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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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26-2574840
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Class A Common Stock, par value $0.001 per share
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TWLO
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The New York Stock Exchange
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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•
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our future financial performance, including our revenue, cost of revenue, gross margin and operating expenses, ability to generate positive cash flow and ability to achieve and sustain profitability;
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•
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anticipated technology trends, such as the use of and demand for cloud communications;
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•
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our ability to continue to build and maintain credibility with the global software developer community;
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•
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our ability to attract and retain customers to use our products;
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•
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the evolution of technology affecting our products and markets;
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•
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our ability to introduce new products and enhance existing products;
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•
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our ability to comply with modified or new industry standards, laws and regulations applying to our business, including the General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act of 2018 and other privacy regulations that may be implemented in the future, and Signature-based Handling of Asserted Information Using toKENs ("SHAKEN") and Secure Telephone Identity Revisited ("STIR") standards (together, "SHAKEN/STIR") and other robocalling prevention and anti-spam standards and increased costs associated with such compliance;
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•
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our ability to optimize our network service provider coverage and connectivity;
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•
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our ability to manage changes in network service provider fees that we pay in connection with the delivery of communications on our platform;
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•
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our ability to work closely with email inbox service providers to maintain deliverability rates;
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•
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our ability to pass on our savings associated with our platform optimization efforts to our customers;
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•
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the impact and expected results from changes in our relationship with our larger customers;
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•
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our ability to attract and retain enterprises and international organizations as customers for our products;
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•
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our ability to form and expand partnerships with technology partners and consulting partners;
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•
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our ability to successfully enter into new markets and manage our international expansion;
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•
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the attraction and retention of qualified employees and key personnel;
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•
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our ability to effectively manage our growth and future expenses and maintain our corporate culture;
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•
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the sufficiency of our cash and cash equivalents to meet our liquidity needs;
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•
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our anticipated investments in sales and marketing and research and development;
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•
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our ability to maintain, protect and enhance our intellectual property;
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•
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our ability to successfully defend litigation brought against us;
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•
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our ability to service the interest on our convertible notes and repay such notes, to the extent required;
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•
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our customers' and other platform users' violation of our policies or other misuse of our platform; and
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•
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our ability to successfully integrate and realize the benefits of our past or future strategic acquisitions or investments, including our acquisition of SendGrid, Inc. (“SendGrid”).
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As of September 30,
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As of December 31,
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||||
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2019
|
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2018
|
||||
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(in thousands)
|
||||||
ASSETS
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||||
Current assets:
|
|
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|
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||||
Cash and cash equivalents
|
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$
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330,601
|
|
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$
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487,215
|
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Short-term marketable securities
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1,551,175
|
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261,128
|
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||
Accounts receivable, net
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131,193
|
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|
97,712
|
|
||
Prepaid expenses and other current assets
|
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55,455
|
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|
26,893
|
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||
Total current assets
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2,068,424
|
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872,948
|
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||
Restricted cash
|
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75
|
|
|
18,119
|
|
||
Property and equipment, net
|
|
118,481
|
|
|
63,534
|
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||
Operating right of use asset
|
|
148,069
|
|
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—
|
|
||
Intangible assets, net
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465,255
|
|
|
27,558
|
|
||
Goodwill
|
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2,283,387
|
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38,165
|
|
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Other long-term assets
|
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26,477
|
|
|
8,386
|
|
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Total assets
|
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$
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5,110,168
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$
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1,028,710
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LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
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||||
Current liabilities:
|
|
|
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|
||||
Accounts payable
|
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$
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25,949
|
|
|
$
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18,495
|
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Accrued expenses and other current liabilities
|
|
135,544
|
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|
96,343
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|
||
Deferred revenue and customer deposits
|
|
26,015
|
|
|
22,972
|
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||
Operating lease liability, current
|
|
22,211
|
|
|
—
|
|
||
Financing lease liability, current
|
|
6,509
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|
|
—
|
|
||
Total current liabilities
|
|
216,228
|
|
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137,810
|
|
||
Operating lease liability, noncurrent
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134,755
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|
|
—
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||
Financing lease liability, noncurrent
|
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8,174
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|
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—
|
|
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Convertible senior notes, net
|
|
452,184
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434,496
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|
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Other long-term liabilities
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14,341
|
|
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18,169
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|
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Total liabilities
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825,682
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590,475
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Commitments and contingencies (Note 12)
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Stockholders’ equity:
|
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|
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||||
Preferred stock
|
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—
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—
|
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||
Class A and Class B common stock
|
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137
