What changed in this filing

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Item 1. Financial Statements

2024-08-01 compared with 2024-05-08 · 156 added, 82 removed, 533 unchanged (31% of the section changed)

1 unchanged sentence

Condensed Consolidated Balance Sheets

As of March 31, As of December 31,

As of June 30, As of December 31,

(In thousands)

35 unchanged sentences

Condensed Consolidated Statements of Operations

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

(In thousands, except share and per share amounts)

22 unchanged sentences

Condensed Consolidated Statements of Comprehensive (Loss) Income

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

(In thousands)

3 unchanged sentences

Foreign currency translation — 86 — 569

Net change in market value of effective foreign currency forward exchange contracts ( 4,505 ) 3,335

Share of other comprehensive income from equity method investment 4,138 14,648

Net change in market value of effective foreign currency

forward exchange contracts ( 823 ) ( 2,167 ) ( 5,328 ) 1,168

Share of other comprehensive (loss) income from equity method

investment ( 3,086 ) 5,146 1,052 19,794

Total other comprehensive (loss) income ( 5,730 ) 11,670 ( 11,290 ) 60,886

2 unchanged sentences

Condensed Consolidated Statements of Stockholders’ Equity

Three Months Ended June 30, 2024

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 March 31, 2024 177,471,887 $ 177 $ 14,960,837 $ ( 4,941 ) $ ( 5,508,343 ) $ 9,447,730

Net loss — — — — ( 31,858 ) ( 31,858 )

Exercises of vested stock options 27,598 — 678 — — 678

Vesting of restricted stock units 1,464,534 1 ( 1 ) — — —

Value of equity awards withheld for tax liability ( 780 ) — ( 45 ) — — ( 45 )

Shares issued under ESPP 394,479 — 20,601 — — 20,601

Shares of Class A common stock issued and donated to charity 22,102 — 1,315 — — 1,315

Unrealized loss on marketable securities

— — — ( 1,821 ) — ( 1,821 )

Repurchases of shares of Class A common stock including related costs ( 15,229,731 ) ( 14 ) — — ( 906,605 ) ( 906,619 )

Net change in market value of effective foreign currency forward exchange contracts — — — ( 823 ) — ( 823 )

Share of other comprehensive loss from equity method investment

— — — ( 3,086 ) — ( 3,086 )

Stock-based compensation — — 153,401 — — 153,401

Balance as of June 30, 2024 164,150,089 $ 164 $ 15,136,786 $ ( 10,671 ) $ ( 6,446,806 ) $ 8,679,473

See accompanying notes to condensed consolidated financial statements.

Condensed Consolidated Statements of Stockholders’ Equity

Six Months Ended June 30, 2024

Class A Additional Paid-In Capital Accumulated Other Comprehensive (Loss) Income

8 unchanged sentences

Value of equity awards withheld for tax liability ( 27,537 ) — ( 1,963 ) — — ( 1,963 )

Shares issued under ESPP 394,479 — 20,601 — — 20,601

Shares of Class A common stock issued and donated to charity 44,204 — 2,610 — — 2,610

7 unchanged sentences

Stock-based compensation - restructuring — — 2,448 — — 2,448

Balance as of June 30, 2024 164,150,089 $ 164 $ 15,136,786 $ ( 10,671 ) $ ( 6,446,806 ) $ 8,679,473

See accompanying notes to condensed consolidated financial statements.

Condensed Consolidated Statements of Stockholders’ Equity

Three Months Ended June 30, 2023

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 March 31, 2023 176,121,918 $ 174 9,617,605 $ 12 $ 14,233,590 $ ( 71,945 ) $ ( 3,842,965 ) $ 10,318,866

177,471,887 $ 177 $ 14,960,837 $ ( 4,941 ) $ ( 5,508,343 ) $ 9,447,730

Net loss — — — — — — ( 166,187 ) ( 166,187 )

