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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________
FORM 10-Q
_____________________________________________
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
☐
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: 001-37806
_____________________________________________
twiliologored2a01.jpg
TWILIO INC.
(Exact name of registrant as specified in its charter)
_____________________________________________
Delaware26-2574840
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
101 Spear Street, Fifth Floor
San Francisco, California 94105
(Address of principal executive offices) (Zip Code)
(415) 390-2337
(Registrant’s telephone number, including area code)
____________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.001 per shareTWLONew York Stock Exchange

As of October 24, 2024, 153,383,697 shares of the registrant’s Class A common stock were outstanding.
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 x  No o
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 x  No o
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.    o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒
1

TWILIO INC.
Quarterly Report on Form 10-Q
For the Three Months Ended September 30, 2024
TABLE OF CONTENTS
Page


2

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
TWILIO INC.
Condensed Consolidated Balance Sheets
(Unaudited)
As of September 30,As of December 31,
20242023
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents$583,969 $655,931 
Short-term marketable securities2,114,279 3,356,064 
Accounts receivable, net550,901 562,773 
Prepaid expenses and other current assets299,173 329,204 
Total current assets3,548,322 4,903,972 
Property and equipment, net194,677 209,639 
Operating right-of-use assets58,509 73,959 
Equity method investment514,977 593,582 
Intangible assets, net265,841 350,490 
Goodwill5,243,266 5,243,266 
Other long-term assets211,665 234,799 
Total assets$10,037,257 $11,609,707 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$71,320 $119,615 
Accrued expenses and other current liabilities452,343 424,311 
Deferred revenue and customer deposits138,752 144,499 
Operating lease liability, current38,322 49,872 
Total current liabilities700,737 738,297 
Operating lease liability, noncurrent94,762 120,770 
Long-term debt, net990,173 988,953 
Other long-term liabilities22,718 29,135 
Total liabilities1,808,390 1,877,155 
Commitments and contingencies (Note 12)
Stockholders' equity:
Preferred stock— — 
Class A common stock
155 182 
Additional paid-in capital15,299,179 14,797,723 
Accumulated other comprehensive income24,395 619 
Accumulated deficit(7,094,862)(5,065,972)
Total stockholders’ equity8,228,867 9,732,552 
Total liabilities and stockholders’ equity$10,037,257 $11,609,707 
See accompanying notes to condensed consolidated financial statements.
3

TWILIO INC.
Condensed Consolidated Statements of Operations
(Unaudited)

Three Months EndedNine Months Ended
September 30,September 30,
2024202320242023
(In thousands, except share and per share amounts)
Revenue$1,133,649 $1,033,670 $3,263,201 $3,077,995 
Cost of revenue555,020 517,351 1,584,686 1,565,231 
Gross profit578,629 516,319 1,678,515 1,512,764 
Operating expenses:
Research and development260,903 241,654 756,170 707,145 
Sales and marketing212,576 262,898 644,150 784,383 
General and administrative106,350 114,071 332,300 361,491 
Restructuring costs3,694 3,437 13,330 140,281 
Impairment of long-lived assets— 3,162 — 34,278 
Total operating expenses583,523 625,222 1,745,950 2,027,578 
Loss from operations(4,894)(108,903)(67,435)(514,814)
Other income (expenses), net:
Share of losses from equity method investment(25,279)(31,058)(78,794)(93,838)
Impairment of strategic investments(803)— (1,470)(46,154)
Other income, net27,325 1 72,644 17,731 
Total other income (expenses), net1,243 (31,057)(7,620)(122,261)
Loss before provision for income taxes(3,651)(139,960)(75,055)(637,075)
Provision for income taxes(6,075)(1,747)(21,878)(12,958)
Net loss attributable to common stockholders$(9,726)$(141,707)$(96,933)$(650,033)
Net loss per share attributable to common stockholders, basic and diluted$(0.06)$(0.78)$(0.57)$(3.54)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted159,091,110 181,749,309 170,063,452 183,854,526 
See accompanying notes to condensed consolidated financial statements.
4

