What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-02-24 compared with 2025-02-26 · 279 added, 379 removed, 1022 unchanged (39% of the section changed)

4 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Comprehensive Income ( Loss )

Consolidated Statements of Stockholders' Equity

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We have audited the accompanying consolidated balance sheets of Twilio Inc.

and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

28 unchanged sentences

As discussed in Note 2(e) to the consolidated financial statements, the Company's revenue is derived from usage and non-usage-based fees earned from customers accessing the Company's cloud-based platform.

As of December 31, 2024, the Company recorded $4.5 billion in revenues, a portion of which related to Programmable Messaging and Programmable Voice APIs.

As of December 31, 2025, the Company recorded $5.1 billion in revenues, a portion of which related to Messaging and Voice APIs.

The Company’s revenue recognition process is highly automated, and revenue is recorded within the Company’s general ledger through reliance on customized and proprietary information technology (IT) systems.

We identified the evaluation of the sufficiency of audit evidence over revenue recognition related to the Company’s Programmable Messaging and Programmable Voice APIs as a critical audit matter.

We identified the evaluation of the sufficiency of audit evidence over revenue recognition related to the Company’s Messaging and Voice APIs as a critical audit matter.

This matter required especially subjective auditor judgment because of the large number of information technology (IT) applications involved in the revenue recognition process.

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We applied auditor judgment to determine the nature and extent of procedures to be performed over revenue recognition.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s Programmable Messaging and Programmable Voice revenue recognition process.

We involved IT professionals with specialized skills and knowledge, who assisted in testing controls related to the Company’s general information technology and application controls related to the systems utilized within the Company’s Programmable Messaging and Programmable Voice revenue recognition process.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s Messaging and Voice revenue recognition process.

For a sample of customer agreements, we compared the pricing reflected in the Company’s revenue IT system to the contractually agreed upon pricing with the customer.

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Additional paid-in capital 16,148,190 15,476,124

Accumulated other comprehensive (loss) income ( 1,301 ) 619

Accumulated other comprehensive income (loss)

15,668 ( 1,301 )

Accumulated deficit ( 8,342,464 ) ( 7,522,010 )

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Total operating expenses 2,320,932 2,331,920 2,920,471

Loss from operations ( 53,708 ) ( 876,541 ) ( 1,205,308 )

Income (loss) from operations 157,802 ( 53,708 ) ( 876,541 )

Other expenses, net:

Share of losses from equity method investment ( 101,217 ) ( 108,481 ) ( 121,897 )

Impairment of equity method investment ( 80,629 ) — —

Impairment of strategic investments — ( 8,220 ) ( 46,154 )

Other income (expenses), net 81,796 47,863 ( 3,009 )

Other income, net 79,138 81,796 47,863

Total other expenses, net

Loss before provision for income taxes ( 88,613 ) ( 996,729 ) ( 1,243,632 )

( 102,708 ) ( 34,905 ) ( 120,188 )

Income (loss) before provision for income taxes 55,094 ( 88,613 ) ( 996,729 )

Provision for income taxes ( 21,260 ) ( 20,790 ) ( 18,712 )

Net loss attributable to common stockholders $ ( 109,403 ) $ ( 1,015,441 ) $ ( 1,256,145 )

Net loss per share attributable to common stockholders, basic and diluted $ ( 0.66 ) $ ( 5.54 ) $ ( 6.86 )

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted 165,925,128 183,327,844 182,994,038

Net income (loss) attributable to common stockholders $ 33,834 $ ( 109,403 ) $ ( 1,015,441 )

Net income (loss) per share attributable to common

stockholders:

Basic $ 0.22 $ ( 0.66 ) $ ( 5.54 )

Diluted $ 0.21 $ ( 0.66 ) $ ( 5.54 )

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

Basic 152,986,390 165,925,128 183,327,844

Diluted 159,788,944 165,925,128 183,327,844

See accompanying notes to consolidated financial statements.

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Comprehensive Income (Loss)

Year Ended December 31,

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(In thousands)

Net loss $ ( 109,403 ) $ ( 1,015,441 ) $ ( 1,256,145 )

Other comprehensive (loss) income:

Unrealized gain (loss) on marketable securities

Net income (loss) $ 33,834 $ ( 109,403 ) $ ( 1,015,441 )

Other comprehensive income (loss):

Unrealized gain on marketable securities

5,273 7,332 99,742

Foreign currency translation — — 5,587

Net change in market value of effective foreign currency

forward exchange contracts ( 9,986 ) 898 556

Share of other comprehensive income (loss) from equity method

Net change in market value of effective foreign currency forward exchange contracts 14,043 ( 9,986 ) 898

Share of other comprehensive (loss) income from equity method

( 2,347 ) 734 15,553

Total other comprehensive (loss) income

Total other comprehensive income (loss)

16,969 ( 1,920 ) 121,780

Comprehensive loss attributable to common stockholders $ ( 111,323 ) $ ( 893,661 ) $ ( 1,359,165 )

Comprehensive income (loss) attributable to common stockholders $ 50,803 $ ( 111,323 ) $ ( 893,661 )

See accompanying notes to consolidated financial statements.

Consolidated Statements of Stockholders’ Equity

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

Accumulated Deficit Total Stockholders' Equity

Class A Additional Paid-In Capital Accumulated Other Comprehensive (Loss) Income Accumulated Deficit Total Stockholders' Equity

Shares Amount

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

Net loss — — — — ( 109,403 ) ( 109,403 )

— — — — 33,834 33,834

Exercises of vested stock options 420,056 — 6,248 — — 6,248

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Unrealized gain on marketable securities — — — 5,273 — 5,273

— — — 7,332 — 7,332

Repurchases of shares of Class A common stock including related costs ( 8,048,649 ) ( 9 ) — — ( 854,288 ) ( 854,297 )

( 36,848,645 ) ( 36 ) — — ( 2,346,635 ) ( 2,346,671 )

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

Shares issued under ESPP 398,494 — 35,115 — — 35,115

Net change in market value of effective foreign currency forward exchange contracts — — — 14,043 — 14,043

Share of other comprehensive income from equity method investment

Share of other comprehensive loss from equity method investment

— — — ( 2,347 ) — ( 2,347 )

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Consolidated Statements of Stockholders’ Equity

Class A Common Stock

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

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

Accumulated Deficit Total Stockholders' Equity

Shares Amount Shares Amount

Shares Amount

(In thousands, except share amounts)

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Value of equity awards withheld for tax liability ( 28,006 ) — ( 2,000 ) — — ( 2,000 )

Conversion of shares of Class B common stock into shares of Class A common stock 9,745,587 12 ( 9,745,587 ) ( 12 ) — — — —

Shares of Class A common stock issued and donated to charity 88,408 — 5,907 — — 5,907

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Repurchases of shares of Class A common stock including related costs ( 36,848,645 ) ( 36 ) — — ( 2,346,635 ) ( 2,346,671 )

( 11,292,516 ) ( 11 ) — — — — ( 674,695 ) ( 674,706 )

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

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

Shares issued under ESPP 632,375 — 33,045 — — 33,045

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Share of other comprehensive income from equity method investment — — — 734 — 734

— — — — — 15,553 — 15,553

Stock-based compensation — — 634,129 — — 634,129

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Class A Common Stock

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

Accumulated Deficit Total Stockholders' Equity

Class B Additional Paid-In Capital Accumulated Other Comprehensive (Loss) Income Accumulated Deficit Total Stockholders' Equity

Shares Amount Shares Amount

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Shares of Class A common stock issued and donated to charity 88,408 — — — 5,346 — — 5,346

Unrealized loss on marketable securities — — — — — ( 83,049 ) — ( 83,049 )

Unrealized gain on marketable securities — — — — — 99,742 — 99,742

Repurchases of shares of Class A common stock including related costs ( 11,292,516 ) ( 11 ) — — — — ( 674,695 ) ( 674,706 )

