UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________

FORM 10-Q

____________________________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                  TO

Commission File Number 001-36164

____________________________________________________

Twitter, Inc.

(Exact name of registrant as specified in its charter)

____________________________________________________

Delaware	20-8913779
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1355 Market Street, Suite 900

San Francisco, California 94103

(Address of principal executive offices and Zip Code)

(415) 222-9670

(Registrant’s telephone number, including area code)

____________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.000005 per share	TWTR	New York Stock Exchange
Preferred Stock Purchase Rights	N/A	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

The number of shares of the registrant’s common stock outstanding as of April 22, 2022 was 764,180,688.

TABLE OF CONTENTS

	PART I – FINANCIAL INFORMATION	Page
Item 1.	Financial Statements (Unaudited)	6
	Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	6
	Consolidated Statements of Income for the Three Months Ended March 31, 2022 and March 31, 2021	7
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2022 and March 31, 2021	8
	Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2022 and March 31, 2021	9
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and March 31, 2021	10
	Notes to Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.	Controls and Procedures	47
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	74
Item 6.	Exhibits	75
	Signatures	77

2

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•our proposed acquisition by entities affiliated with Elon Musk, including our expectations regarding the timing and completion thereof;

•our ability to attract and retain people on Twitter and increase their level of engagement, including ad engagement, and its impact on revenue;

•our expectations regarding our revenue growth, including the impact of COVID-19, Apple’s App Tracking Transparency policy, and the war in Ukraine, and our cost and expenses growth;

•our expectations regarding our monetizable daily active usage or users (mDAU), mDAU growth and growth rates and related opportunities, as well as the continued usage of our website and mobile applications, including the impact of seasonality;

•our plans regarding health and safety and our other top priorities, including our expectations regarding the impact on our reported metrics, policies, enforcement and preventing manipulation of our platform;

•the impact of the COVID-19 pandemic and related responses of businesses and governments to the pandemic on our operations and personnel, and on commercial activity and advertiser demand across our platform and on our operating results;

•our ability to develop or acquire new products, product features and services, improve our existing products and services, including with respect to Promoted Products, video and performance advertising, and increase the value of our products and services;

•our business strategies, plans and priorities, our plans for headcount growth, investment in our research and development efforts, investment in capital expenditures, and our plans to scale capacity and enhance capability and reliability of our infrastructure and new data center;

•our ability to provide new content from third parties, including our ability to secure video content on terms that are acceptable to us;

•our ability to attract advertisers to our platforms, products and services and increase the amount that advertisers spend with us;

•our ability to improve monetization of our products and services;

•our future financial performance, including trends in ad engagements and cost per ad engagement, revenue, costs and expenses (including stock-based compensation) and income taxes;

•our expectations regarding certain deferred tax assets and fluctuations in our tax expense and cash taxes;

•the impact of laws and regulations relating to privacy, data protection, cybersecurity, content or copyright;

•our expectations regarding outstanding litigation or the decisions of the courts;

3

•the effects of seasonal trends on our results of operations;

•the impact of our future transactions and corporate structuring on our income and other taxes;

•our expectations regarding our future share repurchases;

•the sufficiency of our cash and cash equivalents, short-term investment balance and credit facility together with cash generated from operations and continued access to capital markets to meet our working capital, capital expenditure, and other cash requirements including authorized share repurchases;

•our ability to timely and effectively develop, invest in, scale and adapt our existing technology and network infrastructure;

•our ability to successfully acquire and integrate companies and assets;

•the impact of geopolitical events, including the war in Ukraine; and

•our expectations regarding international operations and foreign exchange gains and losses.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, operating results, cash flows or prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

4

NOTE REGARDING KEY METRICS

We review a number of metrics, including monetizable daily active usage or users (mDAU), changes in ad engagements and changes in cost per ad engagement, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Key Metrics” for a discussion of how we calculate mDAU, changes in ad engagements and changes in cost per ad engagement.

We define mDAU as people, organizations, or other accounts who logged in or were otherwise authenticated and accessed Twitter on any given day through twitter.com, Twitter applications that are able to show ads, or paid Twitter products, including subscriptions. Average mDAU for a period represents the number of mDAU on each day of such period divided by the number of days for such period. Changes in mDAU are a measure of changes in the size of our daily logged in or otherwise authenticated active total accounts. To calculate the year-over-year change in mDAU, we subtract the average mDAU for the three months ended in the previous year from the average mDAU for the same three months ended in the current year and divide the result by the average mDAU for the three months ended in the previous year. Additionally, our calculation of mDAU is not based on any standardized industry methodology and is not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies. Similarly, our measures of mDAU growth and engagement may differ from estimates published by third parties or from similarly-titled metrics of our competitors due to differences in methodology.