|
|
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100
|
|
||
Additional paid-in capital
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4,868,261
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808,527
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Accumulated other comprehensive income
|
|
4,578
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|
|
1,282
|
|
||
Accumulated deficit
|
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(588,490
|
)
|
|
(371,674
|
)
|
||
Total stockholders’ equity
|
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4,284,486
|
|
|
438,235
|
|
||
Total liabilities and stockholders’ equity
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$
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5,110,168
|
|
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$
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1,028,710
|
|
|
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
||||||||||||
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2019
|
|
2018
|
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2019
|
|
2018
|
||||||||
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(In thousands, except share and per share amounts)
|
||||||||||||||
Revenue
|
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$
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295,066
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$
|
168,895
|
|
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$
|
803,244
|
|
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$
|
445,765
|
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Cost of revenue
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|
136,904
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|
77,031
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369,017
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|
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204,553
|
|
||||
Gross profit
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158,162
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91,864
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|
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434,227
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241,212
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|
||||
Operating expenses:
|
|
|
|
|
|
|
|
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||||||||
Research and development
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104,481
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42,340
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281,119
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|
|
119,727
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|
||||
Sales and marketing
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100,657
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45,949
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262,685
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116,520
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|
||||
General and administrative
|
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47,690
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28,608
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166,409
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|
|
76,213
|
|
||||
Total operating expenses
|
|
252,828
|
|
|
116,897
|
|
|
710,213
|
|
|
312,460
|
|
||||
Loss from operations
|
|
(94,666
|
)
|
|
(25,033
|
)
|
|
(275,986
|
)
|
|
(71,248
|
)
|
||||
Other income (expense), net
|
|
4,377
|
|
|
(1,939
|
)
|
|
2,861
|
|
|
(3,172
|
)
|
||||
Loss before provision for income taxes
|
|
(90,289
|
)
|
|
(26,972
|
)
|
|
(273,125
|
)
|
|
(74,420
|
)
|
||||
Income tax benefit (provision)
|
|
2,555
|
|
|
(84
|
)
|
|
56,309
|
|
|
(371
|
)
|
||||
Net loss attributable to common stockholders
|
|
$
|
(87,734
|
)
|
|
$
|
(27,056
|
)
|
|
$
|
(216,816
|
)
|
|
$
|
(74,791
|
)
|
Net loss per share attributable to common stockholders, basic and diluted
|
|
$
|
(0.64
|
)
|
|
$
|
(0.28
|
)
|
|
$
|
(1.70
|
)
|
|
$
|
(0.78
|
)
|
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
|
|
136,400,739
|
|
|
98,019,629
|
|
|
127,506,529
|
|
|
96,359,437
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Net loss
|
|
$
|
(87,734
|
)
|
|
$
|
(27,056
|
)
|
|
$
|
(216,816
|
)
|
|
$
|
(74,791
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
||||||||
Unrealized gain on marketable securities
|
|
1,275
|
|
|
291
|
|
|
3,296
|
|
|
126
|
|
||||
Foreign currency translation
|
|
—
|
|
|
(873
|
)
|
|
—
|
|
|
(771
|
)
|
||||
Total other comprehensive income (loss)
|
|
1,275
|
|
|
(582
|
)
|
|
3,296
|
|
|
(645
|
)
|
||||
Comprehensive loss attributable to common stockholders
|
|
$
|
(86,459
|
)
|
|
$
|
(27,638
|
)
|
|
$
|
(213,520
|
)
|
|
$
|
(75,436
|
)
|
|
|
Common Stock
Class A |
|
Common Stock
Class B |
|
Additional Paid In Capital
|
|
Accumulated Other Comprehensive Income
|
|
Accumulated Deficit
|
|
Total Stockholders' Equity
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||
|
|
(In thousands, except share amounts)
|
||||||||||||||||||||||||||||
Balance as of December 31, 2018
|
|
80,769,763
|
|
|
$
|
80
|
|
|
19,310,465
|
|
|
$
|
20
|
|
|
$
|
808,527
|
|
|
$
|
1,282
|
|
|
$
|
(371,674
|
)
|
|
$
|
438,235
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36,503
|
)
|
|
(36,503
|
)
|
||||||
Exercises of vested stock options
|
|
748,679
|
|
|
1
|
|
|
1,023,984
|
|
|
1
|
|
|
15,326
|
|
|
—
|
|
|
—
|
|
|
15,328
|
|
||||||
Vesting of early exercised stock options
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|||||||
Vesting of restricted stock units
|
|
641,406
|
|
|
—
|
|
|
39,360
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Value of equity awards withheld for tax liability
|
|
(5,860
|
)
|
|
—
|
|
|
(4,431
|
)
|
|
—
|
|
|
(1,062
|
)
|
|
—
|
|
|
—
|
|
|
(1,062
|
)
|
||||||
Conversion of shares of Class B common stock into shares of Class A common stock
|
|
4,339,519
|
|
|
4
|
|
|
(4,339,519
|
)
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares issued in acquisition
|
|
23,555,081
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
2,658,874
|
|
|
—
|
|
|
—
|
|
|
2,658,898
|
|
||||||
Equity awards assumed in acquisition
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
191,620
|
|
|
—
|
|
|
—
|
|
|
191,620
|
|
||||||
Unrealized gain on marketable securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,041
|
|
|
—
|
|
|
1,041
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59,947
|
|
|
—
|
|
|
—
|
|
|
59,947
|
|
||||||
Balance as of March 31, 2019
|
|
110,048,588
|
|
|
109
|
|
|
16,029,859
|
|
|
17
|
|
|
$
|
3,733,241
|
|
|
2,323
|
|
|
(408,177
|
)
|
|
3,327,513
|
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(92,579
|
)
|
|
(92,579
|
)
|
||||||
Issuance of common stock in connection with a public offering, net of underwriter discounts
|
|
8,064,515
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
979,992
|
|
|
—
|
|
|
—
|
|
|
980,000
|
|
||||||
Costs related to the public offering
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(953
|
)
|
|
—
|
|
|
—
|
|
|
(953
|
)
|
||||||
Exercises of vested stock options
|
|
313,924
|
|
|
—
|
|
|
503,797
|
|
|
1
|
|
|
9,926
|
|
|
—
|
|
|
—
|
|
|
9,927
|
|
||||||
Vesting of restricted stock units
|
|
675,028
|
|
|
1
|
|
|
29,576
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Value of equity awards withheld for tax liability
|
|
(5,934
|
)
|
|
—
|
|
|
(5,888
|
)
|
|
—
|
|
|
(1,518
|
)
|
|
—
|
|
|
—
|
|
|
(1,518
|
)
|
||||||
Conversion of shares of Class B common stock into shares of Class A common stock
|
|
2,172,598
|
|
|
2
|
|
|
(2,172,598
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares issued under ESPP
|
|
108,895
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,254
|
|
|
—
|
|
|
—
|
|
|
8,254
|
|
||||||
Equity awards assumed in acquisition (measurement period adjustment)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,126
|
)
|
|
—
|
|
|
—
|
|
|
(7,126
|
)
|
||||||
Unrealized gain on marketable securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
980
|
|
|
—
|
|
|
980
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
72,361
|
|
|
—
|
|
|
—
|
|
|
72,361
|
|
||||||
Balance as of June 30, 2019
|
|
121,377,614
|
|
|
120
|
|
|
14,384,746
|
|
|
16
|
|
|
4,794,177
|
|
|
3,303
|
|
|
(500,756
|
)
|
|
4,296,860
|
|
||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(87,734
|
)
|
|
(87,734
|
)
|
||||||
Exercises of vested stock options
|
|
231,571
|
|
|
—
|
|
|
351,563
|
|
|
—
|
|
|
6,845
|
|
|
—
|
|
|
—
|
|
|
6,845
|
|
||||||
Vesting of early exercised stock options
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
12
|
|
||||||
Vesting of restricted stock units
|
|
713,904
|
|
|
1
|
|
|
25,291
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Value of equity awards withheld for tax liability
|
|
(5,860
|
)
|
|
—
|
|
|
(5,888
|
)
|
|
—
|
|
|
(1,568
|
)
|
|
—
|
|
|
—
|
|
|
(1,568
|
)
|
||||||
Conversion of shares of Class B common stock into shares of Class A common stock
|
|
2,158,562
|
|
|
2
|
|
|
(2,158,562
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Equity awards assumed in acquisition (measurement period adjustment)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,940
|
)
|
|
—
|
|
|
—
|
|
|
(1,940
|
)
|
||||||
Unrealized gain on marketable securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,275
|
|
|
—
|
|
|
1,275
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
70,735
|
|
|
—
|
|
|
—
|
|
|
70,735
|
|
||||||
Balance as of September 30, 2019
|
|
124,475,791
|
|
|
$
|
123
|
|
|
12,597,150
|
|
|
$
|
14
|
|
|
$
|
4,868,261
|
|
|
$
|
4,578
|
|
|
$
|
(588,490
|
)
|
|
$
|
4,284,486
|
|
|
|
Common Stock
Class A |
|
Common Stock
Class B |
|
Additional Paid In Capital
|
|
Accumulated Other Comprehensive Income
|
|
Accumulated Deficit
|
|
Total Stockholders' Equity
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||
|
|
(In thousands, except share amounts)
|
||||||||||||||||||||||||||||
Balance as of December 31, 2017
|
|
69,906,550
|
|
|
$
|
70
|
|
|
24,063,246
|
|
|
$
|
24
|
|
|
$
|
608,165
|
|
|
$
|
2,025
|
|
|
$
|
(250,438
|
)
|
|
$
|
359,846
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,729
|
)
|
|
(23,729
|
)
|
||||||
Adjustment to opening retained earnings due to adoption of ASC 606
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
713
|
|
|
713
|
|
||||||
Exercises of vested stock options
|
|
—
|
|
|
—
|
|
|
1,190,387
|
|
|
1
|
|
|
6,677
|
|
|
—
|
|
|
—
|
|
|
6,678
|
|
||||||
Vesting of early exercised stock options
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|||||||
Vesting of restricted stock units
|
|
491,501
|
|
|
—
|
|
|
52,716
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Value of equity awards withheld for tax liability
|
|
(8,352
|
)
|
|
—
|
|
|
(4,380
|
)
|
|
—
|
|
|
(371
|
)
|
|
—
|
|
|
—
|
|
|
(371
|
)
|
||||||
Exercise of unvested stock options
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Conversion of shares of Class B common stock into shares of Class A common stock
|
|
1,358,716
|
|
|
1
|
|
|
(1,358,716
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Unrealized loss on marketable securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(317
|
)
|
|
—
|
|
|
(317
|
)
|