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

Shares returned from escrow ( 152,239 ) — — — ( 387 ) — — ( 387 )

Shares issued under ESPP 906,728 — — — 36,496 — — 36,496

Net change in market value of effective foreign currency forward exchange contracts — — — — — 898 — 898

Share of other comprehensive loss from equity method investment — — — — — ( 14,940 ) — ( 14,940 )

Share of other comprehensive income from equity method investment — — — — — 15,553 — 15,553

Stock-based compensation — — — — 682,241 — — 682,241

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(In thousands)

Net loss $ ( 109,403 ) $ ( 1,015,441 ) $ ( 1,256,145 )

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

Net income (loss) $ 33,834 $ ( 109,403 ) $ ( 1,015,441 )

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

Depreciation and amortization 195,444 205,984 284,413

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Impairment of long-lived assets 1,849 — 320,504

Stock-based compensation including restructuring 616,607 675,857 798,560

Stock-based compensation 600,407 616,607 675,857

Amortization of deferred commissions 74,533 76,348 72,892

Realized and unrealized losses on equity securities 1,681 8,043 —

Realized and unrealized (gains) losses on equity securities ( 1,016 ) 1,681 8,043

Provision for doubtful accounts 8,230 35,393 51,859

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Share of losses from equity method investment 101,217 108,481 121,897

Impairment of equity method investment 80,629 — —

Impairment of strategic investments — 8,220 46,154

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Other long-term liabilities ( 1,275 ) ( 2,034 ) 3,474

Net cash provided by (used in) operating activities 716,241 414,752 ( 254,368 )

Net cash provided by operating activities

1,003,244 716,241 414,752

CASH FLOWS FROM INVESTING ACTIVITIES:

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Purchases of marketable securities and other investments ( 1,050,858 ) ( 923,863 ) ( 1,953,003 )

Proceeds from sales and maturities of marketable securities 2,353,486 2,200,417 1,439,477

Proceeds from sales and maturities of marketable securities and other investments 1,251,119 2,353,486 2,200,417

Capitalized software development costs ( 51,969 ) ( 51,808 ) ( 39,925 )

Purchases of long-lived and intangible assets ( 5,848 ) ( 6,978 ) ( 11,310 )

Net cash provided by (used in) investing activities 1,370,837 228,603 ( 616,452 )

Net cash provided by investing activities

80,948 1,370,837 228,603

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments of costs related to public offerings — — ( 35 )

Principal payments on finance leases ( 5,306 ) ( 12,558 ) ( 16,134 )

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Proceeds from exercises of stock options and shares of Class A common stock issued under ESPP 41,363 37,386 43,840

Net cash (used in) provided by financing activities ( 2,311,572 ) ( 643,610 ) 45,007

Net cash used in financing activities

( 833,095 ) ( 2,311,572 ) ( 643,610 )

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

NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 224,494 ) ( 147 ) ( 825,753 )

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

251,097 ( 224,494 ) ( 147 )

CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period 431,437 655,931 656,078

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

fair values of acquired intangible assets and goodwill;

fair values of acquired intangible assets, goodwill and equity method investments;

accruals and contingencies.

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The Company recognizes revenue from its products on either a usage basis or a subscription basis, depending on the nature of the product and the type of customer contract.

The Company’s reportable segments may contain products that follow either revenue recognition model.

The majority of the revenue in the Communications segment is derived from usage‑based fees.

The majority of the Company’s revenue is derived from usage‑based fees.

These fees are earned when customers access the Company’s cloud-based platform and start using the Company’s products.

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In the years ended December 31, 2025, 2024 and 2023, the revenue from usage-based fees represented 74 %, 72 %, and 71 % of total revenue, respectively.

Subscription-based fees are derived from various products in both the Communications and Segment segments.

Subscription-based products include products such as Segment, Flex, Email and others.

Subscription-based fees are derived from various products such as Segment, Email and others.

Subscription-based contracts revenue is recognized on a ratable basis over the contractual term which is generally between one to three years .

In the years ended December 31, 2025, 2024 and 2023, the revenue from non-usage-based fees represented 26 %, 28 %, and 29 % of total revenue, respectively.

When usage-based products are embedded into subscription-based products, the Company charges for each product separately and records the respective revenue into the reportable segment in which each product resides.

When our usage-based products are embedded into our subscription-based products, or when multiple products

are purchased together as a solution, we charge for each product separately on a usage or a subscription basis, as applicable.

No significant judgments are required in determining whether products and services are considered distinct performance obligations and should be accounted for separately versus together, or to determine the stand-alone selling price.

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The contracts do not provide customers with the right to take possession of the software supporting the applications.

Amounts that have been invoiced are recorded in accounts receivable and in revenue or deferred revenue depending on whether the revenue recognition criteria have been met.

Amounts that have been charged via credit card or invoiced are recorded in accounts receivable and in revenue or deferred revenue depending on whether the revenue recognition criteria have been met.

The Company defines U.S.

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As of December 31, 2025 and 2024, the Company recorded $ 158.7 million and $ 155.7 million as its deferred revenue and customer deposits, respectively, that are included in deferred revenue and customer deposits in the accompanying consolidated balance sheets.

During the years ended December 31, 2024, 2023 and 2022, the Company recognized $ 120.7 million, $ 120.5 million, and $ 124.9 million of revenue, respectively, that was included in the deferred revenue and customer deposits balance as of the end of the previous year.

During the years ended December 31, 2025, 2024 and 2023, the Company recognized $ 134.1 million, $ 120.7 million, and $ 120.5 million of revenue, respectively, that was included in its deferred revenue and customer deposits balances as of the end of the previous year.

(g) Deferred Sales Commissions

The Company records an asset for the incremental costs of obtaining a contract with a customer, for example, sales commissions that are earned upon execution of contracts.

The Company records an asset for the incremental costs of obtaining a contract with a customer, such as sales commissions, that are earned upon execution of contracts.

The Company uses the portfolio of data method to determine the estimated period of benefit of capitalized commissions which is generally determined to be up to five years .

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Cost of revenue also includes cloud infrastructure fees, direct costs of personnel, such as salaries and stock‑based compensation for customer support employees, and other non‑personnel costs, such as depreciation and amortization expense related to data centers and hosting equipment, amortization of capitalized internal-use software development costs and acquired intangible assets.

Costs of revenue are generally directly attributable to each segment.

Certain costs of revenue are allocated to segments based on methodologies that best reflect the patterns of consumptions of these costs.

(i) Research and Development Expense

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The Company capitalizes the portion of its software development costs that meets the criteria for capitalization.

Research and development expenses are generally directly attributable to each segment.

Certain research and development expenses are allocated to segments based on methodologies that best reflect the patterns of consumptions of these costs.

Certain research and development costs are not allocated to segments because they support company-wide processes and are managed on a company-wide level.

(j) Internal-Use Software Development Costs

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These costs are amortized over the estimated useful life of the software on a straight-line basis over three years .

Management evaluates the useful life of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

Management periodically evaluates the useful life of these assets and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

The amortization of costs related to the platform applications is included in cost of revenue, while the amortization of costs related to software applications developed for internal use is included in operating expenses.

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(m) Stock-Based Compensation

All stock-based compensation to employees is measured on the grant date based on the fair value of the awards on the date of grant.

These costs are recognized as an expense following straight-line attribution method over the requisite service period.

All stock-based compensation to employees is measured on the grant date based on the fair value of the awards on that date.

These costs are recognized in expense following a straight-line attribution method over the requisite service period.

For performance-based restricted stock units (“PSUs”) with operational performance targets, the grant date fair value is the closing price of the Company’s Class A common stock on the date of grant.

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• Expected term.

The expected term represents the period that the stock option or the purchase right is expected to be outstanding.

The Company uses the simplified calculation of expected term, which reflects the weighted-average time-to-vest and the contractual life of the stock option or the purchase right;

The expected term represents the period over which the stock option or the purchase right is expected to be outstanding.

