“When you use Signal, your data is stored in encrypted form on your devices. The only information that is stored on the Signal servers for each account is the phone number you registered with, the date and time you joined the service, and the date you last logged on.”
It was almost certainly to reduce operating costs, but I doubt they lost a significant number of users over it. The vast majority of their users are in countries where SMS isn’t really used anymore.
They pretty much straight up said keeping up with SMS on all the different phones and trying to make sure it works, testing, debugging, etc, they were spending a ton of time and effort on something that isn’t even secure. The main decision was to keep operating costs down