||||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
731
|
|
|
—
|
|
|
731
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,968
|
|
|
—
|
|
|
—
|
|
|
18,968
|
|
||||||
Balance as of March 31, 2018
|
|
71,748,415
|
|
|
71
|
|
|
23,943,253
|
|
|
24
|
|
|
$
|
633,460
|
|
|
2,439
|
|
|
(273,454
|
)
|
|
362,540
|
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,006
|
)
|
|
(24,006
|
)
|
||||||
Exercises of vested stock options
|
|
—
|
|
|
—
|
|
|
960,414
|
|
|
1
|
|
|
7,036
|
|
|
—
|
|
|
—
|
|
|
7,037
|
|
||||||
Vesting of early exercised stock options
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||||
Vesting of restricted stock units
|
|
457,495
|
|
|
—
|
|
|
40,070
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Value of equity awards withheld for tax liability
|
|
(5,860
|
)
|
|
—
|
|
|
(5,888
|
)
|
|
—
|
|
|
(539
|
)
|
|
—
|
|
|
—
|
|
|
(539
|
)
|
||||||
Conversion of shares of Class B common stock into shares of Class A common stock
|
|
4,109,726
|
|
|
4
|
|
|
(4,109,726
|
)
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares issued under ESPP
|
|
201,581
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,474
|
|
|
—
|
|
|
—
|
|
|
4,474
|
|
||||||
Issuance of debt conversion option
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
119,435
|
|
|
—
|
|
|
—
|
|
|
119,435
|
|
||||||
Debt conversion option issuance costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,819
|
)
|
|
—
|
|
|
—
|
|
|
(2,819
|
)
|
||||||
Capped call option issuance costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58,465
|
)
|
|
—
|
|
|
—
|
|
|
(58,465
|
)
|
||||||
Unrealized loss on marketable securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
152
|
|
|
—
|
|
|
152
|
|
||||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(629
|
)
|
|
—
|
|
|
(629
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,487
|
|
|
|
|
—
|
|
|
22,487
|
|
|||||||
Balance as of June 30, 2018
|
|
76,511,357
|
|
|
75
|
|
|
20,828,123
|
|
|
21
|
|
|
$
|
725,073
|
|
|
1,962
|
|
|
(297,460
|
)
|
|
429,671
|
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,056
|
)
|
|
(27,056
|
)
|
|||||||
Exercises of vested stock options
|
|
—
|
|
|
—
|
|
|
847,528
|
|
|
1
|
|
|
8,862
|
|
|
—
|
|
|
—
|
|
|
8,863
|
|
||||||
Vesting of early exercised stock options
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||
Vesting of restricted stock units
|
|
511,713
|
|
|
—
|
|
|
40,069
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Value of equity awards withheld for tax liability
|
|
(5,860
|
)
|
|
—
|
|
|
(5,888
|
)
|
|
—
|
|
|
(810
|
)
|
|
—
|
|
|
—
|
|
|
(810
|
)
|
||||||
Conversion of shares of Class B common stock into shares of Class A common stock
|
|
1,982,436
|
|
|
—
|
|
|
(1,982,436
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Unrealized loss on marketable securities
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
291
|
|
|
—
|
|
|
291
|
|
|||||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
(873
|
)
|
|
—
|
|
|
(873
|
)
|
|||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
24,266
|
|
|
—
|
|
|
—
|
|
|
24,266
|
|
|||||||
Balance as of September 30, 2018
|
|
78,999,646
|
|
|
$
|
75
|
|
|
19,727,396
|
|
|
$
|
22
|
|
|
757,392
|
|
|
$
|
1,380
|
|
|
$
|
(324,516
|
)
|
|
$
|
434,353
|
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in thousands)
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Net loss
|
|
$
|
(216,816
|
)
|
|
$
|
(74,791
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
|
||
Depreciation and amortization
|
|
79,295
|
|
|
18,246
|
|
||
Right-of-use asset amortization
|
|
16,732
|
|
|
—
|
|
||
Net amortization of investment premium and discount
|
|
(4,163
|
)
|
|
(845
|
)
|
||
Amortization of debt discount and issuance costs
|
|
17,689
|
|
|
8,374
|
|
||
Stock-based compensation
|
|
197,332
|
|
|
61,287
|
|
||
Tax benefit related to release of valuation allowance
|
|
(55,999
|
)
|
|
—
|
|
||
Other adjustments
|
|
3,981
|
|
|
5,198
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||
Accounts receivable
|
|
(27,619
|
)
|
|
(39,643
|
)
|
||
Prepaid expenses and other current assets
|
|
(20,743
|
)
|
|
(6,600
|
)
|
||
Other long-term assets
|
|
(10,756
|
)
|
|
(3,681
|
)
|
||
Accounts payable
|
|
4,333
|
|
|
1,641
|
|
||
Accrued expenses and other current liabilities
|
|
33,826
|
|
|
39,732
|
|
||
Deferred revenue and customer deposits
|
|
3,043
|
|
|
5,092
|
|
||
Operating right of use liability
|
|
(15,397
|
)
|
|
—
|
|
||
Long-term liabilities
|
|
(2,714
|
)
|
|
(1,177
|
)
|
||
Net cash provided by operating activities
|
|
2,024
|
|
|
12,833
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
||
Acquisitions, net of cash acquired
|
|
146,957
|
|
|
(29,662
|
)
|
||
Purchases of marketable securities and other investments
|
|
(1,769,125
|
)
|
|
(213,533
|
)
|
||
Proceeds from sales and maturities of marketable securities
|
|
475,260
|
|
|
113,497
|
|
||
Capitalized software development costs
|
|
(16,809
|
)
|
|
(15,276
|
)
|
||
Purchases of long-lived assets
|
|
(18,994
|
)
|
|
(3,428
|
)
|
||
Net cash used in investing activities
|
|
(1,182,711
|
)
|
|
(148,402
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
||
Proceeds from a public offering, net of underwriting discount
|
|
980,000
|
|
|
—
|
|
||
Payments of costs related to the public offering
|
|
(850
|
)
|
|
—
|
|
||
Proceeds from issuance of convertible senior notes
|
|
—
|
|
|
550,000
|
|
||
Payment of debt issuance costs
|
|
—
|
|
|
(12,877
|
)
|
||
Purchase of capped call
|
|
—
|
|
|
(58,465
|
)
|
||
Principal payments on notes payable
|
|
(5,400
|
)
|
|
—
|
|
||
Principal payments on finance leases
|
|
(3,927
|
)
|
|
—
|
|
||
Proceeds from exercises of stock options and issuances under ESPP
|
|
40,354
|
|
|
27,052
|
|
||
Value of equity awards withheld for tax liabilities
|
|
(4,148
|
)
|
|
(1,720
|
)
|
||
Net cash provided by financing activities
|
|
1,006,029
|
|
|
503,990
|
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
|
—
|
|
|
105
|
|
||
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
|
(174,658
|
)
|
|
368,526
|
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period
|
|
505,334
|
|
|
120,788
|
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH —End of period
|
|
$
|
330,676
|
|
|
$
|
489,314
|
|
Cash paid for income taxes, net
|
|
$
|
509
|
|
|
$
|
544
|
|
Cash paid for interest
|
|
$
|
1,406
|
|
|
$
|
—
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
||
Purchases of property, equipment and intangible assets, accrued but not paid
|
|
$
|
1,478
|
|
|
$
|
785
|
|
Finance lease right-of-use assets assumed in a business combination
|
|
$
|
14,173
|
|
|
$
|
—
|
|
Purchases of property and equipment through finance leases
|
|
$
|
3,141
|
|
|
$
|
—
|
|
Acquisition holdback
|
|
$
|
4,230
|
|
|
$
|
2,000
|
|
Acquisition - value of common stock issued, stock awards assumed and measurement period adjustments
|
|
$
|
2,841,452
|
|
|
$
|
—
|
|
Stock-based compensation capitalized in software development costs
|
|
$
|
5,711
|
|
|
$
|
4,434
|
|
|
|
Amortized
Cost or
Carrying
Value
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
Less Than
12 Months
|
|
Fair Value Hierarchy as of
September 30, 2019 |
|
Aggregate
Fair Value
|
||||||||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||||||||||||||
Financial Assets:
|
|
(in thousands)
|
||||||||||||||||||||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Money market funds
|
|
$
|
184,880
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
184,880
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
184,880
|
|
Reverse repurchase agreements
|
|
57,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57,500
|
|
|
—
|
|
|
57,500
|
|
|||||||
Commercial paper
|
|
13,484
|
|
|
—
|
|
|
—
|
|
|
|
|
13,484
|
|
|
|
|
13,484
|
|
|||||||||
Total included in cash and cash equivalents
|
|
255,864
|
|
|
—
|
|
|
—
|
|
|
184,880
|
|
|
70,984
|
|
|
—
|
|
|
255,864
|
|
|||||||
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
U.S. Treasury securities
|
|
205,818
|
|
|
203
|
|
|
(60
|
)
|
|
205,961
|
|
|
—
|
|
|
—
|
|
|
205,961
|
|
|||||||
Corporate debt securities and commercial paper
|
|
1,341,337
|
|
|
4,023
|
|
|
(146
|
)
|
|
5,000
|
|
|
1,340,214
|
|
|
—
|
|
|
1,345,214
|
|
|||||||
Total marketable securities
|
|
1,547,155
|
|
|
4,226
|
|
|
(206
|
)
|
|
210,961
|
|
|
1,340,214
|
|
|
—
|
|
|
1,551,175
|
|
|||||||
Strategic investments
|
|
5,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,500
|
|
|
5,500
|
|
|||||||
Total financial assets
|
|
$
|
1,808,519
|
|
|
$
|
4,226
|
|
|
$
|
(206
|
)
|
|
$
|
395,841
|
|
|
$
|
1,411,198
|
|
|
$
|
5,500
|
|
|
$
|
1,812,539
|
|
|
|
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, 2018 |
|
Aggregate
Fair Value
|
||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||||||||||||||||||||
Financial Assets:
|
|
(in thousands)
|
||||||||||||||||||||||||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Money market funds
|
|
$
|
420,234
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
420,234
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
420,234
|
|
Reverse repurchase agreements
|
|
35,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,000
|
|
|
—
|
|
|
35,000
|
|
||||||||
Commercial paper
|
|
9,983
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,983
|
|
|
—
|
|
|
9,983
|
|
||||||||
Total included in cash and cash equivalents
|
|
465,217
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
420,234
|
|
|
44,983
|
|
|
—
|
|
|
465,217
|
|
||||||||
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. Treasury securities
|
|
59,785
|
|
|
—
|
|
|
(7
|
)
|
|
(9
|
)
|
|
59,769
|
|
|
—
|
|
|
—
|
|
|
59,769
|
|
||||||||
Corporate debt securities and commercial paper
|
|
201,683
|
|
|
23
|
|
|
(123
|
)
|
|
(224
|
)
|
|
—
|
|
|
201,359
|
|
|
—
|
|
|
201,359
|
|
||||||||
Total marketable securities
|
|
261,468
|
|
|
23
|
|
|
(130
|
)
|
|
(233
|
)
|
|
59,769
|
|
|
201,359
|
|
|
—
|
|
|
261,128
|
|
||||||||
Total financial assets
|
|
$
|
726,685
|
|
|
$
|
23
|
|
|
$
|
(130
|
)
|
|
$
|
(233
|
)
|
|
$
|
480,003
|
|
|
$
|
246,342
|
|
|
$
|
—
|
|
|
$
|
726,345
|
|
|
|
As of September 30, 2019
|
|
As of December 31, 2018
|
||||||||||||
|
|
Amortized
Cost
|
|
Aggregate
Fair Value
|
|
Amortized
Cost
|
|
Aggregate
Fair Value
|
||||||||
Financial Assets:
|
|
(in thousands)
|
||||||||||||||
Less than one year
|
|
$
|
844,301
|
|
|
$
|
845,578
|
|
|
$
|
261,468
|
|
|
$
|
261,128
|
|
One to two years
|
|
702,854
|
|
|
705,597
|
|
|
—
|
|
|
—
|
|
||||
Total
|
|
$
|
1,547,155
|
|
|
$
|
1,551,175
|
|
|
$
|
261,468
|
|
|
$
|
261,128
|
|
|
|
As of
September 30, 2019 |
|
As of
December 31, 2018 |
||||
|
|
(in thousands)
|
||||||
Capitalized internal-use software development costs
|
|
$
|
93,823
|
|
|
$
|
72,647
|
|
Data center equipment (1)
|
|
19,241
|
|
|
—
|
|
||
Leasehold improvements
|
|
38,572
|
|
|
15,293
|
|
||
Office equipment
|
|
22,720
|
|
|
13,563
|
|
||
Furniture and fixtures (1)
|
|
7,865
|
|
|
4,918
|
|
||
Software
|
|
6,586
|
|
|
1,849
|
|
||
Total property and equipment
|
|
188,807
|
|
|
108,270
|
|
||
Less: accumulated depreciation and amortization
|
|
(70,326
|
)
|
|
(44,736
|
)
|
||
Total property and equipment, net
|
|
$
|
118,481
|
|
|
$
|
63,534
|
|
(1)
|
Data center equipment and furniture and fixtures contain assets under finance leases. See Note 5 for further detail.