Exercises of vested stock options 33,438 — 30,783 — 1,477 — — 1,477

Vesting of restricted stock units 1,144,112 1 — — ( 1 ) — — —

Value of equity awards withheld for tax liability ( 872 ) — — — ( 53 ) — — ( 53 )

Conversion of shares of Class B common stock into shares of Class A common stock 9,648,388 12 ( 9,648,388 ) ( 12 ) — — — —

Shares issued under ESPP 579,857 — — — 23,337 — — 23,337

Shares of Class A common stock issued and donated to charity 22,102 — — — 1,047 — — 1,047

Unrealized gain on marketable securities — — — — — 8,605 — 8,605

Repurchases of shares of Class A common stock including related costs ( 6,374,327 ) ( 6 ) — — — — ( 373,141 ) ( 373,147 )

Foreign currency translation — — — — — 86 — 86

Net change in market value of effective foreign currency forward exchange contracts — — — — — ( 2,167 ) — ( 2,167 )

Share of other comprehensive income from equity method investment — — — — — 5,146 — 5,146

Stock-based compensation — — — — 159,253 — — 159,253

Stock-based compensation - restructuring — — — — 296 — — 296

Balance as of June 30, 2023 181,174,616 $ 181 — $ — $ 14,418,946 $ ( 60,275 ) $ ( 4,382,293 ) $ 9,976,559

See accompanying notes to condensed consolidated financial statements.

Condensed Consolidated Statements of Stockholders’ Equity

Six Months Ended June 30, 2023

Class A Common Stock

Class B Additional Paid-In Capital Accumulated Other Comprehensive (Loss) Income

Class B Additional Paid-In Capital Accumulated Other Comprehensive Loss

Accumulated Deficit Total Stockholders' Equity

7 unchanged sentences

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 44,204 — — — 2,646 — — 2,646

6 unchanged sentences

Stock-based compensation - restructuring — — — — 10,629 — — 10,629

Balance as of March 31, 2023 176,121,918 $ 174 9,617,605 $ 12 $ 14,233,590 $ ( 71,945 ) $ ( 3,842,965 ) $ 10,318,866

Balance as of June 30, 2023 181,174,616 $ 181 — $ — $ 14,418,946 $ ( 60,275 ) $ ( 4,382,293 ) $ 9,976,559

See accompanying notes to condensed consolidated financial statements.

Condensed Consolidated Statements of Cash Flows

Three Months Ended

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

10 unchanged sentences

Share of losses from equity method investment 53,515 62,780

Loss on net assets divested — 32,277

Impairment of strategic investments 667 46,154

11 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisitions, net of cash acquired and payments related to prior period acquisitions — ( 170 )

Purchases of marketable securities and other investments ( 589,995 ) ( 511,734 )

8 unchanged sentences

Repurchases of shares of Class A common stock and related costs ( 1,273,699 ) ( 485,121 )

Proceeds from exercises of stock options 421 3,264

Proceeds from exercises of stock options and shares of Class A common stock issued under ESPP 21,700 28,078

Net cash used in financing activities ( 1,261,022 ) ( 469,356 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash — 108

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 16,664 ( 16,900 )

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH, including cash classified as held for sale 116,828 26,309

CASH, CASH EQUIVALENTS AND RESTRICTED CASH CLASSIFIED AS HELD FOR SALE — ( 7,306 )

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 116,828 19,003

CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period 655,931 656,078

41 unchanged sentences

(d) Remaining Performance Obligations

Revenue allocated to remaining performance obligations for contracts with durations of more than one year was $ 150.6 million as of March 31, 2024, of which 63 % is expected to be recognized over the next 12 months and 91 % is expected to be recognized over the next 24 months.

Revenue allocated to remaining performance obligations for contracts with durations of more than one year was $ 152.6 million as of June 30, 2024, of which 64 % is expected to be recognized over the next 12 months and 93 % is expected to be recognized over the next 24 months.

(e) Deferred Revenue and Customer Deposits

As of March 31, 2024, and December 31, 2023, the Company recorded $ 142.4 million and $ 144.5 million as its deferred revenue and customer deposits, respectively.

