What changed in this filing

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Item 1. Financial Statements

2026-08-07 compared with 2026-05-01 · 190 added, 87 removed, 498 unchanged (36% of the section changed)

1 unchanged sentence

Condensed Consolidated Balance Sheets

As of March 31, As of December 31,

As of June 30, As of December 31,

(In thousands)

11 unchanged sentences

Other long-term assets 188,674 222,648

Deferred tax asset 1,029,402 20,026

Total assets $ 10,838,627 $ 9,770,890

22 unchanged sentences

Condensed Consolidated Statements of Operations

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2026 2025 2026 2025

(In thousands, except share and per share amounts)

6 unchanged sentences

General and administrative 118,430 101,532 220,976 193,609

Impairment loss on prepaid assets 32,771 — 32,771 —

Total operating expenses 641,320 565,751 1,217,898 1,124,236

6 unchanged sentences

( 9,020 ) ( 3,397 ) ( 14,454 ) 105

Income before provision for income taxes

102,232 26,584

Provision for income taxes

( 12,093 ) ( 6,567 )

Income before benefit from (provision for) income taxes 75,526 33,592 177,758 60,176

Benefit from (provision for) income taxes 991,683 ( 11,169 ) 979,590 ( 17,736 )

Net income attributable to common stockholders

8 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2026 2025 2026 2025

(In thousands)

1 unchanged sentence

Other comprehensive (loss) income:

Unrealized (loss) gain on marketable securities

( 10,069 ) 5,058

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

( 10,590 ) 8,386

Share of other comprehensive income (loss) from equity method investment

674 ( 1,785 )

Unrealized (loss) gain on marketable securities, net of tax ( 1,122 ) ( 1,116 ) ( 11,191 ) 3,942

Net change in market value of effective foreign currency

forward exchange contracts, net of tax 391 15,821 ( 10,199 ) 24,207

Share of other comprehensive (loss) income from equity

method investment, net of tax ( 222 ) ( 347 ) 452 ( 2,132 )

Total other comprehensive (loss) income ( 953 ) 14,358 ( 20,938 ) 26,017

( 19,985 ) 11,659

Comprehensive income attributable to common stockholders

Comprehensive income attributable to common

stockholders $ 1,066,256 $ 36,781 $ 1,136,410 $ 68,457

See accompanying notes to condensed consolidated financial statements.

Condensed Consolidated Statements of Stockholders’ Equity

Three Months Ended June 30, 2026

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

Shares Amount

(In thousands, except share amounts)

Balance as of March 31, 2026

152,105,999 $ 152 $ 16,294,528 $ ( 4,317 ) $ ( 8,506,279 ) $ 7,784,084

Net income — — — — 1,067,209 1,067,209

Exercises of vested stock options 96,023 — 9,011 — — 9,011

Vesting of restricted stock units 1,616,234 2 ( 2 ) — — —

Value of equity awards withheld for tax liability ( 3 ) — ( 1 ) — — ( 1 )

Shares issued under ESPP 227,243 — 23,221 — — 23,221

Shares of Class A common stock issued and donated to charity 22,102 — 4,356 — — 4,356

Release of income tax valuation allowance related to previously settled capped call — — 8,675 — — 8,675

Unrealized loss on marketable securities — — — ( 1,122 ) — ( 1,122 )

Repurchases of shares of Class A common stock including related costs ( 495,726 ) — — — ( 66,019 ) ( 66,019 )

Net change in market value of effective foreign currency forward exchange contracts — — — 391 — 391

Share of other comprehensive loss from equity method investment — — — ( 222 ) — ( 222 )

Stock-based compensation — — 148,225 — — 148,225

Balance as of June 30, 2026 153,571,872 $ 154 $ 16,488,013 $ ( 5,270 ) $ ( 7,505,089 ) $ 8,977,808

See accompanying notes to condensed consolidated financial statements.