TWILIO INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
Three Months EndedNine Months Ended
September 30,September 30,
2024202320242023
(In thousands)
Net loss$(9,726)$(141,707)$(96,933)$(650,033)
Other comprehensive income:
Unrealized gain on marketable securities29,317 13,921 22,303 53,276 
Foreign currency translation— 5,018 — 5,587 
Net change in market value of effective foreign currency
      forward exchange contracts 		6,613 (8,626)1,285 (7,458)
Share of other comprehensive (loss) income from equity method
      investment		(864)(2,764)188 17,030 
Total other comprehensive income35,066 7,549 23,776 68,435 
Comprehensive income (loss) attributable to common
      stockholders		$25,340 $(134,158)$(73,157)$(581,598)
See accompanying notes to condensed consolidated financial statements.
5
TWILIO INC.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)

Three Months Ended September 30, 2024
Common Stock
Class A		Additional Paid-In Capital
Accumulated Other Comprehensive (Loss) Income
Accumulated DeficitTotal Stockholders' Equity
SharesAmount
(In thousands, except share amounts)
Balance as of June 30, 2024
164,150,089 $164 $15,136,786 $(10,671)$(6,446,806)$8,679,473 
Net loss— — — — (9,726)(9,726)
Exercises of vested stock options43,562 — 969 — — 969 
Vesting of restricted stock units1,813,439 2 (2)— — — 
Value of equity awards withheld for tax liability(302)— (18)— — (18)
Shares of Class A common stock issued and donated to charity22,102 — 1,301 — — 1,301 
Unrealized gain on marketable securities
— — — 29,317 — 29,317 
Repurchases of shares of Class A common stock including related costs(10,642,581)(11)— — (638,330)(638,341)
Net change in market value of effective foreign currency forward exchange contracts— — — 6,613 — 6,613 
Share of other comprehensive loss from equity method investment
— — — (864)— (864)
Stock-based compensation— — 159,413 — — 159,413 
Stock-based compensation - restructuring— — 730 — — 730 
Balance as of September 30, 2024
155,386,309 $155 $15,299,179 $24,395 $(7,094,862)$8,228,867 

See accompanying notes to condensed consolidated financial statements.























6
TWILIO INC.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)

Nine Months Ended September 30, 2024
Common Stock
Class A		Additional Paid-In Capital
Accumulated Other Comprehensive Income
Accumulated DeficitTotal Stockholders' Equity
SharesAmount
(In thousands, except share amounts)
Balance as of December 31, 2023
181,945,771 $182 $14,797,723 $619 $(5,065,972)$9,732,552 
Net loss— — — — (96,933)(96,933)
Exercises of vested stock options114,995 — 2,068 — — 2,068 
Vesting of restricted stock units4,893,903 5 (5)— — — 
Value of equity awards withheld for tax liability(27,839)— (1,981)— — (1,981)
Shares issued under ESPP394,479 — 20,601 — — 20,601 
Shares of Class A common stock issued and donated to charity66,306 — 3,911 — — 3,911 
Shares returned from escrow(696)— (192)— — (192)
Unrealized gain on marketable securities
— — — 22,303 — 22,303 
Repurchases of shares of Class A common stock including related costs(32,000,610)(32)— — (1,931,957)(1,931,989)
Net change in market value of effective foreign currency forward exchange contracts— — — 1,285 — 1,285 
Share of other comprehensive income from equity method investment— — — 188 — 188 
Stock-based compensation— — 473,876 — — 473,876 
Stock-based compensation - restructuring— — 3,178 — — 3,178 
Balance as of September 30, 2024
155,386,309 $155 $15,299,179 $24,395 $(7,094,862)$8,228,867 
See accompanying notes to condensed consolidated financial statements.
7
TWILIO INC.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)