|
|
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||
|
|
(in thousands)
|
||||||
Operating lease cost
|
|
$
|
8,336
|
|
|
$
|
23,782
|
|
Finance lease cost:
|
|
|
|
|
||||
Amortization of assets
|
|
1,610
|
|
|
4,299
|
|
||
Interest on lease liabilities
|
|
175
|
|
|
512
|
|
||
Short-term lease cost
|
|
1,748
|
|
|
5,088
|
|
||
Variable lease cost
|
|
1,002
|
|
|
2,569
|
|
||
Total net lease cost
|
|
$
|
12,871
|
|
|
$
|
36,250
|
|
Leases
|
|
Classification
|
|
As of
September 30, 2019 |
||
Assets:
|
|
|
|
(in thousands)
|
||
Operating lease assets
|
|
Operating right-of-use asset, net of accumulated amortization (a)
|
|
$
|
148,069
|
|
Finance lease assets
|
|
Property and equipment, net of accumulated depreciation (b)
|
|
13,855
|
|
|
Total leased assets
|
|
|
|
$
|
161,924
|
|
|
|
|
|
|
||
Liabilities:
|
|
|
|
|
||
Current
|
|
|
|
|
||
Operating
|
|
Operating lease liability, current
|
|
$
|
22,211
|
|
Finance
|
|
Financing lease liability, current
|
|
6,509
|
|
|
Noncurrent
|
|
|
|
|
||
Operating
|
|
Operating lease liability, noncurrent
|
|
134,755
|
|
|
Finance
|
|
Finance lease liability, noncurrent
|
|
8,174
|
|
|
Total lease liabilities
|
|
|
|
$
|
171,649
|
|
(a)
|
Operating lease assets are recorded net of accumulated amortization of $16.8 million as of September 30, 2019.
|
(b)
|
Finance lease assets are recorded net of accumulated depreciation of $4.7 million as of September 30, 2019.
|
|
|
Nine Months Ended September 30, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities (in thousands):
|
|
|
||
Operating cash flows from operating leases
|
|
$
|
20,316
|
|
Operating cash flows from finance leases
|
|
$
|
491
|
|
Financing cash flows from finance leases
|
|
$
|
3,927
|
|
|
|
|
||
Weighted average remaining lease term (in years):
|
|
|
||
Operating leases
|
|
6.6
|
|
|
Finance leases
|
|
2.9
|
|
|
|
|
|
||
Weighted average discount rate:
|
|
|
||
Operating leases
|
|
5.8
|
%
|
|
Finance leases
|
|
5.2
|
%
|
|
|
As of September 30, 2019
|
||||||
|
|
Operating
Leases |
|
Finance
Leases |
||||
|
|
(in thousands)
|
||||||
2019 (remaining 3 months)
|
|
$
|
6,539
|
|
|
$
|
1,892
|
|
2020
|
|
31,524
|
|
|
6,793
|
|
||
2021
|
|
29,385
|
|
|
3,905
|
|
||
2022
|
|
28,327
|
|
|
1,579
|
|
||
2023
|
|
27,843
|
|
|
890
|
|
||
Thereafter
|
|
68,521
|
|
|
897
|
|
||
Total lease payments
|
|
192,139
|
|
|
15,956
|
|
||
Less: imputed interest
|
|
(35,173
|
)
|
|
(1,273
|
)
|
||
Total lease obligations
|
|
156,966
|
|
|
14,683
|
|
||
Less: current obligations
|
|
(22,211
|
)
|
|
(6,509
|
)
|
||
Long-term lease obligations
|
|
$
|
134,755
|
|
|
$
|
8,174
|
|
|
|
As of December 31, 2018
|
||||||
|
|
Operating
Leases |
|
Finance
Leases |
||||
|
|
(in thousands)
|
||||||
2019
|
|
$
|
24,128
|
|
|
$
|
306
|
|
2020
|
|
29,527
|
|
|
512
|
|
||
2021
|
|
30,898
|
|
|
573
|
|
||
2022
|
|
30,492
|
|
|
590
|
|
||
2023
|
|
30,122
|
|
|
608
|
|
||
Thereafter
|
|
81,316
|
|
|
1,939
|
|
||
Total lease payments
|
|
$
|
226,483
|
|
|
$
|
4,528
|
|
|
|
Total
|
||
|
|
(in thousands)
|
||
Net tangible liabilities assumed
|
|
$
|
(542
|
)
|
Intangible assets (1)
|
|
7,610
|
|
|
Goodwill (2)
|
|
7,343
|
|
|
Total preliminary purchase price
|
|
$
|
14,411
|
|
|
|
Total
|
|
Estimated life
|
||
|
|
(in thousands)
|
|
(in years)
|
||
Developed technology and software
|
|
$
|
6,390
|
|
|
6
|
Customer relationships
|
|
1,220
|
|
|
4
|
|
Total intangible assets acquired
|
|
$
|
7,610
|
|
|
|
|
|
Total
|
||
|
|
(in thousands)
|
||
Fair value of Class A common stock transferred
|
|
$
|
2,658,898
|
|
Fair value of the pre-combination service through equity awards
|
|
182,554
|
|
|
Total preliminary purchase price, as adjusted
|
|
$
|
2,841,452
|
|
|
|
Total
|
||
|
|
(in thousands)
|
||
Cash and cash equivalents
|
|
$
|
156,783
|
|
Accounts receivable and other current assets
|
|
11,635
|
|
|
Property and equipment, net
|
|
38,350
|
|
|
Operating right of use asset
|
|
33,742
|
|
|
Intangible assets
|
|
483,000
|
|
|
Other assets
|
|
1,664
|
|
|
Goodwill
|
|
2,237,879
|
|
|
Accounts payable and other liabilities
|
|
(11,114
|
)
|
|
Operating lease liability
|
|
(32,568
|
)
|
|
Financing lease liability
|
|
(13,616
|
)
|
|
Note payable
|
|
(5,387
|
)
|
|
Deferred tax liability
|
|
(58,916
|
)
|
|
Total purchase price
|
|
$
|
2,841,452
|
|
|
|
Total
|
|
Estimated life
|
||
|
|
(in thousands)
|
|
(in years)
|
||
Developed technology and software
|
|
$
|
294,000
|
|
|
7
|
Customer relationships
|
|
169,000
|
|
|
7
|
|
Trade names
|
|
20,000
|
|
|
5
|
|
Total intangible assets acquired
|
|
$
|
483,000
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Revenue
|
|
$
|
295,066
|
|
|
$
|
206,093
|
|
|
$
|
816,990
|
|
|
$
|
551,207
|
|
Net loss attributable to common stockholders
|
|
$
|
(81,088
|
)
|
|
$
|
(61,550
|
)
|
|
$
|
(236,928
|
)
|
|
$
|
(134,889
|
)
|
|
|
Total
|
||
|
|
(in thousands)
|
||
Balance as of December 31, 2018
|
|
$
|
38,165
|
|
Goodwill additions related to 2019 acquisitions
|
|
2,246,398
|
|
|
Measurement period adjustments
|
|
(1,176
|
)
|
|
Balance as of September 30, 2019
|
|
$
|
2,283,387
|
|
|
|
As of
September 30, 2019 |
||||||||||
|
|
Gross
|
|
Accumulated
Amortization |
|
Net
|
||||||
Amortizable intangible assets:
|
|
(in thousands)
|
||||||||||
Developed technology
|
|
$
|
328,598
|
|
|
$
|
(43,138
|
)
|
|
$
|
285,460
|
|
Customer relationships
|
|
178,374
|
|
|
(19,775
|
)
|
|
158,599
|
|
|||
Supplier relationships
|
|
2,696
|
|
|
(1,402
|
)
|
|
1,294
|
|
|||
Trade names
|
|
20,060
|
|
|
(2,727
|
)
|
|
17,333
|
|
|||
Patent
|
|
2,525
|
|
|
(251
|
)
|
|
2,274
|
|
|||
Total amortizable intangible assets
|
|
532,253
|
|
|
(67,293
|
)
|
|
464,960
|
|
|||
Non-amortizable intangible assets:
|
|
|
|
|
|
|
||||||
Domain names
|
|
32
|
|
|
—
|
|
|
32
|
|
|||
Trademarks
|
|
263
|
|
|
—
|
|
|
263
|
|
|||
Total
|
|
$
|
532,548
|
|
|
$
|
(67,293
|
)
|
|
$
|
465,255
|
|
|
|
As of
December 31, 2018 |
||||||||||
|
|
Gross
|
|
Accumulated
Amortization |
|
Net
|
||||||
Amortizable intangible assets:
|
|
(in thousands)
|
||||||||||
Developed technology
|
|
$
|
28,209
|
|
|
$
|
(10,497
|
)
|
|
$
|
17,712
|
|
Customer relationships
|
|
8,153
|
|
|
(2,411
|
)
|
|
5,742
|
|
|||
Supplier relationships
|
|
2,696
|
|
|
(973
|
)
|
|
1,723
|
|
|||
Trade name
|
|
60
|
|
|
(60
|
)
