What changed in this filing

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Item 1. Financial Statements

2025-05-02 compared with 2024-10-31 · 202 added, 278 removed, 427 unchanged (53% of the section changed)

1 unchanged sentence

Condensed Consolidated Balance Sheets

As of September 30, As of December 31,

As of March 31, As of December 31,

(In thousands)

28 unchanged sentences

Additional paid-in capital 15,625,545 15,476,124

Accumulated other comprehensive income 24,395 619

Accumulated other comprehensive income (loss)

10,358 ( 1,301 )

Accumulated deficit ( 7,631,765 ) ( 7,522,010 )

3 unchanged sentences

Condensed Consolidated Statements of Operations

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Three Months Ended

(In thousands, except share and per share amounts)

6 unchanged sentences

General and administrative 92,077 112,585

Restructuring costs 3,694 3,437 13,330 140,281

Impairment of long-lived assets — 3,162 — 34,278

Total operating expenses 558,485 587,545

Loss from operations ( 4,894 ) ( 108,903 ) ( 67,435 ) ( 514,814 )

Income (loss) from operations 23,082 ( 43,504 )

Other income (expenses), net:

Share of losses from equity method investment ( 19,471 ) ( 29,575 )

Impairment of strategic investments ( 803 ) — ( 1,470 ) ( 46,154 )

Other income, net 22,973 27,918

Total other income (expenses), net 3,502 ( 1,657 )

Loss before provision for income taxes ( 3,651 ) ( 139,960 ) ( 75,055 ) ( 637,075 )

Income (loss) before provision for income taxes 26,584 ( 45,161 )

Provision for income taxes ( 6,567 ) ( 10,188 )

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

Net income (loss) attributable to common stockholders $ 20,017 $ ( 55,349 )

Net income (loss) per share attributable to common stockholders:

Basic $ 0.13 $ ( 0.31 )

$ 0.12 $ ( 0.31 )

Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:

Basic 153,345,192 181,017,726

161,794,287 181,017,726

See accompanying notes to condensed consolidated financial statements.

Condensed Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Three Months Ended

(In thousands)

Net loss $ ( 9,726 ) $ ( 141,707 ) $ ( 96,933 ) $ ( 650,033 )

Other comprehensive income:

Unrealized gain on marketable securities 29,317 13,921 22,303 53,276

Foreign currency translation — 5,018 — 5,587

Net change in market value of effective foreign currency

forward exchange contracts 6,613 ( 8,626 ) 1,285 ( 7,458 )

Share of other comprehensive (loss) income from equity method

investment ( 864 ) ( 2,764 ) 188 17,030

Total other comprehensive income 35,066 7,549 23,776 68,435

Comprehensive income (loss) attributable to common

stockholders $ 25,340 $ ( 134,158 ) $ ( 73,157 ) $ ( 581,598 )

Net income (loss) $ 20,017 $ ( 55,349 )

Other comprehensive income (loss):

Unrealized gain (loss) on marketable securities 5,058 ( 5,193 )

Net change in market value of effective foreign currency forward exchange contracts 8,386 ( 4,505 )

Share of other comprehensive (loss) income from equity method investment ( 1,785 ) 4,138

Total other comprehensive income (loss) 11,659 ( 5,560 )

Comprehensive income (loss) attributable to common stockholders $ 31,676 $ ( 60,909 )

See accompanying notes to condensed consolidated financial statements.

Condensed Consolidated Statements of Stockholders’ Equity

Three Months Ended September 30, 2024

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

2 unchanged sentences

(In thousands, except share amounts)

Balance as of June 30, 2024

Balance as of December 31, 2024

152,610,697 $ 153 $ 15,476,124 $ ( 1,301 ) $ ( 7,522,010 ) $ 7,952,966

Net loss — — — — ( 9,726 ) ( 9,726 )

— — — — 20,017 20,017

Exercises of vested stock options 131,515 — 2,766 — — 2,766

3 unchanged sentences

Unrealized gain on marketable securities — — — 5,058 — 5,058

— — — 29,317 — 29,317

Repurchases of shares of Class A common stock including related costs ( 1,222,193 ) ( 2 ) — — ( 129,772 ) ( 129,774 )

3 unchanged sentences

Stock-based compensation — — 143,934 — — 143,934

Stock-based compensation - restructuring — — 730 — — 730

Balance as of September 30, 2024

Balance as of March 31, 2025

153,254,342 $ 153 $ 15,625,545 $ 10,358 $ ( 7,631,765 ) $ 8,004,291

1 unchanged sentence

Condensed Consolidated Statements of Stockholders’ Equity

Nine Months Ended September 30, 2024

Class A Additional Paid-In Capital Accumulated Other Comprehensive Income

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

Accumulated Deficit Total Stockholders' Equity

7 unchanged sentences

Value of equity awards withheld for tax liability ( 26,757 ) — ( 1,918 ) — — ( 1,918 )

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

Shares of Class A common stock issued and donated to charity 22,102 — 1,295 — — 1,295

Shares returned from escrow ( 696 ) — ( 192 ) — — ( 192 )

Unrealized gain on marketable securities

— — — 22,303 — 22,303

Repurchases of shares of Class A common stock including related costs ( 32,000,610 ) ( 32 ) — — ( 1,931,957 ) ( 1,931,989 )

Net change in market value of effective foreign currency forward exchange contracts — — — 1,285 — 1,285

Share of other comprehensive income from equity method investment — — — 188 — 188

Stock-based compensation — — 473,876 — — 473,876

Stock-based compensation - restructuring — — 3,178 — — 3,178

Balance as of September 30, 2024

155,386,309 $ 155 $ 15,299,179 $ 24,395 $ ( 7,094,862 ) $ 8,228,867

See accompanying notes to condensed consolidated financial statements.