The numbers of mDAU presented in this Quarterly Report on Form 10-Q are based on internal company data. While these numbers are based on what we believe to be reasonable estimates for the applicable period of measurement, there are inherent challenges in measuring usage and engagement across our large number of total accounts around the world. Furthermore, our metrics may be impacted by our information quality efforts, which are our overall efforts to reduce malicious activity on the service, inclusive of spam, malicious automation, and fake accounts. For example, there are a number of false or spam accounts in existence on our platform. We have performed an internal review of a sample of accounts and estimate that the average of false or spam accounts during the first quarter of 2022 represented fewer than 5% of our mDAU during the quarter. The false or spam accounts for a period represents the average of false or spam accounts in the samples during each monthly analysis period during the quarter. In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated. We are continually seeking to improve our ability to estimate the total number of spam accounts and eliminate them from the calculation of our mDAU, and have made improvements in our spam detection capabilities that have resulted in the suspension of a large number of spam, malicious automation, and fake accounts. We intend to continue to make such improvements. After we determine an account is spam, malicious automation, or fake, we stop counting it in our mDAU, or other related metrics. We also treat multiple accounts held by a single person or organization as multiple mDAU because we permit people and organizations to have more than one account. Additionally, some accounts used by organizations are used by many people within the organization. As such, the calculations of our mDAU may not accurately reflect the actual number of people or organizations using our platform.

In addition, geographic location data collected for purposes of reporting the geographic location of our mDAU is based on the IP address or phone number associated with the account when an account is initially registered on Twitter. The IP address or phone number may not always accurately reflect a person’s actual location at the time they engaged with our platform. For example, someone accessing Twitter from the location of the proxy server that the person connects to rather than from the person’s actual location.

We regularly review and may adjust our processes for calculating our internal metrics to improve their accuracy.

5

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

TWITTER, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(Unaudited)

	March 31, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	2,283,308	$	2,186,549
Short-term investments	3,978,645		4,207,133
Accounts receivable, net of allowance for doubtful accounts of $13,947 and $15,278	948,142		1,217,404
Prepaid expenses and other current assets	265,973		266,484
Assets held for sale	—		40,800
Total current assets	7,476,068		7,918,370
Property and equipment, net	2,150,581		2,082,160
Operating lease right-of-use assets	1,272,435		1,195,124
Intangible assets, net	59,725		69,324
Goodwill	1,298,462		1,301,520
Deferred tax assets, net	941,883		1,148,573
Other assets	351,803		344,445
Total assets	$	13,550,957	$	14,059,516
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	189,524	$	203,171
Accrued and other current liabilities	738,778		918,350
Operating lease liabilities, short-term	208,405		222,346
Total current liabilities	1,136,707		1,343,867
Convertible notes, long-term	3,561,067		3,559,023
Senior notes, long-term	1,683,114		693,996
Operating lease liabilities, long-term	1,173,879		1,071,209
Deferred and other long-term tax liabilities, net	41,227		40,691
Other long-term liabilities	50,047		43,531
Total liabilities	7,646,041		6,752,317
Commitments and contingencies (Note 15)
Stockholders' equity:
Preferred stock, $0.000005 par value-- 200,000 shares authorized; none issued and outstanding	—		—
Common stock, $0.000005 par value-- 5,000,000 shares authorized; 763,578 and 799,384 shares issued and outstanding	4		4
Additional paid-in capital	6,677,294		8,432,112
Treasury stock, at cost-- 0 and 120 shares	—		(5,295)
Accumulated other comprehensive loss	(155,522)		(117,320)
Accumulated deficit	(616,860)		(1,002,302)
Total stockholders' equity	5,904,916		7,307,199
Total liabilities and stockholders' equity	$	13,550,957	$	14,059,516

The accompanying notes are an integral part of these consolidated financial statements.

6

TWITTER, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

	Three Months Ended March 31,
	2022		2021
Revenue	$	1,200,984	$	1,036,018
Costs and expenses
Cost of revenue	507,450		381,008
Research and development	371,695		250,709
Sales and marketing	299,809		234,592
General and administrative	149,863		117,527
Total costs and expenses	1,328,817		983,836
Income (loss) from operations	(127,833)		52,182
Interest expense	(15,444)		(13,185)
Interest income	7,962		11,001
Other income (expense), net	(6,506)		6
Gain on sale of asset group	970,474		—
Income before income taxes	828,653		50,004
Provision (benefit) for income taxes	315,367		(18,001)
Net income	$	513,286	$	68,005
Net income per share:
Basic	$	0.66	$	0.09
Diluted	$	0.61	$	0.08
Numerator used to compute net income per share:
Basic	$	513,286	$	68,005
Diluted	$	515,313	$	68,005
Weighted-average shares used to compute net income per share:
Basic	778,937		795,633
Diluted	838,590		872,187

The accompanying notes are an integral part of these consolidated financial statements.

7

TWITTER, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2022		2021
Net income	$	513,286	$	68,005
Other comprehensive loss, net of tax:
Change in unrealized loss on investments in available-for-sale securities	(32,177)		(11,018)
Change in foreign currency translation adjustment	(6,025)		(19,820)
Net change in accumulated other comprehensive loss	(38,202)		(30,838)
Comprehensive income	$	475,084	$	37,167

The accompanying notes are an integral part of these consolidated financial statements.