|
|
—
|
|
|||
Patent
|
|
2,264
|
|
|
(178
|
)
|
|
2,086
|
|
|||
Total amortizable intangible assets
|
|
41,382
|
|
|
(14,119
|
)
|
|
27,263
|
|
|||
Non-amortizable intangible assets:
|
|
|
|
|
|
|
||||||
Domain names
|
|
32
|
|
|
—
|
|
|
32
|
|
|||
Trademarks
|
|
263
|
|
|
—
|
|
|
263
|
|
|||
Total
|
|
$
|
41,677
|
|
|
$
|
(14,119
|
)
|
|
$
|
27,558
|
|
|
|
As of
September 30, 2019 |
||
|
|
(in thousands)
|
||
2019 (remaining three months)
|
|
$
|
19,774
|
|
2020
|
|
78,079
|
|
|
2021
|
|
76,567
|
|
|
2022
|
|
74,801
|
|
|
2023
|
|
72,309
|
|
|
Thereafter
|
|
143,430
|
|
|
Total
|
|
$
|
464,960
|
|
|
|
As of
September 30, 2019 |
|
As of
December 31, 2018 |
||||
|
|
(in thousands)
|
||||||
Accrued payroll and related
|
|
$
|
21,916
|
|
|
$
|
9,886
|
|
Accrued bonus and commission
|
|
10,524
|
|
|
8,564
|
|
||
Accrued cost of revenue
|
|
38,724
|
|
|
29,901
|
|
||
Sales and other taxes payable
|
|
30,157
|
|
|
23,631
|
|
||
ESPP contributions
|
|
9,297
|
|
|
2,672
|
|
||
Deferred rent
|
|
—
|
|
|
1,418
|
|
||
VAT liability
|
|
4,326
|
|
|
2,217
|
|
||
Acquisition holdback
|
|
2,240
|
|
|
—
|
|
||
Accrued other expense
|
|
18,360
|
|
|
18,054
|
|
||
Total accrued expenses and other current liabilities
|
|
$
|
135,544
|
|
|
$
|
96,343
|
|
|
|
As of
September 30, 2019 |
|
As of
December 31, 2018 |
||||
|
|
(in thousands)
|
||||||
Deferred rent
|
|
$
|
—
|
|
|
$
|
7,569
|
|
Deferred tax liability
|
|
7,711
|
|
|
5,181
|
|
||
Acquisition holdback
|
|
4,280
|
|
|
2,290
|
|
||
Capital lease obligation
|
|
—
|
|
|
2,170
|
|
||
Accrued other expense
|
|
2,350
|
|
|
959
|
|
||
Total other long-term liabilities
|
|
$
|
14,341
|
|
|
$
|
18,169
|
|
|
|
As of
September 30, 2019 |
|
As of
December 31, 2018 |
||||
|
|
(in thousands)
|
||||||
Principal
|
|
$
|
550,000
|
|
|
$
|
550,000
|
|
Unamortized discount
|
|
(90,183
|
)
|
|
(106,484
|
)
|
||
Unamortized issuance costs
|
|
(7,633
|
)
|
|
(9,020
|
)
|
||
Net carrying amount
|
|
$
|
452,184
|
|
|
$
|
434,496
|
|
|
|
As of
September 30, 2019 |
|
As of
December 31, 2018 |
||||
|
|
(in thousands)
|
||||||
Proceeds allocated to the conversion options (debt discount)
|
|
$
|
119,435
|
|
|
$
|
119,435
|
|
Issuance costs
|
|
(2,819
|
)
|
|
(2,819
|
)
|
||
Net carrying amount
|
|
$
|
116,616
|
|
|
$
|
116,616
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Contractual interest expense
|
|
$
|
344
|
|
|
$
|
344
|
|
|
$
|
1,032
|
|
|
$
|
508
|
|
Amortization of debt issuance costs
|
|
471
|
|
|
446
|
|
|
1,387
|
|
|
657
|
|
||||
Amortization of debt discount
|
|
5,536
|
|
|
5,233
|
|
|
16,302
|
|
|
7,717
|
|
||||
Total interest expense related to the Notes
|
|
$
|
6,351
|
|
|
$
|
6,023
|
|
|
$
|
18,721
|
|
|
$
|
8,882
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Balance, beginning of period
|
|
$
|
4,773
|
|
|
$
|
2,536
|
|
|
$
|
4,945
|
|
|
$
|
1,033
|
|
Additions
|
|
676
|
|
|
1,111
|
|
|
1,057
|
|
|
2,626
|
|
||||
Assumed in acquisition
|
|
—
|
|
|
—
|
|
|
59
|
|
|
—
|
|
||||
Write-offs
|
|
(114
|
)
|
|
(5
|
)
|
|
(726
|
)
|
|
(17
|
)
|
||||
Balance, end of period
|
|
$
|
5,335
|
|
|
$
|
3,642
|
|
|
$
|
5,335
|
|
|
$
|
3,642
|
|
Percentage of revenue
|
|
2
|
%
|
|
2
|
%
|
|
1
|
%
|
|
1
|
%
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Balance, beginning of period
|
|
$
|
3,076
|
|
|
$
|
2,625
|
|
|
$
|
3,015
|
|
|
$
|
1,761
|
|
Additions
|
|
5,861
|
|
|
1,651
|
|
|
11,127
|
|
|
4,301
|
|
||||
Assumed in acquisition
|
|
—
|
|
|
—
|
|
|
277
|
|
|
—
|
|
||||
Deductions against reserve
|
|
(3,834
|
)
|
|
(773
|
)
|
|
(9,316
|
)
|
|
(2,559
|
)
|
||||
Balance, end of period
|
|
$
|
5,103
|
|
|
$
|
3,503
|
|
|
$
|
5,103
|
|
|
$
|
3,503
|
|
Percentage of revenue
|
|
2
|
%
|
|
2
|
%
|
|
1
|
%
|
|
1
|
%
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue by geographic area:
|
|
(in thousands)
|
||||||||||||||
United States
|
|
$
|
210,986
|
|
|
$
|
125,697
|
|
|
$
|
572,537
|
|
|
$
|
335,575
|
|
International
|
|
84,080
|
|
|
43,198
|
|
|
230,707
|
|
|
110,190
|
|
||||
Total
|
|
$
|
295,066
|
|
|
$
|
168,895
|
|
|
$
|
803,244
|
|
|
$
|
445,765
|
|
Percentage of revenue by geographic area:
|
|
|
|
|
|
|
|
|
|
|
||
United States
|
|
72
|
%
|
|
74
|
%
|
|
71
|
%
|
|
75
|
%
|
International
|
|
28
|
%
|
|
26
|
%
|
|
29
|
%
|
|
25
|
%
|
|
|
As of
September 30, 2019 |
|
As of
December 31, 2018 |
||
Stock options issued and outstanding
|
|
8,348,766
|
|
|
7,978,369
|
|
Nonvested restricted stock units issued and outstanding
|
|
8,468,680
|
|
|
8,262,902
|
|
Class A common stock reserved for Twilio.org
|
|
776,334
|
|
|
572,676
|
|
Stock-based awards available for grant under 2016 Plan
|
|
15,609,073
|
|
|
9,313,354
|
|
Stock-based awards available for grant under 2016 ESPP
|
|
3,984,686
|
|
|
3,092,779
|
|
Class A common stock reserved for the convertible senior notes
|
|
10,472,165
|
|
|
10,472,165
|
|
Total
|
|
47,659,704
|
|
|
39,692,245
|
|
|
|
Number of
options outstanding |
|
Weighted-
average exercise price (per share) |
|
Weighted-
average remaining contractual term (in years) |
|
Aggregate
intrinsic value (in thousands) |
|||||
Outstanding options as of December 31, 2018
|
|
7,423,369
|
|
|
$
|
16.07
|
|
|
6.80
|
|
$
|
534,640
|
|
Granted
|
|
905,180
|
|
|
118.41
|
|
|
|
|
|
|
||
Assumed in acquisition
|
|
2,978,555
|
|
|
14.91
|
|
|
|
|
|
|
||
Exercised
|
|
(3,173,518
|
)
|
|
10.12
|
|
|
|
|
|
|
||
Forfeited and canceled
|
|
(339,820
|
)
|
|
41.29
|
|
|
|
|
|
|
||
Outstanding options as of September 30, 2019
|
|
7,793,766
|
|
|
$
|
28.83
|
|
|
6.82
|
|
$
|
639,230
|
|
Options vested and exercisable as of September 30, 2019
|
|
4,722,300
|
|
|
$
|
12.48
|
|
|
5.91
|
|
$
|
460,470
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
(In thousands, except per share amounts)
|
||||||||||||||
Aggregate intrinsic value of stock options exercised *
|
|
$
|
67,952
|
|
|
$
|
56,186
|
|
|
$
|
355,776
|
|
|
$
|
130,719
|
|
Total estimated grant date fair value of options vested
|
|
$
|
20,959
|
|
|
$
|
4,594
|
|
|
$
|
62,657
|
|
|
$
|
17,627
|
|
Weighted-average grant date fair value per share of options granted
|
|
$
|
—
|
|
|
$
|
28.84
|
|
|
$
|
58.16
|
|
|
$
|
16.04
|
|
|
|
Number of
options outstanding |
|
Weighted-
average exercise price (per share) |
|
Weighted-
average remaining contractual term (in years) |
|