During the three months ended March 31, 2024 and 2023, the Company recognized $ 65.4 million and $ 71.3 million of revenue, respectively, that was included in the deferred revenue and customer deposits balances as of the end of the previous year.

As of June 30, 2024, and December 31, 2023, the Company recorded $ 138.7 million and $ 144.5 million as its deferred revenue and customer deposits, respectively.

During the three months ended June 30, 2024 and 2023, the Company recognized $ 32.1 million and $ 27.2 million of revenue, respectively, that was included in the deferred revenue and customer deposits balances as of the end of the previous year.

During the six months ended June 30, 2024 and 2023, the Company recognized $ 97.4 million and $ 98.6 million of revenue, respectively, that was included in the deferred revenue and customer deposits balances as of the end of the previous year.

(f) Concentration of Credit Risk

Financial instruments that potentially expose the Company to a concentration of credit risk consist primarily of cash, cash equivalents, marketable securities and accounts receivable.

The Company maintains cash, cash equivalents and marketable securities with financial institutions.

Financial instruments that potentially expose the Company to a concentration of credit risk consist primarily of cash, cash equivalents, restricted cash, marketable securities and accounts receivable.

The Company maintains cash, cash equivalents, restricted cash and marketable securities with financial institutions.

Certain balances held by such financial institutions exceed insured limits.

4 unchanged sentences

Actual credit losses may differ from the Company’s estimates.

As of March 31, 2024, and December 31, 2023, the allowance for doubtful accounts was $ 37.7 million and $ 42.0 million, respectively, and is recorded in accounts receivable, net, in the accompanying condensed consolidated balance sheets.

In the three months ended March 31, 2024 and 2023, no customer organization accounted for more than 10% of the Company’s total revenue.

As of March 31, 2024 and December 31, 2023, no customer organization represented more than 10% of the Company’s gross accounts receivable.

As of June 30, 2024, and December 31, 2023, the allowance for doubtful accounts was $ 37.2 million and $ 42.0 million, respectively, and is recorded in accounts receivable, net, in the accompanying condensed consolidated balance sheets.

In the three and six months ended June 30, 2024 and 2023, no customer organization accounted for more than 10% of the Company’s total revenue.

As of June 30, 2024 and December 31, 2023, no customer organization represented more than 10% of the Company’s gross accounts receivable.

(g) Restructuring Costs

1 unchanged sentence

The Company enacted workforce reduction plans in February 2023, December 2023 and March 2024.

In the three months ended March 31, 2024, restructuring charges incurred and cash paid related to these plans were not significant.

In the six months ended June 30, 2024, restructuring charges incurred and cash paid related to these plans were not significant.

The estimated remaining expenses related to these plans are not expected to be significant.

(h) Recently Adopted Accounting Guidance

In June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No.

(“ASU”) 2022-03, " Fair Value Measurements (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, " which clarifies and amends the guidance of measuring the fair value of equity securities subject to contractual restrictions that prohibit the sale of the equity securities.

The guidance will be effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.

The Company adopted ASU 2022-03 in the first quarter of 2024 with no material impact to the Company’s condensed consolidated financial statements.

(i) Recently Issued Accounting Guidance, Not yet Adopted

In November 2023, the FASB issued ASU 2023-07, “ Segment Reporting (Topic 280):

(h) Recently Issued Accounting Guidance, Not yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No.

(“ASU”) 2023-07, “ Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ,” which is intended to improve reportable segment disclosures.

The ASU expands segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss.

The ASU expands segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of segment profit or loss.

It also requires disclosure of the amount and description of the composition of other segment items and interim disclosures of a reportable segment's profit or loss and assets.

14 unchanged sentences

12 Months Fair Value Hierarchy as of

March 31, 2024 Aggregate

June 30, 2024 Aggregate

Level 1 Level 2 Level 3

4 unchanged sentences

Commercial paper 15,287 — — — — 15,287 — 15,287

Treasury bills 68,383 — — — 68,383 — — 68,383

Total included in cash

35 unchanged sentences

Because the Company views its debt securities as available to support current operations, it has classified all available for sale securities as short-term.

