TWILIO INC 10-Q

Item 1. Financial Statements TWILIO INC. Condensed Consolidated Balance Sheets (Unaudited) As of June 30, As of December 31, 2025 2024 (In thousands) ASSETS Current assets: Cash and cash equivalents $ 969,229 $ 421,297 Short-term marketable securities 1,573,371 1,963,102 Accounts receivable, net 587,966 588,540 Prepaid expenses and other current assets 401,071 474,360 Total current assets 3,531,637 3,447,299 Property and equipment, net 177,957 191,042 Operating right-of-use assets 53,174 53,405 Equity method investment 439,011 485,835 Intangible assets, net 184,260 238,503 Goodwill 5,243,266 5,243,266 Other long-term assets 218,987 206,122 Total assets $ 9,848,292 $ 9,865,472 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 76,181 $ 100,169 Accrued expenses and other current liabilities 461,527 530,686 Deferred revenue and customer deposits 148,009 155,680 Operating lease liability, current 34,342 33,685 Total current liabilities 720,059 820,220 Operating lease liability, noncurrent 76,819 85,875 Long-term debt, net 991,429 990,587 Other long-term liabilities 16,063 15,824 Total liabilities 1,804,370 1,912,506 Commitments and contingencies (Note 11) Stockholders’ equity: Preferred stock — — Class A common stock 154 153 Additional paid-in capital 15,805,141 15,476,124 Accumulated other comprehensive income (loss) 24,716 ( 1,301 ) Accumulated deficit ( 7,786,089 ) ( 7,522,010 ) Total stockholders’ equity 8,043,922 7,952,966 Total liabilities and stockholders’ equity $ 9,848,292 $ 9,865,472 See accompanying notes to condensed consolidated financial statements. 3 Table of Contents TWILIO INC. Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 (In thousands, except share and per share amounts) Revenue $ 1,228,425 $ 1,082,502 $ 2,400,888 $ 2,129,552 Cost of revenue 625,685 526,657 1,216,581 1,029,666 Gross profit 602,740 555,845 1,184,307 1,099,886 Operating expenses: Research and development 243,495 242,785 497,790 503,242 Sales and marketing 220,724 217,825 432,837 432,328 General and administrative 101,532 114,272 193,609 226,857 Total operating expenses 565,751 574,882 1,124,236 1,162,427 Income (loss) from operations 36,989 ( 19,037 ) 60,071 ( 62,541 ) Other (expenses) income, net: Share of losses from equity method investment ( 25,222 ) ( 23,940 ) ( 44,693 ) ( 53,515 ) Other income, net 21,825 16,734 44,798 44,652 Total other (expenses) income, net ( 3,397 ) ( 7,206 ) 105 ( 8,863 ) Income (loss) before provision for income taxes 33,592 ( 26,243 ) 60,176 ( 71,404 ) Provision for income taxes ( 11,169 ) ( 5,615 ) ( 17,736 ) ( 15,803 ) Net income (loss) attributable to common stockholders $ 22,423 $ ( 31,858 ) $ 42,440 $ ( 87,207 ) Net income (loss) per share attributable to common stockholders: Basic $ 0.15 $ ( 0.19 ) $ 0.28 $ ( 0.50 ) Diluted $ 0.14 $ ( 0.19 ) $ 0.26 $ ( 0.50 ) Weighted-average shares used to compute net income (loss) per share attributable to common stockholders: Basic 153,228,766 170,222,104 153,273,594 175,613,672 Diluted 159,691,758 170,222,104 160,729,638 175,613,672 See accompanying notes to condensed consolidated financial statements. 4 Table of Contents TWILIO INC. Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 (In thousands) Net income (loss) $ 22,423 $ ( 31,858 ) $ 42,440 $ ( 87,207 ) Other comprehensive income (loss): Unrealized (loss) gain on marketable securities ( 1,116 ) ( 1,821 ) 3,942 ( 7,014 ) Net change in market value of effective foreign currency forward exchange contracts 15,821 ( 823 ) 24,207 ( 5,328 ) Share of other comprehensive (loss) income from equity method investment ( 347 ) ( 3,086 ) ( 2,132 ) 1,052 Total other comprehensive income (loss) 14,358 ( 5,730 ) 26,017 ( 11,290 ) Comprehensive income (loss) attributable to common stockholders $ 36,781 $ ( 37,588 ) $ 68,457 $ ( 98,497 ) See accompanying notes to condensed consolidated financial statements. 5 Table of Contents TWILIO INC. Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) Three Months Ended June 30, 2025 Common Stock Class A Additional Paid-In Capital Accumulated Other Comprehensive Income Accumulated Deficit Total Stockholders' Equity Shares Amount (In thousands, except share amounts) Balance as of March 31, 2025 153,254,342 $ 153 $ 15,625,545 $ 10,358 $ ( 7,631,765 ) $ 8,004,291 Net income — — — — 22,423 22,423 Exercises of vested stock options 225,709 — 2,384 — — 2,384 Vesting of restricted stock units 1,631,186 2 ( 2 ) — — — Value of equity awards withheld for tax liability ( 661 ) — ( 85 ) — — ( 85 ) Shares issued under ESPP 253,298 — 20,757 — — 20,757 Shares of Class A common stock issued and donated to charity 22,102 — 2,237 — — 2,237 Unrealized loss on marketable securities — — — ( 1,116 ) — ( 1,116 ) Repurchases of shares of Class A common stock including related costs ( 1,809,818 ) ( 1 ) — — ( 176,747 ) ( 176,748 ) Net change in market value of effective foreign currency forward exchange contracts — — — 15,821 — 15,821 Share of other comprehensive loss from equity method investment — — — ( 347 ) — ( 347 ) Stock-based compensation — — 154,305 — — 154,305 Balance as of June 30, 2025 153,576,158 $ 154 $ 15,805,141 $ 24,716 $ ( 7,786,089 ) $ 8,043,922 See accompanying notes to condensed consolidated financial statements. 