Aggregate
intrinsic value (in thousands) |
|||||
Outstanding options as of December 31, 2018
|
|
555,000
|
|
|
$
|
31.72
|
|
|
6.00
|
|
$
|
—
|
|
Granted
|
|
—
|
|
|
—
|
|
|
|
|
|
|
||
Exercised
|
|
—
|
|
|
—
|
|
|
|
|
|
|
||
Forfeited and canceled
|
|
—
|
|
|
—
|
|
|
|
|
|
|
||
Outstanding options as of September 30, 2019
|
|
555,000
|
|
|
$
|
31.72
|
|
|
4.41
|
|
$
|
43,423
|
|
Options vested and exercisable as of September 30, 2019
|
|
393,124
|
|
|
$
|
31.72
|
|
|
4.41
|
|
$
|
30,758
|
|
|
|
Number of
awards outstanding |
|
Weighted-
average grant date fair value (per share) |
|
Aggregate
intrinsic value (in thousands) |
|||||
Nonvested RSUs as of December 31, 2018
|
|
8,262,902
|
|
|
$
|
42.70
|
|
|
$
|
729,373
|
|
Granted
|
|
2,348,316
|
|
|
126.02
|
|
|
|
|||
Assumed in acquisition
|
|
561,999
|
|
|
112.88
|
|
|
|
|||
Vested
|
|
(2,124,565
|
)
|
|
41.35
|
|
|
|
|||
Forfeited and canceled
|
|
(579,972
|
)
|
|
$
|
51.91
|
|
|
|
||
Nonvested RSUs as of September 30, 2019
|
|
8,468,680
|
|
|
$
|
68.39
|
|
|
$
|
926,427
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||
Employee Stock Options:
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Fair value of common stock
|
|
—
|
|
$62.7
|
|
$111.3 - $130.7
|
|
$33.0 - $62.7
|
Expected term (in years)
|
|
—
|
|
6.08
|
|
0.33 - 6.08
|
|
6.08
|
Expected volatility
|
|
—
|
|
43.6%
|
|
48.3% - 66.5.%
|
|
43.6% - 44.2%
|
Risk-free interest rate
|
|
—
|
|
2.8%
|
|
2.4% - 2.5%
|
|
2.7% - 2.9%
|
Dividend rate
|
|
—
|
|
—%
|
|
—%
|
|
—%
|
|
|
Nine Months Ended
September 30, |
||
Employee Stock Purchase Plan:
|
|
2019
|
|
2018
|
Expected term (in years)
|
|
0.5
|
|
0.5
|
Expected volatility
|
|
50.3%
|
|
39.8%
|
Risk-free interest rate
|
|
2.4%
|
|
2.1%
|
Dividend rate
|
|
—%
|
|
—%
|
Asset volatility
|
|
40%
|
Equity volatility
|
|
45%
|
Discount rate
|
|
14%
|
Stock price at grant date
|
|
$31.7
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Cost of revenue
|
|
$
|
1,674
|
|
|
$
|
284
|
|
|
$
|
5,106
|
|
|
$
|
772
|
|
Research and development
|
|
34,348
|
|
|
10,879
|
|
|
93,388
|
|
|
28,500
|
|
||||
Sales and marketing
|
|
16,143
|
|
|
5,246
|
|
|
42,456
|
|
|
14,154
|
|
||||
General and administrative
|
|
16,103
|
|
|
6,332
|
|
|
56,382
|
|
|
17,861
|
|
||||
Total
|
|
$
|
68,268
|
|
|
$
|
22,741
|
|
|
$
|
197,332
|
|
|
$
|
61,287
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
(in thousands, except share and per share data)
|
||||||||||||||
Net loss attributable to common stockholders
|
|
$
|
(87,734
|
)
|
|
$
|
(27,056
|
)
|
|
$
|
(216,816
|
)
|
|
$
|
(74,791
|
)
|
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted
|
|
136,400,739
|
|
|
98,019,629
|
|
|
127,506,529
|
|
|
96,359,437
|
|
||||
Net loss per share attributable to common stockholders, basic and diluted
|
|
$
|
(0.64
|
)
|
|
$
|
(0.28
|
)
|
|
$
|
(1.70
|
)
|
|
$
|
(0.78
|
)
|
|
|
As of September 30,
|
||||
|
|
2019
|
|
2018
|
||
Stock options issued and outstanding
|
|
8,348,766
|
|
|
8,567,152
|
|
Nonvested restricted stock units issued and outstanding
|
|
8,468,680
|
|
|
7,368,918
|
|
Class A common stock reserved for Twilio.org
|
|
776,334
|
|
|
635,014
|
|
Class A common stock committed under 2016 ESPP
|
|
99,158
|
|
|
127,327
|
|
Conversion spread*
|
|
3,515,621
|
|
|
233,799
|
|
Unvested shares subject to repurchase
|
|
—
|
|
|
209
|
|
Total
|
|
21,208,559
|
|
|
16,932,419
|
|
|
|
Three Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
Number of Active Customer Accounts (as of end date of period) (1)
|
|
172,092
|
|
|
61,153
|
|
||
Base Revenue (in thousands) (1)
|
|
$
|
275,548
|
|
|
$
|
154,348
|
|
Base Revenue Growth Rate (1)
|
|
79
|
%
|
|
68
|
%
|
||
Dollar-Based Net Expansion Rate
|
|
132
|
%
|
|
145
|
%
|
|
|
Three Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in thousands)
|
||||||
Reconciliation:
|
|
|
|
|
||||
Gross profit
|
|
$
|
158,162
|
|
|
$
|
91,864
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
||
Stock-based compensation
|
|
1,674
|
|
|
284
|
|
||
Amortization of acquired intangibles
|
|
12,549
|
|
|
1,396
|
|
||
Payroll taxes related to stock-based compensation
|
|
29
|
|
|
—
|
|
||
Non-GAAP gross profit
|
|
$
|
172,414
|
|
|
$
|
93,544
|
|
Non-GAAP gross margin
|
|
58
|
%
|
|
55
|
%
|
|
|
Three Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in thousands)
|
||||||
Reconciliation:
|
|
|
|
|
||||
Operating expenses
|
|
$
|
252,828
|
|
|
$
|
116,897
|
|
Non-GAAP adjustments:
|
|
|
|
|
||||
Stock-based compensation
|
|
(66,594
|
)
|
|
(22,457
|
)
|
||
Amortization of acquired intangibles
|
|
(7,443
|
)
|
|
(410
|
)
|
||
Acquisition-related expenses
|
|
(371
|
)
|
|
(1,554
|
)
|
||
Legal settlements/accruals
|
|
—
|
|
|
(1,510
|
)
|
||
Charitable contributions
|
|
—
|
|
|
(175
|
)
|
||
Payroll taxes related to stock-based compensation
|
|
(2,386
|
)
|
|
(1,498
|
)
|
||
Non-GAAP operating expenses
|
|
$
|
176,034
|
|
|
$
|
89,293
|
|
|
|
Three Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in thousands)
|
||||||
Reconciliation:
|
|
|
|
|
||||
Loss from operations
|
|
$
|
(94,666
|
)
|
|
$
|
(25,033
|
)
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
||
Stock-based compensation
|
|
68,268
|
|
|
22,741
|
|
||
Amortization of acquired intangibles
|
|
19,992
|
|
|
1,806
|
|
||
Acquisition-related expenses
|
|
371
|
|
|
1,554
|
|
||
Legal settlements/accruals
|
|
—
|
|
|
1,510
|
|
||
Charitable contributions
|
|
—
|
|
|
175
|
|
||
Payroll taxes related to stock-based compensation
|
|
2,415
|
|
|
1,498
|
|
||
Non-GAAP (loss) income from operations
|
|
$
|
(3,620
|
)
|
|
$
|
4,251
|
|
Non-GAAP operating margin
|
|
(1
|
)%
|
|
3
|
%
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Cost of revenue
|
|
$
|
1,674
|
|
|
$
|
284
|
|
|
$
|
5,106
|
|
|
$
|
772
|
|
Research and development
|
|
34,348
|
|
|
10,879
|
|
|
93,388
|
|
|
28,500
|
|
||||
Sales and marketing
|
|
16,143
|
|
|
5,246
|
|
|
42,456
|
|
|
14,154
|
|
||||
General and administrative
|
|
16,103
|
|
|
6,332
|
|
|
56,382
|
|
|
17,861
|
|
||||
Total
|
|
$
|
68,268
|
|
|
$
|
22,741
|
|
|
$
|
197,332
|
|
|
$
|
61,287
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Cost of revenue
|
|
$
|
12,549
|
|
|
$
|
1,396
|
|
|
$
|
32,866
|
|
|
$
|
3,719
|
|
Research and development
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