Condensed Consolidated Statements of Stockholders’ Equity

Three Months Ended September 30, 2023

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

Unrealized loss on marketable securities

— — — ( 5,193 ) — ( 5,193 )

See accompanying notes to condensed consolidated financial statements.

Condensed Consolidated Statements of Stockholders’ Equity

Nine Months Ended September 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 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 ( 6,128,298 ) ( 6 ) — — ( 387,022 ) ( 387,028 )

Foreign currency translation — — — — — 5,587 — 5,587

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

1 unchanged sentence

Stock-based compensation — — 163,509 — — 163,509

Stock-based compensation - restructuring — — — — 11,096 — — 11,096

Balance as of September 30, 2023

Balance as of March 31, 2024

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

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Nine Months Ended

September 30,

Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

(In thousands)

Net loss $ ( 96,933 ) $ ( 650,033 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Net income (loss) $ 20,017 $ ( 55,349 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 49,565 53,318

1 unchanged sentence

Net amortization of investment premium and discount ( 4,314 ) ( 6,029 )

Impairment of long-lived assets — 34,278

Stock-based compensation including restructuring 460,824 509,367

Stock-based compensation 139,273 158,606

Amortization of deferred commissions 19,265 18,829

Unrealized loss on equity securities 2,641 9,750

Provision for doubtful accounts 2,453 6,204

Share of losses from equity method investment 19,471 29,575

Loss on net assets divested — 32,277

Impairment of strategic investments 1,470 46,154

Other adjustments 5,846 4,996

10 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisitions, net of cash acquired and payments related to prior period acquisitions — ( 5,770 )

Divestitures, net of cash divested — 38,194

Purchases of marketable securities and other investments ( 213,844 ) ( 435,590 )

2 unchanged sentences

Purchases of long-lived and intangible assets ( 1,163 ) ( 1,671 )

Net cash provided by investing activities

Net cash (used in) provided by investing activities

( 19,140 ) 189,770

CASH FLOWS FROM FINANCING ACTIVITIES:

Principal payments on debt and finance leases ( 10,208 ) ( 13,763 )

Principal payments on finance leases ( 2,251 ) ( 4,832 )

Value of equity awards withheld for tax liabilities ( 53 ) ( 1,918 )

Repurchases of shares of Class A common stock and related costs ( 126,256 ) ( 356,900 )

Proceeds from exercises of stock options and shares of Class A common stock issued under ESPP 22,669 28,949

Proceeds from exercises of stock options 2,766 421

Net cash used in financing activities

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

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 54,268 ) 21,839

( 125,794 ) ( 363,229 )

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 46,108 16,664

CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period 431,437 655,931

4 unchanged sentences

Cash and cash equivalents $ 467,094 $ 672,595

Restricted cash in other current assets 7,554 —

Restricted cash in other long-term assets 10,451 —

16 unchanged sentences

GAAP on an annual reporting basis.

In the opinion of management, the accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss, stockholders’ equity and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year 2024 or any future period.

In the opinion of management, the accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive income (loss), stockholders’ equity and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year 2025 or any future period.

(b) Principles of Consolidation

6 unchanged sentences

recoverability of long-lived and intangible assets;

allocation of goodwill to reporting units;

impairment assessments of goodwill and indefinite-lived intangible assets;

capitalization and useful life of the Company’s capitalized internal-use software development costs;

1 unchanged sentence

accruals and contingencies.

Estimates are based on historical experience and on various assumptions that the Company believes are reasonable under then current circumstances.

Estimates are based on historical experience and on various assumptions that the Company believes are reasonable under current circumstances.

However, future events are subject to change and best estimates and judgments may require further adjustments, therefore, actual results could differ materially from those estimates.

1 unchanged sentence

(d) Remaining Performance Obligations

Revenue allocated to remaining performance obligations for contracts with durations of more than one year was $ 148.1 million as of September 30, 2024, of which 65 % is expected to be recognized over the next 12 months and 95 % is expected to be recognized over the next 24 months.

Revenue allocated to remaining performance obligations for contracts with durations of more than one year was $ 169.4 million as of March 31, 2025, of which 61 % is expected to be recognized over the next 12 months and 92 % is expected to be recognized over the next 24 months.

(e) Deferred Revenue and Customer Deposits

As of September 30, 2024, and December 31, 2023, the Company recorded $ 138.8 million and $ 144.5 million, respectively, as its deferred revenue and customer deposits.

During the three months ended September 30, 2024 and 2023, the Company recognized $ 16.3 million and $ 16.7 million of revenue, respectively, that was included in the deferred revenue and customer deposits balances as of the end of the previous year.