The Company uses a simplified calculation for the expected term, which reflects the weighted-average time-to-vest and the contractual life of the stock option or the purchase right;

• Expected volatility.

The expected volatility is derived from the average of the historical volatilities of the Class A common stock of the Company.

The expected volatility is derived from the average of the historical volatilities of the Company’s Class A common stock.

• Risk -free interest rate.

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Revenue and expense accounts are remeasured at the average exchange rate in effect during the month in which the transactions occur.

Remeasurement adjustments are recognized in the consolidated statements of operations as other income (expense), net, in the year of occurrence.

Foreign currency transaction gains and losses are included in other income (expenses), net, in the accompanying consolidated statements of operations.

Remeasurement adjustments are recognized in the consolidated statements of operations as other income, net, in the year of occurrence.

Foreign currency transaction gains and losses are included in other income, net, in the accompanying consolidated statements of operations.

For those entities where the functional currency is a foreign currency, adjustments resulting from translating the financial statements into U.S.

dollars are recorded as a component of accumulated other comprehensive (loss) income as part of the total stockholders' equity.

dollars are recorded as a component of accumulated other comprehensive income (loss) as part of the total stockholders' equity.

Monetary assets and liabilities denominated in a foreign currency are translated into U.S.

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Equity transactions are translated using historical exchange rates.

(p) Comprehensive Loss

Comprehensive loss refers to net loss and other revenue, expenses, gains and losses that, under U.S.

GAAP, are recorded as an element of stockholders' equity but are excluded from the calculation of net loss.

(q) Net Loss Per Share Attributable to Common Stockholders

The Company calculates its basic and diluted net loss per share attributable to common stockholders in conformity with the two-class method required for companies with participating securities.

(p) Comprehensive Income (Loss)

Comprehensive income (loss) refers to net income (loss) and other revenue, expenses, gains and losses that, under U.S.

GAAP, are recorded as an element of stockholders' equity but are excluded from the calculation of net income (loss).

(q) Net Income (Loss) Per Share Attributable to Common Stockholders

The Company computes net income (loss) per share in accordance with Accounting Standards Codification (“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;

the contingently issuable shares guidance is applied to PSUs.

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

The Company calculates its basic and diluted net income (loss) per share attributable to common stockholders in conformity with the two-class method required for companies with participating securities.

The Company has 100,000,000 shares of preferred stock that are authorized but none are issued or outstanding.

1 unchanged sentence

Each share of Class A common stock is entitled to one vote per share.

Prior to June 28, 2023, the Company had outstanding equity securities of Class B common stock.

Prior to June 28, 2023, the Company’s outstanding equity securities included its Class B common stock.

On June 28, 2023, each outstanding share of the Company’s Class B common stock automatically converted (the “Conversion”) into one share of the Company’s Class A common stock pursuant to the terms of the Company’s certificate of incorporation.

In addition, upon the Conversion, all outstanding stock options that were exercisable for shares of Class B common stock prior to the Conversion became exercisable for shares of Class A common stock.

In addition, upon the Conversion, all outstanding stock options that were exercisable for shares of Class B common stock prior to the

Conversion became exercisable for shares of Class A common stock.

The Company retired all of the shares of its Class B common stock that were issued but not outstanding following the Conversion.

The Company also has dilutive securities, such as potential or restricted common shares or common stock equivalents, that were excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect was antidilutive in all periods presented.

These securities are presented in Note 20 to these consolidated financial statements.

(r) Cash and Cash Equivalents

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Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

Operating lease ROU assets and

lease liabilities are measured and recognized at the lease commencement date based on the present value of the remaining lease payments over the lease term.

Operating lease ROU assets and lease liabilities are measured and recognized at the lease commencement date based on the present value of the remaining lease payments over the lease term.

As the Company’s leases do not generally provide an implicit rate, the Company uses its incremental borrowing rate based on the information available on the commencement date to determine the present value of lease payments.

1 unchanged sentence

When estimating the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain such options will be exercised.

Operating lease costs are recognized in operating expenses in the accompanying consolidated statements of operations on a straight-line basis over the lease term and variable payments are recognized in the period they are incurred.

Operating lease costs are recognized in operating expenses in the accompanying consolidated statements of operations on a straight-line basis over the lease term and variable payments are

recognized in the period they are incurred.

The Company’s lease agreements do not contain any residual value guarantees.

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Profits or losses related to intra-entity sales are eliminated until realized by the Company or the investee.

The Company determines the difference between its purchase price and its proportionate share of the net assets of the investee, which results in an excess basis in the investment.

This excess basis is allocated to the identifiable assets and liabilities of the investee utilizing purchase accounting principles and is used to calculate the amortization of basis differences every reporting period.

Basis differences related to intangible assets with determinable economic lives and liabilities are generally amortized on a straight-line basis over the useful lives of the associated assets and the expected term for the liabilities.

The Company determines the difference between its purchase price and its proportionate share of the net assets of the investee, which constitutes its excess basis in the investment.

This excess basis is allocated to the identifiable assets and liabilities of the investee utilizing purchase accounting principles and is used to calculate the amortizable basis difference and the equity method goodwill.

Basis differences attributed to intangible assets with determinable economic lives and liabilities are generally amortized on a straight-line basis over the useful lives of the associated assets and the expected term for the liabilities.

Basis differences related to intangible assets without determinable economic lives are not amortized.

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If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in the period of such determination.

When an impairment loss is recorded in the period, the Company allocates such loss to its overall basis difference in the following order:

(a) reducing the equity method goodwill to zero, then (b) reducing the individual basis differences attributable to long-lived assets proportionately based on their amounts relative to the overall basis difference on the impairment date.

(w) Segment Information

The Company determines its operating and reportable segments in accordance with Accounting Standards Codification 280 Segment Reporting (“ASC 280”), which requires financial information to be reported based on how the chief operating decision maker (“CODM”), who is the Company's Chief Executive Officer (“CEO”), reviews and manages the business, and establishes criteria for aggregating operating segments into reportable segments.

The Company operates in and reports its results in two reportable segments.

The Company determines its operating and reportable segments in accordance with ASC 280 Segment Reporting , which requires financial information to be reported based on how the chief operating decision maker (“CODM”), who is the Company's Chief Executive Officer (“CEO”), reviews and manages the business, and establishes criteria for aggregating operating segments into reportable segments.

The Company operates in and reports its results in a single operating and reportable segment.

(x) Business Combinations

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Goodwill is not amortized and is tested for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

Goodwill is allocated within the operating segments of the Company to the reporting units.

Prior to 2023, the Company had one reporting unit.

During 2023, as a result of restructuring activities, the Company shifted to a multiple reporting unit structure.

The Company reassigned its assets and liabilities to the reporting units based on which reporting units’ operations the assets and liabilities were employed in or were related to.

Goodwill was reassigned using a relative fair value allocation approach.

The Company historically evaluated goodwill for impairment annually as of November 30 or when an indicator of impairment existed.

During the year ended December 31, 2024, the Company voluntarily changed the date of the annual goodwill impairment assessment for all of its reporting units from November 30 to October 1 and, therefore, evaluated goodwill for impairment on October 1, 2024.

This voluntary change in the annual goodwill assessment date is a change in accounting principle, which the Company believes is preferable as it provides the Company additional time to complete the annual assessment in advance of its year-end reporting, especially in periods when complex fair value measurement is required.

This change in the annual assessment date does not delay, accelerate or avoid an impairment charge.

This change was not applied retrospectively as it was impracticable to do so because retrospective application would require application of significant estimates and assumptions with the use of hindsight.

Accordingly, the change has been applied prospectively.

This change in the assessment date is not a material change to the Company’s financial statements.

The Company has internal controls in place to identify any triggering events subsequent to this assessment date.

The Company operates as one reporting unit and has selected October 1 as the date of its annual impairment test.

The Company has the option to first perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

However, the Company may elect to bypass the qualitative assessment and proceed directly to the quantitative impairment tests.

