|
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
26-2574840
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification Number)
|
Large accelerated filer
x
|
|
Accelerated filer
o
|
Non-accelerated filer
o
|
|
Smaller reporting company
o
|
|
|
Emerging growth company
o
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Class A Common Stock, par value $0.001 per share
|
TWLO
|
The New York Stock Exchange
|
|
•
|
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;
|
•
|
our ability to manage changes in network service provider fees that we pay in connection with the delivery of communications on our platform;
|
•
|
our ability to work closely with email inbox service providers to maintain deliverability rates;
|
•
|
the attraction and retention of qualified employees and key personnel;
|
•
|
our ability to effectively manage our growth and future expenses and maintain our corporate culture;
|
•
|
our anticipated investments in sales and marketing and research and development;
|
•
|
our ability to maintain, protect and enhance our intellectual property;
|
•
|
our ability to successfully defend litigation brought against us;
|
•
|
our ability to service the interest on our convertible notes and repay such notes, to the extent required;
|
•
|
our customers' and other platform users' violation of our policies or other misuse of our platform;
|
•
|
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
|
•
|
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”).
|
|
|
As of March 31, 2019
|
|
As of December 31, 2018
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
377,730
|
|
|
$
|
487,215
|
|
Short-term marketable securities
|
|
541,167
|
|
|
261,128
|
|
||
Accounts receivable, net
|
|
105,149
|
|
|
97,712
|
|
||
Prepaid expenses and other current assets
|
|
39,081
|
|
|
26,893
|
|
||
Total current assets
|
|
1,063,127
|
|
|
872,948
|
|
||
Restricted cash
|
|
1,101
|
|
|
18,119
|
|
||
Property and equipment, net
|
|
105,158
|
|
|
63,534
|
|
||
Operating right of use asset
|
|
156,511
|
|
|
—
|
|
||
Intangible assets, net
|
|
503,947
|
|
|
27,558
|
|
||
Goodwill
|
|
2,277,220
|
|
|
38,165
|
|
||
Other long-term assets
|
|
13,009
|
|
|
8,386
|
|
||
Total assets
|
|
$
|
4,120,073
|
|
|
$
|
1,028,710
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
22,418
|
|
|
$
|
18,495
|
|
Accrued expenses and other current liabilities
|
|
107,295
|
|
|
96,343
|
|
||
Deferred revenue and customer deposits
|
|
23,348
|
|
|
22,972
|
|
||
Operating lease liability, current
|
|
21,147
|
|
|
—
|
|
||
Financing lease liability, current
|
|
6,044
|
|
|
—
|
|
||
Note payable, current
|
|
2,087
|
|
|
—
|
|
||
Total current liabilities
|
|
182,339
|
|
|
137,810
|
|
||
Operating lease liability, noncurrent
|
|
143,950
|
|
|
—
|
|
||
Financing lease liability, noncurrent
|
|
9,124
|
|
|
—
|
|
||
Note payable, noncurrent
|
|
2,773
|
|
|
—
|
|
||
Convertible senior notes, net
|
|
440,337
|
|
|
434,496
|
|
||
Other long-term liabilities
|
|
14,037
|
|
|
18,169
|
|
||
Total liabilities
|
|
792,560
|
|
|
590,475
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
|
||||
Preferred stock
|
|
—
|
|
|
—
|
|
||
Class A and Class B common stock
|
|
126
|
|
|
100
|
|
||
Additional paid-in capital
|
|
3,733,241
|
|
|
808,527
|
|
||
Accumulated other comprehensive income
|
|
2,323
|
|
|
1,282
|
|
||
Accumulated deficit
|
|
(408,177
|
)
|
|
(371,674
|
)
|
||
Total stockholders’ equity
|
|
3,327,513
|
|
|
438,235
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
4,120,073
|
|
|
$
|
1,028,710
|
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Revenue
|
$
|
233,139
|
|
|
$
|
129,116
|
|
Cost of revenue
|
107,089
|
|
|
59,582
|
|
||
Gross profit
|
126,050
|
|
|
69,534
|
|
||
Operating expenses:
|
|
|
|
||||
Research and development
|
77,855
|
|
|
37,576
|
|
||
Sales and marketing
|
71,607
|
|
|
32,822
|
|
||
General and administrative
|
64,176
|
|
|
23,393
|
|
||
Total operating expenses
|
213,638
|
|
|
93,791
|
|
||
Loss from operations
|
(87,588
|
)
|
|
(24,257
|
)
|
||
Other (expenses) income, net
|
(636
|
)
|
|
665
|
|
||
Loss before benefit (provision) for income taxes
|