6 Table of Contents TWILIO INC. Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) Six Months Ended June 30, 2025 Common Stock Class A Additional Paid-In Capital Accumulated Other Comprehensive (Loss) Income Accumulated Deficit Total Stockholders' Equity Shares Amount (In thousands, except share amounts) Balance as of December 31, 2024 152,610,697 $ 153 $ 15,476,124 $ ( 1,301 ) $ ( 7,522,010 ) $ 7,952,966 Net income — — — — 42,440 42,440 Exercises of vested stock options 357,224 — 5,150 — — 5,150 Vesting of restricted stock units 3,343,830 4 ( 4 ) — — — Value of equity awards withheld for tax liability ( 1,084 ) — ( 138 ) — — ( 138 ) Shares issued under ESPP 253,298 — 20,757 — — 20,757 Shares of Class A common stock issued and donated to charity 44,204 — 5,013 — — 5,013 Unrealized gain on marketable securities — — — 3,942 — 3,942 Repurchases of shares of Class A common stock including related costs ( 3,032,011 ) ( 3 ) — — ( 306,519 ) ( 306,522 ) Net change in market value of effective foreign currency forward exchange contracts — — — 24,207 — 24,207 Share of other comprehensive loss from equity method investment — — — ( 2,132 ) — ( 2,132 ) Stock-based compensation — — 298,239 — — 298,239 Balance as of June 30, 2025 153,576,158 $ 154 $ 15,805,141 $ 24,716 $ ( 7,786,089 ) $ 8,043,922 See accompanying notes to condensed consolidated financial statements. 7 Table of Contents TWILIO INC. Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) Three Months Ended June 30, 2024 Common Stock Class A Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity Shares Amount (In thousands, except share amounts) Balance as of 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. 8 Table of Contents TWILIO INC. Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) Six Months Ended June 30, 2024 Common Stock Class A Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders' Equity Shares Amount (In thousands, except share amounts) Balance as of December 31, 2023 181,945,771 $ 182 $ 14,797,723 $ 619 $ ( 5,065,972 ) $ 9,732,552 Net loss — — — — ( 87,207 ) ( 87,207 ) Exercises of vested stock options 71,433 — 1,099 — — 1,099 Vesting of restricted stock units 3,080,464 2 ( 2 ) — — — 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 Shares returned from escrow ( 696 ) — ( 192 ) — — ( 192 ) Unrealized loss on marketable securities — — — ( 7,014 ) — ( 7,014 ) Repurchases of shares of Class A common stock including related costs ( 21,358,029 ) ( 20 ) — — ( 1,293,627 ) ( 1,293,647 ) Net change in market value of effective foreign currency forward exchange contracts — — — ( 5,328 ) — ( 5,328 ) Share of other comprehensive income from equity method investment — — — 1,052 — 1,052 Stock-based compensation — — 314,462 — — 314,462 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. 9 Table of Contents TWILIO INC . Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: (In thousands) Net income (loss) $ 42,440 $ ( 87,207 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 99,403 105,383 Non-cash reduction to the right-of-use asset 10,516 10,064 Net amortization of investment premium and discount ( 8,182 ) ( 12,572 ) Stock-based compensation 288,524 306,263 Amortization of deferred commissions 38,387 37,788 Provision for doubtful accounts 3,686 14,365 Share of losses from equity method investment 44,693 53,515 Other adjustments 8,500 8,591 Changes in operating assets and liabilities: Accounts receivable ( 3,112 ) 11,094 Prepaid expenses and other current assets 84,662 19,752 Other long-term assets ( 51,420 ) 2,396 Accounts payable ( 24,323 ) ( 59,027 ) Accrued expenses and other current liabilities ( 40,086 ) 23,655 Deferred revenue and customer deposits ( 7,671 ) ( 5,755 ) Operating lease liabilities ( 18,693 ) ( 24,177 ) Other long-term liabilities 802 ( 662 ) Net cash provided by operating activities 468,126 403,466 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of marketable securities and other investments ( 408,836 ) ( 589,995 ) Proceeds from sales and maturities of marketable securities 818,034 1,592,970 Capitalized software development costs ( 24,152 ) ( 25,835 ) Purchases of long-lived and intangible assets ( 2,167 ) ( 2,756 ) Net cash provided by investing activities 382,879 974,384 CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on finance leases ( 4,228 ) ( 7,060 ) Value of equity awards withheld for tax liabilities ( 138 ) ( 1,963 ) Repurchases of shares of Class A common stock and related costs ( 323,249 ) ( 1,273,699 ) Proceeds from exercises of stock options and shares of Class A common stock issued under ESPP 25,907 21,700 Net cash used in financing activities ( 301,708 ) ( 1,261,022 ) NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 549,297 116,828 CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period 431,437 655,931 CASH, CASH EQUIVALENTS AND RESTRICTED CASH —End of period $ 980,734 $ 772,759 Cash paid for income taxes, net $ 13,088 $ 19,473 Cash paid for interest $ 18,813 $ 19,007 RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONDENSED CONSOLIDATED BALANCE SHEETS Cash and cash equivalents $ 969,229 $ 755,065 Restricted cash in other current assets — 7,554 Restricted cash in other long-term assets 11,505 10,140 Total cash, cash equivalents and restricted cash $ 980,734 $ 772,759 See accompanying notes to condensed consolidated financial statements. 