Condensed Consolidated Statements of Stockholders’ Equity

Six Months Ended June 30, 2026

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

3 unchanged sentences

Balance as of December 31, 2025 152,411,346 $ 152 $ 16,148,190 $ 15,668 $ ( 8,342,464 ) $ 7,821,546

152,411,346 $ 152 $ 16,148,190 $ 15,668 $ ( 8,342,464 ) $ 7,821,546

Net income — — — — 1,157,348 1,157,348

2 unchanged sentences

Value of equity awards withheld for tax liability ( 358 ) — ( 43 ) — — ( 43 )

Shares issued under ESPP 227,243 — 23,221 — — 23,221

Shares of Class A common stock issued and donated to charity 44,204 — 6,801 — — 6,801

Unrealized loss on marketable securities

Release of tax valuation allowance related to previously settled capped call

— — 8,675 — — 8,675

Unrealized loss on marketable securities — — — ( 11,191 ) — ( 11,191 )

Repurchases of shares of Class A common stock including related costs ( 2,584,024 ) ( 2 ) — — ( 319,973 ) ( 319,975 )

1 unchanged sentence

Share of other comprehensive income from equity method investment — — — 452 — 452

— — — 674 — 674

Stock-based compensation — — 291,603 — — 291,603

Balance as of June 30, 2026

153,571,872 $ 154 $ 16,488,013 $ ( 5,270 ) $ ( 7,505,089 ) $ 8,977,808

See accompanying notes to condensed consolidated financial statements.

Condensed Consolidated Statements of Stockholders’ Equity

Three Months Ended June 30, 2025

Class A Additional Paid-In Capital Accumulated Other Comprehensive Income

Accumulated Deficit Total Stockholders' Equity

Shares Amount

(In thousands, except share amounts)

Balance as of March 31, 2025 153,254,342 $ 153 $ 15,625,545 $ 10,358 $ ( 7,631,765 ) $ 8,004,291

Net income — — — — 22,423 22,423

Exercises of vested stock options 225,709 — 2,384 — — 2,384

Vesting of restricted stock units 1,631,186 2 ( 2 ) — — —

Value of equity awards withheld for tax liability ( 661 ) — ( 85 ) — — ( 85 )

Shares issued under ESPP 253,298 — 20,757 — — 20,757

Shares of Class A common stock issued and donated to charity 22,102 — 2,237 — — 2,237

Unrealized loss on marketable securities

— — — ( 1,116 ) — ( 1,116 )

Repurchases of shares of Class A common stock including related costs ( 1,809,818 ) ( 1 ) — — ( 176,747 ) ( 176,748 )

Net change in market value of effective foreign currency forward exchange contracts — — — 15,821 — 15,821

Share of other comprehensive loss from equity method investment — — — ( 347 ) — ( 347 )

Stock-based compensation — — 154,305 — — 154,305

Balance as of June 30, 2025

153,576,158 $ 154 $ 15,805,141 $ 24,716 $ ( 7,786,089 ) $ 8,043,922

See accompanying notes to condensed consolidated financial statements.

Condensed Consolidated Statements of Stockholders’ Equity

Six Months Ended June 30, 2025

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

8 unchanged sentences

Value of equity awards withheld for tax liability ( 1,084 ) — ( 138 ) — — ( 138 )

Shares issued under ESPP 253,298 — 20,757 — — 20,757

Shares of Class A common stock issued and donated to charity 44,204 — 5,013 — — 5,013

Unrealized gain on marketable securities — — — 3,942 — 3,942

— — — 5,058 — 5,058

Repurchases of shares of Class A common stock including related costs ( 3,032,011 ) ( 3 ) — — ( 306,519 ) ( 306,522 )

3 unchanged sentences

Stock-based compensation — — 298,239 — — 298,239

Balance as of March 31, 2025

Balance as of June 30, 2025

153,576,158 $ 154 $ 15,805,141 $ 24,716 $ ( 7,786,089 ) $ 8,043,922

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Three Months Ended

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

7 unchanged sentences

Amortization of deferred commissions 33,556 38,387

Unrealized (gains) losses on marketable equity securities ( 4,795 ) 750

Provision for doubtful accounts 10,763 3,686

Value of shares of Class A common stock issued and donated to charity 6,801 5,013