(88,224
|
)
|
|
(23,592
|
)
|
||
Benefit (provision) for income taxes
|
51,721
|
|
|
(137
|
)
|
||
Net loss attributable to common stockholders
|
$
|
(36,503
|
)
|
|
$
|
(23,729
|
)
|
Net loss per share attributable to common stockholders, basic and diluted
|
$
|
(0.31
|
)
|
|
$
|
(0.25
|
)
|
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
|
116,590,513
|
|
|
94,673,557
|
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Net loss
|
$
|
(36,503
|
)
|
|
$
|
(23,729
|
)
|
Other comprehensive (loss) income:
|
|
|
|
||||
Unrealized gain (loss) on marketable securities
|
1,041
|
|
|
(317
|
)
|
||
Foreign currency translation
|
—
|
|
|
731
|
|
||
Total other comprehensive (loss) income
|
1,041
|
|
|
414
|
|
||
Comprehensive loss attributable to common stockholders
|
$
|
(35,462
|
)
|
|
$
|
(23,315
|
)
|
|
|
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
|
|
|
|
|
||||||||||||||||||
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
|
)
|
||||||
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
|
|
|
|
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
|
|
|
|
|
||||||||||||||||||
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
|
)
|
||||||
Exercise 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
|
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||
Net loss
|
$
|
(36,503
|
)
|
|
$
|
(23,729
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
21,248
|
|
|
5,631
|
|
||
Right-of-use asset amortization
|
4,854
|
|
|
—
|
|
||
Net amortization of investment premium and discount
|
(1,359
|
)
|
|
28
|
|
||
Amortization of debt discount and issuance costs
|
5,841
|
|
|
—
|
|
||
Stock-based compensation
|
58,324
|
|
|
17,540
|
|
||
Amortization of deferred commissions
|
670
|
|
|
—
|
|
||
Provision for doubtful accounts
|
11
|
|
|
375
|
|
||
Tax benefit related to release of valuation allowance
|
(51,644
|
)
|
|
—
|
|
||
Write-off of internally developed software and intangible assets
|
245
|
|
|
182
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable
|
(206
|
)
|
|
(14,612
|
)
|
||
Prepaid expenses and other current assets
|
(9,479
|
)
|
|
2,512
|
|
||
Other long-term assets
|
(2,959
|
)
|
|
(1,169
|
)
|
||
Accounts payable
|
1,161
|
|
|
6,703
|
|
||
Accrued expenses and other current liabilities
|
4,348
|
|
|
22,789
|
|
||
Deferred revenue and customer deposits
|
377
|
|
|
1,185
|
|
||
Operating right of use liability
|
(1,784
|
)
|
|
—
|
|
||
Long-term liabilities
|
(2,258
|
)
|
|
(499
|
)
|
||
Net cash (used in) provided by operating activities
|
(9,113
|
)
|
|
16,936
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||
Purchases of marketable securities
|
(419,498
|
)
|
|
(42,693
|
)
|
||
Proceeds from sale of marketable securities
|
13,708
|
|
|
—
|
|
||
Maturities of marketable securities
|
126,810
|
|
|
27,600
|
|
||
Capitalized software development costs
|
(5,351
|
)
|
|
(4,795
|
)
|
||
Purchases of property and equipment
|
(2,653
|
)
|
|
(940
|
)
|
||
Purchases of intangible assets
|
—
|
|
|
(112
|
)
|
||
Acquisitions, net of cash acquired
|
156,783
|
|
|
—
|
|
||
Net cash used in investing activities
|
(130,201
|
)
|
|
(20,940
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||
Principal payments on notes payable
|
(494
|
)
|
|
—
|
|
||
Principal payments on financing leases
|
(961
|
)
|
|
—
|
|
||
Proceeds from exercises of stock options
|
15,328
|
|
|
6,678
|
|
||
Value of equity awards withheld for tax liabilities
|
(1,062
|
)
|
|
(371
|
)
|
||
Net cash provided by financing activities
|
12,811
|
|
|
6,307
|
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
—
|
|
|
148
|
|
||
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
(126,503
|
)
|
|
2,451
|
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period
|
505,334
|
|
|
120,788
|
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH —End of period
|
$
|
378,831
|
|
|
$
|
123,239
|
|
Cash paid for income taxes, net
|
$
|
(34
|
)
|
|
$
|
18
|
|
Cash paid on finance leases
|
$
|
148
|
|
|
$
|
—
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
||
Purchases of property, equipment and intangible assets, accrued but not paid
|
$
|
1,821
|
|
|
$
|
473