Interest earned on debt securities was $ 27.2 million and $ 17.2 million in the three months ended March 31, 2024 and 2023, respectively.

Interest earned on debt securities was $ 23.5 million and $ 50.6 million in the three and six months ended June 30, 2024, respectively, and $ 16.7 million and $ 33.9 million in the three and six months ended June 30, 2023, respectively.

The interest is recorded as other income, net, in the accompanying condensed consolidated statements of operations.

The following table summarizes the contractual maturities of debt securities:

As of March 31, As of December 31,

As of June 30, As of December 31,

Cost Aggregate

7 unchanged sentences

Strategic Investments

As of March 31, 2024 and December 31, 2023, the Company held strategic investments with a carrying value of $ 31.1 million and $ 30.7 million, respectively, recorded as other long-term assets in the accompanying condensed consolidated balance sheets.

As of June 30, 2024 and December 31, 2023, the Company held strategic investments with a carrying value of $ 31.1 million and $ 30.7 million, respectively, recorded as other long-term assets in the accompanying condensed consolidated balance sheets.

The carrying value of these securities is determined under the measurement alternative on a non-recurring basis and adjusted for observable changes in fair value or impairment.

There were no impairments or significant adjustments recorded in the three months ended March 31, 2024 related to these investments.

During the three months ended March 31, 2023, the Company recorded an impairment loss of $ 46.2 million related to one of these investments in other expenses, net, in the accompanying condensed consolidated statement of operations.

There were no significant impairments or adjustments recorded in the six months ended June 30, 2024 related to these investments.

During the six months ended June 30, 2023, the Company recorded an impairment loss of $ 46.2 million related to one of these investments in other expenses, net, in the accompanying condensed consolidated statement of operations.

Financial Liabilities

The Company’s financial liabilities that are measured at fair value on a recurring basis consist of foreign currency derivative liabilities and are classified as Level 2 financial instruments in the fair value hierarchy.

As of March 31, 2024 and December 31, 2023, the aggregate fair value of these liabilities and the associated unrealized losses were not significant.

As of June 30, 2024 and December 31, 2023, the aggregate fair value of these liabilities and the associated unrealized losses were not significant.

The Company’s financial liabilities that are not measured at fair value on a recurring basis are its Senior Notes due 2029 (“2029 Notes”) and its Senior Notes due 2031 (“2031 Notes”).

As of March 31, 2024, the fair values of the 2029 Notes and 2031 Notes were $ 449.7 million and $ 437.1 million, respectively.

As of June 30, 2024, the fair values of the 2029 Notes and 2031 Notes were $ 453.5 million and $ 443.3 million, respectively.

As of December 31, 2023, the fair values of the 2029 Notes and 2031 Notes were $ 462.4 million and $ 452.3 million, respectively.

1 unchanged sentence

Property and equipment consisted of the following:

As of March 31, As of December 31,

As of June 30, As of December 31,

(In thousands)

11 unchanged sentences

____________________________________

( 1 ) Data center equipment contains $ 72.4 million in assets held under finance leases as of March 31, 2024 and December 31, 2023.

Accumulated depreciation and amortization includes $ 59.3 million and $ 55.9 million of accumulated depreciation for assets held under finance leases as of March 31, 2024, and December 31, 2023, respectively.

Depreciation and amortization expense was $ 23.8 million and $ 20.1 million in the three months ended March 31, 2024 and 2023, respectively.

The Company capitalized $ 16.1 million and $ 14.2 million in internal‑use software development costs in the three months ended March 31, 2024 and 2023, respectively.

( 1 ) Data center equipment contains $ 72.4 million in assets held under finance leases as of June 30, 2024 and December 31, 2023.

Accumulated depreciation and amortization includes $ 62.7 million and $ 55.9 million of accumulated depreciation for assets held under finance leases as of June 30, 2024, and December 31, 2023, respectively.