10 Table of Contents TWILIO INC. Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Organization and Description of Business Twilio Inc. (the “Company”) was incorporated in the state of Delaware on March 13, 2008. Today's leading companies trust Twilio's Customer Engagement Platform to build direct, personalized relationships with their customers everywhere in the world. Twilio enables companies to use communications and data to add intelligence and security to every step of their customers’ journey, from sales to marketing to growth, customer service and many more engagement use cases in a flexible, programmatic way. The Company’s headquarters are located in San Francisco, California, and the Company has subsidiaries across North America, South America, Europe, Asia and Australia. 2. Summary of Significant Accounting Policies (a) Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K filed with the SEC on February 26, 2025 (“Annual Report”). The condensed consolidated balance sheet as of December 31, 2024, included herein, was derived from the audited financial statements as of that date, but may not include all disclosures including certain notes required by U.S. GAAP on an annual reporting basis. In the opinion of management, the accompanying unaudited 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 The unaudited condensed consolidated financial statements include the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. (c) Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are used for, but not limited to, revenue allowances and sales credit reserves; recoverability of long-lived and intangible assets; capitalization and useful life of the Company’s capitalized internal-use software development costs; fair value of acquired intangible assets and goodwill; accruals and contingencies. 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. Management periodically evaluates such estimates and they are adjusted prospectively based upon such periodic evaluation. (d) Remaining Performance Obligations Revenue allocated to remaining performance obligations for contracts with durations of more than one year was $ 158.8 million as of June 30, 2025, of which 63 % is expected to be recognized over the next 12 months and 93 % is expected to be recognized over the next 24 months. 11 Table of Contents (e) Deferred Revenue and Customer Deposits As of June 30, 2025, and December 31, 2024, the Company recorded $ 148.0 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 unaudited condensed consolidated balance sheets. During the three months ended June 30, 2025 and 2024, the Company recognized $ 35.0 million and $ 32.1 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, 2025 and 2024, the Company recognized $ 105.1 million and $ 97.4 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, restricted cash, cash equivalents and marketable securities with financial institutions. Certain balances held by such financial institutions exceed insured limits. The Company sells its services to a wide variety of customers. If the financial condition or results of operations of any significant customer deteriorates substantially, operating results could be adversely affected. To reduce credit risk, management performs credit evaluations of the financial condition of significant customers and periodic re-evaluations, as needed, of existing customers. The Company does not require collateral from its credit customers and maintains reserves for estimated credit losses on customer accounts when considered necessary. Actual credit losses may differ from the Company’s estimates. As of June 30, 2025, and December 31, 2024, the allowance for doubtful accounts was $ 22.3 million and $ 27.5 million, respectively, and is recorded in accounts receivable, net, in the accompanying unaudited condensed consolidated balance sheets. In the three and six months ended June 30, 2025 and 2024, no customer organization accounted for more than 10% of the Company’s total revenue. As of June 30, 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): Improvements to Income Tax Disclosures, ” which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation and modifies other income tax related disclosures. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024, and may be applied on a prospective basis. Early adoption is permitted. 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 disaggregation of certain expenses in the notes to 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. 