next Decade'

In the second quarter, San Francisco-based Twilio posted sales of $400.85 million. Earnings were up 10.73%, but Twilio still reported an overall loss of $102.64 million. In the first quarter, Twilio brought in $364.87 million in sales but lost $92.70 million in earnings.

The deal with Segment allows Twilio — a $45 billion public company — to get a leg up on rivals in the CRM space.

What's Next? According to TechCrunch, the transaction may be officially announced on Monday.

"Now under the Twilio umbrella, Segment can continue to build key integrations (like they have for Twilio data), which is being used globally inside Fortune 500 companies already," Haystack creator Semil Shah wrote on his blog.