The impairment test involves comparing the fair value of a reporting unit to its carrying amount, including goodwill.

In the valuation of goodwill, management must make assumptions regarding estimated future cash flows to be derived from the reporting unit.

Changes in these estimates or assumptions in future periods may result in the recognition of an impairment in the affected period.

Goodwill impairment is calculated as the amount by which the reporting unit’s carrying amount exceeds its fair value, and is limited to the carrying amount of goodwill.

(z) Intangible Assets

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In the valuation of an asset or an asset group, management must make assumptions regarding estimated future revenue and cash flows to be derived from the respective asset or asset group, discount rates used and other assumptions.

If these estimates or their related assumptions change in the future, the Company may be required to record impairment of these assets.

Changes in these estimates or their related assumptions in future periods may result in the recognition of an impairment of an asset or an asset group in the affected period..

(ab) Derivatives and Hedging

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All marketable securities are considered to be available-for-sale and recorded at their estimated fair values.

Unrealized gains and losses for available-for-sale securities are recorded in other comprehensive loss.

In valuing these items, the Company uses inputs and assumptions that market participants would use to determine their fair value, utilizing valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

Unrealized gains and losses for available-for-sale securities are recorded in other comprehensive income (loss).

In valuing these

items, the Company uses inputs and assumptions that market participants would use to determine their fair value, utilizing valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

The fair values of the senior notes due 2029 and 2031 (“2029 Notes” and “2031 Notes,” respectively) are determined based on their respective closing prices on the last trading day of the reporting period.

These financial liabilities are not measured at fair value on a recurring basis.

The carrying value of the strategic investments, which consist of restricted equity securities of a publicly held company and equity securities of privately held companies, is determined under the measurement alternative on a non-recurring basis adjusting for observable changes in fair value or impairment.

The carrying values of the strategic investments, which consist of restricted equity securities of a publicly held company and equity securities of privately held companies, are determined under the measurement alternative on a non-recurring basis adjusting for observable changes in fair value or impairment.

The Company does not have a controlling interest nor can it exercise significant influence over any of these entities.

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Impairments are considered to be other than temporary if they are related to deterioration in credit risk or if it is likely that the security will be sold before the recovery of its cost basis.

Realized gains and losses and declines in value deemed to be other than temporary are determined based on the specific identification method and are reported in other (income) expenses, net.

Realized gains and losses and declines in value deemed to be other than temporary are determined based on the specific identification method and are reported in other income, net in the accompanying consolidated statements of operations.

(ae) Recently Adopted Accounting Guidance

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 adopted ASU 2023-07 in the fourth quarter of 2024.

The adoption required certain additional disclosure that the Company made in Note 8 to these consolidated financial statements.

(af) Recently Issued Accounting Guidance, Not yet Adopted

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

In December 2023, the Financial Accounting Standards Board (“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 periods beginning after December 15, 2024, and may be applied on a prospective basis.

The Company adopted ASU 2023-09 on a prospective basis in 2025.

Prior periods were not restated to conform to the new presentation.

(af) Recently Issued Accounting Guidance, Not yet Adopted

In September 2025, the FASB issued ASU 2025-06, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software,” which modernizes the accounting for internal-use software by replacing the previous stage-based model and aligning the capitalization process with current development practices, especially agile and iterative methods.

ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and may be applied prospectively, retrospectively, or using a modified transition approach.

Early adoption is permitted.

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

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

The Company is in process of evaluating the impact of the adoption of this ASU on its consolidated financial statements.

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

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Commercial paper 37,517 — — — — 37,517 — 37,517

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

Total included in cash

3 unchanged sentences

Treasury securities 249,396 1,190 ( 9 ) — 250,577 — — 250,577

government securities

2,909 27 — — 2,936 — — 2,936

Corporate debt securities and commercial paper 1,523,935 9,360 ( 84 ) ( 1 ) — 1,533,210 — 1,533,210

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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

15 unchanged sentences

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.

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

Interest earned on marketable securities was $ 70.6 million, $ 90.2 million and $ 77.7 million in the years ended December 31, 2025, 2024 and 2023, respectively.

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

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

The following table summarizes the contractual maturities of marketable securities:

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Total $ 1,773,331 $ 1,783,787 $ 1,954,699 $ 1,959,882

Equity Securities

The equity securities consist of shares of a publicly traded company that were received as consideration in a divestiture transaction described in Note 5 to these consolidated financial statements.

Strategic Investments

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The Company capitalized $ 72.5 million, $ 72.5 million and $ 57.2 million in internal‑use software development costs in the years ended December 31, 2025, 2024 and 2023, respectively.

There were no divestitures in the year ended December 31, 2024.

There were no divestitures in the years ended December 31, 2025 or 2024.

In 2023, the Company sold 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, which is recorded within general and administrative expenses in the accompanying consolidated statement of operations for the year ended December 31, 2023.

The Company also recorded an additional $ 3.3 million of divestiture-related expenses in the same period.

Separately, in 2023, the Company sold its Internet of Things (“IoT”) asset group for stock consideration of $ 15.8 million.

The loss on divestiture and related expenses were not significant.

Impairment of Long-Lived Assets

No significant impairments of long-lived assets were recorded during the years ended December 31, 2025 or 2024.

Operating right-of-use assets

In 2022, the Company adopted a remote-first operating strategy whereby employees work remotely on a permanent basis.

As a result, the Company permanently closed several of its offices in 2023 and 2022, which required reassessment of the operating right-of-use (“ROU”) assets and the associated leasehold improvements and property and equipment for impairment.

The Company determined that the carrying amounts of these assets exceeded their respective fair values.

The Company engaged a third‑party expert to assist with the valuation analysis.

The Company regularly assesses recoverability of its ROU assets and the related long-lived asset categories for indicators of impairment.

In the years ended December 31, 2023 and 2022, the Company recorded $ 34.8 million and $ 97.7 million of impairment, respectively, related to its permanently closed offices.

The impairment is recorded in the impairment of long-lived assets line item in the accompanying consolidated statements of operations for the years ended December 31, 2023 and 2022.

In 2023, the Company permanently closed several of its offices, which triggered reassessment for impairment of certain operating right-of-use (“ROU”) assets and related leasehold improvements and property and equipment.

Based on the reassessment, the Company concluded that certain assets were impaired and recorded a $ 34.8 million impairment in the impairment of long-lived assets line item in the accompanying consolidated statement of operations for the year ended December 31, 2023.

Intangible assets

In the fourth quarter of 2023, the Company identified a change in its Segment reportable segment’s performance which it deemed to be an indicator that the carrying amounts of certain long-lived assets within the segment may not be recoverable.

The Company performed a recoverability assessment and a fair value measurement of the impacted asset group and concluded that the asset group was impaired.

The Company engaged a third-party expert to assist with the valuation analysis.

In the fourth quarter of 2023, the Company identified an indicator that the carrying amounts of certain long-lived assets within its then Segment reportable segment may not have been recoverable.

The Company performed a fair value measurement of the impacted asset group and concluded that the asset group was impaired.

The impairment was allocated to the assets within the impacted asset group reducing the respective carrying amounts of the assets as of the December 1, 2023, measurement date, as follows:

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The impairment is recorded within the impairment of long-lived assets line item in the accompanying consolidated statement of operations for the year ended December 31, 2023.

The Company used a relief-from-royalty method to estimate the fair values of the developed technology and the trade name and a distributor method to estimate the fair value of customer relationships.

The trade name intangible asset was not impaired.

No other significant impairments were recorded during the years ended December 31, 2024, 2023 or 2022.

No other significant impairments were recorded during the year ended December 31, 2023.

Restructuring Activities

No significant restructuring activities occurred in the year ended December 31, 2024.

No significant restructuring activities occurred in the years ended December 31, 2025 or 2024.

In February 2023, the Company announced a workforce reduction plan (the “February 2023 Plan”) that was designed to reduce operating costs, improve operating margins and accelerate profitability.