Three Months Ended September 30, 2023
Common Stock
Class A		Additional Paid-In Capital
Accumulated Other Comprehensive Loss
Accumulated DeficitTotal Stockholders' Equity
SharesAmount
(In thousands, except share amounts)
Balance as of June 30, 2023
181,174,616 $181 $14,418,946 $(60,275)$(4,382,293)$9,976,559 
Net loss— — — — (141,707)(141,707)
Exercises of vested stock options100,000 — 871 — — 871 
Vesting of restricted stock units1,669,596 2 (2)— — — 
Value of equity awards withheld for tax liability(417)— (27)— — (27)
Shares of Class A common stock issued and donated to charity22,102 — 1,339 — — 1,339 
Unrealized gain on marketable securities— — — 13,921 — 13,921 
Repurchases of shares of Class A common stock including related costs(899,799)(1)— — (54,962)(54,963)
Foreign currency translation— — — 5,018 — 5,018 
Net change in market value of effective foreign currency forward exchange contracts— — — (8,626)— (8,626)
Share of other comprehensive loss from equity method investment
— — — (2,764)— (2,764)
Stock-based compensation— — 189,293 — — 189,293 
Stock-based compensation - restructuring— — 467 — — 467 
Balance as of September 30, 2023
182,066,098 $182 $14,610,887 $(52,726)$(4,578,962)$9,979,381 
See accompanying notes to condensed consolidated financial statements.

8
TWILIO INC.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)

Nine Months Ended September 30, 2023
Common Stock
Class A		Common Stock
Class B		Additional Paid-In Capital
Accumulated Other Comprehensive Loss
Accumulated DeficitTotal Stockholders' Equity
SharesAmountSharesAmount
(In thousands, except share amounts)
Balance as of December 31, 2022176,358,104 $174 9,617,605 $12 $14,055,853 $(121,161)$(3,375,836)$10,559,042 
Net loss— — — — — — (650,033)(650,033)
Exercises of vested stock options200,406 — 127,982 — 5,612 — — 5,612 
Vesting of restricted stock units4,330,342 5 — — (5)— — — 
Value of equity awards withheld for tax liability(38,254)— — — (2,536)— — (2,536)
Conversion of shares of Class B common stock into shares of Class A common stock9,745,587 12 (9,745,587)(12)— — — — 
Shares issued under ESPP579,857 — — — 23,337 — — 23,337 
Shares of Class A common stock issued and donated to charity66,306 — — — 3,985 — — 3,985 
Unrealized gain on marketable securities— — — — — 53,276 — 53,276 
Repurchases of shares of Class A common stock including related costs(9,176,250)(9)— — — — (553,093)(553,102)
Foreign currency translation— — — — — 5,587 — 5,587 
Net change in market value of effective foreign currency forward exchange contracts— — — — — (7,458)— (7,458)
Share of other comprehensive income from equity method investment— — — — — 17,030 — 17,030 
Stock-based compensation— — — — 513,545 — — 513,545 
Stock-based compensation - restructuring— — — — 11,096 — — 11,096 
Balance as of September 30, 2023
182,066,098 $182 — $— $14,610,887 $(52,726)$(4,578,962)$9,979,381 
See accompanying notes to condensed consolidated financial statements.
9