8

TWITTER, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2022			2021
	Shares	Amount		Shares	Amount
Common stock
Balance, beginning of period	799,384	$	4	796,000	$	4
Issuance of common stock in connection with RSU vesting	4,121	—		4,400	—
Exercise of stock options	5	—		523	—
Shares withheld related to net share settlement of equity awards	(114)	—		(155)	—
Repurchases of common stock	(39,788)	—		(2,723)	—
Other activities	(30)	—		38	—
Balance, end of period	763,578	$	4	798,083	$	4
Additional paid-in capital
Balance, beginning of period	—	$	8,432,112	—	$	9,167,138
Exercise of stock options	—	77		—	1,957
Shares withheld related to net share settlement of equity awards	—	(4,190)		—	(10,569)
Stock-based compensation	—	199,210		—	125,399
Purchase of convertible note hedge	—	—		—	(213,469)
Tax related to purchase of convertible note hedge	—	—		—	49,262
Issuance of warrants	—	—		—	161,144
Repurchases of common stock	—	(1,349,915)		—	(161,552)
Purchase of forward contract under accelerated share repurchase agreements	—	(600,000)		—	—
Cumulative-effect adjustment from adoption of new accounting standard	—	—		—	(567,547)
Balance, end of period	—	$	6,677,294	—	$	8,551,763
Treasury stock
Balance, beginning of period	—	$	(5,295)	—	$	(5,297)
Retirement of treasury stock	—	5,295		—	5,297
Repurchases of common stock	—	—		—	(5,297)
Balance, end of period	—	$	—	—	$	(5,297)
Accumulated other comprehensive loss
Balance, beginning of period	—	$	(117,320)	—	$	(66,094)
Other comprehensive loss	—	(38,202)		—	(30,838)
Balance, end of period	—	$	(155,522)	—	$	(96,932)
Accumulated deficit
Balance, beginning of period	—	$	(1,002,302)	—	$	(1,125,669)
Repurchases of common stock	—	(127,844)		—	—
Cumulative-effect adjustment from adoption of new accounting standard	—	—		—	344,776
Net income	—	513,286		—	68,005
Balance, end of period	—	$	(616,860)	—	$	(712,888)
Total stockholders' equity	763,578	$	5,904,916	798,083	$	7,736,650

The accompanying notes are an integral part of these consolidated financial statements.

9

TWITTER, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities
Net income	$	513,286	$	68,005
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	160,283		131,052
Stock-based compensation expense	177,263		110,873
Bad debt expense	(709)		(1,405)
Deferred income taxes	190,707		(23,873)
Gain on sale of asset group	(970,474)		—
Other adjustments	5,992		4,739
Changes in assets and liabilities, net of assets acquired and liabilities assumed from acquisitions:
Accounts receivable	190,737		189,297
Prepaid expenses and other assets	(48,836)		(80,989)
Operating lease right-of-use assets	66,054		49,246
Accounts payable	(35,610)		(24,808)
Accrued and other liabilities	(67,953)		6,382
Operating lease liabilities	(54,649)		(38,335)
Net cash provided by operating activities	126,091		390,184
Cash flows from investing activities
Purchases of property and equipment	(163,174)		(181,181)
Proceeds from sales of property and equipment	2,482		1,835
Purchases of marketable securities	(1,100,837)		(1,370,830)
Proceeds from maturities of marketable securities	697,351		1,221,461
Proceeds from sales of marketable securities	590,593		1,067,603
Purchases of investments in privately-held companies	(5,014)		(30,867)
Proceeds from sale of asset group	1,050,000		—
Investments in Finance Justice Fund	(6,500)		(10,200)
Business combinations, net of cash acquired	—		(8,378)
Other investing activities	—		(9,085)
Net cash provided by investing activities	1,064,901		680,358
Cash flows from financing activities
Proceeds from issuance of convertible notes	—		1,437,500
Proceeds from issuance of senior notes	1,000,000		—
Purchases of convertible note hedges	—		(213,469)
Proceeds from issuance of warrants concurrent with note hedges	—		161,144
Debt issuance costs	(11,270)		(16,769)
Repurchases of common stock	(2,077,759)		(161,552)
Taxes paid related to net share settlement of equity awards	(4,190)		(10,569)
Payments of finance lease obligations	—		(565)
Proceeds from exercise of stock options	66		1,958
Net cash provided by (used in) financing activities	(1,093,153)		1,197,678
Net increase in cash, cash equivalents and restricted cash	97,839		2,268,220
Foreign exchange effect on cash, cash equivalents and restricted cash	(814)		(8,018)
Cash, cash equivalents and restricted cash at beginning of period	2,210,685		2,011,276
Cash, cash equivalents and restricted cash at end of period	$	2,307,710	$	4,271,478
Supplemental disclosures of non-cash investing and financing activities
Changes in accrued property and equipment purchases	$	36,166	$	57,030
Reconciliation of cash, cash equivalents and restricted cash as shown in the consolidated statements of cash flows
Cash and cash equivalents	$	2,283,308	$	4,248,702
Restricted cash included in prepaid expenses and other current assets	8,139		3,516
Restricted cash included in other assets	16,263		19,260
Total cash, cash equivalents and restricted cash	$	2,307,710	$	4,271,478

The accompanying notes are an integral part of these consolidated financial statements.

10

TWITTER, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of Twitter, Inc. and its wholly-owned subsidiaries (collectively, “Twitter” or the “Company”). All intercompany accounts and transactions have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP). The unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and reflect, in management’s opinion, all adjustments of a normal, recurring nature that are necessary for the fair statement of the Company’s financial position, results of operations and cash flows for the interim periods, but are not necessarily indicative of the results expected for the full fiscal year or any other period.

The interim consolidated financial statements and these related notes should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Prior Period Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, as well as related disclosure of contingent assets and liabilities. Actual results could differ materially from the Company’s estimates due to risks and uncertainties, including uncertainty in the current economic environment due to the global impact of the COVID-19 pandemic. To the extent that there are material differences between these estimates and actual results, the Company’s financial condition or operating results will be affected. The Company bases its estimates on past experience and other assumptions that the Company believes are reasonable under the circumstances, and the Company evaluates these estimates on an ongoing basis.

Recent Accounting Pronouncements

There have been no recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2022, as compared to the recent accounting pronouncements described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, that are of significance or potential significance to the Company.

Significant Accounting Policies

There have been no material changes to the Company's significant accounting policies from its Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

11

Note 2. Revenue

Revenue Recognition

Revenue is recognized when the control of promised goods or services is transferred to customers at an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those goods or services. The Company identifies its contracts with customers and all performance obligations within those contracts. The Company then determines the transaction price and allocates the transaction price to the performance obligations within the Company's contracts with customers, recognizing revenue when, or as the Company satisfies its performance obligations. While the majority of the Company's revenue transactions are based on standard business terms and conditions, the Company also enters into sales agreements with advertisers and data partners that sometimes involve multiple performance obligations and occasionally include non-standard terms or conditions.

Revenue by geography is based on the billing address of the customers. The following tables set forth revenue by services and revenue by geographic area (in thousands):

	Three Months Ended March 31,
	2022		2021
Revenue by services:
Advertising services	$	1,106,578	$	898,840
Subscription and other (1)	94,406		137,178
Total revenue	$	1,200,984	$	1,036,018

(1) To better reflect the Company's business opportunities, including the sale of MoPub and the launch of Twitter Blue, the name of “Data Licensing and Other Revenue” has been updated to “Subscription and Other Revenue”. This revenue line includes subscription revenue from the Twitter Developer Platform, Twitter Blue, and other subscription-related offerings.

	Three Months Ended March 31,
	2022		2021
Revenue by geographic area:
United States	$	671,500	$	556,220
Japan	179,593		169,964
Rest of World	349,891		309,834
Total revenue	$	1,200,984	$	1,036,018

12

Contract Balances

The Company enters into contracts with its customers, which may give rise to contract liabilities (deferred revenue) and contract assets (unbilled revenue). The payment terms and conditions within the Company’s contracts vary by the type and location of its customer and products or services purchased, the substantial majority of which are due in less than one year. When the timing of revenue recognition differs from the timing of payments made by customers, the Company recognizes either unbilled revenue (its performance precedes the billing date) or deferred revenue (customer payment is received in advance of performance).

Unbilled Revenue (Contract Assets)

The Company presents unbilled revenue on the consolidated balance sheets within prepaid expenses and other current assets and within other assets. The Company’s contracts do not contain material financing components. The Company's unbilled revenue primarily consists of amounts that have yet to be billed under contracts with escalating fee structures. Specifically, because the Company generally recognizes revenue on a straight-line basis for data licensing arrangements with escalating fee structures, revenue recognized represents amounts to which the Company is contractually entitled; however, the revenue recognized exceeds the amounts the Company has a right to bill as of the period end, thus resulting in unbilled revenue.

Deferred Revenue (Contract Liabilities)

The Company presents deferred revenue primarily within accrued and other current liabilities on the consolidated balance sheets and there is not expected to be any material non-current contract liabilities given the Company's contracting provisions. The Company's deferred revenue balance primarily consists of cash payments due in advance of satisfying its performance obligations relating to data licensing contracts and performance obligations given to customers based on their spend relating to advertising contracts, for which the Company defers, as they represent material rights. The Company recognizes deferred revenue relating to its data licensing contracts on a straight-line basis over the period in which the Company provides data. The Company recognizes deferred revenue relating to its advertising contracts based on the amount of customer spend and the relative standalone selling price of the material rights.

The following table presents contract balances (in thousands):

	March 31, 2022		December 31, 2021
Unbilled revenue	$	35,930	$	44,880
Deferred revenue	$	67,194	$	79,414

The amount of revenue recognized in the three months ended March 31, 2022 that was included in the deferred revenue balance as of December 31, 2021 was $52.7 million. This revenue consists primarily of revenue recognized as a result of the utilization of bonus ads inventory earned by and material rights provided to customers in prior periods and the satisfaction of the Company’s performance obligations relating to data licensing contracts with advance cash payments.

The amount of revenue recognized from obligations satisfied (or partially satisfied) in prior periods was not material.

The decrease in the unbilled revenue balance from December 31, 2021 to March 31, 2022 was primarily attributable to differences between revenue recognized and amounts billed in the Company's data licensing arrangements with escalating fee structures due to recognizing such fees as revenue on a straight-line basis.

The decrease in the deferred revenue balance from December 31, 2021 to March 31, 2022 was primarily due to the delivery of bonus ads inventory and the satisfaction of the Company's performance obligations relating to data licensing contracts with advance cash payments, offset by bonus ads inventory offered to customers during the period for meeting certain spend targets and the receipt of advance payments for data licensing contracts.

Remaining Performance Obligations

As of March 31, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations in contracts with an original expected duration exceeding one year is $627.2 million. This total amount primarily consists of long-term data licensing contracts and excludes deferred revenue related to the Company’s short-term advertising service arrangements. The Company expects to recognize this amount as revenue over the following time periods (in thousands):

	Remaining Performance Obligations
	Total		Remainder of 2022		2023		2024 and Thereafter
Revenue expected to be recognized on remaining performance obligations	$	627,164	$	182,862	$	194,894	$	249,408

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Note 3. Cash, Cash Equivalents and Short-term Investments

Cash, cash equivalents and short-term investments consist of the following (in thousands):

	March 31, 2022		December 31, 2021
Cash and cash equivalents:
Cash	$	334,478	$	336,958
Money market funds	760,677		1,000,671
U.S. government and agency securities	99,972		—
Corporate notes, commercial paper and certificates of deposit	1,088,181		848,920
Total cash and cash equivalents	$	2,283,308	$	2,186,549
Short-term investments:
U.S. government and agency securities	$	306,805	$	374,868
Corporate notes, commercial paper and certificates of deposit	3,669,368		3,829,123
Marketable equity securities	2,472		3,142
Total short-term investments	$	3,978,645	$	4,207,133

The contractual maturities of debt securities classified as available-for-sale as of March 31, 2022 were as follows (in thousands):

	March 31, 2022
Due within one year	$	2,504,096
Due after one year through five years	1,472,077
Total	$	3,976,173

The following tables summarize unrealized gains and losses related to available-for-sale debt securities classified as short-term investments on the Company’s consolidated balance sheets (in thousands):

	March 31, 2022
	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregated Estimated Fair Value
U.S. government and agency securities	$	311,105	$	—	$	(4,300)	$	306,805
Corporate notes, commercial paper and certificates of deposit	3,703,202		498		(34,332)		3,669,368
Total available-for-sale debt securities classified as short-term investments	$	4,014,307	$	498	$	(38,632)	$	3,976,173

	December 31, 2021
	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregated Estimated Fair Value
U.S. government and agency securities	$	376,966	$	12	$	(2,110)	$	374,868
Corporate notes, commercial paper and certificates of deposit	3,832,983		4,873		(8,733)		3,829,123
Total available-for-sale debt securities classified as short-term investments	$	4,209,949	$	4,885	$	(10,843)	$	4,203,991

The gross unrealized loss on available-for-sale debt securities in a continuous loss position for 12 months or longer was not material as of March 31, 2022 and December 31, 2021.

The Company evaluates whether the unrealized loss on available-for-sale debt securities is the result of the credit worthiness of the corporate notes it held, or other non-credit-related factors such as liquidity, by reviewing a number of factors such as the implied yield of the corporate note based on the market price, the nature of the invested entity's business or industry, market capitalization relative to debt, changes in credit ratings, and the market prices of the corporate notes subsequent to period end. As of March 31, 2022, the gross unrealized loss on available-for-sale debt securities was $38.6 million. The unrealized losses were not determined to be credit-related, and there were no expected credit losses related to the Company's available-for-sale debt securities. As of March 31, 2022, no allowance for credit losses in short-term investments was recorded.

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Note 4. Fair Value Measurements

The Company measures its cash equivalents, short-term investments and derivative financial instruments at fair value. The Company classifies its cash equivalents, short-term investments and derivative financial instruments within Level 1 or Level 2 because the Company values these investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs. The fair value of the Company’s Level 1 financial assets is based on quoted market prices of the identical underlying security. The fair value of the Company’s Level 2 financial assets is based on inputs that are directly or indirectly observable in the market, including the readily-available pricing sources for the identical underlying security that may not be actively traded.

The following tables set forth the fair value of the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021 based on the three-tier fair value hierarchy (in thousands):

	March 31, 2022
	Level 1		Level 2		Total
Assets
Cash equivalents:
Money market funds	$	760,677	$	—	$	760,677
U.S. government and agency securities	—		99,972		99,972
Commercial paper	—		1,076,175		1,076,175
Certificates of deposit	—		12,006		12,006
Short-term investments:
U.S. government and agency securities	—		306,805		306,805
Corporate notes	—		2,163,942		2,163,942
Commercial paper	—		1,146,247		1,146,247
Certificates of deposit	—		359,179		359,179
Marketable equity securities	2,472		—		2,472
Other current assets:
Foreign currency contracts	—		8,630		8,630
Total	$	763,149	$	5,172,956	$	5,936,105
Liabilities
Other current liabilities:
Foreign currency contracts	$	—	$	5,322	$	5,322
Total	$	—	$	5,322	$	5,322