The February 2023 Plan eliminated approximately 17 % of the Company’s workforce.

The execution of the February 2023 Plan was substantially completed in the first quarter of 2023.

The February 2023 Plan eliminated approximately 17 % of the Company’s workforce and was substantially completed in the first quarter of 2023.

For the year ended December 31, 2023, restructuring charges related to the February 2023 Plan were $ 141.1 million, which consisted of $ 130.0 million related to employee severance, benefits and facilitation costs, and $ 11.1 million related to vesting of employee stock based compensation awards.

$ 108.9 million of the restructuring charges related to the Communications reportable segment, $ 9.4 million related to the Segment reportable segment and $ 22.8 million was included in corporate costs.

The following table summarizes the Company’s restructuring liability related to the February 2023 Plan that is included in accrued expenses and other current liabilities in the accompanying consolidated balance sheet as of December 31, 2023:

Workforce Reduction Costs Facilitation Costs Total

(In thousands)

Balance as of December 31, 2022 $ — $ — $ —

Restructuring charges 120,711 9,289 130,000

Cash payments ( 111,852 ) ( 8,895 ) ( 120,747 )

Balance as of December 31, 2023 $ 8,859 $ 394 $ 9,253

February 2023 Plan restructuring charges incurred in 2024 were not significant.

No amounts were outstanding as of December 31, 2024 related to this plan.

In December 2023, the Company announced a workforce restructuring plan that was designed to streamline operations and accelerate the Company’s path to profitable growth (the “December 2023 Plan”).

The December 2023 Plan eliminated approximately 5 % of the Company’s workforce.

Restructuring charges related to the December 2023 Plan were not significant.

In September 2022, the Company announced a workforce restructuring plan that was designed to reduce operating costs and improve operating margins (the “September 2022 Plan”).

The September 2022 Plan eliminated approximately 11 % of the Company’s workforce.

In the year ended December 31, 2022, the Company recorded $ 76.6 million of restructuring charges, including a $ 14.3 million expense related to vesting of the employee stock-based compensation awards, in its accompanying consolidated statement of operations.

$ 67.4 million of the restructuring charges related to the Communications reportable segment, $ 1.6 million related to the Segment reportable segment and $ 7.6 million was included in corporate costs.

Segment Reporting

As of December 31, 2024, 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 CEO, who is also the 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 the segment 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 years ended December 31, 2024, 2023, and 2022, that reflects management’s current view of the business and that is regularly provided to the CODM.

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

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.

Year Ended December 31, 2024

Communications

(In thousands)

Revenue $ 4,160,340 $ 297,696 $ 4,458,036

Cost of revenue attributable to segments 2,014,491 79,469 2,093,960

Operating expenses attributable to segments 1,103,800 280,882 1,384,682

Segment non-GAAP income (loss) from operations

$ 1,042,049 $ ( 62,655 ) $ 979,394

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

Total segment non-GAAP income from operations

Corporate costs not allocated to segments

Stock-based compensation ( 613,429 )

Amortization of acquired intangibles ( 111,851 )

Payroll taxes related to stock-based compensation

Charitable contributions

Restructuring costs

Loss from operations

Other expenses, net

Loss before provision for income taxes

Year Ended December 31, 2023

Communications

(In thousands)

Revenue $ 3,858,693 $ 295,252 $ 4,153,945

Cost of revenue attributable to segments

1,901,275 68,433 1,969,708

Operating expenses attributable to segments

1,115,428 299,249 1,414,677

Segment non-GAAP income (loss) from operations

$ 841,990 $ ( 72,430 ) $ 769,560

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

Total segment non-GAAP income from operations

Corporate costs not allocated to segments

Stock-based compensation ( 662,842 )

Amortization of acquired intangibles ( 192,307 )

Acquisition and divestiture related expenses

Loss on net assets divested

Payroll taxes related to stock-based compensation

Charitable contributions

Restructuring costs

Impairment of long-lived assets

Loss from operations

Other expenses, net

Loss before provision for income taxes

$ ( 996,729 )

Year Ended December 31, 2022

Communications

(In thousands)

Revenue $ 3,550,087 $ 276,234 $ 3,826,321

Cost of revenue attributable to segments

1,817,019 51,396 1,868,415

Operating expenses attributable to segments

1,414,388 254,533 1,668,921

Segment non-GAAP income (loss) from operations

$ 318,680 $ ( 29,695 ) $ 288,985

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

Total segment non-GAAP loss from operations

Corporate costs not allocated to segments

Stock-based compensation ( 784,285 )

Amortization of acquired intangibles ( 206,181 )

Acquisition and divestiture related expenses

Payroll taxes related to stock-based compensation

Charitable contributions

Restructuring costs

Impairment of long-lived assets

Loss from operations

( 1,205,308 )

Other expenses, net

Loss before provision for income taxes

$ ( 1,243,632 )

Depreciation and amortization expenses, except for amortization of acquired intangibles, that are included in non-GAAP income from operations for the Communications reportable segment was $ 71.9 million, $ 74.1 million and $ 61.9 million in the years ended December 31, 2024, 2023 and 2022, respectively.

Amortization of deferred commissions included in non-GAAP income from operations for the Communications reportable segment was $ 60.7 million, $ 60.0 million and $ 47.7 million in the years ended December 31, 2024, 2023 and 2022, 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 was $ 18.1 million, $ 13.7 million and $ 6.1 million in the years ended December 31, 2024, 2023 and 2022, respectively.

Amortization of deferred commissions included in non-GAAP loss from operations for the Segment reportable segment was $ 15.7 million, $ 12.9 million and $ 10.3 million in the years ended December 31, 2024, 2023 and 2022, respectively.

These charges were recorded within restructuring costs in the accompanying consolidated statement of operations for the year ended December 31, 2023.

Reorganization and Segment Reporting

The Company announced on January 1, 2025, that it realigned its organizational structure into a functional support model by dissolving its previously existing business unit components.

Despite the change in the organizational structure on January 1, 2025, until the end of the second quarter of 2025, the Company had two operating and reportable segments based on the manner in which the CODM reviewed financial information for purposes of assessing business performance and allocating resources.

In the third quarter of 2025, the presentation of the financial information reviewed by the CODM was modified to reflect the change in the organizational structure.

In conjunction with this change, the Company reevaluated its segment structure and concluded that, as of the third quarter of 2025, it had one operating and reportable segment.

Commencing in the third quarter of 2025, the financial information of the Company regularly provided to the CODM was on a consolidated level and consolidated net income was its measure of profitability.

This measure of profitability is used by the CODM to allocate resources and assess performance of the Company by comparing its actual results to the comparable results in prior periods and to any internally or externally set expectations.

The consolidated financial information provided to the CODM, including significant expenses, is presented in a manner consistent with the information already disclosed in the accompanying consolidated financial statements and the notes thereof.

Derivatives and Hedging

As of December 31, 2024, the Company had outstanding foreign currency forward contracts designated as cash flow hedges with a total sell notional value of $ 216.4 million.

As of December 31, 2025, the Company’s outstanding foreign currency forward contracts designated as cash flow hedges had a total sell notional value of $ 280.8 million.

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

As of December 31, 2024, these contracts had maturities of up to 1.4 years.

As of December 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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Right-of-Use Assets and Lease Liabilities

The Company has entered into various operating lease agreements for office space and finance lease agreements for data centers, office equipment and furniture.

The Company has entered into various operating lease agreements for office space.

As of December 31, 2025, the Company had various leased properties with remaining lease terms from 0.1 years to 5.0 years, some of which include options to extend the leases for up to 5.0 years.

During 2023 and 2022, as a result of the office closures described in Note 6, the Company impaired several of its ROU assets related to office leases that would no longer be used to support its ongoing operations.

In the years ended December 31, 2023 and 2022, the Company recorded $ 34.8 million and $ 97.7 million impairment expense, respectively, related to these office closures, of which $ 24.8 million and $ 72.8 million, respectively, related to the ROU assets.