Share of losses from equity method investment 51,569 44,693

Tax benefit related to release of valuation allowance ( 944,097 ) —

Impairment loss on prepaid assets 32,771 —

Other adjustments 4,367 3,487

2 unchanged sentences

Prepaid expenses and other current assets 101,533 84,662

Deferred tax asset ( 49,412 ) ( 1,732 )

Other long-term assets ( 551 ) ( 49,688 )

6 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisitions, net of cash acquired.

and payments related to prior period acquisitions ( 685 ) —

Acquisitions, net of cash acquired and payments related to prior period acquisitions ( 685 ) —

Purchases of marketable securities and other investments ( 491,492 ) ( 408,836 )

2 unchanged sentences

Purchases of long-lived assets ( 7,218 ) ( 2,167 )

Net cash used in investing activities

( 41,190 ) ( 19,140 )

Net cash (used in) provided by investing activities ( 94,436 ) 382,879

CASH FLOWS FROM FINANCING ACTIVITIES:

2 unchanged sentences

Repurchases of shares of Class A common stock and related costs ( 323,048 ) ( 323,249 )

Proceeds from exercises of stock options 559 2,766

Proceeds from exercises of stock options and shares of Class A common stock issued under ESPP 32,791 25,907

Net cash used in financing activities ( 290,428 ) ( 301,708 )

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

( 140,558 ) 46,108

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 140,727 549,297

CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period 682,534 431,437

10 unchanged sentences

(the “Company”) was incorporated in the state of Delaware on March 13, 2008.

Today's leading companies trust Twilio's Customer Engagement Platform to build direct, personalized relationships with their customers everywhere in the world.

Twilio enables companies to use communications and data to add intelligence and security to every step of their customers’ journey, from sales to marketing to growth, customer service and many more engagement use cases in a flexible, programmatic way.

Twilio provides the infrastructure for customer engagement in the AI era.

By combining global communications, memory, and AI orchestration with identity, governance, and observability, the Company enables businesses to deliver continuous, contextual, personal, and secure conversations across every channel and participant — human or AI.

The Company’s headquarters are located in San Francisco, California, and the Company has subsidiaries across North America, South America, Europe, Asia and Australia.

6 unchanged sentences

Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K filed with the SEC on February 24, 2026 (“Annual Report”).

Certain prior year amounts in the unaudited condensed consolidated financial statements have been reclassified to conform to current year presentation.

The unaudited condensed consolidated balance sheet as of December 31, 2025, included herein, was derived from the audited financial statements as of that date, but may not include all disclosures including certain notes required by U.S.

11 unchanged sentences

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

valuation allowances against deferred tax assets;

accruals and contingencies.

3 unchanged sentences

(d) Remaining Performance Obligations

Revenue allocated to remaining performance obligations for contracts with durations of more than one year was $ 158.5 million as of March 31, 2026, of which 67 % is expected to be recognized over the next 12 months and 96 % is expected to be recognized over the next 24 months.

Revenue allocated to remaining performance obligations for contracts with durations of more than one year was $ 138.2 million as of June 30, 2026, of which 70 % is expected to be recognized over the next 12 months and 96 % is expected to be recognized over the next 24 months.

(e) Deferred Revenue and Customer Deposits

As of March 31, 2026, and December 31, 2025, the Company recorded $ 159.6 million and $ 158.7 million as its deferred revenue and customer deposits, respectively, that are included in deferred revenue and customer deposits in the accompanying unaudited condensed consolidated balance sheets.

During the three months ended March 31, 2026 and 2025, the Company recognized $ 76.8 million and $ 70.1 million of revenue, respectively, that was included in the deferred revenue and customer deposits balances as of the end of the previous year.

As of June 30, 2026, and December 31, 2025, the Company recorded $ 153.0 million and $ 158.7 million as its deferred revenue and customer deposits, respectively, that are included in deferred revenue and customer deposits in the accompanying unaudited condensed consolidated balance sheets.