TWILIO INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
20242023
CASH FLOWS FROM OPERATING ACTIVITIES:(In thousands)
Net loss$(96,933)$(650,033)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization156,170 218,968 
Non-cash reduction to the right-of-use asset14,157 21,815 
Net amortization of investment premium and discount(18,100)4,403 
Impairment of long-lived assets— 34,278 
Stock-based compensation including restructuring460,824 509,367 
Amortization of deferred commissions56,984 54,428 
Unrealized loss on equity securities2,641 9,750 
Provision for doubtful accounts18,123 41,454 
Share of losses from equity method investment78,794 93,838 
Loss on net assets divested— 32,277 
Impairment of strategic investments1,470 46,154 
Other adjustments7,673 15,807 
Changes in operating assets and liabilities:
Accounts receivable(12,646)(69,116)
Prepaid expenses and other current assets33,590 (56,506)
Other long-term assets(19,443)(15,367)
Accounts payable(49,256)(2,578)
Accrued expenses and other current liabilities16,035 (59,677)
Deferred revenue and customer deposits(5,748)6,827 
Operating lease liabilities(35,391)(41,446)
Other long-term liabilities(1,149)(2,436)
Net cash provided by operating activities607,795 192,207 
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired and payments related to prior period acquisitions— (5,770)
Divestitures, net of cash divested— 38,194 
Purchases of marketable securities and other investments(739,721)(1,391,975)
Proceeds from sales and maturities of marketable securities2,025,267 1,764,841 
Capitalized software development costs(40,259)(30,526)
Purchases of long-lived and intangible assets(3,548)(9,019)
Net cash provided by investing activities
1,241,739 365,745 
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt and finance leases(10,208)(13,763)
Value of equity awards withheld for tax liabilities(1,981)(2,536)
Repurchases of shares of Class A common stock and related costs(1,914,282)(548,871)
Proceeds from exercises of stock options and shares of Class A common stock issued under ESPP22,669 28,949 
Net cash used in financing activities(1,903,802)(536,221)
Effect of exchange rate changes on cash, cash equivalents and restricted cash— 108 
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH(54,268)21,839 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period655,931 656,078 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH —End of period$601,663 $677,917 
Cash paid for income taxes, net$25,225 $22,916 
Cash paid for interest$37,842 $38,216 
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONDENSED CONSOLIDATED BALANCE SHEETS
Cash and cash equivalents$583,969 $677,917 
Restricted cash in other current assets7,554 — 
Restricted cash in other long-term assets10,140 — 
Total cash, cash equivalents and restricted cash$601,663 $677,917 
See accompanying notes to condensed consolidated financial statements.
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TWILIO INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Organization and Description of Business
Twilio Inc. (the “Company”) was incorporated in the state of Delaware on March 13, 2008. Today's leading companies trust Twilio's Customer Engagement Platform to build direct, personalized relationships with their customers everywhere in the world. Twilio enables companies to use communications and data to add intelligence and security to every step of their customers’ journey, from sales to marketing to growth, customer service and many more engagement use cases in a flexible, programmatic way.
The Company’s headquarters are located in San Francisco, California, and the Company has subsidiaries across North America, South America, Europe, Asia and Australia.
2. Summary of Significant Accounting Policies
(a)Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2024 (“Annual Report”).
The condensed consolidated balance sheet as of December 31, 2023, included herein, was derived from the audited financial statements as of that date, but may not include all disclosures including certain notes required by U.S. GAAP on an annual reporting basis.
In the opinion of management, the accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss, stockholders’ equity and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year 2024 or any future period.
(b)Principles of Consolidation
The condensed consolidated financial statements include the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.