||||
Sales and marketing
|
|
7,322
|
|
|
390
|
|
|
19,654
|
|
|
816
|
|
||||
General and administrative
|
|
121
|
|
|
20
|
|
|
336
|
|
|
60
|
|
||||
Total
|
|
$
|
19,992
|
|
|
$
|
1,806
|
|
|
$
|
52,856
|
|
|
$
|
4,617
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Condensed Consolidated Statements of Operations, as a percentage of revenue:**
|
|
|
|
|
||||||||
Revenue
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Cost of revenue
|
|
46
|
|
|
46
|
|
|
46
|
|
|
46
|
|
Gross profit
|
|
54
|
|
|
54
|
|
|
54
|
|
|
54
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
||
Research and development
|
|
35
|
|
|
25
|
|
|
35
|
|
|
27
|
|
Sales and marketing
|
|
34
|
|
|
27
|
|
|
33
|
|
|
26
|
|
General and administrative
|
|
16
|
|
|
17
|
|
|
21
|
|
|
17
|
|
Total operating expenses
|
|
86
|
|
|
69
|
|
|
88
|
|
|
70
|
|
Loss from operations
|
|
(32
|
)
|
|
(15
|
)
|
|
(34
|
)
|
|
(16
|
)
|
Other income (expenses), net
|
|
1
|
|
|
(1
|
)
|
|
*
|
|
|
(1
|
)
|
Loss before benefit (provision) for income taxes
|
|
(31
|
)
|
|
(16
|
)
|
|
(34
|
)
|
|
(17
|
)
|
Benefit (provision) for income taxes
|
|
1
|
|
|
*
|
|
|
7
|
|
|
*
|
|
Net loss attributable to common stockholders
|
|
(30
|
%)
|
|
(16
|
%)
|
|
(27
|
)%
|
|
(17
|
)%
|
|
|
Three Months Ended
September 30, |
|
|
|
|
||||||||
|
|
2019
|
|
2018
|
|
Change
|
||||||||
|
|
(dollars in thousands)
|
||||||||||||
Base Revenue
|
|
$
|
275,548
|
|
|
$
|
154,348
|
|
|
$
|
121,200
|
|
|
79%
|
Variable Revenue
|
|
19,518
|
|
|
14,547
|
|
|
4,971
|
|
|
34%
|
|||
Total Revenue
|
|
$
|
295,066
|
|
|
$
|
168,895
|
|
|
$
|
126,171
|
|
|
75%
|
|
|
Three Months Ended
September 30, |
|
|
|
|
||||||||
|
|
2019
|
|
2018
|
|
Change
|
||||||||
|
|
(dollars in thousands)
|
||||||||||||
Research and development
|
|
$
|
104,481
|
|
|
$
|
42,340
|
|
|
$
|
62,141
|
|
|
147%
|
Sales and marketing
|
|
100,657
|
|
|
45,949
|
|
|
54,708
|
|
|
119%
|
|||
General and administrative
|
|
47,690
|
|
|
28,608
|
|
|
19,082
|
|
|
67%
|
|||
Total operating expenses
|
|
$
|
252,828
|
|
|
$
|
116,897
|
|
|
$
|
135,931
|
|
|
116%
|
|
|
Nine Months Ended
September 30, |
|
|
|
|
|||||||||
|
|
2019
|
|
2018
|
|
Change
|
|||||||||
|
|
(dollars in thousands)
|
|||||||||||||
Research and development
|
|
$
|
281,119
|
|
|
$
|
119,727
|
|
|
$
|
161,392
|
|
|
135
|
%
|
Sales and marketing
|
|
262,685
|
|
|
116,520
|
|
|
146,165
|
|
|
125
|
%
|
|||
General and administrative
|
|
166,409
|
|
|
76,213
|
|
|
90,196
|
|
|
118
|
%
|
|||
Total operating expenses
|
|
$
|
710,213
|
|
|
$
|
312,460
|
|
|
$
|
397,753
|
|
|
127
|
%
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in thousands)
|
||||||
Cash provided by operating activities
|
|
$
|
2,024
|
|
|
$
|
12,833
|
|
Cash used in investing activities
|
|
(1,182,711
|
)
|
|
(148,402
|
)
|
||
Cash provided by financing activities
|
|
1,006,029
|
|
|
503,990
|
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
|
—
|
|
|
105
|
|
||
Net (decrease) increase in cash, cash equivalents and restricted cash
|
|
$
|
(174,658
|
)
|
|
$
|
368,526
|
|
•
|
our ability to retain and increase revenue from existing customers and attract new customers;
|
•
|
fluctuations in the amount of revenue from our Active Customer Accounts;
|
•
|
our ability to attract and retain enterprises and international organizations as customers;
|
•
|
our ability to introduce new products and enhance existing products;
|
•
|
competition and the actions of our competitors, including pricing changes and the introduction of new products, services and geographies;
|
•
|
changes in laws, industry standards, regulations or regulatory enforcement, in the United States or internationally, including SHAKEN/STIR and other robocalling prevention and anti-spam standards as well as enhanced Know-Your-Client processes that impact our ability to market, sell or deliver our products;
|
•
|
the number of new employees;
|
•
|
changes in network service provider fees that we pay in connection with the delivery of communications on our platform;
|
•
|
changes in cloud infrastructure fees that we pay in connection with the operation of our platform;
|
•
|
changes in our pricing as a result of our optimization efforts or otherwise;
|
•
|
reductions in pricing as a result of negotiations with our larger customers;
|
•
|
the rate of expansion and productivity of our sales force, including our enterprise sales force, which has been a focus of our recent expansion efforts;
|
•
|
change in the mix of products that our customers use;
|
•
|
change in the revenue mix of U.S. and international products;
|
•
|
the amount and timing of operating costs and capital expenditures related to the operations and expansion of our business, including investments in our international expansion;
|
•
|
significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our products on our platform;
|
•
|
the timing of customer payments and any difficulty in collecting accounts receivable from customers;
|
•
|
general economic conditions that may adversely affect a prospective customer’s ability or willingness to adopt our products, delay a prospective customer’s adoption decision, reduce the revenue that we generate from the use of our products or affect customer retention;
|
•
|
changes in foreign currency exchange rates;
|
•
|
extraordinary expenses such as litigation or other dispute‑related settlement payments;
|
•
|
sales tax and other tax determinations by authorities in the jurisdictions in which we conduct business;
|
•
|
the impact of new accounting pronouncements;
|
•
|
expenses in connection with mergers, acquisitions or other strategic transactions;
|
•
|
our ability to realize the anticipated benefits from the acquisition of SendGrid, including the ability to retain SendGrid customers and to cross-sell additional products; and
|
•
|
fluctuations in stock‑based compensation expense.
|
•
|
legacy on‑premise vendors, such as Avaya and Cisco;
|
•
|
regional network service providers that offer limited developer functionality on top of their own physical infrastructure;
|
•
|
smaller software companies that compete with portions of our product line; and
|
•
|
software‑as‑a‑service (“SaaS”) companies and cloud platform vendors that offer prepackaged applications and platforms.
