Twilio Inc 10-Q for FY2024 Q3

Twilio Inc (TWLO)

10-Q 2024-10-31 For: 2024-09-30

Added on April 09, 2026

About this 10-Q

Twilio Inc filed this 10-Q on October 31, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).

Headline figures

Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.13B; up 9.7% from $1.03B a year earlier
Net loss: $9.73M; compared with a net loss of $141.71M a year earlier
Diluted EPS: -$0.06; compared with -$0.78 a year earlier

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Delaware						26-2574840
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


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	New York Stock Exchange


		Page
	PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)	3

	Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023	3

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023	4

	Condensed Consolidated Statements of Comprehensive Income (Loss ) for the Three and Nine Months Ended September 30, 2024 and 2023	5

	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended Sep tember 30, 2024 and 2023	6

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023	10

	Notes to Condensed Consolidated Financial Statements	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42

Item 4.	Controls and Procedures	43

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	44

Item 1A.	Risk Factors	44

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	79

Item 5.	Other Information	79

Item 6.	Exhibits	80

	Signatures	81


	As of September 30,		As of December 31,
	2024		2023
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	583,969	$	655,931

Short-term marketable securities	2,114,279		3,356,064
Accounts receivable, net	550,901		562,773


Prepaid expenses and other current assets	299,173		329,204

Total current assets	3,548,322		4,903,972
Property and equipment, net	194,677		209,639
Operating right-of-use assets	58,509		73,959
Equity method investment	514,977		593,582
Intangible assets, net	265,841		350,490
Goodwill	5,243,266		5,243,266
Other long-term assets	211,665		234,799

Total assets	$	10,037,257	$	11,609,707
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	71,320	$	119,615
Accrued expenses and other current liabilities	452,343		424,311
Deferred revenue and customer deposits	138,752		144,499
Operating lease liability, current	38,322		49,872




Total current liabilities	700,737		738,297
Operating lease liability, noncurrent	94,762		120,770

Long-term debt, net	990,173		988,953
Other long-term liabilities	22,718		29,135

Total liabilities	1,808,390		1,877,155
Commitments and contingencies (Note 12)
Stockholders' equity:
Preferred stock	—		—
Class A common stock	155		182
Additional paid-in capital	15,299,179		14,797,723
Accumulated other comprehensive income	24,395		619
Accumulated deficit	(7,094,862)		(5,065,972)
Total stockholders’ equity	8,228,867		9,732,552
Total liabilities and stockholders’ equity	$	10,037,257	$	11,609,707


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
	(In thousands, except share and per share amounts)
Revenue	$	1,133,649	$	1,033,670	$	3,263,201	$	3,077,995
Cost of revenue	555,020		517,351		1,584,686		1,565,231
Gross profit	578,629		516,319		1,678,515		1,512,764
Operating expenses:
Research and development	260,903		241,654		756,170		707,145
Sales and marketing	212,576		262,898		644,150		784,383
General and administrative	106,350		114,071		332,300		361,491
Restructuring costs	3,694		3,437		13,330		140,281
Impairment of long-lived assets	—		3,162		—		34,278
Total operating expenses	583,523		625,222		1,745,950		2,027,578
Loss from operations	(4,894)		(108,903)		(67,435)		(514,814)
Other income (expenses), net:
Share of losses from equity method investment	(25,279)		(31,058)		(78,794)		(93,838)
Impairment of strategic investments	(803)		—		(1,470)		(46,154)
Other income, net	27,325		1		72,644		17,731
Total other income (expenses), net	1,243		(31,057)		(7,620)		(122,261)
Loss before provision for income taxes	(3,651)		(139,960)		(75,055)		(637,075)
Provision for income taxes	(6,075)		(1,747)		(21,878)		(12,958)
Net loss attributable to common stockholders	$	(9,726)	$	(141,707)	$	(96,933)	$	(650,033)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.06)	$	(0.78)	$	(0.57)	$	(3.54)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	159,091,110		181,749,309		170,063,452		183,854,526