Depreciation and amortization expense was $ 23.3 million and $ 24.3 million in the three months ended June 30, 2024 and 2023, respectively, and $ 47.2 million and $ 44.3 million in the six months ended June 30, 2024 and 2023, respectively.

The Company capitalized $ 20.4 million and $ 14.8 million in internal‑use software development costs in the three months ended June 30, 2024 and 2023, respectively, and $ 36.5 million and $ 29.0 million in the six months ended June 30, 2024 and 2023, respectively.

Segment Reporting

As of March 31, 2024, the Company had two operating and reportable segments:

As of June 30, 2024, the Company had two operating and reportable segments:

Twilio Communications (“Communications”) and Twilio Segment (“Segment”).

4 unchanged sentences

The Segment reportable segment consists of software products that enable businesses to achieve more effective customer engagement by providing the tools necessary for customers to build direct, personalized relationships with their end users.

The key products from which the segment derives its revenue are Segment and Engage.

Presented below is the discrete financial information by reportable segment for the three months ended March 31, 2024 and 2023, that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) for performance assessment and resource allocation decisions.

The key product from which the segment derives its revenue is Segment.

Presented below is the discrete financial information by reportable segment for the three and six months ended June 30, 2024 and 2023, that is regularly reviewed by the CODM for performance assessment and resource allocation decisions.

Prior period amounts were reclassified to conform to the current period’s presentation.

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(In thousands)

8 unchanged sentences

Reconciliation of non-GAAP income (loss) from operations to loss from operations:

Total non-GAAP income (loss) from operations $ 159,610 $ 103,787

Total non-GAAP income from operations $ 175,319 $ 120,147 $ 334,929 $ 223,934

Stock-based compensation ( 147,657 ) ( 152,798 ) ( 303,815 ) ( 313,264 )

10 unchanged sentences

Derivatives and Hedging

As of March 31, 2024, the Company had outstanding foreign currency forward contracts designated as cash flow hedges with a total sell notional value of $ 206.8 million.

As of June 30, 2024, the Company had outstanding foreign currency forward contracts designated as cash flow hedges with a total sell notional value of $ 186.1 million.

The notional value represents the amount that will be sold upon maturity of the forward contract.

As of March 31, 2024, these contracts had maturities of up to 17 months.

As of June 30, 2024, these contracts had maturities of up to 17 months.

Gains and losses associated with these foreign currency forward contracts were not significant.

3 unchanged sentences

The Company manages its exposure to counterparty risk by entering into contracts with a diversified group of major financial institutions and by actively monitoring its outstanding positions.

As of March 31, 2024, the Company did not have any offsetting arrangements.

As of June 30, 2024, the Company did not have any offsetting arrangements.

Goodwill and Intangible Assets

As of March 31, 2024 and December 31, 2023, the balance of the Company’s goodwill was $ 5.2 billion, of which $ 4.9 billion relates to the Communications reportable segment and $ 306.1 million relates to the Segment reportable segment.

There was no goodwill activity during the three months ended March 31, 2024.

As of June 30, 2024 and December 31, 2023, the balance of the Company’s goodwill was $ 5.2 billion, of which $ 4.9 billion relates to the Communications reportable segment and $ 306.1 million relates to the Segment reportable segment.

There was no goodwill activity during the six months ended June 30, 2024.

Intangible assets

Intangible assets consisted of the following:

As of March 31, 2024

As of June 30, 2024

Cost Accumulated Amortization Net

27 unchanged sentences

Total $ 841,454 $ ( 490,964 ) $ 350,490

Amortization expense was $ 29.0 million and $ 50.8 million for the three months ended March 31, 2024 and 2023, respectively.

Amortization expense was $ 28.2 million and $ 50.2 million for the three months ended June 30, 2024 and 2023, respectively, and $ 57.2 million and $ 101.1 million for the six months ended June 30, 2024 and 2023, respectively.