The remaining impairment expense related to the associated assets in the property, plant and equipment categories.

In the year ended December 31, 2024, there was no impairment expense related to office closures.

In the years ended December 31, 2025 and 2024, there were no significant impairment charges related to office closures.

During 2023, as a result of the office closures described in Note 6, the Company impaired several of its ROU assets related to office leases that would no longer be used to support its ongoing operations.

Of the $ 34.8 million of impairment recorded in the year ended December 31, 2023, $ 24.8 million related to the ROU assets and the remaining amount related to the associated assets in the property, plant and equipment categories.

For the years ended December 31, 2025, 2024 and 2023, the Company did not have significant sublease income related to any of its subleased offices.

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Long-term operating lease obligations $ 54,162

Equity Method Investment

In May 2022, the Company acquired 44.6 % of the equity interests in Syniverse Corporation (“Syniverse”) for $ 750.0 million in cash.

The Company determined that it does not have a controlling financial interest in Syniverse but does exercise significant influence and, therefore, the investment was accounted for under the equity method.

The Company estimated that on the investment closing date there was an excess investment basis of $ 530.7 million related to its proportionate share of the identifiable intangible assets and $ 41.3 million related to the associated deferred tax liability.

The equity method goodwill was estimated at $ 623.8 million.

The Company engaged a third‑party expert to assist with the valuation analysis.

The following table presents the estimated basis differences attributable to the identifiable intangible assets as of the date of investment and their respective useful lives:

Business Combinations

On November 14, 2025, the Company acquired all outstanding shares of Stytch, Inc.

(“Stytch”), an identity platform for AI agents based in San Francisco, California, for a purchase price of $ 104.1 million paid in cash, or $ 58.5 million net of cash acquired.

The acquisition was accounted for as a business combination and the total preliminary purchase price of $ 104.1 million was allocated to the net tangible and intangible assets and liabilities based on their fair values on the acquisition date with the excess recorded as goodwill.

The acquired entities' results of operations have been included in the consolidated financial statements of the Company from the date of acquisition.

The following table presents the preliminary purchase price allocation:

(In thousands)

Cash and cash equivalents

Other tangible assets and liabilities, net

Intangible assets (1)

Goodwill 48,507

Total preliminary purchase price

cash and cash equivalents acquired

Total preliminary purchase price, net of cash acquired

____________________________________

(1) Identifiable intangible assets were comprised of the following:

Total Estimated

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Customer relationships 1,969 4

Trademarks 28,822 Indefinite

Total basis difference attributable to the identifiable intangible assets $ 530,741

In the years ended December 31, 2024, 2023 and 2022, the Company recorded $ 108.5 million, $ 121.9 million and $ 35.3 million, respectively, of its proportionate share of the investee's net operating results, the amortization of the basis difference and dilution loss as part of other expenses, net, in the accompanying consolidated statements of operations.

The Company also recorded $ 0.7 million and $ 15.6 million of its proportionate share of the investee’s other comprehensive income for the years ended December 31, 2024 and 2023, respectively, and $ 14.9 million of its proportionate share of the investee’s other comprehensive loss for the year ended December 31, 2022, in the accompanying consolidated statements of other comprehensive loss.

Results of operations and other comprehensive loss were recorded on a 90-day lag.

As of December 31, 2024 and 2023, the Company held 43.8 % and 44.0 %, respectively, of the equity interests in Syniverse.

The unamortized net excess investment basis was $ 353.3 million and $ 410.4 million, respectively.

The carrying amount of the investment in the accompanying consolidated balance sheets was $ 485.8 million and $ 593.6 million as of December 31, 2024 and 2023, respectively.

Total intangible assets acquired $ 11,833

Equity Method Investment

In 2022, the Company acquired 44.6 % of the equity interests in Syniverse Corporation (“Syniverse”) for $ 750.0 million in cash.

The Company determined that it did not have a controlling financial interest in Syniverse but did exercise significant influence and, therefore, the investment was accounted for under the equity method.

The Company’s ownership percentage and other information related to the equity method investment, reported on a 90-day lag, are as follows:

As of December 31,

Ownership percentage

43.7 % 43.8 %

Basis difference attributable to intangible assets and deferred tax liability

$ 297,114 $ 353,307

Equity method goodwill

$ 543,157 $ 623,786

During 2025, the Company observed a change in the performance trend of its equity method investment, which it deemed an indicator that the carrying value of its equity method investment could be in excess of its fair value.

The Company engaged a third-party expert to assist in performing a fair value assessment of the investment and concluded that as of December 31, 2025, its equity method investment was impaired.

The Company recorded an impairment of $ 80.6 million in the impairment of equity method investment line item in the accompanying consolidated statement of operations for the year ended December 31, 2025.

The Company allocated the full impairment amount to the equity method goodwill.

The Company estimated the fair value of its equity method investment using a weighting of fair values derived from an income and a market approach.

Estimating the fair value by these methods involves the use of various assumptions that the Company believed were reasonable under the circumstances.

Under the income approach, the Company determined the fair value of the investment based on the present value of estimated future cash flows using the cash flow projections prepared by the investee management.

The market approach estimated the fair value based on market multiples of adjusted EBITDA derived from comparable publicly traded companies with similar operating and investment characteristics as the investment.

While these assumptions reflect management’s best estimates at the time of the valuation, the estimates are inherently complex and uncertain and the actual results could differ materially from the estimates.

The fair value measurement of the equity method investment is classified as Level 3 in the fair value hierarchy.

In conjunction with this investment, the Company and Syniverse 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.

The values of the transactions that occurred between the Company and Syniverse were $ 145.0 million and $ 143.7 million for the years ended December 31, 2024 and 2023, respectively, and $ 89.6 million for the period from the investment closing date on May 13, 2022, through December 31, 2022.

The values of the transactions that occurred between the Company and Syniverse were $ 138.9 million, $ 145.0 million and $ 143.7 million for the years ended December 31, 2025, 2024 and 2023, respectively.

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

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$ 481,486 $ 474,081 $ 430,140

Income (loss) from operations

Income from operations

$ 92,701 $ 113,950 $ 67,870

2 unchanged sentences

$ ( 59,338 ) $ ( 40,917 ) $ ( 90,770 )

____________________________________

(1) The Company invested in the investee in May 2022.

It is impracticable to provide audited financial information for a partial fiscal year due to its unavailability.

Goodwill and Intangible Assets

During 2023, as a result of business reorganization events, the Company shifted from a single reporting unit structure to a multiple reporting unit structure.

The Company reallocated goodwill to its newly formed reporting units and tested goodwill for impairment on the reporting unit level immediately before and immediately after each reorganization.

The Company engaged a third-party expert to assist in the valuation analysis.

The Company concluded that its goodwill was not impaired immediately before and immediately after each reorganization.

To allocate goodwill to the newly formed reporting units in 2023, the Company estimated the fair value of its reporting units using a weighting of fair values derived from an income and a market approach.

Estimating the fair value by these methods involves the use of various assumptions that the Company believes were reasonable under then current circumstances.

Under the income approach, the Company determined the fair value of a reporting unit based on the present value of estimated

future cash flows using the cash flow projections prepared by management.

The market approach estimates the fair value based on market multiples of revenue or adjusted EBITDA, as applicable, derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit.

While these assumptions reflect management’s best estimates of future performance at that time, the estimates are inherently complex and uncertain and the Company’s actual results could differ materially from the estimates.

The following table presents the goodwill allocated to the Company’s reportable segments as of December 31, 2024 and 2023, and the changes during the period:

Communications Twilio

Segment Total

In connection with the change in the Company’s operating segment structure, as described in Note 8, the Company reevaluated its reporting unit structure and concluded that as of September 30, 2025, it had one reporting unit.

The Company performed goodwill impairment assessments for each reporting unit immediately before and immediately after the change in structure and concluded that goodwill was not impaired.