	December 31, 2021
	Level 1		Level 2		Total
Assets
Cash equivalents:
Money market funds	$	1,000,671	$	—	$	1,000,671
Commercial paper	—		843,919		843,919
Certificates of deposit	—		5,001		5,001
Short-term investments:
U.S. government and agency securities	—		374,868		374,868
Corporate notes	—		2,633,777		2,633,777
Commercial paper	—		953,103		953,103
Certificates of deposit	—		242,243		242,243
Marketable equity securities	3,142		—		3,142
Other current assets:
Foreign currency contracts	—		7,849		7,849
Total	$	1,003,813	$	5,060,760	$	6,064,573
Liabilities
Other current liabilities:
Foreign currency contracts	$	—	$	2,125	$	2,125
Total	$	—	$	2,125	$	2,125

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The following table sets forth the estimated fair value of the Company's convertible and senior notes outstanding as of March 31, 2022 based on the three-tier fair value hierarchy (in thousands):

	March 31, 2022
	Level 2		Level 3		Total
$1.15 billion in aggregate principal amount of 0.25% convertible senior notes due in 2024 (the 2024 Notes)	$	1,179,555	$	—	$	1,179,555
$1.0 billion in aggregate principal amount of 0.375% convertible senior notes due in 2025 (the 2025 Notes)	—		1,130,060		1,130,060
$1.44 billion in aggregate principal amount of 0% convertible senior notes due in 2026 (the 2026 Notes)	1,220,438		—		1,220,438
$700.0 million in aggregate principal amount of 3.875% senior notes due in 2027 (the 2027 Notes)	679,875		—		679,875
$1.0 billion in aggregate principal amount of 5.000% senior notes due in 2030 (the 2030 Notes)	993,750		—		993,750
Total	$	4,073,618	$	1,130,060	$	5,203,678

The estimated fair value of the 2024 Notes, the 2026 Notes, the 2027 Notes, and the 2030 Notes is determined based on a market approach, using the estimated or actual bids and offers of the respective notes in an over-the-counter market on the last business day of the period. The estimated fair value of the 2025 Notes is determined based on a binomial model, using inputs including risk free rate, volatility and discount yield. Refer to Note 11 – Convertible Notes and Senior Notes for further details on the Notes.

Derivative Financial Instruments

The Company enters into foreign currency forward contracts with financial institutions to reduce the risk that its earnings may be adversely affected by the impact of exchange rate fluctuations on monetary assets or liabilities denominated in currencies other than the functional currency of a subsidiary. These contracts do not subject the Company to material balance sheet risk due to exchange rate movements because gains and losses on these derivatives are intended to offset gains and losses on the hedged foreign currency denominated assets and liabilities. These foreign currency forward contracts are not designated as hedging instruments.

The Company recognizes these derivative instruments as either assets or liabilities on the consolidated balance sheets at fair value based on a Level 2 valuation. The Company records changes in the fair value (i.e., gains or losses) of the derivatives in other income (expense), net in the consolidated statements of income. The notional principal of foreign currency contracts outstanding was equivalent to $786.0 million and $910.5 million as of March 31, 2022 and December 31, 2021, respectively.

The fair values of outstanding derivative instruments for the periods presented on a gross basis are as follows (in thousands):

	Balance Sheet Location	March 31, 2022		December 31, 2021
Assets
Foreign currency contracts not designated as hedging instruments	Other current assets	$	8,630	$	7,849
Liabilities
Foreign currency contracts not designated as hedging instruments	Other current liabilities	$	5,322	$	2,125

The Company recognized $3.9 million and $2.1 million of net losses on its foreign currency contracts in the three months ended March 31, 2022 and 2021, respectively.

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Note 5. Property and Equipment, Net

The following tables set forth property and equipment, net by type and by geographic area for the periods presented (in thousands):

	March 31, 2022		December 31, 2021
Property and equipment, net
Equipment	$	2,671,127	$	2,603,304
Furniture and leasehold improvements	517,020		470,678
Capitalized software	1,051,084		948,710
Construction in progress	225,472		261,267
Total	4,464,703		4,283,959
Less: Accumulated depreciation and amortization	(2,314,122)		(2,201,799)
Property and equipment, net	$	2,150,581	$	2,082,160

	March 31, 2022		December 31, 2021
Property and equipment, net:
United States	$	2,100,821	$	2,038,597
International	49,760		43,563
Total property and equipment, net	$	2,150,581	$	2,082,160

Note 6. Operating Leases

The Company has operating leases primarily for office space and data center facilities. The Company subleases certain leased office space to third parties when it determines there is excess leased capacity. Operating lease right-of-use assets obtained in exchange for operating lease obligations were $146.6 million and $123.5 million in the three months ended March 31, 2022 and 2021, respectively.