During the three months ended June 30, 2026 and 2025, the Company recognized $ 36.2 million and $ 35.0 million of revenue, respectively, that was included in the deferred revenue and customer deposits balances as of the end of the previous year.

During the six months ended June 30, 2026 and 2025, the Company recognized $ 113.0 million and $ 105.1 million of revenue, respectively, that was included in the deferred revenue and customer deposits balances as of the end of the previous year.

(f) Concentration of Credit Risk

7 unchanged sentences

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

As of March 31, 2026, and December 31, 2025, the allowance for doubtful accounts was $ 20.5 million and $ 21.5 million, respectively, and is recorded in accounts receivable, net, in the accompanying unaudited condensed consolidated balance sheets.

In the three months ended March 31, 2026 and 2025, no customer organization accounted for more than 10% of the Company’s total revenue.

As of March 31, 2026, and December 31, 2025, no customer organization represented more than 10% of the Company’s gross accounts receivable.

As of June 30, 2026, and December 31, 2025, the allowance for doubtful accounts was $ 27.1 million and $ 21.5 million, respectively, and is recorded in accounts receivable, net, in the accompanying unaudited condensed consolidated balance sheets.

In the three and six months ended June 30, 2026 and 2025, no customer organization accounted for more than 10% of the Company’s total revenue.

As of June 30, 2026, and December 31, 2025, no customer organization represented more than 10% of the Company’s gross accounts receivable.

(g) Segment Reporting

12 unchanged sentences

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

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

ASU 2024-03 is effective for annual reporting periods beginning after

December 15, 2026, and interim periods beginning after December 15, 2027, and may be applied prospectively or retrospectively.

Early adoption is permitted.

3 unchanged sentences

Losses Less Than 12 Months Fair Value Hierarchy as of

March 31, 2026 Aggregate

June 30, 2026 Aggregate

Level 1 Level 2 Level 3

41 unchanged sentences

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

Interest earned on debt securities was $ 17.5 million and $ 18.9 million in the three months ended March 31, 2026 and 2025, respectively.

Interest earned on debt securities was $ 17.8 million and $ 35.3 million in the three and six months ended June 30, 2026, respectively, and $ 17.9 million and $ 36.8 million in the three and six months ended June 30, 2025, respectively.

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

The following table summarizes the contractual maturities of debt securities:

As of March 31, As of December 31,

As of June 30, As of December 31,

Cost Aggregate

7 unchanged sentences

Strategic Investments

As of March 31, 2026 and December 31, 2025, the Company held strategic investments with a carrying value of $ 22.2 million and $ 24.5 million, respectively, recorded as other long-term assets in the accompanying unaudited condensed consolidated balance sheets.

There were no significant impairments or adjustments recorded in the three months ended March 31, 2026 and 2025 related to these securities.

As of June 30, 2026, and December 31, 2025, the Company held strategic investments with a carrying value of $ 24.2 million and $ 24.5 million, respectively, recorded as other long-term assets in the accompanying unaudited condensed consolidated balance sheets.

There were no significant impairments or adjustments recorded in the three and six months ended June 30, 2026 and 2025 related to these securities.

Financial Liabilities

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

As of March 31, 2026 and December 31, 2025, the aggregate fair value of these liabilities and the associated unrealized losses were not significant.

As of June 30, 2026, and December 31, 2025, the aggregate fair value of these liabilities and the associated unrealized losses were not significant.

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

As of March 31, 2026, the fair values of the 2029 Notes and 2031 Notes were $ 479.7 million and $ 468.2 million, respectively.

As of June 30, 2026, the fair values of the 2029 Notes and 2031 Notes were $ 487.6 million and $ 477.1 million, respectively.

As of December 31, 2025, the fair values of the 2029 Notes and 2031 Notes were $ 489.7 million and $ 483.9 million, respectively.

1 unchanged sentence

Property and equipment consist of the following:

As of March 31, As of December 31,

As of June 30, As of December 31,

(In thousands)

10 unchanged sentences

Total property and equipment, net $ 186,628 $ 176,963

Depreciation and amortization expense was $ 17.0 million and $ 21.9 million in the three months ended March 31, 2026 and 2025, respectively.