The goodwill balance as of December 31, 2025 and 2024, and the changes during the period, were as follows:

(In thousands)

Balance as of December 31, 2022 $ — $ — $ 5,284,153

Foreign currency adjustments 26

Reallocation to segments in 2023 (1)

$ 4,978,094 $ 306,085 —

Foreign currency adjustments 251 — 251

Goodwill divested (2)

( 41,164 ) — ( 41,164 )

Balance as of December 31, 2024 and 2023

Goodwill additions related to 2025 acquisitions and other

Balance as of December 31, 2025

____________________________________

( 1 ) Represents reallocation of goodwill as a result of the change in reporting unit structure in 2023.

(2) Represents goodwill related to the divestitures of the ValueFirst business and IoT asset group in 2023, as described in Note 5.

There was no goodwill activity during the year ended December 31, 2024.

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

Intangible assets

24 unchanged sentences

Trade names 25,968 ( 25,014 ) 954

Order backlog 10,000 ( 10,000 ) —

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

5 unchanged sentences

Amortization expense was $ 108.3 million, $ 112.0 million and $ 192.5 million for the years ended December 31, 2025, 2024 and 2023, respectively.

There was no impairment related to intangible assets in the year ended December 31, 2024.

In the year ended December 31, 2023, the Company recorded an impairment charge related to certain of its intangible assets, as described in Note 6.

Total estimated future amortization expense is as follows:

15 unchanged sentences

(In thousands)

Accrued payroll and related $ 76,708 $ 77,593

Accrued payroll and related liabilities $ 95,795 $ 76,708

Company-wide bonus program liability 136,221 109,776

Accrued bonus and commission 21,585 17,345

Accrued sales bonus and commissions 21,922 21,585

Accrued cost of revenue 226,878 173,739

Sales and other taxes payable 58,259 79,731

Restructuring liability 318 29,086

ESPP contributions 6,925 5,745

Accrued other expense 62,119 63,402

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(2) at any time on or after March 15, 2026 at a prepayment price equal to 100.000 % of the principal amount;

(3) at any time on or after March 15, 2026 at a prepayment price equal to 100.000 % of the principal amount;

in each case, the redemption will include the accrued and unpaid interest, as applicable.

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(In thousands)

Twilio Communications:

$ 2,358,767 $ 2,184,752 $ 2,066,300

543,117 511,728 474,790

Messaging $ 2,878,304 $ 2,435,462 $ 2,251,308

Voice 615,655 543,117 511,728

Email 523,470 488,271 440,185

303,250 297,696 295,252

Other 746,541 693,490 655,472

Total Twilio Communications

4,160,340 3,858,693 3,550,087

Twilio Segment

297,696 295,252 276,234

Total $ 5,067,220 $ 4,458,036 $ 4,153,945

________________________________________

(1) Prior year amounts were reclassified to conform to the current year presentation.

In 2025, RCS Messaging and WhatsApp Messaging were reclassified into Messaging.

Previously, revenue related to these products was presented within Other.

As a result, $ 76.7 million and $ 66.6 million were reclassified out of Other and into Messaging for the years ended December 31, 2024 and 2023, respectively.

Commitments and Contingencies

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Refer to Note 10 for additional detail on the Company's operating lease commitments.

Additionally, the Company has contractual commitments with its cloud infrastructure providers, network service providers and other vendors that are noncancellable and expire within one to four years .

In the year ended December 31, 2024, the Company entered into several such agreements with terms of up to four years for a total purchase commitment of $ 182.5 million.

In the year ended December 31, 2025, the Company entered into several such agreements with terms of up to five years for a total purchase commitment of $ 149.1 million.

Future minimum payments under these noncancellable purchase commitments are summarized in the table below.

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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.

The Company accrues for contingencies associated with legal matters 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 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.

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As of December 31, 2025 and 2024, 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 December 31, 2024 and 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 par value of $ 0.001 per share.

As of December 31, 2025 and 2024, the Company had authorized 1,000,000,000 shares of Class A common stock, par value of $ 0.001 per share.

As of December 31, 2024, the Company had also authorized 3,170,181 shares of Class B common stock, par value of $ 0.001 per share.

As of December 31, 2025 and 2024, 152,411,346 and 152,610,697 shares of Class A common stock, respectively, and no shares of Class B common stock were issued and outstanding.

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Share Repurchase Programs

In February 2023, the board of directors of the Company authorized the repurchase of up to $ 1.0 billion in aggregate value of the Company’s outstanding Class A common stock, and in March 2024, the board of directors authorized the repurchase of an additional $ 2.0 billion in aggregate value of the Company’s outstanding Class A common stock.

Repurchases under this program could 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.

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

This repurchase program expired on December 31, 2024.

During the years ended December 31, 2024 and 2023, the Company repurchased 36.8 million shares and 11.3 million shares of its Class A common stock, respectively, for an aggregate purchase price of $ 2.3 billion and $ 672.1 million, respectively.

As of December 31, 2024, the Company completed repurchases of $ 3.0 billion in aggregate value of its Class A common stock, as originally authorized.

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

The new program expires on December 31, 2027.

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.

During the years ended December 31, 2025 and 2024, the Company repurchased 8.0 million shares and 36.8 million shares of its Class A common stock, respectively, for an aggregate purchase price of $ 854.6 million and $ 2.3 billion, respectively.

As of December 31, 2025, approximately $ 1.1 billion of the amount authorized in January 2025 for share repurchases remained available for future repurchases.

Stock-Based Compensation

The following are descriptions for stock plans that govern a significant amount of outstanding equity awards as of December 31, 2024:

2008 Stock Option Plan

In connection with the Company’s initial public offering on June 22, 2016, the 2008 Stock Option Plan, as amended and restated (the “2008 Plan”), was terminated and, accordingly, no shares were available for issuance after the termination.

As of December 31, 2024 and 2023, all remaining outstanding stock options granted under the 2008 Plan were vested and exercisable and continue to be governed by the provisions of this plan.

The following equity incentive plans govern a significant amount of the outstanding equity awards as of December 31, 2025:

2016 Stock Option Plan

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These available shares automatically increase each January 1, beginning on January 1, 2017, by the lesser of 1,800,000 shares of the Company's Class A common stock, 1 % of the number of shares of the Company’s Class A and Class B common stock outstanding on the immediately preceding December 31 or such lesser number of shares as determined by the Company’s compensation committee.

On January 1, 2024 and 2023, the shares available for grant under the 2016 ESPP were automatically increased by 1,800,000 shares.

On January 1, 2025 and 2024, the shares available for grant under the 2016 ESPP were automatically increased by 1,526,106 and 1,800,000 shares, respectively.

The 2016 ESPP allows eligible employees to purchase shares of the Company’s Class A common stock at a discount of 15 % through payroll deductions of their eligible compensation, subject to any plan limitations.

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Exercised ( 420,056 ) $ 14.87

Forfeited and canceled ( 218,867 ) $ 92.18

Outstanding options as of December 31, 2025 902,120 $ 101.75 2.87 $ 59,701

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Total estimated grant date fair value of options vested $ 844 $ 9,351 $ 28,619

Weighted-average grant date fair value per share of options granted $ — $ — $ 50.66

____________________________________

( 1 ) Aggregate intrinsic value represents the difference between the fair value of the Company’s Class A common stock as reported on the New York Stock Exchange and the exercise price of outstanding “in-the-money” options.

As of December 31, 2024, total unrecognized compensation cost related to all unvested stock options was not significant.

As of December 31, 2025, all stock options have vested.

Restricted Stock Units

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Unvested RSUs as of December 31, 2025 13,663,977 $ 80.86 $ 1,943,564

In 2024, the Company granted 516,626 shares of PSUs to certain of its executive employees.

In 2025 and 2024, the Company granted to certain of its executive employees performance-based restricted stock units (“PSUs”) covering 185,899 and 516,626 shares, respectively, of Class A common stock that had an aggregate grant date fair value of $ 27.1 million and $ 34.5 million, respectively.

These awards are included in the table above.

The awards had an aggregate grant date fair value of $ 34.5 million.

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

The final vesting determination will be made by the Company’s Compensation Committee subsequent to the completion of the performance period.

The PSUs will vest if certain operational performance conditions or market conditions, as defined in the respective grant agreements, are met during the performance achievement periods, which expire on December 31, 2027 and 2026, respectively.

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 March 2022, the Company granted 919,289 shares of PSUs to certain of its executive employees.

These awards are included in the table above.

The PSUs were granted with a grant date fair value per share of $ 157.44 and an aggregate grant date fair value of $ 144.7 million.

Each PSU award consisted of three tranches that would vest separately over distinct service periods if the respective performance conditions, as defined in the grant agreements, were met.

The final vesting determination is made by the Company’s Compensation Committee subsequent to the completion of the performance period.

The vesting of the first tranche was based on achievement of revenue growth targets with respect to the year ended December 31, 2022.

The vesting of the second and third tranches was based on both (a) revenue growth targets and (b) profitability targets achievement with respect to each of the years ended December 31, 2023 and 2024.

If performance targets are not achieved, the related tranches are forfeited.

Vesting of these PSUs can range up to 100 % above the target based on levels of performance and is recorded in stock-based compensation expense in the year during which each tranche vests.

As of December 31, 2024, total unrecognized compensation cost related to unvested RSUs was $ 1.2 billion, which will be amortized over a weighted-average period of 2.5 years.

As of December 31, 2025, total unrecognized compensation cost related to unvested RSUs was $ 994.9 million, which will be amortized over a weighted-average period of 2.2 years.

Valuation Assumptions

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5.3 % - 5.4 %

Dividend rate — %

Stock-Based Compensation Expense

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Total $ 600,407 $ 616,607 $ 675,857

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

Year Ended December 31,

2025 2024 2023

Net loss attributable to common stockholders (in thousands) $ ( 109,403 ) $ ( 1,015,441 ) $ ( 1,256,145 )

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

common stockholders, basic and diluted 165,925,128 183,327,844 182,994,038

Net loss per share attributable to common stockholders, basic and diluted $ ( 0.66 ) $ ( 5.54 ) $ ( 6.86 )

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 December 31,

Net income (loss) attributable to common stockholders (in thousands) $ 33,834 $ ( 109,403 ) $ ( 1,015,441 )

Weighted-average shares outstanding, basic 152,986,390 165,925,128 183,327,844

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

6,802,554 — —

Weighted-average shares outstanding, diluted

159,788,944 165,925,128 183,327,844

Net income (loss) per share attributable to common stockholders

$ 0.22 $ ( 0.66 ) $ ( 5.54 )

$ 0.21 $ ( 0.66 ) $ ( 5.54 )

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

Year Ended December 31,

2025 2024 2023

Stock options issued and outstanding 145,350 1,322,176 1,722,861

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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 56,237

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

Total 1,157,431 20,327,778 21,381,913

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(1) 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 following table presents domestic and foreign components of loss before provision for income taxes for the periods presented:

The following table presents domestic and foreign components of income (loss) before provision for income taxes for the periods presented:

Year Ended December 31,

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International ( 95,797 ) ( 129,595 ) ( 180,640 )

Loss before provision for income taxes

Income (loss) before provision for income taxes

$ 55,094 $ ( 88,613 ) $ ( 996,729 )

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Provision for income taxes $ 21,260 $ 20,790 $ 18,712

The following table presents a reconciliation of the statutory federal tax rate and the Company's effective tax rate:

Year Ended December 31,

The provision for income taxes recorded in the years ended December 31, 2025, 2024 and 2023, consists primarily of income taxes and withholding taxes in foreign jurisdictions in which the Company conducts business.

Due to a history of losses in the U.S., the Company maintains a full valuation allowance against its U.S.

deferred tax assets.

As described in Note 2(ae), in the current period, the Company adopted ASU 2023-09 on a prospective basis.

A reconciliation of the U.S.

federal statutory income tax rate to the Company’s effective tax rate for the year ended December 31, 2025, pursuant to the disclosure requirements of ASU 2023-09, is as follows:

December 31, 2025

Amount (in thousands)

Tax at federal statutory rate $ 11,570 21 %

Effect of cross-border tax laws:

Foreign income taxed in the United States, net of foreign tax deductions ( 1,440 ) ( 3 )

Withholding taxes

Research and development tax credits ( 40,879 ) ( 74 )

Changes in valuation allowance 36,651 67

Nontaxable or nondeductible items:

Excess benefit on share-based payment awards ( 41,493 ) ( 75 )

Other share-based payment award related items

Other 1,651 3

Other adjustments 264 1

State and local taxes, net of federal income tax effect (1)

Foreign tax effects:

Statutory tax rate difference between Ireland and United States

Changes in valuation allowance

Foreign exchange gains/losses

( 580 ) ( 1 )

Withholding taxes

Other foreign jurisdictions (2)

Worldwide changes in unrecognized tax benefits (gross)

( 1,613 ) ( 3 )

Effective tax rate $ 21,260 39 %

____________________________________

( 1 ) State taxes in North Carolina and Texas made up the majority (greater than 50 percent) of the tax effect in this category.

(2) Other foreign jurisdictions is comprised of $2.6 million related to India.

The remaining foreign jurisdictions are not significant.

A reconciliation of the U.S.

federal statutory income tax rates to the Company’s effective tax rate for the years ended December 31, 2024 and 2023, pursuant to previous disclosure requirements, is as follows:

Year Ended December 31,

Tax at federal statutory rate 21 % 21 %

1 unchanged sentence

Stock-based compensation ( 40 ) ( 7 )

Credits 20 2 1

Foreign rate differential ( 67 ) 1

2 unchanged sentences

Change in valuation allowance 32 ( 23 )

Other 2 1 ( 1 )

Effective tax rate ( 23 ) % ( 2 ) %

Cash paid for income taxes, net of refunds, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 is as follows:

December 31, 2025

(In thousands)

federal taxes

Total income taxes paid, net

Income taxes paid exceeds 5% of total income taxes paid, net of refunds, in the following jurisdictions:

December 31, 2025

(In thousands)

Income taxes paid, net, for the years ended December 31, 2024 and 2023 were $ 36.5 million and $ 37.8 million, respectively.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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At present, the Company does not believe that it is more likely than not that the federal, state and certain foreign net deferred tax assets will be realized, and accordingly, a valuation allowance has been established.

The valuation allowance decreased by approximately $ 45.6 million during the year ended December 31, 2024, and increased by approximately $ 176.6 million during the year ended December 31, 2023.

The valuation allowance increased by approximately $ 66.4 million during the year ended December 31, 2025, and decreased by approximately $ 45.6 million during the year ended December 31, 2024.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

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Gross increases for tax positions of current year 24,889 13,253 7,754

Gross decreases for tax positions of current year ( 168 ) — —

Lapse of statute of limitations ( 1,795 ) ( 2,101 ) ( 1,239 )

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The remaining amount would be offset by the reversal of related deferred tax assets which are subject to a full valuation allowance.

The Company does not anticipate any significant changes within 12 months of December 31, 2024, in its uncertain tax positions that would be material to its consolidated financial statements taken as a whole because nearly all of the unrecognized tax benefit has been offset by a deferred tax asset, which has been reduced by a valuation allowance.

The Company files U.S.

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There is no impact on the Company’s effective tax rate for years ended December 31, 2025 and 2024 due to a full valuation allowance against its deferred tax assets.

The provision for income taxes recorded in the years ended December 31, 2024 and 2023, respectively, consists primarily of income taxes and withholding taxes in jurisdictions in which the Company conducts business.

Due to a history of losses in the U.S., the Company maintains a full valuation allowance against its U.S.

deferred tax assets.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data