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


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


	Common Stock Class A			Additional Paid-In Capital	Accumulated Other Comprehensive (Loss) Income		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
	(In thousands, except share amounts)
Balance as of June 30, 2024	164,150,089	$	164		$	15,136,786	$	(10,671)	$	(6,446,806)	$	8,679,473
Net loss	—	—			—		—		(9,726)		(9,726)
Exercises of vested stock options	43,562	—			969		—		—		969
Vesting of restricted stock units	1,813,439	2			(2)		—		—		—
Value of equity awards withheld for tax liability	(302)	—			(18)		—		—		(18)


Shares of Class A common stock issued and donated to charity	22,102	—			1,301		—		—		1,301


Unrealized gain on marketable securities	—	—			—		29,317		—		29,317
Repurchases of shares of Class A common stock including related costs	(10,642,581)	(11)			—		—		(638,330)		(638,341)

Net change in market value of effective foreign currency forward exchange contracts	—	—			—		6,613		—		6,613
Share of other comprehensive loss from equity method investment	—	—			—		(864)		—		(864)
Stock-based compensation	—	—			159,413		—		—		159,413
Stock-based compensation - restructuring	—	—			730		—		—		730
Balance as of September 30, 2024	155,386,309	$	155		$	15,299,179	$	24,395	$	(7,094,862)	$	8,228,867


	Common Stock Class A			Additional Paid-In Capital	Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
	(In thousands, except share amounts)
Balance as of June 30, 2023	181,174,616	$	181		$	14,418,946	$	(60,275)	$	(4,382,293)	$	9,976,559
Net loss	—	—			—		—		(141,707)		(141,707)
Exercises of vested stock options	100,000	—			871		—		—		871
Vesting of restricted stock units	1,669,596	2			(2)		—		—		—
Value of equity awards withheld for tax liability	(417)	—			(27)		—		—		(27)


Shares of Class A common stock issued and donated to charity	22,102	—			1,339		—		—		1,339


Unrealized gain on marketable securities	—	—			—		13,921		—		13,921
Repurchases of shares of Class A common stock including related costs	(899,799)	(1)			—		—		(54,962)		(54,963)
Foreign currency translation	—	—			—		5,018		—		5,018
Net change in market value of effective foreign currency forward exchange contracts	—	—			—		(8,626)		—		(8,626)
Share of other comprehensive loss from equity method investment	—	—			—		(2,764)		—		(2,764)
Stock-based compensation	—	—			189,293		—		—		189,293
Stock-based compensation - restructuring	—	—			467		—		—		467
Balance as of September 30, 2023	182,066,098	$	182		$	14,610,887	$	(52,726)	$	(4,578,962)	$	9,979,381


	Common Stock Class A			Common Stock Class B			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
	(In thousands, except share amounts)
Balance as of December 31, 2022	176,358,104	$	174	9,617,605	$	12	$	14,055,853	$	(121,161)	$	(3,375,836)	$	10,559,042
Net loss	—	—		—	—		—		—		(650,033)		(650,033)
Exercises of vested stock options	200,406	—		127,982	—		5,612		—		—		5,612
Vesting of restricted stock units	4,330,342	5		—	—		(5)		—		—		—
Value of equity awards withheld for tax liability	(38,254)	—		—	—		(2,536)		—		—		(2,536)
Conversion of shares of Class B common stock into shares of Class A common stock	9,745,587	12		(9,745,587)	(12)		—		—		—		—
Shares issued under ESPP	579,857	—		—	—		23,337		—		—		23,337
Shares of Class A common stock issued and donated to charity	66,306	—		—	—		3,985		—		—		3,985


Unrealized gain on marketable securities	—	—		—	—		—		53,276		—		53,276
Repurchases of shares of Class A common stock including related costs	(9,176,250)	(9)		—	—		—		—		(553,093)		(553,102)
Foreign currency translation	—	—		—	—		—		5,587		—		5,587
Net change in market value of effective foreign currency forward exchange contracts	—	—		—	—		—		(7,458)		—		(7,458)
Share of other comprehensive income from equity method investment	—	—		—	—		—		17,030		—		17,030
Stock-based compensation	—	—		—	—		513,545		—		—		513,545
Stock-based compensation - restructuring	—	—		—	—		11,096		—		—		11,096
Balance as of September 30, 2023	182,066,098	$	182	—	$	—	$	14,610,887	$	(52,726)	$	(4,578,962)	$	9,979,381


	Amortized Cost or Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses Less Than 12 Months		Gross Unrealized Losses More Than 12 Months		Fair Value Hierarchy as of September 30, 2024						Aggregate Fair Value
									Level 1		Level 2		Level 3
Financial Assets:	(In thousands)
Cash and cash equivalents:
Money market funds	$	380,767	$	—	$	—	$	—	$	380,767	$	—	$	—	$	380,767

Commercial paper	1,400		—		—		—		1,400		—		—		1,400
U.S. Treasury bills	15,969		—		—		—		15,969		—		—		15,969
Total included in cash and cash equivalents	398,136		—		—		—		398,136		—		—		398,136
Marketable securities:
Debt securities:
U.S. Treasury securities	354,415		3,887		—		(70)		358,232		—		—		358,232
Non-U.S. government securities	6,643		56		—		(2)		6,697		—		—		6,697
Corporate debt securities and commercial paper	1,730,807		17,690		(1,011)		(396)		13,140		1,733,950		—		1,747,090
Total debt securities	2,091,865		21,633		(1,011)		(468)		378,069		1,733,950		—		2,112,019
Equity securities	2,260		—		—		—		2,260		—		—		2,260
Total marketable securities	2,094,125		21,633		(1,011)		(468)		380,329		1,733,950		—		2,114,279
Total financial assets	$	2,492,261	$	21,633	$	(1,011)	$	(468)	$	778,465	$	1,733,950	$	—	$	2,512,415


		Three Months Ended September 30,				Nine Months Ended September 30,

		2024		2023		2024		2023
	(In thousands)
Revenue:
Communications		$	1,060,250	$	960,289	$	3,039,558	$	2,857,772
Segment		73,399		73,381		223,643		220,223
Total		$	1,133,649	$	1,033,670	$	3,263,201	$	3,077,995
Non-GAAP income (loss) from operations:
Communications		$	267,773	$	220,610	$	766,713	$	593,599
Segment		(15,805)		(17,740)		(52,613)		(53,937)
Corporate costs		(69,550)		(66,436)		(196,753)		(179,294)
Total		$	182,418	$	136,434	$	517,347	$	360,368

Reconciliation of non-GAAP income from operations to loss from operations:
Total non-GAAP income from operations		$	182,418	$	136,434	$	517,347	$	360,368
Stock-based compensation		(153,831)		(185,007)		(457,646)		(498,271)
Amortization of acquired intangibles		(27,437)		(48,872)		(84,560)		(149,836)
Acquisition and divestiture related expenses		—		(183)		—		(5,515)
Loss on net assets held for sale		—		—		—		(32,277)
Payroll taxes related to stock-based compensation		(1,049)		(3,337)		(11,335)		(10,739)
Charitable contributions		(1,301)		(1,339)		(17,911)		(3,985)
Restructuring costs		(3,694)		(3,437)		(13,330)		(140,281)
Impairment of long-lived assets		—		(3,162)		—		(34,278)
Loss from operations		(4,894)		(108,903)		(67,435)		(514,814)
Other income (expenses), net		1,243		(31,057)		(7,620)		(122,261)
Loss before provision for income taxes		$	(3,651)	$	(139,960)	$	(75,055)	$	(637,075)


	As of September 30, 2024
	Cost		Accumulated Amortization		Net
Amortizable intangible assets:	(In thousands)
Developed technology	$	388,341	$	(292,649)	$	95,692
Customer relationships	348,314		(204,186)		144,128
Supplier relationships	49,756		(33,092)		16,664
Trade names	25,968		(24,744)		1,224
Order backlog	10,000		(10,000)		—
Patent	3,968		(1,050)		2,918
Total amortizable intangible assets	826,347		(565,721)		260,626
Non-amortizable intangible assets:
Telecommunication licenses	4,920		—		4,920
Trademarks and other	295		—		295
Total	$	831,562	$	(565,721)	$	265,841


	As of December 31, 2023
	Cost		Accumulated Amortization		Net
Amortizable intangible assets:	(In thousands)
Developed technology	$	397,473	$	(259,635)	$	137,838
Customer relationships	349,074		(170,511)		178,563
Supplier relationships	49,756		(26,316)		23,440
Trade names	25,968		(23,600)		2,368
Order backlog	10,000		(10,000)		—
Patent	3,968		(902)		3,066
Total amortizable intangible assets	836,239		(490,964)		345,275
Non-amortizable intangible assets:
Telecommunication licenses	4,920		—		4,920
Trademarks and other	295		—		295
Total	$	841,454	$	(490,964)	$	350,490


	As of September 30, 2024
Year Ended December 31,	(In thousands)
2024 (remaining three months)	$	27,393
2025	107,862
2026	42,149
2027	25,330
2028	19,055
Thereafter	38,837
Total	$	260,626


	As of September 30,		As of December 31,
	2024		2023
	(In thousands)
Capitalized internal-use software developments costs	$	349,038	$	297,655
Data center equipment (1)	104,583		104,543
Leasehold improvements	92,148		92,315
Office equipment	57,983		60,905
Furniture and fixtures	14,562		14,558
Software	14,639		14,639
Total property and equipment	632,953		584,615
Less: accumulated depreciation and amortization (1)	(438,276)		(374,976)
Total property and equipment, net	$	194,677	$	209,639


	As of September 30,		As of December 31,
	2024		2023
	(In thousands)
2029 Senior Notes
Principal	$	500,000	$	500,000
Unamortized discount	(3,710)		(4,274)
Unamortized issuance costs	(835)		(962)
Net carrying amount	495,455		494,764
2031 Senior Notes
Principal	500,000		500,000
Unamortized discount	(4,312)		(4,744)
Unamortized issuance costs	(970)		(1,067)
Net carrying amount	494,718		494,189
Total long-term debt, net	$	990,173	$	988,953


Percentage of revenue by geographic area:
United States	65	%	67	%	65	%	66	%
International	35	%	33	%	35	%	34	%


	Three Months Ended
	September 30,
	2024			2023
Reconciliation:	(In thousands)
Net cash provided by operating activities	$	204,329		$	206,427
Operating cash flow margin	18		%	20		%
Non-GAAP adjustments:
Capitalized software development costs	(14,424)			(10,451)
Purchases of long-lived and intangible assets	(792)			(765)
Free cash flow	$	189,113		$	195,211
Free cash flow margin	17		%	19		%

Net cash provided by (used in) investing activities	$	267,355		$	(144,032)
Net cash used in financing activities	$	(642,780)		$	(66,865)



	Total Number of Shares Purchased(1)	Average Price Paid Per Share(2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1)
	(In thousands)			(In thousands)	(In millions)
July 1 - 31, 2024	4,892	$	57.97	4,892	$	762
August 1 - 31, 2024	3,085	$	60.48	3,085	$	575
September 1 - 30, 2024	2,666	$	64.11	2,666	$	412
	10,643			10,643


						TWILIO INC.

October 31, 2024						/s/ KHOZEMA Z. SHIPCHANDLER
						Khozema Z. Shipchandler Director and Chief Executive Officer (Principal Executive Officer)

October 31, 2024						/s/ AIDAN VIGGIANO
						Aidan Viggiano Chief Financial Officer (Principal Accounting and Financial Officer)


/s/ KHOZEMA Z. SHIPCHANDLER
Khozema Z. Shipchandler
Chief Executive Officer (Principal Executive Officer)


/s/ AIDAN VIGGIANO
Aidan Viggiano
Chief Financial Officer (Principal Accounting and Financial Officer)