During the nine months ended September 30, 2024 and 2023, the Company recognized $ 113.7 million and $ 115.3 million of revenue, respectively, that was included in the deferred revenue and customer deposits balances as of the end of the previous year.

As of March 31, 2025, and December 31, 2024, the Company recorded $ 154.0 million and $ 155.7 million as its deferred revenue and customer deposits, respectively, that are included in deferred revenue and customer deposits and other long-term liabilities in the accompanying condensed consolidated balance sheets.

During the three months ended March 31, 2025 and 2024, the Company recognized $ 70.1 million and $ 65.4 million of revenue, respectively, that was included in the deferred revenue and customer deposits balances as of the end of the previous year.

(f) Concentration of Credit Risk

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

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

The Company maintains cash, restricted cash, cash equivalents 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 September 30, 2024, and December 31, 2023, the allowance for doubtful accounts was $ 26.7 million and $ 42.0 million, respectively, and is recorded in accounts receivable, net, in the accompanying condensed consolidated balance sheets.

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

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

(g) Restructuring Costs

The Company records restructuring expenses when (i) management commits to a restructuring plan, (ii) the restructuring plan identifies all significant actions, (iii) the period of time to complete the restructuring plan indicates that significant changes to the plan are not likely, and (iv) employees who are impacted have been notified of the pending involuntary termination.

The Company enacted various workforce reduction plans in 2023 and 2024.

In the nine months ended September 30, 2024, restructuring charges incurred, cash paid and the estimated remaining expenses related to these plans were not significant.

(h) Recently Issued Accounting Guidance, Not yet Adopted

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

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

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

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

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

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with retrospective application required.

Early adoption is permitted.

The Company expects to adopt ASU 2023-07 upon its effective date.

The adoption will require certain additional disclosure in the notes to the Company’s consolidated financial statements.

As of March 31, 2025, and December 31, 2024, the allowance for doubtful accounts was $ 26.6 million and $ 27.5 million, respectively, and is recorded in accounts receivable, net, in the accompanying condensed consolidated balance sheets.

In the three months ended March 31, 2025 and 2024, no customer organization accounted for more than 10% of the Company’s total revenue.

As of March 31, 2025, and December 31, 2024, no customer organization represented more than 10% of the Company’s gross accounts receivable.

(g) Recently Issued Accounting Guidance, Not yet Adopted

In December 2023, the FASB issued ASU 2023-09, “ Income Taxes (Topic 740):

2 unchanged sentences

Early adoption is permitted.

The Company expects to adopt ASU 2023-09 upon its effective date.

The Company expects to adopt ASU 2023-09 in its consolidated financial statements for the year ended December 31, 2025.

The adoption will require certain additional disclosure in the notes to the Company’s consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, “ Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses,” which requires the disaggregation of certain expenses in the notes of the financial statements to provide enhanced transparency into the expense captions presented on the face of the statements of operations.

ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, and may be applied either prospectively or retrospectively.

Early adoption is permitted.

The adoption will require certain additional disclosure in the notes to the Company’s consolidated financial statements.

Fair Value Measurements

3 unchanged sentences

12 Months Fair Value Hierarchy as of

September 30, 2024 Aggregate

March 31, 2025 Aggregate

Level 1 Level 2 Level 3

26 unchanged sentences

Money market funds $ 207,323 $ — $ — $ — $ 207,323 $ — $ — $ 207,323

Commercial paper 15,059 — — — 15,059 15,059

Treasury bills 2,748 — — — 2,748 — — 2,748

Total included in cash

3 unchanged sentences

Treasury securities 379,846 1,243 ( 296 ) ( 55 ) 380,738 — — 380,738

government securities

83,576 55 ( 111 ) ( 1,209 ) 82,311 — — 82,311

Corporate debt securities and commercial paper 2,859,071 15,366 ( 10,818 ) ( 5,922 ) 16,690 2,841,007 — 2,857,697

securities 2,909 27 — — 2,936 — — 2,936

Corporate debt securities and

commercial paper 1,571,944 6,415 ( 1,594 ) ( 557 ) 16,890 1,559,318 — 1,576,208

Total debt securities 1,954,699 7,685 ( 1,890 ) ( 612 ) 400,564 1,559,318 — 1,959,882

3 unchanged sentences

Total financial assets $ 2,183,049 $ 7,685 $ ( 1,890 ) $ ( 612 ) $ 613,855 $ 1,574,377 $ — $ 2,188,232

Debt Securities

The Company’s primary objective when investing excess cash is preservation of capital, hence the Company’s debt securities primarily consist of U.S.

1 unchanged sentence

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

Interest earned on debt securities was $ 20.1 million and $ 70.7 million in the three and nine months ended September 30, 2024, respectively, and $ 19.3 million and $ 53.2 million in the three and nine months ended September 30, 2023, respectively.

Interest earned on debt securities was $ 18.9 million and $ 27.2 million in the three months ended March 31, 2025 and 2024, respectively.

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

The following table summarizes the contractual maturities of debt securities:

As of September 30, As of December 31,

As of March 31, As of December 31,

Cost Aggregate

7 unchanged sentences

Strategic Investments

As of September 30, 2024 and December 31, 2023, the Company held strategic investments with a carrying value of $ 30.3 million and $ 30.7 million, respectively, recorded as other long-term assets in the accompanying condensed consolidated balance sheets.

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

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

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

As of March 31, 2025 and December 31, 2024, the Company held strategic investments with a carrying value of $ 22.2 million and $ 23.5 million, respectively, recorded as other long-term assets in the accompanying condensed consolidated balance sheets.

There were no significant impairments or adjustments recorded in the three months ended March 31, 2025 and 2024, related to these securities.

Financial Liabilities

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

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

As of March 31, 2025 and December 31, 2024, the aggregate fair value of these liabilities and the associated unrealized losses were not significant.

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

As of September 30, 2024, the fair values of the 2029 Notes and 2031 Notes were $ 467.0 million and $ 462.4 million, respectively.

As of March 31, 2025, the fair values of the 2029 Notes and 2031 Notes were $ 465.5 million and $ 451.4 million, respectively.

As of December 31, 2024, the fair values of the 2029 Notes and 2031 Notes were $ 464.9 million and $ 453.9 million, respectively.

Property and Equipment

Property and equipment consisted of the following:

As of September 30, As of December 31,

Property and equipment consist of the following:

As of March 31, As of December 31,

(In thousands)

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____________________________________

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

Accumulated depreciation and amortization includes $ 65.5 million and $ 55.9 million of accumulated depreciation for assets held under finance leases as of September 30, 2024, and December 31, 2023, respectively.

Depreciation and amortization expense was $ 22.8 million and $ 23.2 million in the three months ended September 30, 2024 and 2023, respectively, and $ 70.0 million and $ 67.5 million in the nine months ended September 30, 2024 and 2023, respectively.

The Company capitalized $ 20.0 million and $ 14.7 million in internal‑use software development costs in the three months ended September 30, 2024 and 2023, respectively, and $ 56.5 million and $ 43.7 million in the nine months ended September 30, 2024 and 2023, respectively.

There were no divestitures in the three and nine months ended September 30, 2024.

In the three months ended September 30, 2023, the Company completed the sale of its ValueFirst business, which operated an enterprise communications platform in India, for a total cash sales price of $ 45.5 million, or $ 38.2 million in proceeds, net of cash divested.

As part of the transaction, the Company divested $ 17.4 million of tangible net assets, $ 17.3 million of intangible assets and $ 34.6 million of goodwill.

The sale resulted in a loss of $ 28.8 million.

The loss was recorded within general and administrative expenses in the accompanying condensed consolidated statement of operations for the nine months ended September 30, 2023.

No other significant divestitures were completed in the three and nine months ended September 30, 2023.

( 1 ) Data center equipment includes $ 28.3 million and $ 33.5 million in assets held under finance leases as of March 31, 2025, and December 31, 2024, respectively.

Accumulated depreciation and amortization includes $ 25.5 million and $ 28.6 million of accumulated depreciation for assets held under finance leases as of March 31, 2025, and December 31, 2024, respectively.

Depreciation and amortization expense was $ 21.9 million and $ 23.8 million in the three months ended March 31, 2025 and 2024, respectively.

The Company capitalized $ 16.2 million and $ 16.1 million in internal‑use software development costs in the three months ended March 31, 2025 and 2024, respectively .

Segment Reporting

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

As of March 31, 2025, the Company had two operating and reportable segments:

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

Twilio Communications :

The Communications reportable segment consists of a variety of application programming interfaces (“APIs”) and software solutions to optimize communications between Twilio customers and their end users.

The key products from which the segment derives its revenue are Messaging, Voice, and Email and Marketing Campaigns.

The Communications segment consists of a variety of application programming interfaces (“APIs”) and software solutions to optimize communications between Twilio customers and their end users.

The key products from which the segment derives its revenue are Messaging, Voice and Email.

Twilio Segment :

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

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

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

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

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

Asset information is not presented below since it is not reviewed by the CODM on a segment by segment basis.

The Company’s Chief Executive Officer, who is also the Chief Operating Decision Maker (“CODM”), reviews the operating results by segment using non-GAAP income (loss) from operations as the measure of segment profitability.

The CODM uses this measure of segment profitability to allocate resources and assess performance of each segment by comparing each segment’s actual results to the comparable results in prior periods and to any internally or externally set expectations.

Presented below is the discrete financial information by reportable segment for the three months ended March 31, 2025 and 2024, that reflects management’s current view of the business and that is regularly provided to the CODM.

Asset information is not reviewed by the CODM on a segment basis.

Revenue, costs of revenue and operating expenses are generally directly attributable to each segment.

Certain costs of revenue and operating expenses are allocated based on methodologies that best reflect the patterns of consumption of these costs.

Corporate costs consist of costs that support company-wide processes and are managed on the company-wide level, and include costs related to corporate governance and communication, global brand awareness, information security, and certain legal, human resources, finance and accounting expenses.

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(In thousands)

Corporate costs are not allocated to operating segments.

Corporate costs consist of costs that support company-wide processes, are managed on the company-wide level, and include costs related to corporate governance and communication, global brand awareness, information security, and certain legal, human resources, finance and accounting expenses.

In addition to corporate costs, cost of revenue and operating expenses not allocated to operating segments include stock-based compensation, amortization of acquired intangibles, payroll taxes related to stock-based compensation, charitable contributions and restructuring costs.

Three Months Ended March 31, 2025

Communications

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:

(In thousands)

Revenue $ 1,096,806 $ 75,657 $ 1,172,463

Cost of revenue attributable to segments 550,780 19,681 570,461

Operating expenses attributable to segments 268,564 57,494 326,058

Segment non-GAAP income (loss) from operations $ 277,462 $ ( 1,518 ) $ 275,944

Reconciliation of total segment non-GAAP income from operations to income from operations:

Total segment non-GAAP income from operations $ 275,944

Corporate costs not allocated to segments ( 62,536 )

Stock-based compensation ( 137,520 )

Amortization of acquired intangibles ( 27,139 )

Payroll taxes related to stock-based compensation ( 11,200 )

Charitable contributions ( 2,776 )

Restructuring costs ( 11,691 )

Income from operations 23,082

Other income, net

Income before provision for income taxes

Three Months Ended March 31, 2024

Communications

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

(In thousands)

Revenue $ 972,005 $ 75,045 $ 1,047,050

Cost of revenue attributable to segments 464,299 16,792 481,091

Operating expenses attributable to segments 258,696 79,247 337,943

Segment non-GAAP income (loss) from operations $ 249,010 $ ( 20,994 ) $ 228,016

Reconciliation of total segment non-GAAP income from operations to loss from operations:

Total segment non-GAAP income from operations $ 228,016

Corporate costs not allocated to segments ( 68,406 )

Stock-based compensation ( 156,158 )

Amortization of acquired intangibles ( 28,939 )

Acquisition and divestiture related expenses — ( 183 ) — ( 5,515 )

Loss on net assets held for sale — — — ( 32,277 )

Payroll taxes related to stock-based compensation ( 6,776 )

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Restructuring costs ( 9,946 )

Impairment of long-lived assets — ( 3,162 ) — ( 34,278 )

Loss from operations ( 43,504 )

Other income (expenses), net

1,243 ( 31,057 ) ( 7,620 ) ( 122,261 )

Other expenses, net

Loss before provision for income taxes

Depreciation and amortization expenses, except for amortization of acquired intangibles, that are included in non-GAAP income from operations for the Communications reportable segment were $ 16.7 million and $ 19.3 million in the three months ended March 31, 2025 and 2024, respectively.

Amortization of deferred commissions included in non-GAAP income from operations for the Communications reportable segment was $ 15.2 million in each of the three months ended March 31, 2025 and 2024, respectively.

Depreciation and amortization expenses, except for amortization of acquired intangibles, that are included in non-GAAP loss from operations for the Segment reportable segment were $ 4.9 million and $ 4.1 million in the three months ended March 31, 2025 and 2024, respectively.

Amortization of deferred commissions included in non-GAAP loss from operations for the Segment reportable segment was $ 4.0 million and $ 3.6 million in the three months ended March 31, 2025 and 2024, respectively.

Derivatives and Hedging

As of September 30, 2024, the Company had outstanding foreign currency forward contracts designated as cash flow hedges with a total sell notional value of $ 200.6 million.

As of March 31, 2025, the Company had outstanding foreign currency forward contracts designated as cash flow hedges with a total sell notional value of $ 218.7 million.

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

As of September 30, 2024, these contracts had maturities of up to 16 months.

As of March 31, 2025, these contracts had maturities of up to seventeen months.

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

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

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

As of March 31, 2025, the Company did not have any offsetting arrangements.

Goodwill and Intangible Assets

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

There was no goodwill activity during the nine months ended September 30, 2024.

As of March 31, 2025 and December 31, 2024, the balance of the Company’s goodwill was $ 5.2 billion, of which $ 4.9 billion related to the Communications reportable segment and $ 306.1 million related to the Segment reportable segment.

There was no goodwill activity during the three months ended March 31, 2025.

Intangible assets

Intangible assets consisted of the following:

As of September 30, 2024

Intangible assets consist of the following:

As of March 31, 2025

Cost Accumulated Amortization Net

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Trade names 25,968 ( 25,284 ) 684

Order backlog 10,000 ( 10,000 ) —

Patent 3,968 ( 1,145 ) 2,823

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Trade names 25,968 ( 25,014 ) 954

Order backlog 10,000 ( 10,000 ) —

Patent 3,968 ( 1,096 ) 2,872

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Total $ 821,562 $ ( 583,059 ) $ 238,503

Amortization expense was $ 27.5 million and $ 48.9 million for the three months ended September 30, 2024 and 2023, respectively, and $ 84.7 million and $ 150.0 million for the nine months ended September 30, 2024 and 2023, respectively.

Amortization expense was $ 27.2 million and $ 29.0 million for the three months ended March 31, 2025 and 2024, respectively.

Total estimated future amortization expense is as follows:

As of September 30, 2024

As of March 31, 2025

Year Ended December 31, (In thousands)

2024 (remaining three months) $ 27,393

2025 (remaining nine months) $ 80,674

Thereafter 23,922

Total $ 206,100

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

As of September 30, As of December 31,

Balance Sheet Components

Prepaid expenses and other current assets consist of the following:

As of March 31, As of As of December 31,

(In thousands)

Prepaid expenses $ 321,312 $ 333,911

Other current assets 120,843 140,449

Total prepaid expenses and other current assets

$ 442,155 $ 474,360

Accrued expenses and other current liabilities consist of the following:

As of March 31, As of December 31,

(In thousands)

Accrued payroll and related $ 56,733 $ 76,708

Corporate bonus program accrual 70,182 —

Accrued commission 18,024 17,345

Company-wide bonus program liability 25,386 109,776

Accrued sales bonus and commissions 22,265 21,585

Accrued cost of revenue 173,372 173,739

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ESPP contributions 16,935 5,745

Finance lease liability 2,678 8,489

Restructuring liability 1,606 29,086

Share repurchase costs payable 8,002 3,526

Accrued other expense 56,562 63,402

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Long-Term Debt

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

As of September 30, As of December 31,

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

As of March 31, As of December 31,

(In thousands)

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Total long-term debt, net $ 991,006 $ 990,587

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

As of March 31, 2025, the Company was in compliance with all of its covenants under the related indentures.

Revenue by Geographic Area

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Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Revenue by geographic area:

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(a) Lease and Other Commitments

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

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

The Company leases its facilities under various non-cancelable operating lease agreements.

In the three months ended March 31, 2025, 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 and nine months ended September 30, 2024, the Company entered into several such agreements with terms up to four years for a total purchase commitment of $ 14.4 million and $ 55.2 million, respectively.

In the three months ended March 31, 2025, the Company entered into several new agreements with terms up to three years for a total purchase commitment of $ 18.3 million .

(b) Legal Matters

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While the Company currently believes that the final outcomes of these matters will not have a material adverse effect on its business, the results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.

The Company accrues for contingencies when it believes that a loss is probable and can be reasonably estimated.

To the extent there is a reasonable possibility that a loss may be incurred that is in excess of the amounts already recognized and such additional loss amount may be material, the Company either discloses the estimated additional loss amount or states that such an estimate cannot be made.

The Company accrues for contingencies when it believes that a loss is probable and that it can be reasonably estimated.

To the extent there is a reasonable possibility that a loss may be incurred that is in excess of amounts already recognized and such additional loss amount may be material, the Company either discloses the estimated additional loss amount or states that such an estimate cannot be made.

Significant judgment is required to determine the probability of a loss and to estimate the amount of any probable loss.

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

As of March 31, 2025, and December 31, 2024, no amounts were accrued related to any outstanding indemnification agreements.

(d) Other Taxes

The Company conducts operations in multiple tax jurisdictions within and outside of the United States.

The Company conducts operations in many tax jurisdictions within and outside the United States.

In many of these jurisdictions, non-income-based taxes, such as sales, use, telecommunications and other local taxes are assessed on the Company’s operations.

The Company carries reserves for certain of its non-income-based tax exposures in certain jurisdictions when it is both probable that a liability was incurred and the amount of the exposure can be reasonably estimated.

These reserves are based on estimates which include several key assumptions including, but not limited to, the taxability of the Company’s services, the jurisdictions in which its management believes it had nexus and the sourcing of revenues to those jurisdictions.

These reserves are based on estimates which include several key assumptions including, but not limited to, the taxability of the Company’s services, the jurisdictions in which management believes it had nexus and the sourcing of revenues to those jurisdictions.

The Company continues to remain in discussions with certain jurisdictions regarding its prior sales and other taxes that it may owe.

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 September 30, 2024, the liabilities recorded for the non-income-based taxes were $ 18.5 million for domestic jurisdictions and $ 19.7 million for jurisdictions outside of the United States.

As of March 31, 2025, the liabilities accrued for non-income-based taxes were $ 19.4 million for domestic jurisdictions and $ 22.8 million for jurisdictions outside of the United States.

As of December 31, 2024, these liabilities were $ 19.3 million and $ 22.0 million, respectively.

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Preferred Stock

As of September 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 September 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 September 30, 2024, 155,386,309 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.

As of December 31, 2023, 181,945,771 shares of Class A common stock and no shares of Class B common stock were issued and outstanding.

As of March 31, 2025, and December 31, 2024, the Company had authorized 100,000,000 shares of preferred stock, par value $ 0.001 , of which no shares were issued and outstanding in either period.

As of March 31, 2025 and December 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, 2025 and December 31, 2024, 153,254,342 and 152,610,697 shares of Class A common stock, respectively, and no shares of Class B common stock were issued and outstanding.

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

As of September 30, As of December 31,

As of March 31, As of December 31,

Stock options issued and outstanding 1,190,661 1,322,176

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Total 59,956,015 53,064,084

Share Repurchase Programs

In February 2023, the board of directors of the Company authorized a repurchase of up to $ 1.0 billion in aggregate value of its outstanding Class A common stock through a share repurchase program.

In March 2024, the board of directors of the Company authorized a second share repurchase program for an additional $ 2.0 billion in aggregate value of its outstanding Class A common stock.

Repurchases under these programs can be made through open market, private transactions or other means, in compliance with applicable federal securities laws, and could include repurchases pursuant to Rule 10b5-1 trading plans.

Share Repurchase Program

In January 2025, the board of directors of the Company authorized a share repurchase program to repurchase up to $ 2.0 billion in aggregate value of the Company’s outstanding Class A common stock.

Repurchases under this program can be made through open market, private transactions or other means, in compliance with applicable federal securities laws, and can include repurchases pursuant to Rule 10b5-1 trading plans.

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

Both programs expire on December 31, 2024.

In the three months ended September 30, 2024 and 2023, the Company repurchased 10.6 million and 0.9 million shares of its Class A common stock, respectively, for an aggregate purchase price of $ 633.0 million and $ 56.0 million, respectively.

In the nine months ended September 30, 2024 and 2023, the Company repurchased 32.0 million and 9.2 million shares of its Class A common stock, respectively, for an aggregate purchase price of $ 1.9 billion and $ 551.0 million, respectively.

As of September 30, 2024, approximately $ 412.0 million of the aggregate amount authorized under the stock repurchase programs remained available for future repurchases.

The program expires on December 31, 2027.

The Company’s previous share repurchase authorizations expired on December 31, 2024.

In the three months ended March 31, 2025 and 2024, the Company repurchased 1.2 million and 6.1 million shares of its Class A common stock, respectively, for an aggregate purchase price of $ 130.2 million and $ 384.3 million, respectively.

As of March 31, 2025, approximately $ 1.9 billion of the amount originally authorized for share repurchases in January 2025 remained available for future repurchases.

Stock-Based Compensation

The Company’s 2016 Stock Option and Incentive Plan (the “2016 Plan”) provides for granting stock options, restricted stock units, restricted stock awards, stock appreciation rights, unrestricted stock awards, performance share awards, dividend equivalent rights and cash-based awards to its employees, directors and consultants.

The Company’s 2016 Stock Option and Incentive Plan (the “2016 Plan”) provides for the grant of stock options, restricted stock units, restricted stock awards, stock appreciation rights, unrestricted stock awards, performance share awards, dividend equivalent rights and cash-based awards by the Company to its employees, directors and consultants.

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 certain of its executive employees performance-based restricted stock units (“PSUs”) covering 516,626 shares of Class A common stock that had an aggregate grant date fair value of $ 34.5 million.

In the first quarter of 2025, the Company granted to certain of its executive employees performance-based restricted stock units (“PSUs”) covering 185,899 shares of Class A common stock that had an aggregate grant date fair value of $ 27.1 million.

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, 2027.

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.

For this portion, 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

cumulative adjustments are recorded in the period in which the probability assessment changes.

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.

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

As of September 30, 2024, total unrecognized compensation cost related to unvested restricted stock units was $ 1.4 billion which will be amortized over a weighted-average period of 2.7 years.

As of September 30, 2024, total unrecognized compensation cost related to unvested stock options and the ESPP was not significant.

As of March 31, 2025, total unrecognized compensation cost related to unvested restricted stock units (“RSUs”) was $ 1.1 billion which will be amortized over a weighted-average period of 2.4 years.

As of March 31, 2025, total unrecognized compensation cost related to unvested stock options and the ESPP was not significant.

Stock-Based Compensation Expense

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Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(In thousands)

3 unchanged sentences

General and administrative 25,577 34,289

Restructuring costs 730 467 3,178 11,096

Total $ 139,273 $ 158,606

Net Loss Per Share Attributable to Common Stockholders

The following table sets forth the calculation of basic and diluted net loss per share attributable to common stockholders during the periods presented:

Net Income (Loss) Per Share Attributable to Common Stockholders

The Company computes net income (loss) per share in accordance with ASC 260 “Earnings per Share” .

Basic net income (loss) per share attributable to common stockholders is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

Diluted net income (loss) per share gives effect to all dilutive potential common shares outstanding during the period, such as stock options, RSUs, including PSUs, and shares partially paid for under ESPP, using the treasury stock method;

PSUs follow the contingently issuable shares guidance.

Diluted net income (loss) per share excludes all dilutive potential common shares if their effect is anti-dilutive.

The following table sets forth the calculation of basic and diluted net income (loss) per share attributable to common stockholders during the periods presented:

Three Months Ended

September 30, Nine Months Ended

September 30,

Net income (loss) attributable to common stockholders (in thousands) $ 20,017 $ ( 55,349 )

Weighted-average shares outstanding, basic 153,345,192 181,017,726

Dilutive effect of outstanding stock options, RSUs and stock committed under ESPP

Weighted-average shares outstanding, diluted

161,794,287 181,017,726

Net loss attributable to common stockholders (in thousands) $ ( 9,726 ) $ ( 141,707 ) $ ( 96,933 ) $ ( 650,033 )

Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted 159,091,110 181,749,309 170,063,452 183,854,526

Net loss per share attributable to common stockholders, basic and diluted $ ( 0.06 ) $ ( 0.78 ) $ ( 0.57 ) $ ( 3.54 )

Net income (loss) per share attributable to common stockholders:

$ 0.13 $ ( 0.31 )

$ 0.12 $ ( 0.31 )

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 September 30,

As of March 31,

Stock options issued and outstanding 145,350 1,584,426

Unvested restricted stock units issued and outstanding (1)

1,384,775 16,173,773

Shares of Class A common stock reserved for Twilio.org — 419,939

Shares of Class A common stock committed under ESPP — 396,611

Shares of Class A common stock in escrow — 31,503

Shares of Class A common stock in escrow and restricted stock awards subject to future vesting — 3,771

Shares of Class A common stock in escrow subject to future vesting — 3,771

Total 1,530,125 18,578,520

The Company has historically computed its provision for income taxes for interim periods using a forecasted 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 nine months ended September 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.