(c)Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are used for, but not limited to, revenue allowances and sales credit reserves; recoverability of long-lived and intangible assets; allocation of goodwill to reporting units; impairment assessments of goodwill and indefinite-lived intangible assets; capitalization and useful life of the Company’s capitalized internal-use software development costs; fair value of acquired intangible assets and goodwill; accruals and contingencies. Estimates are based on historical experience and on various assumptions that the Company believes are reasonable under then current circumstances. However, future events are subject to change and best estimates and judgments may require further adjustments, therefore, actual results could differ materially from those estimates. Management periodically evaluates such estimates and they are adjusted prospectively based upon such periodic evaluation.
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(d)Remaining Performance Obligations
Revenue allocated to remaining performance obligations for contracts with durations of more than one year was $148.1 million as of September 30, 2024, of which 65% is expected to be recognized over the next 12 months and 95% is expected to be recognized over the next 24 months.
(e)Deferred Revenue and Customer Deposits
As of September 30, 2024, and December 31, 2023, the Company recorded $138.8 million and $144.5 million, respectively, as its deferred revenue and customer deposits. During the three months ended September 30, 2024 and 2023, the Company recognized $16.3 million and $16.7 million of revenue, respectively, that was included in the deferred revenue and customer deposits balances as of the end of the previous year. During the nine months ended September 30, 2024 and 2023, the Company recognized $113.7 million and $115.3 million of revenue, respectively, that was included in the deferred revenue and customer deposits balances as of the end of the previous year.
(f)Concentration of Credit Risk
Financial instruments that potentially expose the Company to a concentration of credit risk consist primarily of cash, cash equivalents, restricted cash, marketable securities and accounts receivable. The Company maintains cash, cash equivalents, restricted cash and marketable securities with financial institutions. Certain balances held by such financial institutions exceed insured limits.
The Company sells its services to a wide variety of customers. If the financial condition or results of operations of any significant customer deteriorates substantially, operating results could be adversely affected. To reduce credit risk, management performs credit evaluations of the financial condition of significant customers and periodic re-evaluations, as needed, of existing customers. The Company does not require collateral from its credit customers and maintains reserves for estimated credit losses on customer accounts when considered necessary. Actual credit losses may differ from the Company’s estimates. As of September 30, 2024, and December 31, 2023, the allowance for doubtful accounts was $26.7 million and $42.0 million, respectively, and is recorded in accounts receivable, net, in the accompanying condensed consolidated balance sheets.
In the three and nine months ended September 30, 2024 and 2023, no customer organization accounted for more than 10% of the Company’s total revenue.
As of September 30, 2024 and December 31, 2023, no customer organization represented more than 10% of the Company’s gross accounts receivable.
(g)Restructuring Costs
The Company records restructuring expenses when (i) management commits to a restructuring plan, (ii) the restructuring plan identifies all significant actions, (iii) the period of time to complete the restructuring plan indicates that significant changes to the plan are not likely, and (iv) employees who are impacted have been notified of the pending involuntary termination.
The Company enacted various workforce reduction plans in 2023 and 2024. In the nine months ended September 30, 2024, restructuring charges incurred, cash paid and the estimated remaining expenses related to these plans were not significant.
(h)Recently Issued Accounting Guidance, Not yet Adopted
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. (“ASU”) 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosures. The ASU expands segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of segment profit or loss. It also requires disclosure of the amount and description of the composition of other segment items and interim disclosures of a reportable segment's profit or loss and assets. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with retrospective application required. Early adoption is permitted. The Company expects to adopt ASU 2023-07 upon its effective date. The adoption will require certain additional disclosure in the notes to the Company’s consolidated financial statements.
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In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation and modifies other income tax related disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 and may be applied on a prospective basis. Early adoption is permitted. The Company expects to adopt ASU 2023-09 upon its effective date. The adoption will require certain additional disclosure in the notes to the Company’s consolidated financial statements.
3. Fair Value Measurements
Financial Assets
The following tables provide the financial assets measured at fair value on a recurring basis:
Amortized
Cost or
Carrying
Value		Gross
Unrealized
Gains		Gross
Unrealized
Losses Less Than 12 Months		Gross
Unrealized
Losses More
Than
12 Months		Fair Value Hierarchy as of
September 30, 2024		Aggregate
Fair Value
Level 1Level 2Level 3
Financial Assets:(In thousands)
Cash and cash equivalents:
Money market funds$380,767 $— $— $— $380,767 $— $— $380,767 
Commercial paper1,400 — — — 1,400 — — 1,400 
U.S. Treasury bills15,969 — — — 15,969 — — 15,969 
Total included in cash
    and cash equivalents		398,136 — — — 398,136 — — 398,136 
Marketable securities:
Debt securities:
U.S. Treasury securities354,415 3,887 — (70)358,232 — — 358,232 
Non-U.S. government
   securities
6,643 56 — (2)6,697 — — 6,697 
Corporate debt securities and commercial paper1,730,807 17,690 (1,011)(396)13,140 1,733,950 — 1,747,090 
Total debt securities2,091,865 21,633 (1,011)(468)378,069 1,733,950 — 2,112,019 
Equity securities2,260 — — — 2,260 — — 2,260 
Total marketable
   securities		2,094,125 21,633 (1,011)(468)380,329 1,733,950 — 2,114,279 
Total financial assets$2,492,261 $21,633 $(1,011)$(468)$778,465 $1,733,950 $— $2,512,415 
Amortized
Cost or
Carrying
Value		Gross
Unrealized
Gains		Gross
Unrealized
Losses Less Than 12 Months		Gross
Unrealized
Losses More
Than
12 Months		Fair Value Hierarchy as of
December 31, 2023		Aggregate
Fair Value
Level 1Level 2Level  3
Financial Assets:(In thousands)
Cash and cash equivalents:
Money market funds$408,696 $— $— $— $408,696 $— $— $408,696 
Total included in cash
    and cash equivalents		408,696 — — — 408,696 — — 408,696 
Marketable securities:
Debt securities:
U.S. Treasury securities410,665 2,162 (7)(1,665)411,155 — — 411,155 
Non-U.S. government
   securities
83,576 55 (111)(1,209)82,311 — — 82,311 
Corporate debt securities and commercial paper2,859,071 15,366 (10,818)(5,922)16,690 2,841,007 — 2,857,697 
Total debt securities3,353,312 17,583 (10,936)(8,796)510,156 2,841,007 — 3,351,163 
Equity securities4,901 — — — 4,901 — — 4,901 
Total marketable
   securities		3,358,213 17,583 (10,936)(8,796)515,057 2,841,007 — 3,356,064 
Total financial assets$3,766,909 $17,583 $(10,936)$(8,796)$923,753 $2,841,007 $— $3,764,760 
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The Company’s primary objective when investing excess cash is preservation of capital, hence the Company’s debt securities primarily consist of U.S. Treasury Securities, non-U.S government securities, high credit quality corporate debt securities and commercial paper. Because the Company views its debt securities as available to support current operations, it has classified all available for sale securities as short-term.
Interest earned on debt securities was $20.1 million and $70.7 million in the three and nine months ended September 30, 2024, respectively, and $19.3 million and $53.2 million in the three and nine months ended September 30, 2023, respectively. The interest is recorded as other income, net, in the accompanying condensed consolidated statements of operations.
The following table summarizes the contractual maturities of debt securities:
As of September 30,As of December 31,
20242023
Amortized
Cost		Aggregate
Fair Value		Amortized
Cost		Aggregate
Fair Value
Financial Assets:(In thousands)
Less than one year$772,631 $773,324 $1,448,256 $1,434,149 
One to three years1,319,234 1,338,695 1,905,056 1,917,014 
Total$2,091,865 $2,112,019 $3,353,312 $3,351,163 
Strategic Investments
As of September 30, 2024 and December 31, 2023, the Company held strategic investments with a carrying value of $30.3 million and $30.7 million, respectively, recorded as other long-term assets in the accompanying condensed consolidated balance sheets. The carrying value of these securities is determined under the measurement alternative on a non-recurring basis and adjusted for observable changes in fair value or impairment. There were no significant impairments or adjustments recorded in the nine months ended September 30, 2024 related to these investments. During the nine months ended September 30, 2023, the Company recorded an impairment loss of $46.2 million related to one of these investments in other income (expenses), net, in the accompanying condensed consolidated statement of operations.
Financial Liabilities
The Company’s financial liabilities that are measured at fair value on a recurring basis consist of foreign currency derivative liabilities and are classified as Level 2 financial instruments in the fair value hierarchy. As of September 30, 2024 and December 31, 2023, the aggregate fair value of these liabilities and the associated unrealized losses were not significant.
The Company’s financial liabilities that are not measured at fair value on a recurring basis are its Senior Notes due 2029 (“2029 Notes”) and its Senior Notes due 2031 (“2031 Notes”). As of September 30, 2024, the fair values of the 2029 Notes and 2031 Notes were $467.0 million and $462.4 million, respectively. As of December 31, 2023, the fair values of the 2029 Notes and 2031 Notes were $462.4 million and $452.3 million, respectively.
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4. Property and Equipment
Property and equipment consisted of the following:
As of September 30,As of December 31,
20242023
(In thousands)
Capitalized internal-use software developments costs$349,038 $297,655 
Data center equipment (1)
104,583 104,543 
Leasehold improvements92,148 92,315 
Office equipment57,983 60,905 
Furniture and fixtures14,562 14,558 
Software14,639 14,639 
Total property and equipment632,953 584,615 
Less: accumulated depreciation and amortization (1)
(438,276)(374,976)
Total property and equipment, net$194,677 $209,639 
____________________________________
(1) Data center equipment contains $72.4 million in assets held under finance leases as of September 30, 2024 and December 31, 2023. Accumulated depreciation and amortization includes $65.5 million and $55.9 million of accumulated depreciation for assets held under finance leases as of September 30, 2024, and December 31, 2023, respectively.
Depreciation and amortization expense was $22.8 million and $23.2 million in the three months ended September 30, 2024 and 2023, respectively, and $70.0 million and $67.5 million in the nine months ended September 30, 2024 and 2023, respectively.
The Company capitalized $20.0 million and $14.7 million in internal‑use software development costs in the three months ended September 30, 2024 and 2023, respectively, and $56.5 million and $43.7 million in the nine months ended September 30, 2024 and 2023, respectively.
5. Divestitures
There were no divestitures in the three and nine months ended September 30, 2024.
In the three months ended September 30, 2023, the Company completed the sale of its ValueFirst business, which operated an enterprise communications platform in India, for a total cash sales price of $45.5 million, or $38.2 million in proceeds, net of cash divested. As part of the transaction, the Company divested $17.4 million of tangible net assets, $17.3 million of intangible assets and $34.6 million of goodwill. The sale resulted in a loss of $28.8 million. The loss was recorded within general and administrative expenses in the accompanying condensed consolidated statement of operations for the nine months ended September 30, 2023. No other significant divestitures were completed in the three and nine months ended September 30, 2023.
6. Segment Reporting
As of September 30, 2024, the Company had two operating and reportable segments: Twilio Communications (“Communications”) and Twilio Segment (“Segment”).
Twilio Communications: The Communications reportable segment consists of a variety of application programming interfaces (“APIs”) and software solutions to optimize communications between Twilio customers and their end users. The key products from which the segment derives its revenue are Messaging, Voice, and Email and Marketing Campaigns.
Twilio Segment: The Segment reportable segment consists of software products that enable businesses to achieve more effective customer engagement by providing the tools necessary for customers to build direct, personalized relationships with their end users. The key product from which the segment derives its revenue is Segment.
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Presented below is the discrete financial information by reportable segment for the three and nine months ended September 30, 2024 and 2023, that is regularly reviewed by the CODM for performance assessment and resource allocation decisions. Prior period amounts were reclassified to conform to the current period’s presentation. Asset information is not presented below since it is not reviewed by the CODM on a segment by segment basis. Revenue, costs of revenue and operating expenses are generally directly attributable to each segment. Certain costs of revenue and operating expenses are allocated based on methodologies that best reflect the patterns of consumption of these costs. Corporate costs consist of costs that support company-wide processes and are managed on the company-wide level, and include costs related to corporate governance and communication, global brand awareness, information security, and certain legal, human resources, finance and accounting expenses.
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
(In thousands)
Revenue:
Communications$1,060,250 $960,289 $3,039,558 $2,857,772 
Segment73,399 73,381 223,643 220,223 
Total$1,133,649 $1,033,670 $3,263,201 $3,077,995 
Non-GAAP income (loss) from operations:
Communications$267,773 $220,610 $766,713 $593,599 
Segment(15,805)(17,740)(52,613)(53,937)
Corporate costs(69,550)(66,436)(196,753)(179,294)
Total$182,418 $136,434 $517,347 $360,368 
Reconciliation of non-GAAP income from operations to loss from operations:
Total non-GAAP income from operations$182,418 $136,434 $517,347 $360,368 
Stock-based compensation(153,831)(185,007)(457,646)(498,271)
Amortization of acquired intangibles(27,437)(48,872)(84,560)(149,836)
Acquisition and divestiture related expenses— (183)— (5,515)
Loss on net assets held for sale— — — (32,277)
Payroll taxes related to stock-based compensation(1,049)(3,337)(11,335)(10,739)
Charitable contributions(1,301)(1,339)(17,911)(3,985)
Restructuring costs (3,694)(3,437)(13,330)(140,281)
Impairment of long-lived assets— (3,162)— (34,278)
Loss from operations(4,894)(108,903)(67,435)(514,814)
Other income (expenses), net
1,243 (31,057)(7,620)(122,261)
Loss before provision for income taxes$(3,651)$(139,960)$(75,055)$(637,075)
7. Derivatives and Hedging
As of September 30, 2024, the Company had outstanding foreign currency forward contracts designated as cash flow hedges with a total sell notional value of $200.6 million. The notional value represents the amount that will be sold upon maturity of the forward contract. As of September 30, 2024, these contracts had maturities of up to 16 months. Gains and losses associated with these foreign currency forward contracts were not significant.
The Company is subject to master netting agreements with certain counterparties of the foreign exchange contracts, under which it is permitted to net settle transactions of the same currency with a single net amount payable by one party to the other. It is the Company’s policy to present the derivatives at gross in its condensed consolidated balance sheets. The Company’s foreign currency forward contracts are not subject to any credit contingent features or collateral requirements. The Company manages its exposure to counterparty risk by entering into contracts with a diversified group of major financial institutions and by actively monitoring its outstanding positions. As of September 30, 2024, the Company did not have any offsetting arrangements.
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8. Goodwill and Intangible Assets
Goodwill
As of September 30, 2024 and December 31, 2023, the balance of the Company’s goodwill was $5.2 billion, of which $4.9 billion related to the Communications reportable segment and $306.1 million related to the Segment reportable segment. There was no goodwill activity during the nine months ended September 30, 2024.
Intangible assets
Intangible assets consisted of the following:
As of September 30, 2024
CostAccumulated AmortizationNet
Amortizable intangible assets:(In thousands)
Developed technology$388,341 $(292,649)$95,692 
Customer relationships348,314 (204,186)144,128 
Supplier relationships49,756 (33,092)16,664 
Trade names25,968 (24,744)1,224 
Order backlog10,000 (10,000)— 
Patent3,968 (1,050)2,918 
Total amortizable intangible assets826,347 (565,721)260,626 
Non-amortizable intangible assets:
Telecommunication licenses4,920 — 4,920 
Trademarks and other295 — 295 
Total$831,562 $(565,721)$265,841 
As of December 31, 2023
CostAccumulated AmortizationNet
Amortizable intangible assets:(In thousands)
Developed technology$397,473 $(259,635)$137,838 
Customer relationships349,074 (170,511)178,563 
Supplier relationships49,756 (26,316)23,440 
Trade names25,968 (23,600)2,368 
Order backlog10,000 (10,000)— 
Patent3,968 (902)3,066 
Total amortizable intangible assets836,239 (490,964)345,275 
Non-amortizable intangible assets:
Telecommunication licenses4,920 — 4,920 
Trademarks and other295 — 295 
Total$841,454 $(490,964)$350,490 
Amortization expense was $27.5 million and $48.9 million for the three months ended September 30, 2024 and 2023, respectively, and $84.7 million and $150.0 million for the nine months ended September 30, 2024 and 2023, respectively.
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Total estimated future amortization expense is as follows:
As of September 30, 2024
Year Ended December 31,(In thousands)
2024 (remaining three months)$27,393 
2025107,862 
202642,149 
202725,330 
202819,055 
Thereafter38,837 
Total$260,626 
9. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:
As of September 30,As of December 31,
20242023
(In thousands)
Accrued payroll and related$63,660 $77,593 
Corporate bonus program accrual70,182 — 
Accrued commission18,024 17,345 
Accrued cost of revenue164,472 155,721 
Sales and other taxes payable73,408 70,913 
ESPP contributions11,205 6,130 
Finance lease liability2,678 8,489 
Restructuring liability1,606 29,086 
Share repurchase costs payable8,002 3,526 
Accrued other expense39,106 55,508 
Total accrued expenses and other current liabilities$452,343 $424,311 
10. Long-Term Debt
Long-term debt, net, consisted of the following:
As of September 30,As of December 31,
2024