12 Table of Contents 3. Fair Value Measurements Financial Assets The following tables provide the financial assets measured at fair value on a recurring basis: Amortized Cost or Carrying Value Gross Unrealized Gains Gross Unrealized Losses Less Than 12 Months Gross Unrealized Losses More Than 12 Months Fair Value Hierarchy as of June 30, 2025 Aggregate Fair Value Level 1 Level 2 Level 3 Financial Assets: (In thousands) Cash and cash equivalents: Money market funds $ 715,048 $ — $ — $ — $ 715,048 $ — $ — $ 715,048 Commercial paper 12,305 — — — — 12,305 — 12,305 U.S. Treasury bills 22,748 — — — 22,748 — — 22,748 Total included in cash and cash equivalents 750,101 — — — 737,796 12,305 — 750,101 Marketable securities: Debt securities: U.S. Treasury securities 285,864 1,066 — — 286,930 — — 286,930 Corporate debt securities and commercial paper 1,275,992 8,253 ( 180 ) ( 14 ) — 1,284,051 — 1,284,051 Total debt securities 1,561,856 9,319 ( 180 ) ( 14 ) 286,930 1,284,051 — 1,570,981 Equity securities 2,390 — — — 2,390 — — 2,390 Total marketable securities 1,564,246 9,319 ( 180 ) ( 14 ) 289,320 1,284,051 — 1,573,371 Total financial assets $ 2,314,347 $ 9,319 $ ( 180 ) $ ( 14 ) $ 1,027,116 $ 1,296,356 $ — $ 2,323,472 Amortized Cost or Carrying Value Gross Unrealized Gains Gross Unrealized Losses Less Than 12 Months Gross Unrealized Losses More Than 12 Months Fair Value Hierarchy as of December 31, 2024 Aggregate Fair Value Level 1 Level 2 Level 3 Financial Assets: (In thousands) Cash and cash equivalents: Money market funds $ 207,323 $ — $ — $ — $ 207,323 $ — $ — $ 207,323 Commercial paper 15,059 — — — 15,059 15,059 U.S. Treasury bills 2,748 — — — 2,748 — — 2,748 Total included in cash and cash equivalents 225,130 — — — 210,071 15,059 — 225,130 Marketable securities: Debt securities: U.S. Treasury securities 379,846 1,243 ( 296 ) ( 55 ) 380,738 — — 380,738 Non-U.S. government 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 Equity securities 3,220 — — — 3,220 — — 3,220 Total marketable securities 1,957,919 7,685 ( 1,890 ) ( 612 ) 403,784 1,559,318 — 1,963,102 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. Treasury securities, non-U.S government securities, high credit quality corporate debt securities and commercial paper. 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 $ 17.9 million and $ 36.8 million in the three and six months ended June 30, 2025, respectively, and $ 23.5 million and $ 50.6 million in the three and six months ended June 30, 2024, respectively. The interest is recorded as other (expenses) income, net, in the accompanying unaudited condensed consolidated statements of operations. 13 Table of Contents The following table summarizes the contractual maturities of debt securities: As of June 30, As of December 31, 2025 2024 Amortized Cost Aggregate Fair Value Amortized Cost Aggregate Fair Value Financial Assets: (In thousands) Less than one year $ 601,214 $ 602,947 $ 684,294 $ 685,091 One to three years 960,642 968,034 1,270,405 1,274,791 Total $ 1,561,856 $ 1,570,981 $ 1,954,699 $ 1,959,882 Strategic Investments As of June 30, 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 unaudited condensed consolidated balance sheets. There were no significant impairments or adjustments recorded in the three and six months ended June 30, 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 June 30, 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 June 30, 2025, the fair values of the 2029 Notes and 2031 Notes were $ 481.7 million and $ 473.7 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. 4. Property and Equipment Property and equipment consist of the following: As of June 30, As of December 31, 2025 2024 (In thousands) Capitalized internal-use software developments costs $ 387,454 $ 357,334 Data center equipment (1) 47,384 63,672 Leasehold improvements 61,980 78,104 Office equipment 46,856 50,659 Furniture and fixtures 10,370 12,618 Software 14,143 14,143 Total property and equipment 568,187 576,530 Less: accumulated depreciation and amortization (1) ( 390,230 ) ( 385,488 ) Total property and equipment, net $ 177,957 $ 191,042 ____________________________________ ( 1 ) Data center equipment includes $ 21.4 million and $ 33.5 million in assets held under finance leases as of June 30, 2025, and December 31, 2024, respectively. Accumulated depreciation and amortization includes $ 20.4 million and $ 28.6 million of accumulated depreciation for assets held under finance leases as of June 30, 2025, and December 31, 2024, respectively. Depreciation and amortization expense was $ 22.3 million and $ 23.3 million in the three months ended June 30, 2025 and 2024, respectively, and $ 44.1 million and $ 47.2 million in the six months ended June 30, 2025 and 2024, respectively. The Company capitalized $ 17.6 million and $ 20.4 million in internal‑use software development costs in the three months ended June 30, 2025 and 2024, respectively, and $ 33.9 million and $ 36.5 million in the six months ended June 30, 2025 and 2024, respectively. 14 Table of Contents 5. Segment Reporting As of June 30, 2025, the Company had two operating and reportable segments: Twilio Communications (“Communications”) and Twilio Segment (“Segment”). Twilio Communications : 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 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. 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 and six months ended June 30, 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 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 June 30, 2025 Communications Segment Total (In thousands) Revenue $ 1,152,955 $ 75,470 $ 1,228,425 Cost of revenue attributable to segments 586,146 19,377 605,523 Operating expenses attributable to segments 286,196 50,084 336,280 Segment non-GAAP income from operations $ 280,613 $ 6,009 $ 286,622 Reconciliation of total segment non-GAAP income from operations to income from operations: Total segment non-GAAP income from operations $ 286,622 Corporate costs not allocated to segments ( 66,079 ) Stock-based compensation ( 149,251 ) Amortization of acquired intangibles ( 27,005 ) Payroll taxes related to stock-based compensation ( 4,921 ) Charitable contributions ( 2,237 ) Restructuring costs ( 140 ) Income from operations 36,989 Other expenses, net ( 3,397 ) Income before provision for income taxes $ 33,592 15 Table of Contents Three Months Ended June 30, 2024 Communications Segment Total (In thousands) Revenue $ 1,007,302 $ 75,200 $ 1,082,502 Cost of revenue attributable to segments 485,155 20,034 505,189 Operating expenses attributable to segments 272,217 70,981 343,198 Segment non-GAAP income (loss) from operations $ 249,930 $ ( 15,815 ) $ 234,115 Reconciliation of total segment non-GAAP income from operations to loss from operations: Total segment non-GAAP income from operations $ 234,115 Corporate costs not allocated to segments ( 58,796 ) Stock-based compensation ( 147,657 ) Amortization of acquired intangibles ( 28,184 ) Payroll taxes related to stock-based compensation ( 3,510 ) Charitable contributions ( 15,315 ) Restructuring costs 310 Loss from operations ( 19,037 ) Other expenses, net ( 7,206 ) Loss before provision for income taxes $ ( 26,243 ) Six Months Ended June 30, 2025 Communications Segment Total (In thousands) Revenue $ 2,249,762 $ 151,126 $ 2,400,888 Cost of revenue attributable to segments 1,136,925 39,059 1,175,984 Operating expenses attributable to segments 554,760 107,576 662,336 Segment non-GAAP income from operations $ 558,077 $ 4,491 $ 562,568 Reconciliation of total segment non-GAAP income from operations to income from operations: Total segment non-GAAP income from operations $ 562,568 Corporate costs not allocated to segments ( 128,617 ) Stock-based compensation ( 286,771 ) Amortization of acquired intangibles ( 54,144 ) Payroll taxes related to stock-based compensation ( 16,121 ) Charitable contributions ( 5,013 ) Restructuring costs ( 11,831 ) Income from operations 60,071 Other income, net 105 Income before provision for income taxes $ 60,176 16 Table of Contents Six Months Ended June 30, 2024 Communications Segment Total (In thousands) Revenue $ 1,979,308 $ 150,244 $ 2,129,552 Cost of revenue attributable to segments 949,455 36,825 986,280 Operating expenses attributable to segments 530,913 150,228 681,141 Segment non-GAAP income (loss) from operations $ 498,940 $ ( 36,809 ) $ 462,131 Reconciliation of total segment non-GAAP income from operations to income from operations: Total segment non-GAAP income from operations $ 462,131 Corporate costs not allocated to segments ( 127,202 ) Stock-based compensation ( 303,815 ) Amortization of acquired intangibles ( 57,123 ) Payroll taxes related to stock-based compensation ( 10,286 ) Charitable contributions ( 16,610 ) Restructuring costs ( 9,636 ) Loss from operations ( 62,541 ) Other expenses, net ( 8,863 ) Loss before provision for income taxes $ ( 71,404 ) 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 $ 18.5 million in the three months ended June 30, 2025 and 2024, respectively, and $ 33.4 million and $ 37.8 million in the six months ended June 30, 2025 and 2024, respectively. Amortization of deferred commissions included in non-GAAP income from operations for the Communications reportable segment was $ 15.1 million in each of the three months ended June 30, 2025 and 2024, respectively, and $ 30.4 million and $ 30.3 million in the six months ended June 30, 2025 and 2024, respectively. Depreciation and amortization expenses, except for amortization of acquired intangibles, that are included in non-GAAP income (loss) from operations for the Segment reportable segment were $ 5.2 million and $ 4.4 million in the three months ended June 30, 2025 and 2024, respectively, and $ 10.1 million and $ 8.5 million in the six months ended June 30, 2025 and 2024, respectively. Amortization of deferred commissions included in non-GAAP income (loss) from operations for the Segment reportable segment was $ 4.0 million and $ 3.8 million in the three months ended June 30, 2025 and 2024, respectively, and $ 8.0 million and $ 7.5 million in the six months ended June 30, 2025 and 2024, respectively. 6. Derivatives and Hedging As of June 30, 2025, the Company had outstanding foreign currency forward contracts designated as cash flow hedges with a total sell notional value of $ 308.8 million. The notional value represents the amount that will be sold upon maturity of the forward contract. As of June 30, 2025, these contracts had maturities of up to seventeen months. Gains and losses associated with these foreign currency forward contracts were not significant. The Company is subject to master netting agreements with certain counterparties of the foreign exchange contracts, under which it is permitted to net settle transactions of the same currency with a single net amount payable by one party to the other. It is the Company’s policy to present the derivatives at gross in its unaudited condensed consolidated balance sheets. The Company’s foreign currency forward contracts are not subject to any credit contingent features or collateral requirements. 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 June 30, 2025, the Company did not have any offsetting arrangements. 17 Table of Contents 7. Goodwill and Intangible Assets Goodwill As of June 30, 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 six months ended June 30, 2025. Intangible assets Intangible assets consist of the following: As of June 30, 2025 Cost Accumulated Amortization Net Amortizable intangible assets: (In thousands) Developed technology $ 388,341 $ ( 332,799 ) $ 55,542 Customer relationships 348,314 ( 237,851 ) 110,463 Supplier relationships 49,756 ( 39,903 ) 9,853 Trade names 25,968 ( 25,554 ) 414 Patent 3,968 ( 1,195 ) 2,773 Total amortizable intangible assets 816,347 ( 637,302 ) 179,045 Non-amortizable intangible assets: Telecommunication licenses 4,920 — 4,920 Trademarks and other 295 — 295 Total $ 821,562 $ ( 637,302 ) $ 184,260 As of December 31, 2024 Cost Accumulated Amortization Net Amortizable intangible assets: (In thousands) Developed technology $ 388,341 $ ( 306,063 ) $ 82,278 Customer relationships 348,314 ( 215,523 ) 132,791 Supplier relationships 49,756 ( 35,363 ) 14,393 Trade names 25,968 ( 25,014 ) 954 Patent 3,968 ( 1,096 ) 2,872 Total amortizable intangible assets 816,347 ( 583,059 ) 233,288 Non-amortizable intangible assets: Telecommunication licenses 4,920 — 4,920 Trademarks and other 295 — 295 Total $ 821,562 $ ( 583,059 ) $ 238,503 Amortization expense was $ 27.1 million and $ 28.2 million for the three months ended June 30, 2025 and 2024, respectively, and $ 54.2 million and $ 57.2 million for the six months ended June 30, 2025 and 2024, respectively. 18 Table of Contents Total estimated future amortization expense is as follows: As of June 30, 2025 Year Ended December 31, (In thousands) 2025 (remaining six months) $ 53,619 2026 42,149 2027 25,330 2028 19,055 2029 14,970 Thereafter 23,922 Total $ 179,045 8. Balance Sheet Components Prepaid expenses and other current assets consist of the following: As of June 30, As of December 31, 2025 2024 (In thousands) Prepaid expenses $ 262,421 $ 333,911 Other current assets 138,650 140,449 Total prepaid expenses and other current assets $ 401,071 $ 474,360 Accrued expenses and other current liabilities consist of the following: As of June 30, As of December 31, 2025 2024 (In thousands) Accrued payroll and related liabilities $ 72,170 $ 76,708 Company-wide bonus program liability 54,357 109,776 Accrued sales bonus and commissions 20,431 21,585 Accrued cost of revenue 194,775 173,739 Sales and other taxes payable 68,681 79,731 ESPP contributions 5,210 5,745 Accrued other expense 45,903 63,402 Total accrued expenses and other current liabilities $ 461,527 $ 530,686 19 Table of Contents 9. Long-Term Debt Long-term debt, net, consists of the following: As of June 30, As of December 31, 2025 2024 (In thousands) 2029 Senior Notes Principal $ 500,000 $ 500,000 Unamortized discount ( 3,130 ) ( 3,518 ) Unamortized issuance costs ( 704 ) ( 792 ) Net carrying amount 496,166 495,690 2031 Senior Notes Principal 500,000 500,000 Unamortized discount ( 3,867 ) ( 4,166 ) Unamortized issuance costs ( 870 ) ( 937 ) Net carrying amount 495,263 494,897 Total long-term debt, net $ 991,429 $ 990,587 As of June 30, 2025, the Company was in compliance with all of its covenants under the related indentures. 10. Revenue by Geographic Area Revenue by geographic area is based on the IP address or the mailing address of the customer at the time of registration. The following table sets forth revenue by geographic area: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Revenue by geographic area: (In thousands) United States $ 786,974 $ 706,451 $ 1,536,414 $ 1,392,978 International 441,451 376,051 864,474 736,574 Total $ 1,228,425 $ 1,082,502 $ 2,400,888 $ 2,129,552 Percentage of revenue by geographic area: United States 64 % 65 % 64 % 65 % International 36 % 35 % 36 % 35 % 11. Commitments and Contingencies (a) Lease and Other Commitments The Company leases its facilities under various non-cancelable operating lease agreements. In the three and six months ended June 30, 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 six months ended June 30, 2025, the Company entered into several new agreements with terms up to three years for a total purchase commitment of $ 21.7 million and $ 40.0 million, respectively. 20 Table of Contents (b) Legal Matters From time to time, the Company may be subject to legal actions, claims, and government investigations or inquiries arising in the ordinary course of business. These matters may include, but are not limited to, matters involving privacy, data protection, data security, intellectual property, competition, telecommunications, consumer protection, taxation, securities, employment and contractual rights. 