Total estimated future amortization expense is as follows:

As of March 31, 2024

As of June 30, 2024

Year Ended December 31, (In thousands)

2024 (remaining nine months) $ 83,053

2024 (remaining six months) $ 54,880

Thereafter 38,837

2 unchanged sentences

Accrued expenses and other current liabilities consisted of the following:

As of March 31, As of December 31,

As of June 30, As of December 31,

(In thousands)

11 unchanged sentences

Long-term debt, net, consisted of the following:

As of March 31, As of December 31,

As of June 30, As of December 31,

(In thousands)

10 unchanged sentences

Total long-term debt, net $ 989,762 $ 988,953

As of March 31, 2024, the Company was in compliance with all of its covenants under the related indentures.

As of June 30, 2024, the Company was in compliance with all of its covenants under the related indentures.

Revenue by Geographic Area

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Revenue by geographic area:

9 unchanged sentences

The Company has entered into various non-cancelable operating lease agreements for its facilities.

In the three months ended March 31, 2024, the Company did not enter into any significant new lease agreements.

In the three and six months ended June 30, 2024, the Company did not enter into any significant new lease agreements.

The Company has non-cancelable contractual commitments with its cloud infrastructure provider, network service providers and other vendors.

In the three months ended March 31, 2024, the Company did not enter into any significant non-cancelable contractual commitments.

In the three and six months ended June 30, 2024, the Company entered into several such agreements with terms up to three years for a total purchase commitment of $ 25.6 million and $ 40.8 million, respectively.

(b) Legal Matters

9 unchanged sentences

The Company has also signed indemnification agreements with all of its board members and executive officers and certain employees that may require the Company to indemnify them for certain events in connection with their services to the Company or its direct or indirect subsidiaries.

As of March 31, 2024, and December 31, 2023, no amounts were accrued related to any outstanding indemnification agreements.

As of June 30, 2024, and December 31, 2023, no amounts were accrued related to any outstanding indemnification agreements.

(d) Other Taxes

5 unchanged sentences

In the event any of these jurisdictions disagree with management’s assumptions and analysis, the assessment of the Company’s tax exposure could differ materially from management’s current estimates.

As of March 31, 2024, the liabilities recorded for the non-income-based taxes were $ 18.2 million for domestic jurisdictions and $ 20.0 million for jurisdictions outside of the United States.

As of June 30, 2024, the liabilities recorded for the non-income-based taxes were $ 18.6 million for domestic jurisdictions and $ 20.2 million for jurisdictions outside of the United States.

As of December 31, 2023, these liabilities were $ 18.0 million and $ 22.2 million, respectively.

1 unchanged sentence

Preferred Stock

As of March 31, 2024, and December 31, 2023, the Company had authorized 100,000,000 shares of preferred stock, par value $ 0.001 , of which no shares were issued and outstanding.

As of March 31, 2024, the Company had authorized 1,000,000,000 shares of Class A common stock and 3,170,181 shares of Class B common stock, each with a par value of $ 0.001 per share.

As of March 31, 2024, 177,471,887 shares of Class A common stock and no shares of Class B common stock were issued and outstanding.

As of June 30, 2024, and December 31, 2023, the Company had authorized 100,000,000 shares of preferred stock, par value $ 0.001 , of which no shares were issued and outstanding.

As of June 30, 2024, the Company had authorized 1,000,000,000 shares of Class A common stock and 3,170,181 shares of Class B common stock, each with a par value of $ 0.001 per share.

As of June 30, 2024, 164,150,089 shares of Class A common stock and no shares of Class B common stock were issued and outstanding.

As of December 31, 2023, the Company had authorized 1,000,000,000 shares of Class A common stock and 3,170,181 shares of Class B common stock, each with a par value of $ 0.001 per share.

1 unchanged sentence

The Company had reserved shares of common stock for issuance as follows:

As of March 31, As of December 31,

As of June 30, As of December 31,

Stock options issued and outstanding 1,529,641 1,722,861

9 unchanged sentences

The Company has discretion in determining the conditions under which shares may be repurchased from time to time.