|
|
Purchases of property and equipment through finance leases
|
$
|
13,616
|
|
|
$
|
—
|
|
Value of common stock issued and equity awards assumed in acquisition
|
$
|
2,850,518
|
|
|
$
|
—
|
|
Stock-based compensation capitalized in software development costs
|
$
|
1,623
|
|
|
$
|
1,428
|
|
|
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
March 31, 2019 |
|
Aggregate
Fair Value
|
||||||||||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||||||||||||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Money market funds
|
$
|
287,941
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
287,941
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
287,941
|
|
|
Reverse repurchase agreements
|
25,000
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
25,000
|
|
|||||||||||||
Commercial paper
|
29,336
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
29,336
|
|
|
|
|
29,336
|
|
||||||||||
Total included in cash and cash equivalents
|
342,277
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
287,941
|
|
|
54,336
|
|
|
—
|
|
|
342,277
|
|
||||||||
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. Treasury securities
|
154,173
|
|
|
79
|
|
|
(2
|
)
|
|
|
|
154,250
|
|
|
—
|
|
|
—
|
|
|
154,250
|
|
|||||||||
Corporate debt securities, commercial paper, and certificates of deposit
|
386,293
|
|
|
729
|
|
|
(20
|
)
|
|
(85
|
)
|
|
5,000
|
|
|
381,917
|
|
|
—
|
|
|
386,917
|
|
||||||||
Total marketable securities
|
540,466
|
|
|
808
|
|
|
(22
|
)
|
|
(85
|
)
|
|
159,250
|
|
|
381,917
|
|
|
—
|
|
|
541,167
|
|
||||||||
Total financial assets
|
$
|
882,743
|
|
|
$
|
808
|
|
|
$
|
(22
|
)
|
|
$
|
(85
|
)
|
|
$
|
447,191
|
|
|
$
|
436,253
|
|
|
$
|
—
|
|
|
$
|
883,444
|
|
|
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
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 March 31, 2019
|
|
As of December 31, 2018
|
||||||||||||
|
Amortized
Cost
|
|
Aggregate
Fair Value
|
|
Amortized
Cost
|
|
Aggregate
Fair Value
|
||||||||
Financial Assets:
|
|
|
|
|
|
|
|
||||||||
Less than one year
|
$
|
420,271
|
|
|
$
|
420,342
|
|
|
$
|
261,468
|
|
|
$
|
261,128
|
|
One to two years
|
120,195
|
|
|
120,825
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
540,466
|
|
|
$
|
541,167
|
|
|
$
|
261,468
|
|
|
$
|
261,128
|
|
|
|
As of
March 31, 2019 |
|
As of
December 31, 2018 |
||||
Capitalized internal-use software development costs
|
|
$
|
78,950
|
|
|
$
|
72,647
|
|
Data center equipment
(1)
|
|
15,151
|
|
|
—
|
|
||
Leasehold improvements
|
|
31,799
|
|
|
15,293
|
|
||
Office equipment
|
|
18,458
|
|
|
13,563
|
|
||
Furniture and fixtures
(1)
|
|
6,661
|
|
|
4,918
|
|
||
Software
|
|
6,067
|
|
|
1,849
|
|
||
Total property and equipment
|
|
157,086
|
|
|
108,270
|
|
||
Less: accumulated depreciation and amortization
|
|
(51,928
|
)
|
|
(44,736
|
)
|
||
Total property and equipment, net
|
|
$
|
105,158
|
|
|
$
|
63,534
|
|
(1)
|
Data center equipment and furniture and fixtures contain assets under finance leases. See Note 5 below for further detail.
|
|
|
Three Months Ended
March 31, 2019 |
||
Operating lease cost
|
|
$
|
7,173
|
|
Finance lease cost:
|
|
|
||
Amortization of assets
|
|
1,163
|
|
|
Interest on lease liabilities
|
|
148
|
|
|
Short-term lease cost
|
|
1,435
|
|
|
Variable lease cost
|
|
487
|
|
|
Total net lease cost
|
|
$
|
10,406
|
|
Leases
|
|
Classification
|
|
As of
March 31, 2019 |
||
Assets:
|
|
|
|
|
||
Operating lease assets
|
|
Operating right of use asset (a)
|
|
$
|
156,511
|
|
Finance lease assets
|
|
Property and equipment, net of accumulated depreciation (b)
|
|
15,476
|
|
|
Total leased assets
|
|
|
|
$
|
171,987
|
|
|
|
|
|
|
||
Liabilities:
|
|
|
|
|
||
Current
|
|
|
|
|
||
Operating
|
|
Operating lease liability, current
|
|
$
|
21,147
|
|
Finance
|
|
Financing lease liability, current
|
|
6,044
|
|
|
Noncurrent
|
|
|
|
|
||
Operating
|
|
Operating lease liability, noncurrent
|
|
143,950
|
|
|
Finance
|
|
Finance lease liability, noncurrent
|
|
9,124
|
|
|
Total lease liabilities
|
|
|
|
$
|
180,265
|
|
(a)
|
Operating lease assets are recorded net of accumulated amortization of
$4.9 million
as of March 31, 2019.
|
(b)
|
Finance lease assets are recorded net of accumulated depreciation of
$1.2 million
as of March 31, 2019.
|
|
|
As of March 31, 2019
|
||||||
|
|
Operating Leases
|
|
Finance Leases
|
||||
2019 (remaining nine months)
|
|
$
|
23,869
|
|
|
$
|
4,962
|
|
2020
|
|
29,848
|
|
|
6,015
|
|
||
2021
|
|
28,062
|
|
|
3,130
|
|
||
2022
|
|
27,602
|
|
|
807
|
|
||
2023
|
|
27,127
|
|
|
413
|
|
||
Thereafter
|
|
68,033
|
|
|
1,354
|
|
||
Total lease payments
|
|
204,541
|
|
|
16,681
|
|
||
Less: imputed interest
|
|
(39,444
|
)
|
|
(1,513
|
)
|
||
Total lease obligations
|
|
165,097
|
|
|
15,168
|
|
||
Less: current obligations
|
|
(21,147
|
)
|
|
(6,044
|
)
|
||
Long-term lease obligations
|
|
$
|
143,950
|
|
|
$
|
9,124
|
|
|
|
As of December 31, 2018
|
||||||
|
|
Operating Leases
|
|
Finance Leases
|
||||
2019 (remaining nine months)
|
|
$
|
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
|
||
Fair value of Class A common stock transferred
|
|
$
|
2,658,898
|
|
Fair value of the pre-combination service through equity awards
|
|
191,620
|
|
|
Total purchase price
|
|
$
|
2,850,518
|
|
|
|
Total
|
||
Cash and cash equivalents
|
|
$
|
156,783
|
|
Accounts receivable and other current assets
|
|
11,635
|
|
|
Property and equipment, net
|
|
39,188
|
|
|
Operating right of use asset
|
|
33,742
|
|
|
Intangible assets
|
|
490,000
|
|
|
Other assets
|
|
1,664
|
|
|
Goodwill
|
|
2,239,055
|
|
|
Accounts payable and other liabilities
|
|
(11,114
|
)
|
|
Operating lease liability
|
|
(32,568
|
)
|
|
Financing lease liability
|
|
(13,616
|
)
|
|
Note payable
|
|
(5,387
|
)
|
|
Deferred tax liability
|
|
(58,864
|
)
|
|
Total purchase price
|
|
$
|
2,850,518
|
|
|
|
Total
|
|
Estimated life
(in years) |
||
Developed technology and software
|
|
$
|
301,000
|
|
|
7
|
Customer relationships
|
|
169,000
|
|
|
7
|
|
Trade names
|
|
20,000
|
|
|
5
|
|
Total intangible assets acquired
|
|
$
|
490,000
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Revenue
|
|
$
|
246,885
|
|
|
$
|
161,685
|
|
Net loss attributable to common stockholders
|
|
$
|
(72,960
|
)
|
|
$
|
(19,481
|
)
|
|
|
Total
|
||
Balance as of December 31, 2018
|
|
$
|
38,165
|
|
Goodwill additions related to 2019 acquisition
|
|
2,239,055
|
|
|
Balance as of March 31, 2019
|
|
$
|
2,277,220
|
|
|
|
As of
March 31, 2019 |
||||||||||
|
|
Gross
|
|
Accumulated
Amortization |
|
Net
|
||||||
Amortizable intangible assets:
|
|
|
|
|
|
|
||||||
Developed technology
|
|
$
|
329,209
|
|
|
$
|
(18,806
|
)
|
|
$
|
310,403
|
|
Customer relationships
|
|
177,154
|
|
|
(6,889
|
)
|
|
170,265
|
|
|||
Supplier relationships
|
|
2,696
|
|
|
(1,107
|
)
|
|
1,589
|
|
|||
Trade names
|
|
20,060
|
|
|
(727
|
)
|
|
19,333
|
|
|||
Patent
|
|
2,262
|
|
|
(200
|
)
|
|
2,062
|
|
|||
Total amortizable intangible assets
|
|
531,381
|
|
|
(27,729
|
)
|
|
503,652
|
|
|||
Non-amortizable intangible assets:
|
|
|
|
|
|
|
||||||
Domain names
|
|
32
|
|
|
—
|
|
|
32
|
|
|||
Trademarks
|
|
263
|
|
|
—
|
|
|
263
|
|
|||
Total
|
|
$
|
531,676
|
|
|
$
|
(27,729
|
)
|
|
$
|
503,947
|
|
|
|
As of
December 31, 2018 |
||||||||||
|
|
Gross
|
|
Accumulated
Amortization |
|
Net
|
||||||
Amortizable intangible assets:
|
|
|
|
|
|
|
||||||
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
March 31, 2019 |
||
2019 (remaining nine months)
|
|
$
|
56,796
|
|
2020
|
|
83,027
|
|
|
2021
|
|
81,516
|
|
|
2022
|
|
80,123
|
|
|
2023
|
|
68,435
|
|
|
Thereafter
|
|
133,755
|
|
|
Total
|
|
$
|
503,652
|
|
|
|
As of
March 31, 2019 |
|
As of
December 31, 2018 |
||||
Accrued payroll and related
|
|
$
|
16,858
|
|
|
$
|
9,886
|
|
Accrued bonus and commission
|
|
8,130
|
|
|
8,564
|
|
||
Accrued cost of revenue
|
|
27,554
|
|
|
29,901
|
|
||
Sales and other taxes payable
|
|
26,578
|
|
|
23,631
|
|
||
ESPP contributions
|
|
6,501
|
|
|
2,672
|
|
||
Deferred rent
|
|
—
|
|
|
1,418
|
|
||
VAT liability
|
|
2,129
|
|
|
2,217
|
|
||
Acquisition holdback
|
|
2,000
|
|
|
—
|
|
||
Accrued other expense
|
|
17,545
|
|
|
18,054
|
|
||
Total accrued expenses and other current liabilities
|
|
$
|
107,295
|
|
|
$
|
96,343
|
|
|
|
As of
March 31, 2019 |
|
As of
December 31, 2018 |
||||
Deferred rent
|
|
$
|
—
|
|
|
$
|
7,569
|
|
Deferred tax liability
|
|
11,734
|
|
|
5,181
|
|
||
Acquisition holdback
|
|
290
|
|
|
2,290
|
|
||
Capital lease obligation
|
|
—
|
|
|
2,170
|
|
||
Accrued other expense
|
|
2,013
|
|
|
959
|
|
||
Total other long-term liabilities
|
|
$
|
14,037
|
|
|
$
|
18,169
|
|
|
|
As of
March 31, 2019 |
|
As of December 31, 2018
|
||||
Principal
|
|
$
|
550,000
|
|
|
$
|
550,000
|
|
Unamortized discount
|
|
(101,101
|
)
|
|
(106,484
|
)
|
||
Unamortized issuance costs
|
|
(8,562
|
)
|
|
(9,020
|
)
|
||
Net carrying amount
|
|
$
|
440,337
|
|
|
$
|
434,496
|
|
|
|
As of
March 31, 2019 |
|
As of December 31, 2018
|
||||
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
March 31, 2019 |
||
Contractual interest expense
|
|
$
|
344
|
|
Amortization of debt issuance costs
|
|
458
|
|
|
Amortization of debt discount
|
|
5,383
|
|
|
Total interest expense related to the Notes
|
|
$
|
6,185
|
|
Year Ending December 31:
|
|
Principal
|
|
Interest
|
||||
2019 (remaining nine months)
|
|
$
|
1,533
|
|
|
$
|
214
|
|
2020
|
|
2,165
|
|
|
165
|
|
||
2021
|
|
1,162
|
|
|
28
|
|
||
Total minimum payments
|
|
$
|
4,860
|
|
|
$
|
407
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
Balance, beginning of period
|
|
$
|
4,945
|
|
|
$
|
1,033
|
|
Additions
|
|
(304
|
)
|
|
375
|
|
||
Assumed in acquisition
|
|
59
|
|
|
—
|
|
||
Write-offs
|
|
(419
|
)
|
|
(4
|
)
|
||
Balance, end of period
|
|
$
|
4,281
|
|
|
$
|
1,404
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
Balance, beginning of period
|
|
$
|
3,015
|
|
|
$
|
1,761
|
|
Additions
|
|
2,404
|
|
|
1,107
|
|
||
Assumed in acquisition
|
|
277
|
|
|
—
|
|
||
Deductions against reserve
|
|
(2,865
|
)
|
|
(1,166
|
)
|
||
Balance, end of period
|
|
$
|
2,831
|
|
|
$
|
1,702
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
Revenue by geographic area:
|
|
|
|
|
||||
United States
|
|
$
|
166,553
|
|
|
$
|
98,635
|
|
International
|
|
66,586
|
|
|
30,481
|
|
||
Total
|
|
$
|
233,139
|
|
|
$
|
129,116
|
|
Percentage of revenue by geographic area:
|
|
|
|
|
||
United States
|
|
71
|
%
|
|
76
|
%
|
International
|
|
29
|
%
|
|
24
|
%
|
|
|
As of
March 31, 2019 |
|
As of
December 31, 2018 |
||
Stock options issued and outstanding
|
|
10,045,155
|
|
|
7,978,369
|
|
Nonvested restricted stock units issued and outstanding
|
|
8,813,737
|
|
|
8,262,902
|
|
Class A common stock reserved for Twilio.org
|
|
776,334
|
|
|
572,676
|
|
Stock-based awards available for grant under 2016 Plan
|
|
16,496,032
|
|
|
9,313,354
|
|
Stock-based awards available for grant under 2016 ESPP
|
|
4,093,581
|
|
|
3,092,779
|
|
Class A common stock reserved for the convertible senior notes
|
|
10,472,165
|
|
|
10,472,165
|
|
Total
|
|
50,697,004
|
|
|
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
|
|
878,414
|
|
|
$
|
118.12
|
|
|
|
|
|
|
|
Assumed in acquisition
|
|
2,978,555
|
|
|
$
|
14.91
|
|
|
|
|
|
|
|
Exercised
|
|
(1,772,663
|
)
|
|
$
|
8.65
|
|
|
|
|
|
|
|
Forfeited and canceled
|
|
(17,520
|
)
|
|
$
|
20.07
|
|
|
|
|
|
|
|
Outstanding options as of March 31, 2019
|
|
9,490,155
|
|
|
$
|
26.53
|
|
|
7.23
|
|
$
|
974,515
|
|
Options vested and exercisable as of March 31, 2019
|
|
4,985,915
|
|
|
$
|
10.59
|
|
|
6.17
|
|
$
|
591,279
|
|
|
|
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 March 31, 2019
|
|
555,000
|
|
|
$
|
31.72
|
|
|
4.92
|
|
$
|
54,090
|
|
Options vested and exercisable as of March 31, 2019
|
|
242,812
|
|
|
$
|
31.72
|
|
|
4.92
|
|
$
|
18,030
|
|
|
|
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
|
|
822,800
|
|
|
$
|
115.03
|
|
|
|
||
Assumed in acquisition
|
|
561,999
|
|
|
$
|
112.88
|
|
|
|
||
Vested
|
|
(680,766
|
)
|
|
$
|
34.64
|
|
|
|
||
Forfeited and canceled
|
|
(153,198
|
)
|
|
$
|
69.98
|
|
|
|
||
Nonvested RSUs as of March 31, 2019
|
|
8,813,737
|
|
|
$
|
55.05
|
|
|
$
|
1,138,559
|
|
|
|
Three Months Ended
March 31, |
||
|
|
2019
|
|
2018
|
Fair value of common stock
|
|
$111.3 - $130.7
|
|
$33.01
|
Expected term (in years)
|
|
0.33 - 6.08
|
|
6.08
|
Expected volatility
|
|
48.3% - 66.5%
|
|
44.09%
|
Risk-free interest rate
|
|
2.4% - 2.5%
|
|
2.74%
|
Dividend rate
|
|
—%
|
|
—%
|
Asset volatility
|
|
40%
|
Equity volatility
|
|
45%
|
Discount rate
|
|
14%
|
Stock price at grant date
|
|
$31.72
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
Cost of revenue
|
|
$
|
1,809
|
|
|
$
|
222
|
|
Research and development
|
|
25,339
|
|
|
7,872
|
|
||
Sales and marketing
|
|
11,749
|
|
|
3,859
|
|
||
General and administrative
|
|
19,427
|
|
|
5,587
|
|
||
Total
|
|
$
|
58,324
|
|
|
$
|
17,540
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
Net loss attributable to common stockholders
|
|
$
|
(36,503
|
)
|
|
$
|
(23,729
|
)
|
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted
|
|
116,590,513
|
|
|
94,673,557
|
|
||
Net loss per share attributable to common stockholders, basic and diluted
|
|
$
|
(0.31
|
)
|
|
$
|
(0.25
|
)
|
|
|
As of March 31,
|
||||
|
|
2019
|
|
2018
|
||
Stock options issued and outstanding
|
|
10,045,155
|
|
|
10,392,199
|
|
Nonvested restricted stock units issued and outstanding
|
|
8,813,737
|
|
|
7,106,203
|
|
Class A common stock reserved for Twilio.org
|
|
776,334
|
|
|
635,014
|
|
Class A common stock committed under 2016 ESPP
|
|
113,959
|
|
|
249,730
|
|
Conversion spread*
|
|
2,873,836
|
|
|
—
|
|
Unvested shares subject to repurchase
|
|
1,250
|
|
|
767
|
|
Total
|
|
22,624,271
|
|
|
18,383,913
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
Number of Active Customer Accounts (as of end date of period)
|
|
154,797
|
|
|
53,985
|
|
||
Base Revenue (in thousands)
|
|
$
|
220,885
|
|
|
$
|
117,507
|
|
Base Revenue Growth Rate
|
|
88
|
%
|
|
46
|
%
|
||
Dollar-Based Net Expansion Rate
|
|
146
|
%
|
|
132
|
%
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
|
|
(In thousands)
|
||||||
Reconciliation:
|
|
|
|
|
||||
Gross profit
|
|
$
|
126,050
|
|
|
$
|
69,534
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
||
Stock-based compensation
|
|
1,809
|
|
|
222
|
|
||
Amortization of acquired intangibles
|
|
8,460
|
|
|
1,198
|
|
||
Non-GAAP gross profit
|
|
$
|
136,319
|
|
|
$
|
70,954
|
|
Non-GAAP gross margin
|
|
58
|
%
|
|
55
|
%
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
|
|
(In thousands)
|
||||||
Reconciliation:
|
|
|
|
|
||||
Operating expenses
|
|
$
|
213,638
|
|
|
$
|
93,791
|
|
Non-GAAP adjustments:
|
|
|
|
|
||||
Stock-based compensation
|
|
(56,515
|
)
|
|
(17,318
|
)
|
||
Amortization of acquired intangibles
|
|
(5,156
|
)
|
|
(262
|
)
|
||
Acquisition-related expenses
|
|
(12,543
|
)
|
|
—
|
|
||
Payroll taxes related to stock-based compensation
|
|
(6,468
|
)
|
|
(564
|
)
|
||
Non-GAAP operating expenses
|
|
$
|
132,956
|
|
|
$
|
75,647
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
|
|
(In thousands)
|
||||||
Reconciliation:
|
|
|
|
|
||||
Loss from operations
|
|
$
|
(87,588
|
)
|
|
$
|
(24,257
|
)
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
||
Stock-based compensation
|
|
58,324
|
|
|
17,540
|
|
||
Amortization of acquired intangibles
|
|
13,616
|
|
|
1,460
|
|
||
Acquisition-related expenses
|
|
12,543
|
|
|
—
|
|
||
Payroll taxes related to stock-based compensation
|
|
6,468
|
|
|
564
|
|
||
Non-GAAP income (loss) from operations
|
|
$
|
3,363
|
|
|
$
|
(4,693
|
)
|
Non-GAAP operating margin
|
|
1
|
%
|
|
(4
|
)%
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
|
|
(In thousands)
|
||||||
Cost of revenue
|
|
$
|
1,809
|
|
|
$
|
222
|
|
Research and development
|
|
25,339
|
|
|
7,872
|
|
||
Sales and marketing
|
|
11,749
|
|
|
3,859
|
|
||
General and administrative
|
|
19,427
|
|
|
5,587
|
|
||
Total
|
|
$
|
58,324
|
|
|
$
|
17,540
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
|
|
(In thousands)
|
||||||
Cost of revenue
|
|
$
|
8,460
|
|
|
$
|
1,198
|
|
Research and development
|
|
—
|
|
|
22
|
|
||
Sales and marketing
|
|
5,003
|
|
|
220
|
|
||
General and administrative
|
|
153
|
|
|
20
|
|
||
Total
|
|
$
|
13,616
|
|
|
$
|
1,460
|
|
|
|
Three Months Ended
March 31, |
||||
|
|
2019
|
|
2018
|
||
Condensed Consolidated Statements of Operations, as a percentage of revenue:**
|
||||||
Revenue
|
|
100
|
%
|
|
100
|
%
|
Cost of revenue
|
|
46
|
%
|
|
46
|
%
|
Gross profit
|
|
54
|
%
|
|
54
|
%
|
Operating expenses:
|
|
|
|
|
||
Research and development
|
|
33
|
%
|
|
29
|
%
|
Sales and marketing
|
|
31
|
%
|
|
25
|
%
|
General and administrative
|
|
28
|
%
|
|
18
|
%
|
Total operating expenses
|
|
92
|
%
|
|
73
|
%
|
Loss from operations
|
|
(38
|
%)
|
|
(19
|
%)
|
Other (expenses) income, net
|
|
*
|
|
|
1
|
%
|
Loss before benefit (provision) for income taxes
|
|
(38
|
%)
|
|
(18
|
%)
|
Benefit (provision) for income taxes
|
|
22
|
%
|
|
*
|
|
Net loss attributable to common stockholders
|
|
(16
|
%)
|
|
(18
|
%)
|
|
|
Three Months Ended
March 31, |
|
|
|
|
||||||||
|
|
2019
|
|
2018
|
|
Change
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||
Base Revenue
|
|
$
|
220,885
|
|
|
117,507
|
|
|
$
|
103,378
|
|
|
88%
|
|
Variable Revenue
|
|
12,254
|
|
|
11,609
|
|
|
645
|
|
|
6%
|
|||
Total Revenue
|
|
$
|
233,139
|
|
|
$
|
129,116
|
|
|
$
|
104,023
|
|
|
81%
|
|
|
Three Months Ended
March 31, |
|
|
|
|
||||||||
|
|
2019
|
|
2018
|
|
Change
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||
Research and development
|
|
$
|
77,855
|
|
|
$
|
37,576
|
|
|
$
|
40,279
|
|
|
107%
|
Sales and marketing
|
|
71,607
|
|
|
32,822
|
|
|
38,785
|
|
|
118%
|
|||
General and administrative
|
|
64,176
|
|
|
23,393
|
|
|
40,783
|
|
|
174%
|
|||
Total operating expenses
|
|
$
|
213,638
|
|
|
$
|
93,791
|
|
|
$
|
119,847
|
|
|
128%
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
Cash (used in) provided by operating activities
|
|
$
|
(9,113
|
)
|
|
$
|
16,936
|
|
Cash used in investing activities
|
|
(130,201
|
)
|
|
(20,940
|
)
|
||
Cash provided by financing activities
|
|
12,811
|
|
|
6,307
|
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
|
—
|
|
|
148
|
|
||
Net (decrease) increase in cash, cash equivalents and restricted cash
|
|
$
|
(126,503
|
)
|
|
$
|
2,451
|
|
•
|
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.
|
•
|
our ability to retain and increase revenue from existing customers and attract new customers;
|
•
|
fluctuations in the amount of revenue from our Variable Customer Accounts and our larger Base 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;
|
•
|
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;
|
•
|
changes in laws, industry standards, regulations or regulatory enforcement, in the United States or internationally, that impact our ability to market, sell or deliver our 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.
|
•
|
exposure to political developments in the United Kingdom (“U.K.”), including the planned departure of the U.K. from the European Union (EU) in 2019, which has created an uncertain political and economic environment, instability for businesses and volatility in global financial markets;
|
•
|
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;
|
•
|
our ability to comply with GDPR, which went into effect on May 25, 2018;
|
•
|
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;
|
•
|
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;
|
•
|
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.
|
•
|
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.
|
•
|
market acceptance of our products and platform;
|
•
|
adding new customers, particularly enterprises;
|
•
|
retention of customers;
|
•
|
the successful expansion of our business, particularly in markets outside of the United States;
|
•
|
competition;
|
•
|
our ability to control costs, particularly our operating expenses;
|
•
|
network outages or security breaches and any associated expenses;
|
•
|
foreign currency exchange rate fluctuations;
|
•
|
executing acquisitions and integrating the acquired businesses, technologies, services, products and other assets; and
|
•
|
general economic and political conditions.
|
•
|
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.
|
•
|
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.
|
•
|
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;
|
•
|
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;
|
•
|
new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
|
•
|
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;
|
•
|
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
|
•
|
effecting potential actions that may be required in connection with obtaining regulatory approvals.
|
Exhibit
Number
|
|
Description
|
|
Filing Date
|
|
|
|
|
|
31.1
|
|
|
Filed herewith
|
|
31.2
|
|
|
Filed herewith
|
|
32.1*
|
|
|
Furnished herewith
|
|
101.INS
|
|
XBRL Instance 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
|
*
|
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.
|
|
|
May 8, 2019
|
/s/ JEFFREY LAWSON
|
|
Jeffrey Lawson
|
|
Chief Executive Officer (Principal Executive Officer)
|
|
|
May 8, 2019
|
/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)
|
|
/s/ JEFFREY LAWSON
|
|
Jeffrey Lawson
|
|
Chief Executive Officer (Principal Executive Officer)
|
|
|
|
/s/ KHOZEMA SHIPCHANDLER
|
|
Lee Kirkpatrick
|
|
Chief Financial Officer (Principal Accounting and Financial Officer)
|
|