|
•
|
investments in our engineering team, improvements in security and data protection, the development of new products, features and functionality and enhancements to our platform;
|
•
|
sales and marketing, including the continued expansion of our direct sales organization and marketing programs, especially for enterprises and for organizations outside of the United States, and expanding our programs directed at increasing our brand awareness among current and new developers;
|
•
|
expansion of our operations and infrastructure, both domestically and internationally; and
|
•
|
general administration, including legal, accounting and other expenses related to being a public company.
|
•
|
exposure to political developments in the United Kingdom (“U.K.”), including the planned departure of the U.K. from the European Union ("EU") ("Brexit"), which has created an uncertain political and economic environment, instability for businesses, volatility in global financial markets and the value of foreign currencies, all of which could disrupt trade, the sale of our services and the mobility of our employees and contractors between the United Kingdom, EU and other jurisdictions. Any long–term impact from Brexit on our business and operations will depend, in part, on the outcome of the U.K.'s negotiations on tariffs, tax treaties, trade, regulatory, and other matters and may require us to expend significant time and expense to make adjustments to our business and operations.
|
•
|
the difficulty of managing and staffing international operations and the increased operations, travel, infrastructure and legal compliance costs associated with servicing international customers and operating numerous international locations;
|
•
|
our ability to effectively price our products in competitive international markets;
|
•
|
new and different sources of competition;
|
•
|
understanding and reconciling different technical standards, data privacy and telecommunications regulations, registration and certification requirements outside the United States, which could prevent customers from deploying our products or limit their usage;
|
•
|
our ability to comply with the General Data Protection Regulation ("GDPR"), which went into effect on May 25, 2018 and laws, regulations and industry standards relating to data privacy, data localization and security enacted in countries and other regions in which we operate or do business;
|
•
|
potentially greater difficulty collecting accounts receivable and longer payment cycles;
|
•
|
higher or more variable network service provider fees outside of the United States;
|
•
|
the need to adapt and localize our products for specific countries;
|
•
|
the need to offer customer support in various languages;
|
•
|
difficulties in understanding and complying with local laws, regulations and customs in non-U.S. jurisdictions;
|
•
|
export controls and economic sanctions administered by the Department of Commerce Bureau of Industry and Security and the Treasury Department’s Office of Foreign Assets Control;
|
•
|
compliance with various anti‑bribery and anti‑corruption laws such as the Foreign Corrupt Practices Act and United Kingdom Bribery Act of 2010;
|
•
|
tariffs and other non‑tariff barriers, such as quotas and local content rules;
|
•
|
more limited protection for intellectual property rights in some countries;
|
•
|
adverse tax consequences;
|
•
|
fluctuations in currency exchange rates, which could increase the price of our products outside of the United States, increase the expenses of our international operations and expose us to foreign currency exchange rate risk;
|
•
|
currency control regulations, which might restrict or prohibit our conversion of other currencies into U.S. dollars;
|
•
|
restrictions on the transfer of funds;
|
•
|
deterioration of political relations between the United States and other countries; and
|
•
|
political or social unrest or economic instability in a specific country or region in which we operate, which could have an adverse impact on our operations in that location.
|
•
|
the Communications Act of 1934, as amended, which regulates communications services and the provision of such services;
|
•
|
the Telephone Consumer Protection Act, which limits the use of automatic dialing systems, artificial or prerecorded voice messages, SMS text messages and fax machines;
|
•
|
the Communications Assistance for Law Enforcement Act (“CALEA”), which requires covered entities to assist law enforcement in undertaking electronic surveillance;
|
•
|
requirements to safeguard the privacy of certain customer information;
|
•
|
payment of annual FCC regulatory fees based on our interstate and international revenues;
|
•
|
rules pertaining to access to our services by people with disabilities and contributions to the Telecommunications Relay Services fund; and
|
•
|
FCC rules regarding the use of customer proprietary network information.
|
•
|
issue additional equity securities that would dilute our existing stockholders;
|
•
|
use cash that we may need in the future to operate our business;
|
•
|
incur large charges or substantial liabilities;
|
•
|
incur debt on terms unfavorable to us or that we are unable to repay;
|
•
|
encounter difficulties retaining key employees of the acquired company or integrating diverse software codes or business cultures; or
|
•
|
become subject to adverse tax consequences, substantial depreciation, or deferred compensation charges.
|
•
|
price and volume fluctuations in the overall stock market from time to time;
|
•
|
volatility in the trading prices and trading volumes of technology stocks;
|
•
|
changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;
|
•
|
sales of shares of our Class A common stock by us or our stockholders;
|
•
|
failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;
|
•
|
the financial projections we may provide to the public, any changes in those projections or our failure to meet those projections;
|
•
|
announcements by us or our competitors of new products or services;
|
•
|
the public’s reaction to our press releases, other public announcements and filings with the SEC;
|
•
|
rumors and market speculation involving us or other companies in our industry;
|
•
|
new laws or regulations or new interpretations of existing laws or regulations applicable to our business, including regulations relating to the prevention of spam and robocalls;
|
•
|
actual or anticipated changes in our results of operations or fluctuations in our results of operations;
|
•
|
actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally;
|
•
|
litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;
|
•
|
developments or disputes concerning our intellectual property or other proprietary rights;
|
•
|
announced or completed acquisitions of businesses, products, services or technologies by us or our competitors;
|
•
|
changes in accounting standards, policies, guidelines, interpretations or principles;
|
•
|
any significant change in our management; and
|
•
|
general economic conditions and slow or negative growth of our markets.
|
•
|
authorizing “blank check” preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our Class A and Class B common stock;
|
•
|
limiting the liability of, and providing indemnification to, our directors and officers;
|
•
|
limiting the ability of our stockholders to call and bring business before special meetings;
|
•
|
providing for a dual class common stock structure in which holders of our Class B common stock have the ability to control the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the outstanding shares of our Class A and Class B common stock, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets;
|
•
|
providing that our board of directors is classified into three classes of directors with staggered three‑year terms;
|
•
|
prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;
|
•
|
requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors; and
|
•
|
controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings.
|
•
|
combining the companies’ corporate functions;
|
•
|
combining SendGrid’s business with our business in a manner that permits us to achieve the synergies anticipated to result from the acquisition, the failure of which would result in the anticipated benefits of the acquisition not being realized in the time frame currently anticipated or at all;
|
•
|
maintaining existing agreements with customers, distributors, providers, talent and vendors and avoiding delays in entering into new agreements with prospective customers, distributors, providers, talent and vendors;
|
•
|
determining whether and how to address possible differences in corporate cultures and management philosophies;
|
•
|
integrating the companies’ administrative and information technology infrastructure;
|
•
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developing products and technology that allow value to be unlocked in the future;
|
•
|
evaluating and forecasting the financial impact of the acquisition transaction, including accounting charges; and
|
•
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effecting potential actions that may be required in connection with obtaining regulatory approvals.
|
Exhibit
Number
|
|
Description
|
|
Filing Date
|
|
|
|
|
|
10.1*
|
|
|
Filed herewith
|
|
10.2*
|
|
|
Filed herewith
|
|
31.1
|
|
|
Filed herewith
|
|
31.2
|
|
|
Filed herewith
|
|
32.1**
|
|
|
Furnished herewith
|
|
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
|
Filed herewith
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
Filed herewith
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
Filed herewith
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
Filed herewith
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
Filed herewith
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
Filed herewith
|
*
|
Indicates a management contract or compensatory plan or arrangement.
|
**
|
The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.
|
|
Twilio Inc.
|
|
|
October 31, 2019
|
/s/ JEFFREY LAWSON
|
|
Jeffrey Lawson
|
|
Chief Executive Officer (Principal Executive Officer)
|
|
|
October 31, 2019
|
/s/ KHOZEMA SHIPCHANDLER
|
|
Khozema Shipchandler
|
|
Chief Financial Officer (Principal Accounting and Financial Officer)
|
1.
|
Definitions.
|
2.
|
Notice to Grantees.
|
3.
|
Terms and Conditions.
|
◦
|
Vesting Restrictions.
|
◦
|
Sale Restrictions.
|
•
|
During the 10 trading days before and 2 trading days following the publication of the Company’s annual financial statements, and
|
•
|
During the period beginning when the Company’s board of directors become aware of any information, which, were it to be public knowledge, could have a significant impact on the market price of Shares, and ending 2 full trading days after the information becomes public knowledge.
|
◦
|
Treatment upon Death or Disability.
|
4.
|
Special Tax Consequences.
|
/s/ JEFFREY LAWSON
|
|
Jeffrey Lawson
|
|
Chief Executive Officer (Principal Executive Officer)
|
|
/s/ KHOZEMA SHIPCHANDLER
|
|
Khozema Shipchandler
|
|
Chief Financial Officer (Principal Accounting and Financial Officer)
|
|
/s/ JEFFREY LAWSON
|
|
Jeffrey Lawson
|
|
Chief Executive Officer (Principal Executive Officer)
|
|
|
|
/s/ KHOZEMA SHIPCHANDLER
|
|
Khozema Shipchandler
|
|
Chief Financial Officer (Principal Accounting and Financial Officer)
|
|