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 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. Legal fees and other costs related to litigation and other legal proceedings are expensed as incurred and are included in general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations. (c) Indemnification Agreements In the ordinary course of business and in connection with its financing and business combination transactions, the Company enters into contractual arrangements under which it agrees to provide indemnification of varying scope and terms to business partners, customers and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, intellectual property infringement claims made by third parties and other liabilities relating to or arising from the Company’s products or its acts or omissions. 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 June 30, 2025, and December 31, 2024, no amounts were accrued related to any outstanding indemnification agreements. (d) Other Taxes 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 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 June 30, 2025, the liabilities accrued for non-income-based taxes were $ 20.3 million for domestic jurisdictions and $ 23.2 million for jurisdictions outside of the United States. As of December 31, 2024, these liabilities were $ 19.3 million and $ 22.0 million, respectively. 12. Stockholders' Equity Preferred Stock As of June 30, 2025, and December 31, 2024, the Company had authorized 100,000,000 shares of preferred stock, par value $ 0.001 per share, of which no shares were issued and outstanding in either period. 21 Table of Contents Common Stock As of June 30, 2025 and December 31, 2024, the Company had authorized 1,000,000,000 shares of Class A common stock, par value $ 0.001 per share. As of June 30, 2025 and December 31, 2024, the Company had authorized 0 and 3,170,181 shares of Class B common stock, par value $ 0.001 per share, respectively. As of June 30, 2025 and December 31, 2024, 153,576,158 and 152,610,697 shares of Class A common stock were issued and outstanding, 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 June 30, As of December 31, 2025 2024 Stock options issued and outstanding 964,952 1,322,176 Unvested restricted stock units issued and outstanding 17,300,882 18,386,271 Shares of Class A common stock reserved for Twilio.org 309,429 353,633 Stock-based awards available for grant under 2016 Plan 28,518,814 23,292,678 Shares of Class A common stock reserved for issuance pursuant to ESPP 10,982,134 9,709,326 Total 58,076,211 53,064,084 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. The program expires on December 31, 2027. The Company’s previous share repurchase authorizations expired on December 31, 2024. In the three months ended June 30, 2025 and 2024, the Company repurchased 1.8 million and 15.2 million shares of its Class A common stock, respectively, for an aggregate purchase price of $ 176.7 million and $ 898.6 million, respectively. In the six months ended June 30, 2025 and 2024, the Company repurchased 3.0 million and 21.4 million shares of its Class A common stock, respectively, for an aggregate purchase price of $ 306.9 million and $ 1.3 billion, respectively. As of June 30, 2025, approximately $ 1.7 billion of the amount originally authorized for share repurchases in January 2025 remained available for future repurchases. 13. Stock-Based Compensation 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 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. For this portion, the expense is recognized on a straight-line basis when 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 periods 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. 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. 22 Table of Contents As of June 30, 2025, total unrecognized compensation cost related to unvested restricted stock units (“RSUs”) was $ 1.3 billion, which will be amortized over a weighted-average period of 2.4 years. As of June 30, 2025, total unrecognized compensation cost related to unvested stock options and the ESPP was not significant. Stock-Based Compensation Expense The Company recorded total stock-based compensation expense as follows: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 (In thousands) Cost of revenue $ 4,087 $ 5,503 $ 8,358 $ 11,394 Research and development 80,590 80,790 158,656 164,351 Sales and marketing 34,413 33,449 65,772 68,315 General and administrative 30,161 27,915 55,738 62,203 Total $ 149,251 $ 147,657 $ 288,524 $ 306,263 14. 