The programs each expire on December 31, 2024.

In the three months ended March 31, 2024 and 2023, the Company repurchased 6.1 million and 1.9 million shares of its Class A common stock, respectively, for an aggregate purchase price of $ 384.3 million and $ 125.0 million, respectively.

As of March 31, 2024, approximately $ 1.9 billion of the aggregate amount authorized under the stock repurchase programs remained available for future repurchases.

Both programs expire on December 31, 2024.

In the three months ended June 30, 2024 and 2023, the Company repurchased 15.2 million and 6.4 million shares of its Class A common stock, respectively, for an aggregate purchase price of $ 898.6 million and $ 370.0 million, respectively.

In the six months ended June 30, 2024 and 2023, the Company repurchased 21.4 million and 8.3 million shares of its Class A common stock, respectively, for an aggregate purchase price of $ 1.3 billion and $ 495.0 million, respectively.

As of June 30, 2024, approximately $ 1.0 billion of the aggregate amount authorized under the stock repurchase programs remained available for future repurchases.

Stock-Based Compensation

1 unchanged sentence

Certain of the Company’s outstanding equity awards were granted under equity incentive plans that are no longer active but continue to govern the outstanding equity awards granted thereunder.

In the second quarter of 2024, the Company granted performance-based restricted stock units (“PSUs”) covering 516,626 shares that had an aggregate grant date fair value of $ 34.5 million to certain of its executive employees.

The PSUs will vest if certain operational performance or market conditions, as defined in the grant agreements, are met during the performance achievement period, which expires on December 31, 2026.

The fair value of the portion of the PSUs with an operational performance target equals the closing price of the Company’s Class A common stock on the date of grant.

The expense is recognized on a straight-line basis and only if it is probable that the performance target will be achieved during the performance period.

The probability of achievement is assessed each reporting period and adjustments are recorded accordingly.

The fair value of the portion of the PSUs with market conditions was determined using a Monte-Carlo simulation model and the expense is recognized on a straight-line basis over the performance achievement period.

At the end of the vesting period the number of shares actually issued may range from 0 % to 200 % of the target based on levels of performance.

In addition, pursuant to the Company’s 2016 Employee Stock Purchase Plan (“ESPP”), eligible employees may purchase shares of the Company’s Class A common stock at a discount of 15 % through payroll deductions of their eligible compensation.

The ESPP provides for separate six-month offering periods beginning in May and November of each year.

As of March 31, 2024, total unrecognized compensation cost related to unvested restricted stock units was $ 1.2 billion, which will be amortized over a weighted-average period of 2.6 years.

As of March 31, 2024, total unrecognized compensation cost related to unvested stock options, the ESPP, and shares of Class A common stock in escrow subject to future vesting was not significant.

As of June 30, 2024, total unrecognized compensation cost related to unvested restricted stock units was $ 1.5 billion which will be amortized over a weighted-average period of 2.9 years.

As of June 30, 2024, total unrecognized compensation cost related to unvested stock options, the ESPP, and shares of Class A common stock in escrow subject to future vesting was not significant.

Stock-Based Compensation Expense

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(In thousands)

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net loss attributable to common stockholders (in thousands) $ ( 31,858 ) $ ( 166,187 ) $ ( 87,207 ) $ ( 508,326 )

Weighted-average shares used to compute net loss per share attributable to

common stockholders, basic and diluted 181,017,726 186,403,349

Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted 170,222,104 183,490,982 175,613,672 184,926,875

Net loss per share attributable to common stockholders, basic and diluted $ ( 0.19 ) $ ( 0.91 ) $ ( 0.50 ) $ ( 2.75 )

The following outstanding shares of common stock equivalents were excluded from the calculation of the diluted net loss per share attributable to common stockholders because their effect would have been anti-dilutive:

As of March 31,

As of June 30,

Stock options issued and outstanding 1,529,641 1,907,102

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Total 24,725,399 24,929,965

The Company computes its provision for income taxes for interim periods using an estimated annual effective tax rate based on anticipated annual pretax income or loss.