The Company capitalized $ 23.3 million and $ 16.2 million in internal‑use software development costs in the three months ended March 31, 2026 and 2025, respectively.

Depreciation and amortization expense was $ 17.7 million and $ 22.3 million in the three months ended June 30, 2026 and 2025, respectively, and $ 34.6 million and $ 44.1 million in the six months ended June 30, 2026 and 2025, respectively.

The Company capitalized $ 22.8 million and $ 17.6 million in internal‑use software development costs in the three months ended June 30, 2026 and 2025, respectively, and $ 46.1 million and $ 33.9 million in the six months ended June 30, 2026 and 2025, respectively.

Derivatives and Hedging

As of March 31, 2026, the Company’s outstanding foreign currency forward contracts designated as cash flow hedges had a total sell notional value of $ 294.6 million.

As of June 30, 2026, the Company’s outstanding foreign currency forward contracts designated as cash flow hedges had a total sell notional value of $ 330.6 million.

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

As of March 31, 2026, these contracts had maturities of up to seventeen months .

As of June 30, 2026, these contracts had maturities of up to seventeen months .

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

3 unchanged sentences

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

As of March 31, 2026, the Company did not have any offsetting arrangements.

As of June 30, 2026, the Company did not have any offsetting arrangements.

Goodwill and Intangible Assets

The goodwill balance as of March 31, 2026 and December 31, 2025, and the changes during the period, were as follows:

The goodwill balance as of June 30, 2026 and December 31, 2025, and the changes during the period, were as follows:

(In thousands)

1 unchanged sentence

Measurement period adjustment and other

Balance as of March 31, 2026

Balance as of June 30, 2026 $ 5,292,457

Intangible assets

Intangible assets consist of the following:

As of March 31, 2026

As of June 30, 2026

Cost Accumulated Amortization Net

25 unchanged sentences

Total $ 833,395 $ ( 691,330 ) $ 142,065

Amortization expense was $ 16.7 million and $ 27.2 million for the three months ended March 31, 2026 and 2025, respectively.

Amortization expense was $ 11.3 million and $ 27.1 million for the three months ended June 30, 2026 and 2025, respectively, and $ 28.0 million and $ 54.2 million for the six months ended June 30, 2026 and 2025, respectively.

Total estimated future amortization expense is as follows:

As of March 31, 2026

As of June 30, 2026

Year Ended December 31, (In thousands)

2026 (remaining nine months) $ 27,949

2026 (remaining six months) $ 16,614

Thereafter 8,952

2 unchanged sentences

Prepaid expenses and other current assets consist of the following:

As of March 31, As of December 31,

As of June 30, As of December 31,

(In thousands)

Prepaid expenses (1)

$ 223,615 $ 307,263

Other current assets 106,396 162,387

1 unchanged sentence

$ 330,011 $ 469,650

____________________________________

(1) In the three months ended June 30, 2026, the Company recorded a $ 32.8 million impairment loss on prepaid assets, which contributed to a decrease in prepaid expenses from December 31, 2025.

The impairment loss was due to the Company’s determination that it would be unable to consume certain network services that were prepaid in previous periods due to operational and financial challenges experienced by two network service providers.

Accrued expenses and other current liabilities consist of the following:

As of March 31, As of December 31,

As of June 30, As of December 31,

(In thousands)

9 unchanged sentences

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

As of March 31, As of December 31,

As of June 30, As of December 31,

(In thousands)

10 unchanged sentences

Total long-term debt, net $ 993,162 $ 992,287

As of March 31, 2026, the Company was in compliance with all of its covenants under the related indentures.

As of June 30, 2026, the Company was in compliance with all of its covenants under the related indentures.

Revenue by Geographic Area

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Revenue by geographic area:

9 unchanged sentences

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

In the three months ended March 31, 2026, the Company did not enter into any significant new lease agreements.

In the three and six months ended June 30, 2026, the Company did not enter into any significant new lease agreements.

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

The Company had $ 273.2 million of non-cancelable purchase commitments as of March 31, 2026 with remaining terms up to five years .

The Company had $ 1.5 billion of non-cancelable purchase commitments as of June 30, 2026 with remaining terms up to five years .

(b) Legal Matters

9 unchanged sentences

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

As of March 31, 2026, and December 31, 2025, no amounts were accrued related to any outstanding indemnification agreements.

As of June 30, 2026, and December 31, 2025, no amounts were accrued related to any outstanding indemnification agreements.

(d) Other Taxes

5 unchanged sentences

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

As of March 31, 2026, the liabilities accrued for non-income-based taxes were $ 21.8 million for domestic jurisdictions and $ 21.0 million for jurisdictions outside of the United States.

As of June 30, 2026, the liabilities accrued for non-income-based taxes were $ 23.1 million for domestic jurisdictions and $ 22.1 million for jurisdictions outside of the United States.

As of December 31, 2025, these liabilities were $ 21.1 million and $ 21.8 million, respectively.

1 unchanged sentence

Preferred Stock

As of March 31, 2026 and December 31, 2025, the Company had authorized 100,000,000 shares of preferred stock, par value $ 0.001 per share, of which no shares were issued and outstanding.

As of March 31, 2026 and December 31, 2025, the Company had authorized 1,000,000,000 shares of Class A common stock, par value $ 0.001 per share.

As of March 31, 2026 and December 31, 2025, 152,105,999 and 152,411,346 shares of Class A common stock, respectively, were issued and outstanding.

As of June 30, 2026 and December 31, 2025, the Company had authorized 100,000,000 shares of preferred stock, par value $ 0.001 per share, of which no shares were issued and outstanding.

As of June 30, 2026 and December 31, 2025, the Company had authorized 1,000,000,000 shares of Class A common stock, par value $ 0.001 per share.

As of June 30, 2026 and December 31, 2025, 153,571,872 and 152,411,346 shares of Class A common stock, respectively, were issued and outstanding.

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

As of March 31, As of December 31,

As of June 30, As of December 31,

Stock options issued and outstanding 767,453 902,120

1 unchanged sentence

Shares of Class A common stock reserved for Twilio.org 221,021 265,225

Stock-based awards available for grant under 2016 Plan 35,759,787 28,543,969

Stock-based awards available for grant under 2016 equity plan 10,529,415 28,543,969

Shares of Class A common stock reserved for issuance pursuant to ESPP (1)

12,133,808 10,836,938

Total 35,819,762 54,212,229

____________________________________

(1) The amount as of June 30, 2026 reflects the number of shares of Class A common stock reserved for issuance pursuant to the ESPP governing the current offering period as of that date.

See Note 12 for further details.

Share Repurchase Program

3 unchanged sentences

The program expires on December 31, 2027.

In the three months ended March 31, 2026 and 2025, the Company repurchased 2.1 million and 1.2 million shares of its Class A common stock, respectively, for an aggregate purchase price of $ 253.4 million and $ 130.2 million, respectively.

As of March 31, 2026, approximately $ 892.0 million of the amount authorized in January 2025 for share repurchases remained available for future repurchases.

In the three months ended June 30, 2026 and 2025, the Company repurchased 0.5 million and 1.8 million shares of its Class A common stock, respectively, for an aggregate purchase price of $ 66.0 million and $ 176.7 million, respectively.

In the six months ended June 30, 2026 and 2025, the Company repurchased 2.6 million and 3.0 million shares of its Class A common stock, respectively, for an aggregate purchase price of $ 319.4 million and $ 306.9 million, respectively.

As of June 30, 2026, approximately $ 826.0 million of the amount authorized in January 2025 for share repurchases remained available for future repurchases.

Stock-Based Compensation

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

Stock Option and Incentive Plan

The Company’s 2016 Stock Option and Incentive Plan (the “Prior Equity Plan”) that originally became effective on June 21, 2016, and was scheduled to expire in June 2026, was amended on June 16, 2026 (the “Amendment Date”), pursuant to the Company’s stockholders’ approval.

The amended 2016 Stock Option and Incentive Plan (the “Amended Equity Plan”) superseded the Prior Equity Plan and will expire on June 16, 2036.

As of its effective date, the Amended Equity Plan reduced the number of shares reserved for issuance under the plan to a maximum of 10,500,000 shares of the Company’s Class A common stock, which will be increased by the amount of any shares subject to awards granted under the Amended Equity Plan (or the Prior Equity Plan prior to the Amendment Date) that are forfeited, canceled, reacquired by the Company prior to vesting

or otherwise terminated.

The Amended Equity Plan does not provide for automatic annual increases of available shares in the plan.

The types of awards permitted for granting under the Amended Equity Plan remain unchanged and include stock options, restricted stock units (“RSUs”), restricted stock awards, stock appreciation rights, unrestricted stock awards, performance share awards, dividend equivalent rights and cash-based awards by the Company to be granted to its employees, directors and consultants.

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

Employee Stock Purchase Plan

The Company’s 2016 Employee Stock Purchase Plan (the “Prior ESPP”) that originally became effective on June 21, 2016, and was scheduled to expire in June 2026, was amended on June 16, 2026, pursuant to the Company's stockholders’ approval.

The amended 2016 Employee Stock Purchase Plan (the “Amended ESPP”) superseded the Prior ESPP and will remain effective until terminated by the Company’s board of directors in its discretion.

As of its effective date, the Amended ESPP reduced the number of shares reserved for issuance thereunder to a maximum of 4,000,000 shares of the Company’s Class A common stock.

The Amended ESPP does not provide for automatic annual increases of available shares in the plan.

Both the Prior ESPP and the Amended ESPP allow 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, and provide for separate six-month offering periods beginning in May and November of each year.

The initial offering under the Amended ESPP will begin on November 16, 2026, following the conclusion of the current six-month offering period that commenced in May 2026 under the Prior ESPP.

On each purchase date, eligible employees purchase shares of the Company’s Class A common stock at a price per share equal to 85 % of the lesser of (i) the fair market value of the Company’s Class A common stock on the offering date or (ii) the fair market value of the Company’s Class A common stock on the purchase date.

Performance-Based Restricted Stock Units

In the first quarter of 2026, the Company granted to certain of its executive employees performance-based restricted stock units (“PSUs”) covering 210,301 shares of Class A common stock that had an aggregate grant date fair value of $ 24.8 million.

5 unchanged sentences

The probability of achievement is assessed each reporting period and cumulative adjustments are recorded in periods in which the probability assessment changes.

The Company’s 2016 Employee Stock Purchase Plan (“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.

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

As of March 31, 2026, total unrecognized compensation cost related to unvested RSUs was $ 885.6 million, which will be amortized over a weighted-average period of 2.0 years.

As of March 31, 2026, total unrecognized compensation cost related to unvested stock options and the ESPP was not significant.

As of June 30, 2026, total unrecognized compensation cost related to unvested RSUs, including PSUs, was $ 1.1 billion, which will be amortized over a weighted-average period of 2.2 years.

As of June 30, 2026, total unrecognized compensation cost related to the ESPP was not significant.

Stock-Based Compensation Expense

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Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

(In thousands)

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Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Net income attributable to common stockholders (in thousands)

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Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Stock options issued and outstanding 132,180 414,972 132,180 145,350

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2,286,140 4,458,044 2,286,140 4,261,767

Shares of Class A common stock committed under ESPP 90,584 148,220 90,584 148,220

Total 2,508,904 5,021,236 2,508,904 4,555,337

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

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

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

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

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

Given the Company’s recent history of generating net income in the U.S., the Company believes that there is a reasonable possibility that during 2026 sufficient positive evidence may become available to allow the Company to determine that a significant portion of the valuation allowance recorded against the Company’s U.S.

deferred tax assets should be released.

This would result in a significant income tax benefit for the period when the Company releases the valuation allowance in the U.S.

However, the exact timing and amount of the valuation allowance release are subject to change based on the Company’s actual operating results.

The provision for income taxes recorded in the three months ended March 31, 2026 and 2025 consists primarily of federal, state and foreign income taxes and withholding taxes in foreign jurisdictions in which the Company conducts business.

In 2026, the primary difference between the Company’s effective tax rate and federal statutory rate relates to the tax benefit recognized from the U.S.

valuation allowance released during the second quarter of 2026.

In prior periods, the primary difference between the Company’s effective tax rate and the federal statutory rate related to the valuation allowance the Company established on the federal, state and certain foreign net operating losses and credits.

The benefit for income taxes recorded in the three and six months ended June 30, 2026 consists primarily of the release of the valuation allowance on U.S.

deferred tax assets.

The benefit for income taxes recorded in the three and six months ended June 30, 2026 was also impacted by federal, state and foreign income taxes and withholding taxes in foreign jurisdictions in which the Company conducts business, primarily driven by the excess benefit on share-based payment awards.

The provision for income taxes recorded in the three and six months ended June 30, 2025 consists primarily of federal, state and foreign income taxes and withholding taxes in foreign jurisdictions in which the Company conducts business.

The Company regularly assesses the need for a valuation allowance on its deferred tax assets.

In making that assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of all available evidence, whether it is more-likely-than-not that some or all of the deferred tax assets will be realized.

The determination of the realizability of deferred tax assets requires significant judgment and relies on management's estimates of future taxable income.

As of June 30, 2026, the Company demonstrated sustained profitability in the U.S.

over a cumulative period of three years based on the U.S.

pre-tax book income adjusted for permanent book-tax differences, and expects to continue to sustain this profitability position in the U.S.

for the annual period ended December 31, 2026.

This evidence is objective and verifiable and represents strong positive evidence that carries significant weight.

Based on the Company’s analysis of all available positive and negative evidence, including the objective and verifiable positive evidence as described above, and anticipated future earnings, the Company concluded that it is more likely than not that the majority of its U.S.

deferred tax assets are realizable.

As a result of this change in estimate, the Company released a significant portion of the valuation allowance on its U.S.

deferred tax assets in the current quarter.

The majority of this valuation allowance related to the U.S.

federal and state net operating losses, tax credit carryforwards, and capitalized R&D expenditures.

As the change in estimate occurred during an interim period, the Company included the change in valuation allowance resulting from the current year income in the estimated annual effective tax rate and recorded the release of the valuation allowance as a discrete tax benefit during the period, which resulted in the recognition of deferred tax assets and an income tax benefit during the three and six months ended June 30, 2026 of $ 944.1 million.

An additional $ 8.7 million of the valuation allowance release was recorded in the statement of shareholders’ equity related to deferred tax assets that arose from a previously settled capped call.

The Company’s judgment regarding the need for a valuation allowance may reasonably change in future reporting periods due to many factors, including changes in expectations of future profitability in the U.S.

and changes in tax laws or regulations.

The Company will continue to maintain a valuation allowance against deferred tax assets where the Company believes that it is more likely than not that they will not be realized.

The remaining valuation allowance as of June 30, 2026 was $ 519.3 million, maintained against deferred tax assets related to investments, certain state research and development credits and certain foreign deferred tax assets.

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

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

For the three months ended March 31, 2026 and 2025, the value of transactions that occurred between the Company and Syniverse were $ 31.0 million and $ 38.7 million, respectively.

For the three and six months ended June 30, 2026, the value of transactions that occurred between the Company and Syniverse were $ 13.0 million and $ 44.0 million, respectively.

For the three and six months ended June 30, 2025, the value of the transactions that occurred between the Company and Syniverse were $ 30.3 million and $ 69.0 million, respectively.

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

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• the impact of, and our ability to comply with, modified or new industry standards, laws and regulations applying to our business, including legislative developments that may affect our tax obligations or tax expense;

• our expectations regarding the potential release of the valuation allowance recorded against our U.S.

deferred tax assets;

• our expectations regarding changes in network service provider fees that we pay in connection with the delivery of communications on our platform, including A2P messaging fees, our ability to manage such fees and their impact on our financial results;

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

What changed 10-Q

Item 1. Financial Statements