____________________________________

(1) A portion of these unvested restricted stock units are PSUs.

The number of PSUs that will ultimately vest may increase or decrease the number of shares that will be issued at the end of the performance period.

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 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 provision for income taxes recorded in the three months ended September 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 nine months ended September 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 nine months ended September 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 provision for income taxes recorded in the three months ended March 31, 2025 and 2024 consist 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 three months ended March 31, 2024 also consists of income tax expense from a foreign audit settlement.

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 and nine months ended September 30, 2024, the value of the transactions that occurred between the Company and Syniverse were $ 34.6 million and $ 103.8 million, respectively.

For the three and nine months ended September 30, 2023, the value of the transactions that occurred between the Company and Syniverse were $ 40.1 million and $ 110.2 million, respectively.

For the three months ended March 31, 2025 and 2024, the value of the transactions that occurred between the Company and Syniverse were $ 38.7 million and $ 34.0 million, respectively.

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

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Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

• the impact of macroeconomic uncertainties and significant market volatility in the global economy on our customers, partners, employees and business;

• the impact of global economic and political conditions and uncertainty and significant market volatility on our business, customers and partners;

• our future financial performance, including expectations regarding our revenue, revenue growth, cost of revenue, gross profit, gross margin and operating expenses, our ability to generate positive cash flow and ability to achieve and sustain profitability on GAAP and non-GAAP bases, the factors affecting our results of operations, the timing of future expenses, the end dates for certain types of expenses, and the assumptions underlying such expectations;

• the benefits and efficiencies we expect to derive from workforce reductions and other cost-saving initiatives, and from our cash bonus program;

• 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 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, the expected benefits and timeline of the migration to a new infrastructure provider, 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;

• our ability to maintain reliable service levels for our customers;

• the realignment of our business unit structure, including its expected costs and benefits and the related accounting determinations;

• our ability to execute on our vision for our platform, including delivering new product releases and enhancements, reducing friction across our platform and streamlining cross-channel orchestration;

• our ability to successfully deliver an interoperable platform that allows businesses to harness the power of customer data and consumer insights to improve customer engagement;

• our ability to leverage artificial intelligence and machine learning, including to develop and commercialize products and features for our customers and deploy internal applications for our own operational efficiency;

• our ability to drive revenue growth, improve profitability and increase our market share, including by forming and expanding partnerships with independent software vendors and other partners, improving our self-service capabilities, cross-selling our products and expanding internationally;

• our ability to simplify and modernize our business processes and improve our overall operating efficiency;

• our ability to compete effectively in an intensely competitive market, including our ability to set optimal prices for our products and adapt and respond effectively to rising costs, competing offerings, rapidly changing technology and technology trends, and evolving customer needs and preferences;

• our anticipated investments in sales and marketing, research and development and additional systems and processes to support our growth;

• the anticipated results of our foreign currency hedging activities;

• our ability to compete effectively in an intensely competitive market, including our ability to set optimal prices for our products and adapt and respond effectively to rising costs, rapidly changing technology and evolving customer needs, requirements, and preferences;

• potential harm caused by compromises in security, data and infrastructure, including cybersecurity protections;

• our ability to maintain reliable service levels for our customers;

• our ability to maintain, protect and enhance our intellectual property;

• our ability to comply with modified or new industry standards, laws and regulations applying to our business;

• our ability to make progress on our environmental, social and governance (“ESG”) programs, goals and commitments;

• our ability to manage changes in network service provider fees that we pay in connection with the delivery of communications on our platform;

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• the impact and expected results from changes in our relationships with our larger customers;

• our ability to form and expand partnerships with technology partners and consulting partners;

• anticipated technology trends, such as the use of and demand for cloud communications and customer engagement tools;

• our ability to leverage artificial intelligence (“AI”) and machine learning (“ML”) and develop and deliver products that incorporate AI and ML and our expectations about CustomerAI and its potential;

• our ability to successfully enter into new markets and manage our international expansion;

• the sufficiency of our cash and cash equivalents to meet our liquidity needs;

• our expectations regarding our share repurchase programs;

• our ability to maintain, protect and enhance our intellectual property;

• our expectations regarding share repurchases;

• our ability to successfully defend litigation brought against us;

• the anticipated results of our foreign currency hedging activities;

• our ability to service the interest on our 3.625% senior notes due 2029 (“2029 Notes”) and on our 3.875% notes due 2031 (“2031 Notes,” and together with the 2029 Notes, the “Notes”), and repay such Notes;

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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