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, and shares partially paid for under ESPP, using the treasury stock method as well as PSUs using 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 June 30, Six Months Ended June 30, 2025 2024 2025 2024 Numerator: Net income (loss) attributable to common stockholders (in thousands) $ 22,423 $ ( 31,858 ) $ 42,440 $ ( 87,207 ) Denominator: Weighted-average shares outstanding, basic 153,228,766 170,222,104 153,273,594 175,613,672 Dilutive effect of outstanding stock options, RSUs, PSUs and stock committed under ESPP 6,462,992 — 7,456,044 — Weighted-average shares outstanding, diluted 159,691,758 170,222,104 160,729,638 175,613,672 Net income (loss) per share attributable to common stockholders: Basic $ 0.15 $ ( 0.19 ) $ 0.28 $ ( 0.50 ) Diluted $ 0.14 $ ( 0.19 ) $ 0.26 $ ( 0.50 ) 23 Table of Contents 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: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Stock options issued and outstanding 414,972 1,529,641 145,350 1,529,641 Unvested restricted stock units issued and outstanding (1) 4,458,044 22,542,340 4,261,767 22,542,340 Shares of Class A common stock reserved for Twilio.org — 397,837 — 397,837 Shares of Class A common stock committed under ESPP 148,220 251,810 148,220 251,810 Shares of Class A common stock in escrow subject to future vesting — 3,771 — 3,771 Total 5,021,236 24,725,399 4,555,337 24,725,399 ____________________________________ (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. 15. Income Taxes 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 and six months ended June 30, 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 and six months ended June 30, 2024 also includes income tax expense from a foreign audit settlement. The Company is subject to taxation in the U.S. and various other state and foreign jurisdictions. Because the Company has net operating loss carryforwards for U.S. federal and state jurisdictions, the statute of limitations is open for all tax years. On July 4, 2025, the United States enacted tax reform legislation through the One Big Beautiful Bill Act. Included in this legislation are provisions that restore the immediate expensing of certain domestic research and development expenses, reinstate immediate expensing of certain capital expenditures, and make other changes to the U.S. taxation of profits derived from foreign operations. The Company is currently assessing the impact of the legislation on its future consolidated financial statements. 16. Related Party Transactions 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 six months ended June 30, 2025, the value of the transactions that occurred between the Company and Syniverse were $ 30.3 million and $ 69.0 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. These transactions were recorded as cost of revenue in the accompanying unaudited condensed consolidated statements of operations. 24 Table of Contents Special Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “can,” “will,” “would,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “forecasts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about: • 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, operating expenses, and stock-based compensation, our ability to generate positive cash flow and our ability to achieve, improve and sustain profitability; • our expectations regarding the factors affecting our results of operations, the timing of future expenses, and the assumptions underlying such expectations; • 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 durable, profitable growth and increase our market share, including through product innovation, leveraging artificial intelligence, forming and enhancing relationships 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; • our ability to maintain reliable service levels for our customers; • our ability to maintain, protect and enhance our intellectual property; • the impact of, and our ability to comply with, modified or new industry standards, laws and regulations applying to our business, including legislative developments that may affect our tax obligations or tax expense; • our expectations regarding changes in network service provider fees that we pay in connection with the delivery of communications on our platform, including A2P messaging fees, our ability to manage such fees and their impact on our financial results; 25 Table of Contents • investments and costs required to prevent, detect and remediate potential cybersecurity threats, incidents and breaches of ours or our customers’ systems or information; • our ability to optimize our network service provider coverage and connectivity; • our ability to work closely with email inbox service providers to maintain deliverability rates; • the impact and expected results from changes in our relationships with our larger customers; • the sufficiency of our cash and cash equivalents to meet our liquidity needs; • 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; • our customers’ and other platform users’ violation of our policies or other misuse of our platform; and • our ability to successfully integrate acquired businesses and realize the benefits of our past or future strategic acquisitions, divestitures or investments. We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q. You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, results of operations and financial condition. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described below in Part II, Item 1A, “Risk Factors,” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.