Future lease payments under operating leases and sublease income as of March 31, 2022 were as follows (in thousands):

	Operating Leases		Sublease Income
Year Ending December 31,
Remainder of 2022	$	210,209	$	(3,302)
2023	234,934		(3,187)
2024	234,902		(1,725)
2025	229,758		(120)
2026	207,427		—
Thereafter	686,129		—
Total future lease payments (receipts)	1,803,359		$	(8,334)
Less: leases not yet commenced	(229,432)
Less: imputed interest	(191,643)
Total operating lease liabilities	$	1,382,284
Reconciliation of operating lease liabilities as shown on the consolidated balance sheets
Operating lease liabilities, short-term	$	208,405
Operating lease liabilities, long-term	1,173,879
Total operating lease liabilities	$	1,382,284

There were no other material changes in the Company's operating leases in the three months ended March 31, 2022, as compared to the disclosure in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

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Note 7. Goodwill and Intangible Assets

The following table presents the goodwill activities for the periods presented (in thousands):

Goodwill
Balance as of December 31, 2021	$	1,301,520
Other	(3,058)
Balance as of March 31, 2022	$	1,298,462

For each of the periods presented, gross goodwill balance equaled the net balance since no impairment charges have been recorded.

The following table presents the detail of intangible assets for the periods presented (in thousands):

	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
March 31, 2022:
Patents and developed technologies	$	106,261	$	(64,650)	$	41,611
Other	23,500		(5,386)		18,114
Total	$	129,761	$	(70,036)	$	59,725
December 31, 2021:
Patents and developed technologies	$	106,261	$	(57,988)	$	48,273
Assembled workforce	23,500		(2,449)		21,051
Total	$	129,761	$	(60,437)	$	69,324

Amortization expense associated with intangible assets was $9.6 million and $8.1 million for the three months ended March 31, 2022 and 2021, respectively.

Estimated future amortization expense as of March 31, 2022 is as follows (in thousands):

Remainder of 2022	$	21,667
2023	19,467
2024	6,673
2025	2,510
2026	2,410
Thereafter	6,998
Total	$	59,725

Note 8. Accrued and Other Current Liabilities

The following table presents the detail of accrued and other current liabilities for the periods presented (in thousands):

	March 31, 2022		December 31, 2021
Accrued compensation	$	261,051	$	325,113
Federal Trade Commission accrual (see Note 15)	—		150,000
Deferred revenue	64,404		78,541
Accrued operations and engineering costs	58,705		55,682
Accrued professional services	57,809		41,321
Accrued tax liabilities	54,294		47,830
Accrued publisher, content and ad network costs	46,083		45,025
Accrued other	196,432		174,838
Total	$	738,778	$	918,350

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Note 9. Investments in Privately-Held Companies

The Company makes strategic investments in privately-held companies that primarily consist of non-marketable equity securities without readily determinable fair values. The Company evaluates each investee to determine if the investee is a variable interest entity and, if so, whether the Company is the primary beneficiary of the variable interest entity. The Company has determined, as of March 31, 2022, there were no variable interest entities required to be consolidated in the Company’s consolidated financial statements. The Company’s non-marketable equity securities had a combined carrying value of $213.1 million and $207.4 million as of March 31, 2022 and December 31, 2021, respectively. The maximum loss the Company can incur for its investments is their carrying value.

The Company periodically evaluates the carrying value of its investments in privately-held companies when events and circumstances indicate that the carrying amount of the investment may not be recovered. No impairment charges were recorded in the three months ended March 31, 2022 and 2021. The Company records upward adjustments for the difference between the fair value and carrying value of its investments in privately-held companies resulting from observable price changes in orderly transactions for identical or similar investments. No upward adjustments were recorded in the three months ended March 31, 2022 and 2021. As of March 31, 2022, the Company recorded cumulative upward adjustments of $85.7 million on its investments in privately-held companies.

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Note 10. Sale of Asset Group

On January 1, 2022, the Company completed the sale of certain assets that comprised its MoPub business to AppLovin Corporation for a total consideration of $1.05 billion in cash. The assets sold, which were classified as assets held for sale on the consolidated balance sheets as of December 31, 2021, consisted only of goodwill. No liabilities were transferred in the transaction. The Company recorded a pre-tax gain of $970.5 million on the sale of its MoPub asset group in the consolidated statements of income in the three months ended March 31, 2022. The gain represents the excess of the proceeds from the sale less the carrying value of the net assets sold and closing and transition service costs. The sale of MoPub enables the Company to focus on key areas of the business, including performance-based advertising, SMB offerings, and commerce initiatives on Twitter. The sale did not represent a strategic shift that would have a major effect on the Company's operations and financial results, and therefore did not qualify for reporting as a discontinued operation.

Note 11. Convertible Notes and Senior Notes

Senior Notes

In February 2022, the Company issued $1.0 billion aggregate principal amount of 5.000% senior notes due 2030 (the 2030 Notes) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, and outside the United States pursuant to Regulation S under the Securities Act of 1933, as amended. The total net proceeds from this offering was approximately $988.7 million, after deducting $11.3 million of debt issuance costs.

The 2030 Notes represent senior unsecured obligations of the Company. The interest rate is fixed at 5.000% per annum and interest is payable semi-annually in arrears on March 1 and September 1 of each year, commencing on September 1, 2022. The 2030 Notes mature on March 1, 2030.

The Company may redeem the 2030 Notes, in whole or in part, at any time prior to December 1, 2029, at a price equal to 100% of the principal amount of the 2030 Notes plus a “make-whole” premium and accrued and unpaid interest, if any. On and after December 1, 2029, the Company may redeem the 2030 Notes at 100% of the principal amount of the 2030 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

In 2019, the Company issued $700.0 million aggregate principal amount of 3.875% senior notes due 2027 (the 2027 Notes, which we refer to together with the 2030 Notes as the Senior Notes) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, and outside the United States pursuant to Regulation S under the Securities Act of 1933, as amended. The total net proceeds from this offering were approximately $691.9 million, after deducting $8.1 million of debt issuance costs in connection with the issuance of the 2027 Notes. The 2027 Notes represent senior unsecured obligations of the Company. The interest rate is fixed at 3.875% per annum and interest is payable semi-annually in arrears on June 15 and December 15 of each year, which commenced on June 15, 2020. The 2027 Notes mature on December 15, 2027.

If the Company experiences a change of control triggering event (as defined in the indenture governing the applicable series of Senior Notes), the Company must offer to repurchase such Senior Notes at a repurchase price equal to 101% of the principal amount of the Senior Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date. A change of control triggering event occurs when a change of control (as defined in the indenture governing the applicable Senior Notes), including the Merger (as defined below), occurs accompanied or followed by a downgrade of the rating by each of Moody’s Investors Service, Inc. and S&P Global Ratings of the applicable series of Senior Notes between the first public announcement of such change of control and ends on the 60th day following consummation of such change of control.

Pursuant to the terms of the Merger Agreement as defined below, the Company is required to use its commercially reasonable best efforts to, solely at the Parent’s (as defined below) expense, cause the payoff, redemption, defeasance, discharge or other satisfaction of the Senior Notes on or subsequent to the effective time of the Merger.

Convertible Notes

In 2018, the Company issued $1.15 billion aggregate principal amount of 0.25% convertible senior notes due 2024 (the 2024 Notes) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The total net proceeds from this offering was approximately $1.14 billion, after deducting $12.3 million of debt issuance costs in connection with the 2024 Notes.

In 2020, the Company entered into an investment agreement (the Investment Agreement) with Silver Lake Partners V DE (AIV), L.P. (Silver Lake) relating to the issuance and sale to Silver Lake of $1.0 billion in aggregate principal amount of the Company's 0.375% convertible senior notes due 2025 (the 2025 Notes). The total net proceeds from this offering was approximately $985.3 million, after deducting $14.7 million of debt issuance costs in connection with the 2025 Notes.

In 2021, the Company issued $1.44 billion in aggregate principal amount of 0% convertible senior notes due 2026 (the 2026 Notes, which we refer to together with the 2024 Notes and the 2025 Notes as the Convertible Notes) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The total net proceeds from this offering was approximately $1.42 billion, after deducting $16.8 million of debt issuance costs in connection with the 2026 Notes.

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As described below, at the effective time of the Merger, holders of the Convertible Notes can require the Company (the surviving entity following the Merger) to repurchase their Notes at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest. Holders may also elect to surrender their Notes for conversion upon effectiveness of the Merger.

The Convertible Notes represent senior unsecured obligations of the Company. The interest rate of the 2024 Notes is fixed at 0.25% per annum and interest is payable semi-annually in arrears on June 15 and December 15 of each year. The interest rate of the 2025 Notes is fixed at 0.375% per annum and interest is payable semi-annually in arrears on March 15 and September 15 of each year. The 2026 Notes do not bear interest except in special circumstances described below, and the principal amount of the 2026 Notes does not accrete. The 2024 Notes, 2025 Notes, and 2026 Notes mature on June 15, 2024, March 15, 2025, and March 15, 2026, respectively.

Each $1,000 of principal of the 2024 Notes, 2025 Notes, and 2026 Notes will initially be convertible into 17.5001 shares, 24.0964 shares, and 7.6905 shares, respectively, of the Company’s common stock, which is equivalent to an initial conversion price of approximately $57.14, $41.50, and $130.03 per share, respectively, in each case, subject to adjustment upon the occurrence of specified events set forth in the indenture governing such series of Convertible Notes.

Holders of the 2024 Notes may convert their 2024 Notes at their option at any time on or after March 15, 2024 until close of business on the second scheduled trading day immediately preceding the maturity date of June 15, 2024. Holders of the 2026 Notes may convert their 2026 Notes at their option at any time on or after December 15, 2025 until close of business on the second scheduled trading day immediately preceding the maturity date of March 15, 2026. The 2025 Notes are convertible at the option of the holder at any time until the scheduled trading day prior to the maturity date.

Holders of the 2024 Notes and 2026 Notes may convert all or any portion of their 2024 Notes or 2026 Notes at the option of such holder prior to March 15, 2024 for the 2024 Notes, and prior to the close of business on the business day immediately preceding December 15, 2025 for the 2026 Notes, under the following circumstances:

1)during any calendar quarter, if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the applicable series of Convertible Notes on each applicable trading day;

2)during the five business day period after any five consecutive trading day period (the measurement period) in which the trading price (as defined in the indenture governing the applicable series of Convertible Notes) per $1,000 principal amount of such series of Convertible Notes for each trading day of the applicable measurement period was less than 98% of the product of the last reported sale price of T