The estimated annual effective tax rate is applied to the Company’s year-to- date income or loss, and is adjusted for discrete items recorded in the period.

The Company has historically computed its provision for income taxes for interim periods using an estimated annual effective tax rate (“AETR”) based on anticipated annual pretax income or loss, which was adjusted for discrete items recorded in the period.

However, due to the level of forecasted provision for income taxes relative to the forecasted pre-tax income used in computing the effective tax rate, the effective tax rate is highly sensitive to fluctuations in pre-tax income and does not provide a reasonable estimate for income taxes in the interim period.

As such, the Company computed its provision for income taxes based on the year-to-date actual effective tax rate for the three and six months ended June 30, 2024.

The Company plans to revert to applying a forecasted annual effective tax rate to year-to-date earnings and adjusting for discrete items once that method produces more reasonable results.

The primary difference between the Company’s effective tax rate and the federal statutory rate is the full valuation allowance the Company has established on its federal, state and certain foreign net operating losses and credits.

The Company recorded an income tax provision of $ 10.2 million and $ 10.5 million for the three months ended March 31, 2024 and 2023, respectively.

The provision for income taxes recorded in the three months ended March 31, 2024 consists primarily of federal, state and foreign income taxes, withholding taxes in foreign jurisdictions in which the Company conducts business, and income tax expense from a foreign audit settlement.

The provision for income taxes recorded in the three months ended March 31, 2023 consists primarily of federal, state and foreign income taxes and withholding taxes in foreign jurisdictions in which the Company conducts business, partially offset by an income tax benefit from the release of tax liabilities related to uncertain tax positions for which the statute of limitation had lapsed.

The provision for income taxes recorded in the three months ended June 30, 2024 consists primarily of federal, state and foreign income taxes and withholding taxes in foreign jurisdictions in which the Company conducts business.

The provision for income taxes recorded in the six months ended June 30, 2024 consists primarily of the same factors and also income tax expense from a foreign audit settlement.

The provision for income taxes recorded in the three and six months ended June 30, 2023 consists primarily of income taxes and withholding taxes, partially offset by an income tax benefit from the release of tax liabilities related to uncertain tax positions for which the statute of limitation had lapsed.

The Company is subject to taxation in the U.S.

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In May 2022, the Company and Syniverse Corporation (“Syniverse”), an equity method investee, entered into a wholesale agreement pursuant to which Syniverse would process, route and deliver application-to-person messages originating and/or terminating between the Company’s customers and mobile network operators.

For the three months ended March 31, 2024 and 2023, the value of the transactions that occurred between the Company and Syniverse were $ 34.0 million and $ 33.5 million, respectively.

For the three and six months ended June 30, 2024, the value of the transactions that occurred between the Company and Syniverse were $ 35.2 million and $ 69.2 million, respectively.

For the three and six months ended June 30, 2023, the value of the transactions that occurred between the Company and Syniverse were $ 37.3 million and $ 70.3 million, respectively.

These transactions were recorded as cost of revenue in the accompanying condensed consolidated statements of operations.

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• our business unit reorganization, including its expected costs and benefits, related accounting determinations and the shift in our segment reporting structure, and changes to our leadership structure;

• the impact on our business, corporate culture, and employees as a result of our recent leadership transition;

• our expectations regarding our Segment (formerly known as Data & Applications) business, including the targets set as a result of our recent operational review of Segment, new product releases, increased investment and go-to-market focus to capture market share, and increased revenue growth;

• the impact on our business, corporate culture, and employees as a result of our leadership transition;

• our expectations regarding our Communications business, including anticipated efficiencies and strategy for streamlining the customer experience, including increased focus on self-service capabilities;

• our expectations regarding our Segment business, including the targets set as a result of our operational review of Segment, new product releases, increased investment and go-to-market focus to capture market share, and increased revenue growth;

• our ability to retain and increase revenue from existing customers and attract new customers, including enterprises and international organizations;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements