On December 1, 2016, we filed a patent infringement lawsuit against Telesign in the United States District Court, Northern District of California, alleging infringement of United States Patent No. 8,306,021 (“021”), United States Patent No. 8,837,465 (“465”), United States Patent No. 8,755,376 (“376”), United States Patent No. 8,736,051 (“051”), United States Patent No. 8,737,962 (“962”), United States Patent No. 9,270,833 (“833”), and United States Patent No. 9,226,217 (“217”). Telesign filed a motion to dismiss the complaint on January 25, 2017. In two orders, issued on March 31, 2017 and April 17, 2017, the court granted Telesign’s motion to dismiss with respect to the ‘962, ‘833, ‘051 and ‘217 patents, but denied Telesign’s motion to dismiss as to the ‘021, ‘465 and ‘376 patents. On August 23, 2017, Telesign petitioned the U.S. Patent and Trademark Office (“U.S. PTO”) for ~~inter partes~~ ~~review of the ‘021, ‘465, and ‘376 patents. On March 9, 2018, the U.S PTO denied Telesign’s petition for~~ ~~inter partes~~ ~~review of the ‘021 patent and granted Telesign’s petitions for~~ ~~inter partes~~ review of the ‘465 and ‘376 patents. On March 6, 2019, the U.S. PTO found all challenged claims of the '465 and '376 patents unpatentable. We appealed the decisions to the United States Court of Appeals for the Federal Circuit who, on June 10, 2020, affirmed the U.S. PTO's rulings. The district court litigation had been stayed pending resolution of the ~~inter partes~~ reviews (and appeals from them). After the appeals were concluded, the district court reopened the case and set trial on the ’021 Patent for July 2021. We sought a judgment of infringement, a judgment of willful infringement, monetary and injunctive relief, enhanced damages, and an award of costs and expenses against Telesign. A settlement agreement was executed on November 25, 2020, settling all claims. On December 2, 2020, a joint stipulation of dismissal was filed and the Court entered an order dismissing the case with prejudice. This matter is now concluded.

In addition to the litigation discussed above, from time to time, we may be subject to legal actions and claims in the ordinary course of business. We have received, and may in the future continue to receive, claims from third parties asserting, among other things, infringement of their intellectual property rights. Future litigation may be necessary to defend ourselves, our partners and our customers by determining the scope, enforceability and validity of third‑party proprietary rights, or to establish our proprietary rights. 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 us because of defense and settlement costs, diversion of management resources, and other factors.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Price of Our Class A Common Stock

Our Class A common stock is traded on ~~The~~the New York Stock Exchange and, as of August 2021, the Long-Term Stock Exchange under the symbol ~~"TWLO."~~“TWLO.” As of January 31, ~~2021,~~2022, we had ~~269~~196 holders of record of our Class A and Class B common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.

Dividend Policy

We have never declared or paid any cash dividends on our capital stock. We intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.

Stock Performance Graph

This performance graph shall not be deemed "soliciting material" or to be "filed" with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of Twilio Inc. under the Securities Act or the Exchange ~~Act~~Act.

We have presented below the cumulative total return to our stockholders between June 23, 2016 (the date our Class A common stock commenced trading on the NYSE) through December 31, ~~2020,~~2021, in comparison to the S&P 500 Index and S&P 500 Information Technology Index. All values assume a $100 initial investment and data for the S&P 500 Index and S&P 500 Information Technology Index assume reinvestment of dividends. The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our Class A common stock.

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Recent Sales of Unregistered Securities and Use of Proceeds from Registered Securities

(a) Sales of Unregistered Securities

In ~~February 2021, and in~~each of the years ended December 31, ~~2020~~2021 and ~~2018,~~2020, Twilio.org donated ~~22,102 shares,~~ 88,408 ~~shares and 62,338~~ shares of our unregistered Class A common stock ~~respectively,~~ to an independent donor advised fund to further our philanthropic goals. The shares ~~are "restricted securities"~~were “restricted securities” for purposes of Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"), and ~~the~~had an aggregate fair market value ~~of these shares~~ on the date of donation ~~was $9.4~~of $31.2 million and $19.0 million, ~~and $6.0 million, respectively. These amount were recorded as general and administrative expense in our consolidated statements of operations for February 2021 and the fiscal years 2020 and 2018,~~ respectively.

In ~~May~~ 2018, we issued ~~$550~~$550.0 million in aggregate principal amount of 0.25% Convertible Senior Notes due 2023 (the ~~"Notes"~~“Convertible Notes”). In connection with the offering of the Convertible Notes, we entered into privately-negotiated capped call transactions with certain counterparties (the ~~"capped calls"~~“capped calls”). The capped calls each ~~have~~had an initial strike price of approximately $70.90 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Convertible Notes. The capped calls ~~have~~had initial cap prices of $105.04 per share, subject to certain adjustments. The capped calls ~~cover,~~covered, subject to anti-dilution adjustments, approximately 7,757,200 shares of Class A Common Stock. ~~See~~Refer to Note 910 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information about the Convertible Notes and capped calls.

We offered and sold the Convertible Notes to the initial purchasers in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and for resale by the initial purchasers to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A under the Securities Act. We relied on these exemptions from registration based in part on representations made by the initial purchasers in the purchase agreement dated May 14, 2018. ~~The~~On May 18, 2021, we issued a notice of redemption for our Convertible Notes and in June 2021, we redeemed all of the remaining outstanding principal amount of the Convertible Notes and settled all related capped call arrangements. These transactions are described in detail in Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

In connection with our acquisition of Zipwhip in July 2021, we issued an additional 526 shares of ~~the~~unregistered Class A common stock issuable upon conversion of the Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

In the year ended December 31, 2020, we converted $206.3 million aggregate principal of the Notes by issuing 2,902,434 shares of the Class A common stock issuable upon conversion of the Notes and the aggregate fair market value of these shares on ~~the dates of conversion was $892.6 million. To the extent that any further shares of the Class A common stock are issued upon conversion of the Notes, they will be issued in transactions anticipated~~November 15, 2021, pursuant to bea post-closing adjustment. These issuances were exempt from registration under the Securities Act by virtue of Section ~~3(a)(9) thereof, because no commission or other remuneration is expected to be paid in connection with conversion~~4(a)(2) of the ~~Notes,~~Securities Act and ~~any resulting issuance~~Rule 506 of ~~shares of the Class A common stock.~~Regulation D promulgated thereunder.

(b) Use of Proceeds

In February 2021, we closed a follow-on public offering, in which we sold 4,312,500 shares of Class A common stock at a price to the public of $409.60 per share, including shares sold in connection with the exercise of the underwriters' option to purchase additional shares. The offer and sale of all of the shares in the follow-on offering were registered under the Securities Act pursuant to a registration statement on Form S-3 (File No. 333-231794), which was declared effective by the SEC on May 29, 2019. We raised $1.8 billion in net proceeds after deducting offering expenses paid ~~and payable~~ by us. No payments were made by us to directors, officers or persons owning 10 percent or more of our capital stock or to their associates, or to our affiliates, other than payments in the ordinary course of business to officers for salaries. There has been no material change in the planned use of proceeds from our follow-on offering as described in our final prospectus filed with the SEC on February 22, 2021, pursuant to Rule 424(b)(5). We invested the funds received in accordance with our board-approved investment policy, which provides for investments in obligations of the U.S. government, money market instruments, registered money market funds and corporate bonds. The managing underwriters of our follow-on offering were Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, Academy Securities, Inc., Cabrera Capital Markets LLC, and Siebert Williams Shank & Co., LLC.

In August 2020, we closed a follow-on public offering, in which we sold 5,819,838 shares of Class A common stock at a price to the public of $247.00 per share, including shares sold in connection with the exercise of the underwriters' option to purchase additional shares. The offer and sale of all of the shares in the follow-on offering were registered under the Securities Act pursuant to a registration statement on Form S-3 (File No. 333-231794), which was declared effective by the SEC on May 29, 2019. We raised $1.4 billion in net proceeds after deducting underwriting discounts and commissions and offering expenses paid by us. No payments were made by us to directors, officers or persons owning 10 percent or more of our capital stock or to their associates, or to our affiliates, other than payments in the ordinary course of business to officers for salaries. There has been no material change in the planned use of proceeds from our follow-on offering as described in our final prospectus filed with the SEC on August 7, 2020, pursuant to Rule 424(b)(5). We invested the funds received in accordance with our board-approved investment policy, which provides for investments in obligations of the U.S. government, money market instruments, registered money market funds and corporate bonds. The managing underwriters of our follow-on offering were J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Goldman, Sachs & Co. and BofA Securities, Inc.

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In June 2019, we closed a follow-on public offering, in which we sold 8,064,515 shares of Class A common stock at a price to the public of $124.00 per share, including shares sold in connection with the exercise of the underwriters' option to purchase additional shares. The offer and sale of all of the shares in the follow-on offering were registered under the Securities Act pursuant to a registration statement on Form S-3 (File No. 333-231794), which was declared effective by the SEC on May 29, 2019. We raised $979.0 million in net proceeds after deducting underwriting discounts and commissions and offering expenses paid ~~and payable~~ by us. No payments were made by us to directors, officers or persons owning 10 percent or more of our capital stock or to their associates, or to our affiliates, other than payments in the ordinary course of business to officers for salaries. There has been no material change in the planned use of proceeds from our follow-on offering as described in our final prospectus filed with the SEC on May 31, 2019, pursuant to Rule 424(b). We invested the funds received in accordance with our board-approved investment policy, which provides for investments in obligations of the U.S. government, money market instruments, registered money market funds and corporate bonds. The managing underwriters of our follow-on offering were Goldman, Sachs & Co. and J.P. Morgan Securities LLC.

None.

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Item 6. ~~Selected Financial and Other Data~~

We have derived the selected consolidated statements of operations data for the years ended December 31, 2020, 2019 and 2018 and the balance sheet data as of December 31, 2020 and 2019 from our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. The selected consolidated statements of operations data for the years ended December 31, 2017 and 2016 and the consolidated balance sheet data as of December 31, 2018, 2017 and 2016 are derived from audited consolidated financial statements not included in this Annual Report on Form 10-K. We have included Twilio Segment in our consolidated results of operations prospectively from November 2, 2020, and Twilio SendGrid in our consolidated results of operations prospectively from February 1, 2019, the closing dates of each acquisitions, respectively. Our historical results are not necessarily indicative of the results that may be expected in the future. The following selected consolidated financial and other data should be read in conjunction with Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations", and our consolidated financial statements and the related notes appearing in Part II, Item 8, "Financial Statements and Supplementary Data", of this Annual Report on Form 10-K to fully understand factors that may affect the comparability of the information presented below.

~~Consolidated Statements of Operations Data:~~

Year Ended December 31,
2020 2019 2018 2017 2016
(In thousands, except share and per share amounts)
Revenue $ 1,761,776 $ 1,134,468 $ 650,067 $ 399,020 $ 277,335
Cost of revenue (1) (2)
846,115 525,551 300,841 182,895 120,520
Gross profit 915,661 608,917 349,226 216,125 156,815
Operating expenses:
Research and development (1) (2)
530,548 391,355 171,358 120,739 77,926
Sales and marketing (1) (2)
567,407 369,079 175,555 100,669 65,267
General and administrative (1) (2)
310,607 218,268 117,548 60,791 54,937
Total operating expenses 1,408,562 978,702 464,461 282,199 198,130
Loss from operations (492,901) (369,785) (115,235) (66,074) (41,315)
Other (expenses) income, net (11,525) 7,569 (5,923) 3,071 317
Loss before (provision) benefit for income taxes (504,426) (362,216) (121,158) (63,003) (40,998)
Benefit (provision) for income taxes 13,447 55,153 (791) (705) (326)
Net loss attributable to common
stockholders $ (490,979) $ (307,063) $ (121,949) $ (63,708) $ (41,324)
Net loss per share attributed to common
stockholders, basic and diluted $ (3.35) $ (2.36) $ (1.26) $ (0.70) $ (0.78)
Weighted-average shares used in
computing net loss per share
attributable to common stockholders,
basic and diluted 146,708,663 130,083,046 97,130,339 91,224,607 53,116,675

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~~Key Business Metrics:~~

Year Ended December 31,
2020 2019 2018 2017 2016
Number of Active Customer Accounts
(as of end date of period) (3) (4)
221,000 179,000 64,286 48,979 36,606
Total Revenue (in thousands) (3)
$ 1,761,776 $ 1,134,468 $ 650,067 $ 399,020 $ 277,335
Total Revenue Growth Rate (3)
55 % 75 % 63 % 44 % 66 %
Dollar-Based Net Expansion Rate (5)
137 % 135 % 143 % 127 % 147 %

~~_________________________~~

~~(1)~~ ~~Includes stock-based compensation expense as follows:~~

Year Ended December 31,
2020 2019 2018 2017 2016
(In thousands)
Cost of revenue $ 8,857 $ 7,123 $ 1,126 $ 650 $ 291
Research and development 173,303 126,012 42,277 22,808 12,946
Sales and marketing 103,450 60,886 23,616 9,822 4,972
General and administrative 76,301 70,297 26,254 16,339 6,016
Total $ 361,911 $ 264,318 $ 93,273 $ 49,619 $ 24,225

~~_________________________~~

~~(2)~~ ~~Includes amortization of acquired intangibles as follows:~~

Year Ended December 31,
2020 2019 2018 2017 2016
(In thousands)
Cost of revenue $ 59,501 $ 45,267 $ 5,656 $ 4,644 $ 619
Research and development — — 22 139 151
Sales and marketing 38,915 27,540 1,117 753 —
General and administrative 78 — 375 84 110
Total $ 98,494 $ 72,807 $ 7,170 $ 5,620 $ 880

~~_________________________~~

~~(3)~~ For the year ended December 31, 2020, Active Customer Accounts, Total Revenue, and Total Revenue Growth Rate include the partial year contribution from Twilio Segment, from the date of acquisition on November 2, 2020. For the year ended December 31, 2019, Active Customer Accounts, Total Revenue and Total Revenue Growth Rate include the partial year contribution from Twilio SendGrid, from the date of acquisition on February 1, 2019. Effective December 31, 2019, we round down the number of Active Customer Accounts to the nearest thousand.[Reserved]

~~(4)~~ ~~See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Business Metrics—Number of Active Customer Accounts."~~

~~(5)~~ ~~See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Business Metrics—Dollar- Based Net Expansion Rate."~~

~~Consolidated Balance Sheet Data:~~

As of December 31,
2020 2019 2018 2017 2016
(In thousands)
Cash and cash equivalents $ 933,885 $ 253,660 $ 487,215 $ 115,286 $ 305,665
Marketable securities $ 2,105,906 $ 1,599,033 $ 261,128 $ 175,587 $ —
Working capital $ 2,924,029 $ 1,814,109 $ 735,138 $ 274,738 $ 279,676
Property and equipment, net $ 183,239 $ 141,256 $ 63,534 $ 50,541 $ 37,552
Total assets $ 9,487,433 $ 5,150,516 $ 1,028,710 $ 449,782 $ 412,694
Total stockholders’ equity $ 8,452,665 $ 4,279,411 $ 438,235 $ 359,846 $ 329,447

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~~Non-GAAP Financial Measures:~~

We use the following non‑GAAP financial information, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non‑GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance, facilitates period‑to‑period comparisons of results of operations, and assists in comparisons with other companies, many of which use similar non‑GAAP financial information to supplement their GAAP results. Non‑GAAP financial information is presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with generally accepted accounting principles, and may be different from similarly‑titled non‑GAAP measures used by other companies. Whenever we use a non‑GAAP financial measure, a reconciliation is provided to the most closely applicable financial measure stated in accordance with generally accepted accounting principles. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non‑GAAP financial measures to their most directly comparable GAAP financial measures.

~~Non‑GAAP Gross Profit and Non‑GAAP Gross Margin.~~ For the periods presented, we define non‑GAAP gross profit and non‑GAAP gross margin as GAAP gross profit and GAAP gross margin, respectively, adjusted to exclude, as applicable, certain expenses as presented in the table below:

Year Ended December 31,
2020 2019 2018 2017 2016
Reconciliation: (In thousands)
Gross profit $ 915,661 $ 608,917 $ 349,226 $ 216,125 $ 156,815
Non-GAAP adjustments:
Stock-based compensation 8,857 7,123 1,126 650 291
Amortization of acquired intangibles 59,501 45,267 5,656 4,644 619
Payroll taxes related to stock-based compensation — 104 — — —
Non-GAAP gross profit $ 984,019 $ 661,411 $ 356,008 $ 221,419 $ 157,725
Non-GAAP gross margin 56 % 58 % 55 % 55 % 57 %

~~Non‑GAAP Operating Expenses~~. For the periods presented, we define non‑GAAP operating expenses (including categories of operating expenses) as GAAP operating expenses (and categories of operating expenses) adjusted to exclude, as applicable, certain expenses as presented in the table below:

Year Ended December 31,
2020 2019 2018 2017 2016
Reconciliation: (In thousands)
Operating expenses $ 1,408,562 $ 978,702 $ 464,461 $ 282,199 $ 198,130
Non-GAAP adjustments:
Stock-based compensation (353,054) (257,195) (92,147) (48,969) (23,934)
Amortization of acquired intangibles (38,993) (27,540) (1,514) (976) (261)
Acquisition-related expenses (21,765) (15,713) (4,481) (310) (499)
Release of tax liability upon obligation settlement — — — 13,365 805
Charitable contributions (18,993) — (7,121) (1,172) (3,860)
Legal settlements/accruals — — (1,710) — —
Gain on lease termination — — — 295 —
Payroll taxes related to stock-based compensation (27,389) (15,084) (5,617) (2,950) (434)
Non-GAAP operating expenses $ 948,368 $ 663,170 $ 351,871 $ 241,482 $ 169,947

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~~Non‑GAAP Income (Loss) from Operations and Non‑GAAP Operating Margin~~. For the periods presented, we define non‑GAAP income (loss) from operations and non‑GAAP operating margin as GAAP loss from operations and GAAP operating margin, respectively, adjusted to exclude, as applicable, certain expenses as presented in the table below:

Year Ended December 31,
2020 2019 2018 2017 2016
Reconciliation: (In thousands)
Loss from operations $ (492,901) $ (369,785) $ (115,235) $ (66,074) $ (41,315)
Non-GAAP adjustments:
Stock-based compensation 361,911 264,318 93,273 49,619 24,225
Amortization of acquired intangibles 98,494 72,807 7,170 5,620 880
Acquisition-related expenses 21,765 15,713 4,481 310 499
Release of tax liability upon obligation settlement — — — (13,365) (805)
Charitable contributions 18,993 — 7,121 1,172 3,860
Legal settlements/accruals — — 1,710 — —
Gain on lease termination — — — (295) —
Payroll taxes related to stock-based compensation 27,389 15,188 5,617 2,950 434
Non-GAAP income (loss) from operations $ 35,651 $ (1,759) $ 4,137 $ (20,063) $ (12,222)
Non-GAAP operating margin 2 % — % 1 % (5) % (4) %

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. In addition to historical financial information, the following discussion contains forward-looking statements that are based upon current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K. Our fiscal year ends on December 31.

Overview

We are the leader in the ~~Cloud Communications Platform~~cloud communications platform category. We enable developers to build, scale and operate real‑time customer engagement within their software applications via our simple‑to‑use Application Programming Interfaces (“APIs”). The power, flexibility, and reliability offered by our software building blocks empowers companies of virtually every shape and size to build world‑class engagement into their customer experience.

applications. We offer a customer engagement platform with software designed to address specific use cases like account security and contact centers, and a set of ~~APIs~~Application Programming Interfaces (“APIs”) that handles the higher level communication logic needed for nearly every type of customer engagement. ~~These APIs are focused~~The power, flexibility and reliability offered by our software building blocks empower companies of virtually every shape and size to build world-class engagement into their customer experience. For additional detail on the business challenges that a developer is looking to address, allowing our customers to more quickly and easily build better ways to engage with their customers throughout their journey. We also offer a set of APIs that enables developers to embed voice, messaging, video and email capabilities into their applications and are designed to support almost all the fundamental ways humans communicate, unlocking innovators to address just about any communication market. The Super Network is our software layer that allows our customers’ software to communicate with connected devices globally. It interconnects with communications networks and inbox service providers around the world and continually analyzes data to optimize the quality and cost of communications that flow through our platform. The Super Network also contains a set of APIs that gives our customers access to more foundational componentsdescription of our ~~platform, like phone numbers.~~

~~Our customers’ applications are able~~business and products please refer to reach users via voice, messaging, video and email in nearly every country in the world by utilizing our platform. We support our global business through over 25 cloud data centers across more than seven regions around the world and have developed contractual relationships with network service providers globally.

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~~Our business model is primarily focused~~Part I, Item 1, “Business”, included elsewhere on ~~reaching and serving the needs of software developers, who we believe are becoming increasingly influential in technology decisions in a wide variety of companies. We call~~ this approach our Business Model for Innovators, which empowers developers by reducing friction and upfront costs, encouraging experimentation, and enabling developers to grow as customers as their ideas succeed. We established and maintain our leadership position by engaging directly with, and cultivating, our developer community, which has led to the rapid adoption of our platform. We reach developers through community events and conferences, including our SIGNAL customer and developer conference, to demonstrate how every developer can create differentiated applications incorporating communications using our products.

Once developers are introduced to our platform, we provide them with a low friction trial experience. By accessing our easy‑to‑adopt APIs, extensive self‑service documentation and customer support team, developers build our products into their applications and then test such applications through free trial periods that we provide. Once they have decided to use our products beyond the initial free trial period, customers provide their credit card information and only pay for the actual usage of our products. Historically, we have acquired the substantial majority of our customers through this self‑service model. As customers expand their usage of our platform, our relationships with them often evolve to include business leaders within their organizations. Once our customers reach a certain spending level with us, we support them with account executives or customer success advocates within our sales organization to ensure their satisfaction and expand their usage of our products.

We also supplement our self‑service model with a sales effort aimed at engaging larger potential customers, strategic leads and existing customers through a direct sales approach. To help increase awareness of our products in the enterprise, we have expanded our marketing efforts through programs like our Twilio Engage roadshow where we seek to bring business leaders and developers together to discuss the future of customer engagement. We have developed products to support this effort as well, like the Twilio Enterprise Plan, which provides capabilities for advanced security, access management and granular administration. Our sales organization targets technical leaders and business leaders who are seeking to leverage software to drive competitive differentiation. As we educate these leadersAnnual Report on the benefits of developing applications incorporating our products to differentiate their business, they often consult with their developers regarding implementation. We believe that developers are often advocates for our products as a result of our developer‑focused approach. Our sales organization includes sales development, inside sales, field sales and sales engineering personnel.

When potential customers do not have the available developer resources to build their own applications, we refer them to either our technology partners who embed our products in the solutions that they sell to other businesses (such as contact centers and sales force and marketing automation) or our consulting partners who provide consulting and development services for organizations that have limited software development expertise to build our platform into their software applications.

We generate the substantial majority of our revenue from customers based on their usage of our software products that they have incorporated into their applications. Our Flex contact center platform is generally offered on a per user, per month basis or on a usage basis per agent hour. In addition, our email API is offered on a monthly subscription basis and our Marketing Campaigns product is priced based on the number of email contacts stored on our platform and the number of monthly emails sent to those contacts through our Email API. Also, customers using our Programmable Messaging or Programmable Voice APIs typically purchase one or more telephone numbers from us, for which we charge a monthly flat fee per number. Some customers also choose to purchase various levels of premium customer support for a monthly fee. Customers that register in our self‑service model typically pay upfront via credit card and draw down their balance as they purchase or use our products. Most of our customers draw down their balance in the same month they pay up front or are charged on a monthly subscription basis for our email-related products. As a result, our deferred revenue and customer deposits liability at any particular time is not a meaningful indicator of future revenue. As our customers’ usage grows, some of our customers enter into contracts and are invoiced monthly in arrears. Most of these customer contracts have terms of approximately 12 months and typically include some level of minimum revenue commitment. Most customers with minimum revenue commitment contracts generate a significant amount of revenue in excess of their minimum revenue commitment in any period. Historically, the aggregate minimum commitment revenue from customers with whom we have contracts has constituted a minority of our revenue in any period, and we expect this to continue in the future.

Our developer‑focused products are delivered to customers and users through our Super Network, which uses software to optimize communications on our platform. We interconnect with communications networks and inbox service providers globally to deliver our products, and therefore we have arrangements with network service providers in many regions in the world. Historically, a substantial majority of our cost of revenue has been network service provider fees. We continue to optimize our network service provider coverage and connectivity through continuous improvements in routing and sourcing in order to lower the usage expenses we incur for network service provider fees. As we benefit from our platform optimization efforts, we sometimes pass these savings on to customers in the form of lower usage prices on our products in an effort to drive increased usage and expand the reach and scale of our platform. In the near term, we intend to operate our business to expand the reach and scale of our platform and to grow our revenue, rather than to maximize our gross margins.

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Form 10-K.

We have achieved significant growth in recent periods. In the years ended December 31, 2021, 2020 ~~2019~~ and ~~2018,~~2019, our revenue was $2.8 billion, $1.8 billion and $1.1 billion, ~~and $650.1 million,~~ respectively, and our net loss was $949.9 million, $491.0 million ~~$307.1 million~~ and ~~$121.9~~$307.1 million, respectively. In the years ended December 31, 2021, 2020 ~~2019~~ and ~~2018,~~2019, our 10 largest Active Customer Accounts generated an aggregate of ~~14%~~11%, ~~13%~~14% and ~~18%~~13% of our total revenue, respectively.

Acquisition of Zipwhip, Inc. in 2021

In July 2021, we acquired Zipwhip, Inc. (“Zipwhip”), a leading provider of toll-free messaging in the United States, for a purchase price of $838.8 million. The purchase price was paid in the form of shares of our Class A common stock and cash and included fair value of pre-combination services of Zipwhip employees that was embedded in the unvested equity awards which we assumed on the acquisition closing date. Part of the cash was paid to settle the vested stock options of Zipwhip employees that were outstanding on the acquisition closing date. We assumed all unvested and outstanding stock options and restricted stock units of Zipwhip continuing employees as converted into our own respective equity awards at the conversion ratio provided in the Agreement and Plan of Merger and Reorganization. Vesting of Class A shares of our common stock and assumed equity awards that were subject to service conditions is recorded into our stock-based compensation expense as the services are provided. This acquisition is described in detail in Note 7 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

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Because the acquisition of Zipwhip occurred during the year ended December 31, 2021, the information presented in this section with respect to the year ended December 31, 2021 includes the contribution of Zipwhip starting from July 14, 2021, the date of acquisition. The information with respect to the periods prior to the date of acquisition relates to Twilio on a standalone basis, not including Zipwhip. As a result, comparisons to prior periods may not be indicative of future results or future rates of growth.

Acquisition of Segment.io, Inc. in 2020

In November 2020, we acquired Segment.io, Inc. ~~("Segment"~~(“Segment”), the market-leading customer data platform, for a purchase price of $3.0 ~~billion, consisting~~billion. The purchase price was paid in the form of ~~9.5 million~~ shares of our Class A common stock ~~with a total~~and cash and included fair value of ~~$2.5 billion and $413.3 million~~pre-combination services of Segment employees that was embedded in ~~cash.~~the unvested equity awards which we assumed on the acquisition closing date. Part of the cash ~~consideration~~ was paid to settle the vested equity awards of Segment ~~employees. The estimated transaction value of $3.2 billion, as previously announced, includes certain shares of Class A common stock and assumed equity awards~~employees that ~~are subject to future vesting.~~were outstanding on the acquisition closing date. We assumed all unvested and outstanding equity awards of ~~Segment's~~Segment continuing employees as converted into our own equity awards at the conversion ratio provided in the Agreement and Plan of Reorganization. ~~The total value~~Vesting of Class A shares of our common stock and assumed equity awards that ~~are~~were subject to ~~future vesting was $316.0 million on the acquisition closing date, which will be~~service conditions is recorded into our stock-based compensation expense over the period the services are provided. This acquisition is described in detail in Note 7 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Because the acquisition of Twilio Segment occurred during the year ended December 31, 2020, the information presented in this section with respect to the year ended December 31, 2020 includes the contribution of Twilio Segment starting from November 2, 2020, the date of acquisition. The information with respect to periods prior to the ~~prior-year comparable periods~~date of acquisition relates to Twilio on a standalone ~~basis.~~basis, not including Segment. The information with respect to year 2021 includes Segment results for the full year. As a result, comparisons to prior periods or the ~~prior-year~~current full year period may not be indicative of future results or future rates of growth.

~~Acquisition of SendGrid, Inc.~~Investment in ~~2019~~Syniverse Corporation

In February ~~2019,~~2021, we ~~acquired SendGrid, Inc. ("SendGrid"~~entered into a Framework Agreement, as amended, with Syniverse Corporation (“Syniverse”) and Carlyle Partners V Holdings, L.P., (“Framework Agreement”), ~~the leading email API platform, by issuing 23.6 million~~pursuant to which Syniverse would issue to us shares of ~~its Class A~~Syniverse common stock ~~with~~in consideration for an investment by us of up to $750.0 million, subject to certain terms and conditions. The initial agreements and conditions to closing of this transaction are described in detail in Note 13(a) to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

On February 9, 2022, Syniverse mutually terminated a total value of $2.7 billion. We also assumed all of the outstanding stock options and restricted stock units of SendGrid as converted into our stock options and restricted stock units, respectively,based on the conversion ratio provided in theproposed Agreement and Plan of Merger with M-3 Brigade Acquisition II Corp. (“MBAC”) because the rate of MBAC shareholder redemptions for the proposed transaction would have exceeded the minimum cash condition for closing, which occurred as a result of recent changes in market conditions (“MBAC Transaction Termination”). Because of the MBAC Transaction Termination, Twilio will not purchase any shares of common stock of, or make any investment in, MBAC.

The Framework Agreement, dated as of February 26, 2021, by and ~~Reorganization,~~between Twilio, Syniverse and Carlyle Partners V Holdings, L.P., remains in full force and effect. The amendment, dated as ~~amended.~~of August 16, 2021, to the Framework Agreement terminated on February 9, 2022, as a result of the MBAC Transaction Termination. Pursuant to the terms and subject to the closing conditions set forth in the Framework Agreement, the parties thereto are pursuing the alternative transaction, whereby Twilio will make a minority investment of $500.0 million to $750.0 million in Syniverse and the parties (or their applicable subsidiaries) will enter into a wholesale agreement.

Public Equity Offerings

In February 2021, August 2020 and June 2019, we completed public equity offerings in which we sold 4,312,500 shares, 5,819,838 shares and 8,064,515 shares, respectively, of our Class A common stock at public offering prices of $409.60 per share, $247.00 per share and $124.00 per share, respectively. We received aggregate proceeds of $1.8 billion, $1.4 billion and $979.0 million, respectively, after deducting underwriting discounts and offering expenses paid ~~and payable~~ by us.

Issuance of 2029 and 2031 Senior Notes

In March 2021, we issued and sold $1.0 billion aggregate principal amount of senior notes, consisting of $500.0 million principal amount of 3.625% notes due 2029 (the “2029 Notes”) and $500.0 million principal amount of 3.875% notes due 2031 (the “2031 Notes,” and together with the 2029 Notes, the “Notes”). The net proceeds from the offering of these Notes were

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approximately $984.7 million, after deducting underwriting discounts and issuance costs paid by us. These Notes are described in detail in Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Redemption of Convertible Senior Notes and Capped Call Transactions

During 2021 we issued a notice of redemption for our convertible senior notes due 2023 (the “Convertible Notes”) and on June 2, 2021, we redeemed all of the remaining outstanding principal amount of the notes. During 2021 and through the date of the redemption, we converted $343.7 million aggregate principal amount of the Convertible Notes by issuing 4,846,965 shares of our Class A common stock. The extinguishment of these notes resulted in a $29.0 million loss that is included in other (expenses) income, net, in our consolidated statement of operations included elsewhere in this Annual Report on Form 10-K.

Concurrently with the principal redemption, we settled the related capped call arrangements that were entered into contemporaneously with the Convertible Notes offering in May 2018. The capped call arrangements were settled for gross cash consideration of $229.8 million that we received and recorded as additional paid-in-capital, net of $1.4 million of transaction costs and a $3.2 million realized gain. These transactions are described in detail in Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

COVID-19 UPDATE

~~A novel coronavirus disease (“COVID-19”) was declared~~The rapid spread of the COVID-19 globally has disrupted, and may continue to disrupt, our day-to-day operations and the operations of our customers, partners and service providers for an indefinite period of time, including as a ~~global pandemic during~~result of changing public health recommendations, travel restrictions and limitations, the ~~first quarter~~duration, spread and severity and potential recurrence of ~~2020 and has resulted in the imposition of numerous, unprecedented, national and international measures to try to contain~~ the virus ~~including travel bans~~ and ~~restrictions, shutdowns, quarantines, shelter-in-place~~its variants, as well as the efficacy of vaccines and ~~social distancing orders. To prioritize~~vaccine distribution and the ~~health~~timing and ~~safety~~trajectory of the economic recovery, all of which could negatively impact our ~~employees, customers~~business and ~~our community at large, we have either cancelled or shifted other planned events to virtual-only experiences~~results of operations and ~~may determine to alter, postpone or cancel additional customer, employee or industry events in the future.~~financial condition. Since mid-March 2020, we have ~~also~~ taken ~~several~~ precautionary measures to protect our employees and contingent workers and to help minimize the spread of the virus ~~including~~by temporarily closing our worldwide offices ~~requiring all employees~~ and ~~contingent workers~~minimizing business travel. We have continued to ~~work from home and suspending all business travel worldwide~~monitor the progress of vaccination efforts around the world. In the second half of 2021, as COVID-19 related restrictions have eased in some geographies, we commenced a phased reopening for ~~our employees for the time being.~~certain offices.

The broader implications of COVID-19 on our results of operations and overall financial performance remain uncertain. The COVID-19 pandemic and its adverse effects on economic and market conditions, including labor shortages, supply chain disruptions and inflation, have ~~become more~~been prevalent in the locations where we, our customers, our suppliers or our third-party business partners conduct business. ~~In the three months ended December 31, 2020, we experienced a modest rebound in usage levels from customers in the travel~~These adverse conditions may continue for an extended period and hospitality industry, while the ridesharing industry remained below pre-COVID-19 levels. We also continued to experience increased usage in other areas, including healthcare, education, consumer on-demand, and retail. We acknowledge that there may be additional impacts to the economy and our business as a result of COVID-19. ~~We expect that there may be some volatility~~This could result in ~~customer~~decreased business spending by our customers and prospective customers and business partners and third-party business partners, reduced demand ~~and buying habits as the pandemic continues, and we may experience constrained supply~~for our solutions, lower renewal rates by our customers, longer or ~~curtailed customer demand that could materially and adversely impact our business, results of operations and financial performance in future periods. Specifically, we may experience impact from~~ delayed sales cycles, including customers and prospective customers delaying contract signing or contract renewals, or reducing

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budgets or minimum commitments related to the ~~products~~product and services that we offer, all of which could have an adverse impact on our business operations and changes to consumer behavior that may affect customers who use our products and service for confirmations, notifications, and other use cases. While we are continuing our recruiting efforts, it is possible that the pace of our hiring may slow during the COVID-19 pandemic.financial condition. See the risk factor titled ~~"The~~“The global COVID-19 pandemic may adversely impact our business, results of operations and financial ~~performance"~~condition” in Part I, Item 1A, “Risk Factors” of this Annual Report on Form 10-K for further discussion of the possible impact of the COVID-19 pandemic on our business, financial condition and results of operations.

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Key Business Metrics


		Year Ended December 31,										Year Ended December 31,
		2020			2019			2018				2021			2020			2019
Number of Active Customer Accounts (as of end date of period) (1)	Number of Active Customer Accounts (as of end date of period) (1)	221,000			179,000			64,286			Number of Active Customer Accounts (as of end date of period) (1)	256,000			221,000			179,000
Total Revenue (in thousands) (1)	Total Revenue (in thousands) (1)	$	1,761,776		$	1,134,468		$	650,067		Total Revenue (in thousands) (1)	$	2,841,839		$	1,761,776		$	1,134,468
Total Revenue Growth Rate (1)	Total Revenue Growth Rate (1)	55		%	75		%	63		%	Total Revenue Growth Rate (1)	61		%	55		%	75		%
Dollar-Based Net Expansion Rate (2)	Dollar-Based Net Expansion Rate (2)	137		%	135		%	143		%	Dollar-Based Net Expansion Rate (2)	131		%	137		%	135		%
____________________	____________________										____________________
(1) Includes the contributions from our Twilio Segment business, acquired November 2, 2020, and Twilio SendGrid business, acquired February 1, 2019, from the dates of their respective acquisitions. Effective December 31, 2019, we round down the number of Active Customer Accounts to the nearest thousand.
(1) Includes the contributions from our Zipwhip business, acquired July 14, 2021; Twilio Segment business, acquired November 2, 2020; Twilio SendGrid business, acquired February 1, 2019; and other smaller acquisitions from the dates of their respective acquisitions except for the Number of Active Customer Accounts, which excludes customer accounts from our Zipwhip business.											(1) Includes the contributions from our Zipwhip business, acquired July 14, 2021; Twilio Segment business, acquired November 2, 2020; Twilio SendGrid business, acquired February 1, 2019; and other smaller acquisitions from the dates of their respective acquisitions except for the Number of Active Customer Accounts, which excludes customer accounts from our Zipwhip business.

(2) As previously announced in our Annual Report on Form 10-K filed with the SEC on March 2, 2020, commencing with the three-month period ended March 31, 2020, we calculate our Dollar-Based Net Expansion Rate by comparing total revenue from a cohort of Active Customer Accounts in a period to the same period in the prior year (the "New DBNE Definition"). To facilitate comparison between the periods presented, Dollar-Based Net Expansion Rate as presented in the table above has been calculated as if the New DBNE Definition had been in effect during that period. As a result of the New DBNE Definition, unless specifically identified as being calculated using total revenue, any Dollar-Based Net Expansion Rates disclosed by us in our SEC filings, press releases and presentations prior to the date of our press release for the three months ended March 31, 2020, will not be directly comparable to our Dollar-Based Net Expansion Rates going forward. Revenue from Twilio Segment will not impact this calculation until the one-year anniversary of the acquisition.
(2) As previously announced in our Annual Report on Form 10-K filed with the SEC on March 2, 2020, commencing with the three-month period ended March 31, 2020, we calculate our Dollar-Based Net Expansion Rate by comparing total revenue from a cohort of Active Customer Accounts in a period to the same period in the prior year (the “New DBNE Definition”). To facilitate comparison between the periods presented, Dollar-Based Net Expansion Rate as presented in the table above has been calculated as if the New DBNE Definition had been in effect during that period. As a result of the New DBNE Definition, unless specifically identified as being calculated using total revenue, any Dollar-Based Net Expansion Rates disclosed by us in our SEC filings, press releases and presentations prior to the date of our press release for the three months ended March 31, 2020, will not be directly comparable to our Dollar-Based Net Expansion Rates going forward. Unless an acquisition closes on the first day of a quarter, revenue from an acquisition will not impact this calculation until the quarter following the one year anniversary of the acquisition.											(2) As previously announced in our Annual Report on Form 10-K filed with the SEC on March 2, 2020, commencing with the three-month period ended March 31, 2020, we calculate our Dollar-Based Net Expansion Rate by comparing total revenue from a cohort of Active Customer Accounts in a period to the same period in the prior year (the “New DBNE Definition”). To facilitate comparison between the periods presented, Dollar-Based Net Expansion Rate as presented in the table above has been calculated as if the New DBNE Definition had been in effect during that period. As a result of the New DBNE Definition, unless specifically identified as being calculated using total revenue, any Dollar-Based Net Expansion Rates disclosed by us in our SEC filings, press releases and presentations prior to the date of our press release for the three months ended March 31, 2020, will not be directly comparable to our Dollar-Based Net Expansion Rates going forward. Unless an acquisition closes on the first day of a quarter, revenue from an acquisition will not impact this calculation until the quarter following the one year anniversary of the acquisition.

Table of ~~Revenue and Gross Margin~~Contents

Year Ended December 31,
2020 2019 2018 2019 to 2020
Change 2018 to 2019
Change
(Dollars in thousands)
Cost of revenue $ 846,115 $ 525,551 $ 300,841 $ 320,564 61 % $ 224,710 75 %
Gross margin 52 % 54 % 54 %

2020 compared to 2019

In 2020, cost of revenue increased by $320.6 million, or 61%, compared to the same period last year. The increase in cost of revenue was primarily attributable to a $246.2 million increase in network service providers’ costs and a $32.3 million increase in cloud infrastructure fees, both to support the growth in usage of our products. The increase was also due to a $14.2 million increase in the amortization expense of intangible assets that we acquired through business combinations.

In 2020, gross margin percentage declined compared to ~~2019.~~the same period last year. This decline was primarily driven by a re-acceleration in growth of our messaging business, an increase in amortization expense related to acquired intangible assets, the impact of an increasing mix of international product usage and an increase in network service provider fees in certain ~~geographies.~~geographies, which we pass to our customers at cost. These declines were partially offset by the impact of the acquisition of ~~the~~our Twilio Segment business and certain operational improvements.

~~2019~~Operating Expenses


	Year Ended December 31,
	2021		2020		2019		2020 to 2021 Change				2019 to 2020 Change
	(Dollars in thousands)
Research and development	$	789,219	$	530,548	$	391,355	$	258,671	49	%	$	139,193	36	%
Sales and marketing	1,044,618		567,407		369,079		477,211		84	%	198,328		54	%
General and administrative	472,460		310,607		218,268		161,853		52	%	92,339		42	%
Total operating expenses	$	2,306,297	$	1,408,562	$	978,702	$	897,735	64	%	$	429,860	44	%

2021 compared to ~~2018~~2020

In ~~2019, cost of revenue~~2021, research and development expenses increased by ~~$224.7~~$258.7 million, or ~~75%~~49%, compared to the same period last year. The increase ~~in cost of revenue~~ was primarily attributable to a ~~$133.1~~$225.0 million increase in ~~network service providers’~~personnel costs, ~~and~~net of a ~~$18.6~~$15.7 million increase in ~~cloud infrastructure fees, both~~capitalized software development costs, largely as a result of a 54% average increase in our research and development headcount, as we continued to ~~support~~focus on enhancing our existing products, introducing new products as well as enhancing product management and other technical functions. In addition, the year ended December 31, 2021 included research and development expenses and the impact of growth in ~~usage~~headcount from our recent acquisitions.

In 2021, sales and marketing expenses increased by $477.2 million, or 84%, compared to the same period last year. The increase was primarily attributable to a $331.5 million increase in personnel costs, largely as a result of a 74% average increase in sales and marketing headcount, as we continued to expand our ~~products.~~sales efforts globally. The increase was also due to a ~~$39.6~~$43.6 million increase ~~in depreciation and amortization expense primarily~~ related to the amortization of acquired intangible assets and ~~our internally developed software.~~

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a $31.6 million increase in advertising expenses. In ~~2019, gross margin percentage remained stable compared to 2018. Changes in product mix, which includes~~addition, the year ended December 31, 2021 included sales and marketing expenses and the impact of growth in headcount from our recent acquisitions.

In 2021, general and administrative expenses increased by $161.9 million, or 52%, compared to the ~~acquisition~~same period last year. The increase was primarily attributable to a $142.1 million increase in personnel costs, largely as a result of a 75% average increase in general and administrative headcount, to support the ~~Twilio SendGrid~~growth of our business ~~and some operational improvements were largely~~globally. The increase was also due to a $12.2 million increase in charitable contributions that we made through Twilio.org, $11.2 million increase in professional service fees incurred in the ordinary course of business, offset by ~~an increase~~a $14.2 million decrease in ~~amortization expense~~professional services related to ~~acquired intangible assets,~~our acquisitions. In addition, the year ended December 31, 2021 included general and administrative expenses and the impact of ~~an increasing mix of international product usage, and an increase~~growth in ~~network service provider fees in certain geographies.~~

~~Operating Expenses~~

Year Ended December 31,
2020 2019 2018 2019 to 2020
Change 2018 to 2019
Change
(Dollars in thousands)
Research and development $ 530,548 $ 391,355 $ 171,358 $ 139,193 36 % $ 219,997 128 %
Sales and marketing 567,407 369,079 175,555 198,328 54 % 193,524 110 %
General and administrative 310,607 218,268 117,548 92,339 42 % 100,720 86 %
Total operating expenses $ 1,408,562 $ 978,702 $ 464,461 $ 429,860 44 % $ 514,241 111 %
headcount from our recent acquisitions.

2020 compared to 2019

In 2020, research and development expenses increased by $139.2 million, or 36%, compared to the same period last year. The increase was primarily attributable to a $128.3 million increase in personnel costs, net of a $17.8 million increase in capitalized software development costs, largely as a result of a 63% average increase in our research and development headcount, as we continued to focus on enhancing our existing products, introducing new products as well as enhancing product management and other technical functions. ~~This increase also reflected the impact of growth in the headcount as a result of the acquisition of our Twilio Segment business on November 2, 2020.~~ The increase was also due to a $13.3 million increase in our cloud infrastructure fees related to staging and development of our products. In addition, the year ended December 31, 2020 included research and development expenses and headcount from our ~~acquired Twilio Segment business for the period from November 2, 2020 through December 31, 2020.~~recent acquisitions.

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In 2020, sales and marketing expenses increased by $198.3 million, or 54%, compared to the same period last year. The increase was primarily attributable to a $137.4 million increase in personnel costs, largely as a result of a 88% average increase in sales and marketing headcount, as we continued to expand our sales efforts in the United States and abroad. The increase ~~also reflected the impact of growth in the headcount as a result of the acquisition of our Twilio Segment business on November 2, 2020. The increase~~ was also due to a $11.4 million increase related to the amortization of acquired intangible assets and a $20.1 million increase in advertising expenses. In addition, the year ended December 31, 2020, included sales and marketing expenses and headcount from our ~~acquired Twilio Segment business for the period from November 2, 2020 through December 31, 2020.~~recent acquisitions.

In 2020, general and administrative expenses increased by $92.3 million, or 42%, compared to the same period last year. The increase was primarily attributable to a $25.4 million increase in personnel costs, largely as a result of a 66% average increase in general and administrative headcount, to support the growth of our business ~~domestically and internationally. The increase also reflected the impact of growth in the headcount as a result of the acquisition of our Twilio Segment business on November 2, 2020.~~globally. The increase was also due to a $19.0 million increase in charitable contributions due to several donations made by Twilio.org, a $10.7 million increase in our allowance for estimated credit losses partially impacted by the COVID-19 environment and a $5.8 million increase in professional expenses related to our acquisitions of other business. Additionally, certain of our taxes increased by $7.9 million primarily in foreign jurisdictions and our professional services fees increased by $6.6 million. In addition, ~~2020~~the year ended December 31, 2021 included general and administrative expenses and headcount from our ~~acquired Twilio Segment business for the period from November 2, 2020 through December 31, 2020.~~

~~2019 compared to 2018~~

In 2019, research and development expenses increased by $220.0 million, or 128%, compared to the same period last year. The increase was primarily attributable to a $183.3 million increase in personnel costs, net of a $5.0 million increase in capitalized software development costs, largely as a result of a 71% average increase in our research and development headcount, as we continued to focus on enhancing our existing products, introducing new products as well as enhancing product management and other technical functions. This increase also reflected the impact of growth in the headcount as a result of the acquisition of our Twilio SendGrid business. The increase was also due to a $16.5 million increase in facilities and depreciation expenses to accommodate the growth in our headcount. In addition, 2019 included research and development expenses from our acquired Twilio SendGrid business for the period from February 1, 2019 through December 31, 2019.

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In 2019, sales and marketing expenses increased by $193.5 million, or 110%, compared to the same period last year. The increase was primarily attributable to a $117.3 million increase in personnel costs, largely as a result of a 93% average increase in sales and marketing headcount, as we continued to expand our sales efforts in the United States and internationally. The increase also reflected the impact of growth in the headcount as a result of the acquisition of our Twilio SendGrid business. The increase was also due to a $26.4 million increase related to the amortization of acquired intangible assets, a $16.4 million increase in advertising expenses and an $11.4 million increase in facilities and related expenses. In addition, 2019 included sales and marketing expenses from our acquired Twilio SendGrid business for the period from February 1, 2019 through December 31, 2019.

In 2019, general and administrative expenses increased by $100.7 million, or 86%, compared to the same period last year. The increase was primarily attributable to a $74.3 million increase in personnel costs, largely as a result of a 64% average increase in general and administrative headcount, to support the growth of our business domestically and internationally. The increase also reflected the impact of growth in the headcount as a result of the acquisition of our Twilio SendGrid business. The increase was also due to a $11.7 million increase in professional expenses related to our acquisitions of other business and a $6.5 million increase in facilities and depreciation expenses. In addition, 2019 included general and administrative expenses from our acquired Twilio SendGrid business for the period from February 1, 2019 through December 31, 2019.

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~~Quarterly Results of Operations~~

The following tables set forth our unaudited quarterly statements of operations data for each of the eight quarters within the two years ended December 31, 2020, as well as the percentage that each line item represents of our revenue for each quarter presented. The information for each quarter has been prepared on a basis consistent with our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K, and reflect, in the opinion of management, all adjustments of a normal, recurring nature that are necessary for a fair presentation of the financial information contained in those statements. For the three months ended December 31, 2020, our revenue also includes the contribution from our Twilio Segment business since the date of our acquisition of this business on November 2, 2020. For the three months ended March 31, 2019 and all subsequent periods thereafter, our revenue also includes the contribution from our Twilio SendGrid business since the date of our acquisition of this business on February 1, 2019. Our historical results are not necessarily indicative of the results that may be expected in the future. The following quarterly financial data should be read in conjunction with our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

~~Consolidated Statements of Operations:~~

Three Months Ended
Mar 31,
2019 Jun 30,
2019 Sep 30,
2019 Dec 31,
2019 Mar 31,
2020 Jun 30,
2020 Sep 30,
2020 Dec 31,
2020
(Unaudited, in thousands)
Revenue $ 233,139 $ 275,039 $ 295,066 $ 331,224 $ 364,868 $ 400,849 $ 447,969 $ 548,090
Cost of revenue (1) (2)
107,089 125,024 136,904 156,534 171,333 191,718 217,095 265,969
Gross profit 126,050 150,015 158,162 174,690 193,535 209,131 230,874 282,121
Operating expenses:
Research and development (1) (2)
77,855 98,783 104,481 110,236 114,339 120,701 136,652 158,856
Sales and marketing (1) (2)
71,607 90,421 100,657 106,394 116,722 129,823 140,875 179,987
General and administrative (1) (2)
64,176 54,543 47,690 51,859 55,170 61,251 65,617 128,569
Total operating expenses 213,638 243,747 252,828 268,489 286,231 311,775 343,144 467,412
Loss from operations (87,588) (93,732) (94,666) (93,799) (92,696) (102,644) (112,270) (185,291)
Other (expenses) income, net (636) (880) 4,377 4,708 (1,118) 3,015 (3,996) (9,426)
Loss before benefit (provision) for income taxes (88,224) (94,612) (90,289) (89,091) (93,814) (99,629) (116,266) (194,717)
Benefit (provision) for income taxes 51,721 2,033 2,555 (1,156) (977) (294) (648) 15,366
Net loss attributable to common stockholders $ (36,503) $ (92,579) $ (87,734) $ (90,247) $ (94,791) $ (99,923) $ (116,914) $ (179,351)

~~____________________________________~~
~~(1)~~ ~~Includes stock-based compensation expense as follows:~~

Three Months Ended
Mar 31,
2019 Jun 30,
2019 Sep 30,
2019 Dec 31,
2019 Mar 31,
2020 Jun 30,
2020 Sep 30,
2020 Dec 31,
2020
(Unaudited, in thousands)
Cost of revenue $ 1,809 $ 1,623 $ 1,674 $ 2,017 $ 1,837 $ 2,143 $ 2,237 $ 2,640
Research and development 25,339 33,701 34,348 32,624 33,209 39,841 46,294 53,959
Sales and marketing 11,749 14,564 16,143 18,430 19,943 23,086 26,573 33,848
General and administrative 19,427 20,852 16,103 13,915 14,036 14,317 14,306 33,642
Total $ 58,324 $ 70,740 $ 68,268 $ 66,986 $ 69,025 $ 79,387 $ 89,410 $ 124,089

~~____________________________________~~
~~(2)~~ ~~Includes amortization of acquired intangibles as follows:~~

Three Months Ended
Mar 31,
2019 Jun 30,
2019 Sep 30,
2019 Dec 31,
2019 Mar 31,
2020 Jun 30,
2020 Sep 30,
2020 Dec 31,
2020
(Unaudited, in thousands)
Cost of revenue $ 8,460 $ 11,857 $ 12,549 $ 12,401 $ 12,381 $ 12,695 $ 12,540 $ 21,885
Sales and marketing 5,003 7,329 7,322 7,886 7,864 7,889 7,876 15,286
General and administrative 153 62 121 (336) 47 11 10 10
Total $ 13,616 $ 19,248 $ 19,992 $ 19,951 $ 20,292 $ 20,595 $ 20,426 $ 37,181

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Consolidated Statement of Operations, as a percentage of revenue **

Three Months Ended
Mar 31,
2019 Jun 30,
2019 Sep 30,
2019 Dec 31,
2019 Mar 31,
2020 Jun 30,
2020 Sep 30,
2020 Dec 31,
2020
(Unaudited)
Revenue 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 %
Cost of revenue 46 45 46 47 47 48 48 49
Gross profit 54 55 54 53 53 52 52 51
Operating expenses:
Research and development 33 36 35 33 31 30 31 29
Sales and marketing 31 33 34 32 32 32 31 33
General and administrative 28 20 16 16 15 15 15 23
Total operating expenses 92 89 86 81 78 78 77 85
Loss from operations (38) (34) (32) (28) (25) (26) (25) (34)
Other (expenses) income, net — — 1 1 * 1 (1) (2)
Loss before benefit (provision) for income taxes (38) (34) (31) (27) (26) (25) (26) (36)
Benefit (provision) for income taxes 22 1 1 * * * * *
Net loss attributable to common stockholders (16) % (34) % (30) % (27) % (26) % (25) % (26) % (33) %

~~____________________________________~~
* Less than 0.5% of revenue.

** Columns may not add up to 100% due to rounding.

Three Months Ended
Mar 31,
2019 Jun 30,
2019 Sep 30,
2019 Dec 31,
2019 Mar 31,
2020 Jun 30,
2020 Sep 30,
2020 Dec 31,
2020
(Unaudited, dollars in thousands)
Number of Active Customer Accounts
(as of end date of period) (1) (2) (3)
154,797 161,869 172,092 179,000 190,000 200,000 208,000 221,000
Total Revenue (in thousands) (1) (2)
$ 233,139 $ 275,039 $ 295,066 $ 331,224 $ 364,868 $ 400,849 $ 447,969 $ 548,090
Total Revenue Growth Rate (1) (2)
81 % 86 % 75 % 62 % 57 % 46 % 52 % 65 %
Dollar-Based Net Expansion Rate (4)
142 % 141 % 132 % 125 % 143 % 132 % 137 % 139 %

~~(1)~~ For the three months ended December 31, 2020, Active Customer Accounts, Total Revenue and Total Revenue Growth Rate include the contribution from the Twilio Segment acquisition, which closed on November 2, 2020. Effective December 31, 2019, we round down the number of Active Customer Accounts to the nearest thousand.

~~(2)~~ For the three months ended March 31, 2019 and all subsequent quarterly periods thereafter, Active Customer Accounts, Total Revenue and Total Revenue Growth Rate include the contribution from the Twilio SendGrid acquisition, which closed on February 1, 2019.

~~(3)~~ ~~See the section titled "Key Business Metrics—Number of Active Customer Accounts."~~

~~(4)~~ ~~See the section titled "Key Business Metrics—Dollar-Based Net Expansion Rate."~~

~~Quarterly Trends in Revenue and Gross Margin~~

Our quarterly revenue increased in each period presented primarily due to an increase in the usage of our products, the adoption of additional products by our existing customers, as evidenced by our Dollar-Based Net Expansion Rates and an increase in our new customers. For the three months ended December 31, 2020, our revenue also includes the contribution from our Twilio Segment business since the date of our acquisition of this business on November 2, 2020. For the three months ended March 31, 2019 and all subsequent quarterly periods thereafter, our revenue also includes the contribution from our Twilio SendGrid business since the date of our acquisition of this business on February 1, 2019.

In the first three quarters of 2020, the gross margin stayed relatively consistent due to continued platform optimization, offset by continued international product usage. In the fourth quarter of 2020, international usage continued to increase at a higher rate than domestic usage, causing a slight decline in the gross margin percentage.

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In the first three quarters of 2019 the gross margin stayed relatively consistent due to continued platform optimization, offset by continued international product usage. In the fourth quarter of 2019, international usage continued to increase at a higher rate than domestic usage, causing a slight decline in gross margin percentage.

~~Quarterly Trends in Operating Expenses~~

Our operating expenses have generally increased sequentially on a dollar basis as a result of our growth, primarily related to our acquisitions of our Segment and SendGrid businesses, increased personnel costs to support our expanded operations, our continued investment in our products, our operations as a public company and our litigation costs.

In the fourth quarter of 2020, our general and administrative expenses included $20.7 million of costs related to the acquisition of our Twilio Segment business on November 2, 2020. The fourth quarter general and administrative expense also included $31.7 million of stock-based compensation expense related to vesting of equity awards of Twilio Segment that we assumed, and vesting of certain shares of our Class A common stock that we issued subject to service conditions on the acquisition closing date.

In the first and second quarters of 2019, our general and administrative expenses included $20.7 million and $26.0 million, respectively, of additional stock-based compensation expense related to vesting of equity awards of Twilio SendGrid that we assumed on the acquisition closing date. The first quarter general and administrative expenses also included $12.4 million of costs related to the acquisition of SendGrid on February 1, 2019. In the third quarter of 2019, our sales and marketing expenses included $9.4 million of costs related to our SIGNAL customer and developer conference, which occurred in the third quarter of 2019.
recent acquisitions.

Liquidity and Capital Resources

~~To date, our~~Our principal sources of liquidity have been (i) the net proceeds of ~~$155.5~~$979.0 million, ~~$64.4 million, $979.0 million,$1.4~~$1.4 billion and $1.8 billion, net of underwriting discounts and offering expenses paid by us, from our ~~initial~~ public ~~offering in June 2016 and our subsequent public~~equity offerings in ~~October 2016,~~ June 2019, August 2020 and February 2021, respectively; (ii) the ~~net proceeds we received through private sales of equity securities; (iii) the~~aggregate net proceeds of approximately $537.0 million, after deducting purchaser discounts and debt issuance costs paid by us, from the issuance of our Convertible Notes in May 2018; (iii) the ~~0.25% convertible senior notes due 2023 (the "Notes"),~~aggregate net proceeds of approximately $984.7 million, after deducting purchaser discounts and debt issuance costs paid by us, from the issuance of our 2029 Notes and 2031 Notes in March 2021; (iv) the net proceeds of $228.4 million, after deducting transaction costs paid by us, from settlement of our capped call arrangements in June 2021; and (v) the payments received from customers using our products.

Our primary uses of cash include operating costs, such as ~~described in~~personnel-related costs, network service provider costs, cloud infrastructure costs, facility-related spending, as well as acquisitions and investments. Refer to Note 96, Note 10, Note 13(a) and Note 18 to our consolidated financial statements included elsewhere in this Annual Report on Form ~~10-K;~~10-K for detailed discussions of our obligations and ~~(iv) the payments received~~commitments related to leases, debt, other purchase obligations and our proposed minority investment in Syniverse Corporation.

We may, from ~~customers using~~time to time, consider acquisitions of, or investments in, complementary businesses, products, services, capital infrastructure or technologies which might affect our ~~products.~~liquidity requirements, cause us to secure additional financing or issue additional equity or debt securities. There can be no assurance that additional credit lines or financing instruments will be available in amounts or on terms acceptable to us, if at all.

We believe that our cash, cash equivalents and marketable securities balances, as well as the cash flows generated by our operations, will be sufficient to satisfy our anticipated cash needs for working capital and capital expenditures for ~~at least~~ the next 12 ~~months.~~months and beyond. However, our belief may prove to be incorrect, and we could utilize our available financial resources sooner than we currently expect. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth in Part I, Item 1A, “Risk Factors.” We may be required to seek additional equity or debt financing in order to meet these future capital requirements. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us, or at all. If we are unable to raise additional capital when desired, our business, results of operations and financial condition would be adversely affected. Additionally, cash from operations could also be affected by various risks and uncertainties in connection with the COVID-19 pandemic, including timing and ability to collect payments from our customers and other risks detailed in Part I, Item 1A, “Risk Factors.”

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Cash Flows

The following table summarizes our cash flows:

Year Ended December 31,
2020 2019 2018
(In thousands)
Cash provided by operating activities $ 32,654 $ 14,048 $ 7,983
Cash used in investing activities (845,855) (1,285,792) (139,419)
Cash provided by financing activities 1,493,311 1,020,145 515,819
Effect of exchange rate changes on cash, cash equivalents and restricted cash 40 — 163
Net increase (decrease) in cash, cash equivalents and restricted cash $ 680,150 $ (251,599) $ 384,546

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	Year Ended December 31,
	2021		2020		2019
	(In thousands)
Cash (used in) provided by operating activities	$	(58,192)	$	32,654	$	14,048
Cash (used in) investing activities	(2,489,996)		(845,855)		(1,285,792)
Cash provided by financing activities	3,096,325		1,493,311		1,020,145
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(191)		40		—
Net increase (decrease) in cash, cash equivalents and restricted cash	$	547,946	$	680,150	$	(251,599)

Cash Flows from Operating Activities

In 2021, cash used in operating activities consisted primarily of our net loss of $949.9 million adjusted for non-cash items, including $632.3 million of stock-based compensation expense, $17.2 million of tax benefit related to release of valuation allowance in connection with our Zipwhip and prior acquisitions, $258.4 million of depreciation and amortization expense, $5.8 million amortization of the debt discount and issuance costs related to our long-term debt, $48.8 million of non-cash reduction to our operating right-of-use asset, $31.5 million amortization of deferred commissions and $185.1 million of cumulative changes in operating assets and liabilities. With respect to changes in operating assets and liabilities, accounts receivable and prepaid expenses increased $196.0 million primarily due to revenue growth, the timing of cash receipts and pre-payments for cloud infrastructure fees and certain operating expenses. Accounts payable and other current liabilities increased $137.7 million primarily due to increases in transaction volumes. Operating lease liability decreased $49.0 million due to payments made against our operating lease obligations. Other long-term assets increased $121.2 million primarily due to an increase in the sales commissions balances related to the growth of our business.

In 2020, cash provided by operating activities consisted primarily of our net loss of $491.0 million adjusted for non-cash items, including $360.9 million of stock-based compensation expense, $16.5 million of tax benefit related to release of valuation allowance in connection with our acquisitions of other businesses, $149.7 million of depreciation and amortization expense, $23.8 million amortization of the debt discount and issuance costs related to our ~~Notes,~~long-term debt, $38.4 million of non-cash reduction to our operating right-of-use asset, $13.3 million amortization of deferred commissions, a $13.2 million increase in our allowance for credit losses, and $97.4 million of cumulative changes in operating assets and liabilities. With respect to changes in operating assets and liabilities, accounts receivable and prepaid expenses increased $92.9 million primarily due to the timing of cash receipts from certain of our larger customers, pre-payments for cloud infrastructure fees and certain operating expenses. Accounts payable and other current liabilities increased $98.4 million primarily due to increases in transaction volumes. Operating lease liability decreased $33.9 million due to payments made against our operating lease obligations. Other long-term assets increased $81.9 million primarily due to an increase in the sales commissions balances related to the growth of our business.

In 2019, cash provided by operating activities consisted primarily of our net loss of $307.1 million adjusted for non-cash items, including $264.3 million of stock-based compensation expense, $55.7 million of tax benefit related to release of valuation allowance in connection with our acquisitions of other businesses, $110.4 million of depreciation and amortization expense, $23.7 million amortization of the debt discount and issuance costs related to our Notes, $23.2 million of non-cash reduction to our operating right-of-use asset and $48.0 million of cumulative changes in operating assets and liabilities. With respect to changes in operating assets and liabilities, accounts receivable and prepaid expenses increased $71.7 million primarily due to the timing of cash receipts from certain of our larger customers, pre-payments for cloud infrastructure fees and certain operating expenses. Accounts payable and other current liabilities increased $63.4 million primarily due to increases in transaction volumes. Operating lease liability decreased $21.1 million due to payments made against our operating lease obligations. Other long-term assets increased $18.0 million primarily due to an increase in the deferred sales commissions balances related to the growth of our business.

In 2018, cash provided by operating activities consisted primarily of our net loss of $121.9 million adjusted for non-cash items, including $93.3 million of stock-based compensation expense, $26.1 million of depreciation and amortization expense, $14.1 million amortization of the debt discount and issuance costs related to our Notes and $14.8 million of cumulative changes in operating assets and liabilities. With respect to changes in operating assets and liabilities, accounts receivable and prepaid expenses increased $67.0 million, which resulted primarily from the timing of cash receipts from certain of our larger customers, pre-payments for cloud infrastructure fees and certain operating expenses. Accounts payable and other current liabilities increased $52.1 million and deferred revenue and customer deposits increased $6.0 million primarily due to increases in transaction volumes.

Cash Flows from Investing Activities

In 2021, cash used in investing activities was $2.5 billion primarily consisting of $1.9 billion of purchases of marketable securities and other investments, net of maturities and sales, $491.5 million of net cash paid to acquire other businesses as described in Note 7 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, $44.0 million related to capitalized software development costs and $46.0 million related to purchases of long-lived assets.

In 2020, cash used in investing activities was $845.9 million primarily consisting of $453.1 million of purchases of marketable securities and other investments, net of maturities and sales, $333.6 million of net cash paid to acquire other businesses as described in Note 67 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, $33.3 million related to capitalized software development costs and $25.8 million related to purchases of long-lived assets.

~~In 2019, cash used in investing activities was $1.3 billion, primarily consisting~~

Table of $1.3 billion of purchases of marketable securities and other investments, net of maturities and sales, $122.7 million of net cash paid to acquire other businesses, $21.9 million related to capitalized software development costs and $45.4 million related to purchases of long-lived assets.Contents

In 2018, cash used in investing activities was $139.4 million, primarily consisting of $84.2 million of purchases of marketable securities, net of maturities, $30.6 million of net cash paid to acquire other businesses and $19.5 million related to capitalized software development costs.

Cash Flows from Financing Activities

In 2021, cash provided by financing activities was $3.1 billion primarily consisting of $1.8 billion in net proceeds from our public equity offering, as described in Note 14 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K; $984.7 million in net proceeds from the issuance of our 2029 Notes and 2031 Notes and $228.4 million in net proceeds from the settlement of the capped call transactions related to our Convertible Notes, which were fully redeemed during 2021, as described in Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K; and $136.2 million in proceeds from stock options exercised by our employees and shares issued under our employee stock purchase plan.

In 2020, cash provided by financing activities was $1.5 billion primarily consisting of $1.4 billion in net proceeds from our public equity offering, as described in Note 1314 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, and $104.8 million in proceeds from stock options exercised by our employees and shares issued under our employee stock purchase plan.

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In 2019, cash provided by financing activities was $1.0 billion primarily consisting of $979.1 million in net proceeds from our public equity offering and $57.5 million in proceeds from stock options exercised by our employees and shares issued under our employee stock purchase plan.

In 2018, cash provided by financing activities was $515.8 million, primarily consisting of $537.1 million in net proceeds from our Notes, net of purchaser discounts and issuance costs paid in the period, and $40.0 million in proceeds from stock options exercised by our employees and shares issued under our employee stock purchase plan. This was partially offset by a $58.5 million payment for capped call transactions.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements and do not have any holdings in variable interest entities.

~~Contractual Obligations and Other Commitments~~

~~The following table summarizes our contractual obligations as of December 31, 2020:~~

Less Than One Year One to Three Years Three to Five Years Five Years or More Total Payments
(In thousands)
Operating leases (1)
$ 60,220 $ 109,281 $ 76,664 $ 75,410 $ 321,575
Finance leases (2)
9,866 14,429 3,920 518 28,733
Convertible senior notes (3)
— 343,702 — — 343,702
Noncancelable purchase obligations (4)
81,988 57,049 — — 139,037
Total payments $ 152,074 $ 524,461 $ 80,584 $ 75,928 $ 833,047

~~(1)~~ ~~Operating leases represent total future minimum rent payments under noncancellable operating lease agreements.~~

~~(2)~~ ~~Finance leases represent total future minimum payments under a noncancellable financing lease agreements.~~

~~(3)~~ ~~See Note 9 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discussion of our convertible senior notes.~~

~~(4)~~ Noncancellable purchase obligations represent total future minimum payments under contracts with our cloud infrastructure provider, network service providers and other vendors. Purchase obligations exclude agreements that are cancellable without penalty. Unrecognized tax benefits are not included in the table above because any amounts expected to be settled in cash are not material.

Segment Information

We have one business activity and operate in one reportable segment.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.

We believe that the accounting policies, assumptions and estimates associated with revenue recognition and business combinations have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.

~~Table~~See Note 2 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discussion of ~~Contents~~

our accounting policies.

Revenue Recognition

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of allowances for credits and any taxes collected from customers, which are subsequently remitted to governmental authorities.

Our revenue is primarily derived from usage-based fees earned from customers accessing our enterprise cloud computing services. Platform access is considered a monthly series comprising one performance obligation and usage-based fees are recognized as revenue in the period in which the usage occurs.

Subscription-based fees are derived from certain non-usage-based contracts, such as with the sales of short codes, customer support, and fees charged to access the cloud-based platform of our ~~recently acquired~~ Twilio Segment business, ~~that~~which acquisition is further described in Note 67 to our consolidated financial statements included elsewhere in this Annual Report of Form 10-K. Non-usage-based contracts revenue is recognized on a ratable basis over the contractual term which is generally ~~one year or less for our legacy products and~~from one to three ~~years for the contracts acquired with Segment.~~years.

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Our arrangements do not contain general rights of return. However, credits may be issued on a case-by-case basis. Credits are accounted for as variable consideration, are estimated based on historical trends and are recorded against revenue. 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.

Business Combinations

Accounting for business combinations requires us to make significant estimates and assumptions, especially at the acquisition date with respect to tangible and intangible assets acquired and liabilities assumed. We use our best estimates and assumptions to accurately assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date as well as the useful lives of those acquired intangible assets. Examples of critical estimates in valuing certain of the intangible assets and goodwill we have acquired include but are not limited to future expected cash flows from acquired developed technologies; existing customer relationships; uncertain tax positions and tax related valuation allowances assumed; and discount rates. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results.

Recent Accounting Pronouncements Not Yet Adopted

See Note 2(ac) to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discussion of recent accounting pronouncements not yet adopted.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to certain market risks in the ordinary course of our business, including sensitivities as follows:

Interest Rate Risk

We had cash, ~~and~~ cash equivalents and restricted cash of ~~$933.9 million~~$1.5 billion and marketable securities of ~~$2.1~~$3.9 billion as of December 31, ~~2020.~~2021. Cash, ~~and~~ cash equivalents and restricted cash consist of bank deposits, ~~and~~ money market ~~funds.~~funds and commercial paper. Marketable securities consist primarily of U.S. treasury securities, non-U.S. government securities and high credit quality corporate debt securities. The cash and cash equivalents and marketable securities are held for working capital purposes. Such interest‑earning instruments carry a degree of interest rate risk. To date, fluctuations in interest income have not been significant. The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. Due to the short‑term nature of our investments, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates. A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our consolidated financial statements.

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In May 2018, we issued $550.0 million aggregate principal amount of Convertible Notes, of which ~~$206.3 million was~~were fully redeemed as of December 31, 2020. The fair market value of the Notes is affected by our stock price. The fair value of the Notes will generally increase as our common stock price increases and will generally decrease as our common stock price declines in value. June 2, 2021.

In ~~addition, the fair market value of the Notes is exposed to interest rate risk. Generally, the fair market value~~March 2021, we issued $1.0 billion aggregate principal amount of our 2029 Notes and 2031 Notes carrying fixed interest ~~rate Notes will increase as interest~~ rates ~~fall~~of 3.625% and decrease as interest rates rise. Additionally, on our balance sheet we carry the Notes at face value less unamortized discount and debt issuance cost, and we present the fair value for required disclosure purposes only.3.875%, respectively.

Currency Exchange Risks

The functional currency of most of our foreign subsidiaries is the U.S. dollar. The local currencies of our foreign subsidiaries are the Australian dollar, the Bermuda dollar, the Brazilian real, the British pound, the Canadian dollar, the ~~Columbian~~Colombian peso, the Czech Republic koruna, the Euro, the Hong Kong dollar, the Indian rupee, the Japanese yen, the Mexican Peso, the Polish Zloty, the Serbian ~~Dollar,~~Dinar, the Singapore dollar and the Swedish krona.

Our subsidiaries remeasure monetary assets and liabilities at period-end exchange rates, while non-monetary items are remeasured at historical rates. Revenue and expense accounts are remeasured at the average exchange rate in effect during the ~~year.~~month in which a transaction occurs. If there is a change in foreign currency exchange rates, the conversion of our foreign subsidiaries’ financial statements into U.S. dollars would result in a realized gain or loss which is recorded in our consolidated statements of operations.

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We ~~do not currently engage in any~~enter into foreign currency derivative hedging ~~activity~~transactions to ~~reduce~~mitigate our ~~potential~~ exposure to market risks that may result from changes in foreign currency ~~fluctuations, although we may choose~~exchange rates. For further information, see Note 2(x) and Note 5 to ~~do so~~our consolidated financial statements included elsewhere in ~~the future.~~ this Annual Report on Form 10-K.

A hypothetical 10% change in foreign exchange rates during any of the periods presented would not have had a material impact on our consolidated financial statements.

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Item 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


			Page
Reports of Independent Registered Public Accounting Firm (PCAOB ID:185)			8075
Consolidated Balance Sheets			8378
Consolidated Statements of Operations			8479
Consolidated Statements of Comprehensive Loss			8580
Consolidated Statements of Stockholders' Equity			8681
Consolidated Statements of Cash Flows			8883
Notes to Consolidated Financial Statements			8984

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
Twilio Inc.:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Twilio Inc. and subsidiaries (the ~~Company)~~"Company") as of December 31, ~~2020~~2021 and ~~2019,~~2020, 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, ~~2020,~~2021, and the related notes (collectively, the ~~consolidated~~"consolidated financial ~~statements)~~statements"). We also have audited the Company’s internal control over financial reporting as of December 31, ~~2020,~~2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, ~~2020~~2021 and ~~2019,~~2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, ~~2020,~~2021, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2020~~2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

The Company acquired ~~Segment.io (Segment)~~Zipwhip, Inc. during fiscal ~~2020,~~2021, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2020, Segment’s~~2021, Zipwhip, Inc.’s internal control over financial reporting associated with ~~$253.6 million, or 3%, of~~ total assets ~~and $23.0~~of $51.9 million ~~or 1%, of~~and total revenues of $55.4 million included in the consolidated financial statements of the Company as of and for the year ended December 31, ~~2020.~~2021. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of ~~Segment.~~

~~Change in Accounting Principle~~

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Financial Accounting Standards Codification (ASC) Topic 842, ~~Leases.~~Zipwhip, Inc.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying ~~Management~~Annual Report on Internal Control Over Financial ~~Reporting, appearing under Item 9A(b).~~Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

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Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of the sufficiency of audit evidence over revenue recognition

As discussed in Note 2(e) to the consolidated financial statements, the ~~Company’s~~Company's revenue is derived from usage and non-usage based fees earned from customers accessing the ~~Company’s~~Company's enterprise cloud computing services. As of December 31, ~~2020,~~2021, the Company recorded ~~$1.8~~$2.8 billion in revenues, a portion of which related to Programmable Messaging and Programmable 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. This matter required especially subjective auditor judgment because of the large number of information technology (IT) applications involved in the revenue recognition process. Auditor judgment was required in determining the nature and extent of audit evidence obtained over these information systems that process revenue transactions. Involvement of IT professionals with specialized skills and knowledge was required to assist with the performance and evaluation of certain procedures and determination of IT applications subject to testing.

The following are the primary procedures we performed to address this critical audit matter. 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. For a sample of customer agreements, we tested the Company’s identification and treatment of significant contract terms, including comparing the pricing reflected in the Company’s revenue IT system to the contractually agreed upon pricing with the customer. For a sample of revenue transactions, we compared the amounts recognized for consistency with underlying documentation, including contracts with customers. We assessed the recorded revenue by comparing revenue to underlying cash receipts. We evaluated credits issued after year end to assess the revenue recorded within the period. In addition, we evaluated the overall sufficiency of audit evidence obtained by assessing the results of procedures performed, including appropriateness of the nature and extent of such evidence.

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Valuation of the acquisition date intangible assets related to a business combination

As discussed in Note 67 to the consolidated financial statements, on ~~November 2, 2020,~~July 14, 2021, the Company acquired ~~Segment.io,~~Zipwhip, Inc. ~~(Segment)~~(Zipwhip) by issuing shares of its Class A common stock worth approximately ~~$2.5 billion~~$419.2 million and ~~$413.3~~paying approximately $418.1 million inof cash. As part of the acquisition, the Company acquired ~~$595.0~~$244.5 million of intangible assets, including ~~developed technology and~~ customer relationships.

We identified the assessment of the valuation of the acquisition date ~~developed technology and~~ customer relationship intangible ~~assets~~asset acquired as a critical audit matter. There was a high degree of subjective auditor judgment in assessing the discount rate ~~customer retention rate,~~ and forecasted revenue growth rates used to derive the fair value of the ~~developed technology and~~ customer relationship acquired intangible ~~assets.~~asset. In addition, ~~these~~this fair ~~values were~~value was challenging to test due to the sensitivity of the fair value ~~determinations~~determination to changes in these assumptions.

The following are the primary procedures we performed to address the critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s process to value acquired intangible assets, including the Company’s controls over the discount rate ~~customer retention rate,~~ and forecasted revenue growth rate. We compared prior period forecasted revenue to prior period actual revenue to evaluate the Company’s ability to forecast. We evaluated the Company’s forecasted revenue growth rates used to value ~~developed technology and~~the customer relationship intangible ~~assets~~asset by (1) comparing the growth forecast assumptions to historical growth rates of peer companies, and (2) comparing forecasted growth rates to historical growth rates. ~~We evaluated the estimated annual customer retention rate by comparing to Segment’s historical customer retention data.~~ We involved a valuation professional with specialized skills and knowledge, who assisted in testing by:

•evaluating the discount rate used by the Company to value the ~~developed technology and~~ customer relationship intangible ~~assets~~asset by ~~comparing it against~~assessing the relevant inputs used by the Company in their calculation of their discount ~~rates that were independently developed using publicly available data for comparable companies~~

•~~recalculating the estimate of the fair value of the developed technology intangible assets acquired using the Company’s forecasted revenue and our independently developed discount~~ rate ~~and comparing the result to the Company’s fair value estimate~~

•recalculating the estimate of the fair value of the customer relationship intangible ~~assets~~asset acquired using the Company’s cash flow forecast and ~~our independently developed~~ discount rate independently corroborated by our valuation specialists and comparing the result to the Company’s fair value estimate.

/s/ KPMG LLP

We have served as the Company’s auditor since 2013.

Santa Clara, California
February ~~25, 2021~~22, 2022

8277

Table of Contents

TWILIO INC.

Consolidated Balance Sheets


		As of December 31,					As of December 31,
		2020		2019			2021		2020
		(In thousands, except share and per share amounts)					(In thousands, except share and per share amounts)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	933,885	$	253,660	Cash and cash equivalents	$	1,479,452	$	933,885
Short-term marketable securities	Short-term marketable securities	2,105,906		1,599,033		Short-term marketable securities	3,878,430		2,105,906
Accounts receivable, net	Accounts receivable, net	251,167		154,067		Accounts receivable, net	388,215		251,167
Prepaid expenses and other current assets	Prepaid expenses and other current assets	81,377		54,571		Prepaid expenses and other current assets	186,131		81,377
Total current assets	Total current assets	3,372,335		2,061,331		Total current assets	5,932,228		3,372,335

Property and equipment, net	Property and equipment, net	183,239		141,256		Property and equipment, net	255,316		183,239
Operating right-of-use asset		258,610		156,741
Operating right-of-use assets						Operating right-of-use assets	234,584		258,610
Intangible assets, net	Intangible assets, net	966,573		460,849		Intangible assets, net	1,050,012		966,573
Goodwill	Goodwill	4,595,394		2,296,784		Goodwill	5,263,166		4,595,394
Other long-term assets	Other long-term assets	111,282		33,555		Other long-term assets	263,292		111,282
Total assets	Total assets	$	9,487,433	$	5,150,516	Total assets	$	12,998,598	$	9,487,433
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	60,042	$	39,099	Accounts payable	$	93,333	$	60,042
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	243,833		147,681		Accrued expenses and other current liabilities	417,503		252,895
Deferred revenue and customer deposits	Deferred revenue and customer deposits	87,031		26,362		Deferred revenue and customer deposits	140,389		87,031

Operating lease liability, current	Operating lease liability, current	48,338		27,156		Operating lease liability, current	52,325		48,338
Finance lease liability, current		9,062		6,924

Total current liabilities	Total current liabilities	448,306		247,222		Total current liabilities	703,550		448,306

Operating lease liability, noncurrent	Operating lease liability, noncurrent	229,905		139,200		Operating lease liability, noncurrent	211,253		229,905
Finance lease liability, noncurrent	Finance lease liability, noncurrent	17,856		8,746		Finance lease liability, noncurrent	25,132		17,856

Convertible senior notes, net		302,068		458,190
Long-term debt						Long-term debt	985,907		302,068
Other long-term liabilities	Other long-term liabilities	36,633		17,747		Other long-term liabilities	41,290		36,633
Total liabilities	Total liabilities	1,034,768		871,105		Total liabilities	1,967,132		1,034,768
Commitments and contingencies (Note 12)		0		0
Commitments and contingencies (Note 13)						Commitments and contingencies (Note 13)	0		0
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, $0.001 par value, 100,000,000 shares authorized, NaN issued		0		0
Preferred stock, $0.001 par value, 100,000,000 shares authorized, none issued						Preferred stock, $0.001 par value, 100,000,000 shares authorized, none issued	—		—
Class A and Class B common stock, $0.001 par value per share	Class A and Class B common stock, $0.001 par value per share					Class A and Class B common stock, $0.001 par value per share
Authorized shares 1,100,000,000 as of December 31, 2020 and 2019; Issued and outstanding shares 164,047,524 and 138,412,799 as of December 31, 2020 and 2019		164		138
Authorized shares 1,100,000,000 as of December 31, 2021 and 2020; Issued and outstanding shares 180,468,099 and 164,047,524 as of December 31, 2021 and 2020						Authorized shares 1,100,000,000 as of December 31, 2021 and 2020; Issued and outstanding shares 180,468,099 and 164,047,524 as of December 31, 2021 and 2020	180		164
Additional paid-in capital	Additional paid-in capital	9,613,246		4,952,999		Additional paid-in capital	13,169,118		9,613,246
Accumulated other comprehensive income		9,046		5,086
Accumulated other comprehensive (loss) income						Accumulated other comprehensive (loss) income	(18,141)		9,046
Accumulated deficit	Accumulated deficit	(1,169,791)		(678,812)		Accumulated deficit	(2,119,691)		(1,169,791)
Total stockholders’ equity	Total stockholders’ equity	8,452,665		4,279,411		Total stockholders’ equity	11,031,466		8,452,665
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	9,487,433	$	5,150,516	Total liabilities and stockholders’ equity	$	12,998,598	$	9,487,433

See accompanying notes to consolidated financial statements.

8378

TWILIO INC.

Consolidated Statements of Operations


		Year Ended December 31,							Year Ended December 31,
		2020		2019		2018			2021		2020		2019
		(In thousands, except share and per share amounts)							(In thousands, except share and per share amounts)
Revenue	Revenue	$	1,761,776	$	1,134,468	$	650,067	Revenue	$	2,841,839	$	1,761,776	$	1,134,468
Cost of revenue	Cost of revenue	846,115		525,551		300,841		Cost of revenue	1,451,126		846,115		525,551
Gross profit	Gross profit	915,661		608,917		349,226		Gross profit	1,390,713		915,661		608,917
Operating expenses:	Operating expenses:							Operating expenses:
Research and development	Research and development	530,548		391,355		171,358		Research and development	789,219		530,548		391,355
Sales and marketing	Sales and marketing	567,407		369,079		175,555		Sales and marketing	1,044,618		567,407		369,079
General and administrative	General and administrative	310,607		218,268		117,548		General and administrative	472,460		310,607		218,268
Total operating expenses	Total operating expenses	1,408,562		978,702		464,461		Total operating expenses	2,306,297		1,408,562		978,702
Loss from operations	Loss from operations	(492,901)		(369,785)		(115,235)		Loss from operations	(915,584)		(492,901)		(369,785)
Other (expense) income, net		(11,525)		7,569		(5,923)
Loss before benefit (provision) for income taxes		(504,426)		(362,216)		(121,158)
Income tax benefit (provision)		13,447		55,153		(791)
Other (expenses) income, net								Other (expenses) income, net	(45,345)		(11,525)		7,569
Loss before benefit for income taxes								Loss before benefit for income taxes	(960,929)		(504,426)		(362,216)
Benefit for income taxes								Benefit for income taxes	11,029		13,447		55,153
Net loss attributable to common stockholders	Net loss attributable to common stockholders	$	(490,979)	$	(307,063)	$	(121,949)	Net loss attributable to common stockholders	$	(949,900)	$	(490,979)	$	(307,063)
Net loss per share attributable to common stockholders, basic and diluted	Net loss per share attributable to common stockholders, basic and diluted	$	(3.35)	$	(2.36)	$	(1.26)	Net loss per share attributable to common stockholders, basic and diluted	$	(5.45)	$	(3.35)	$	(2.36)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	146,708,663		130,083,046		97,130,339		Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	174,180,465		146,708,663		130,083,046

See accompanying notes to consolidated financial statements.

8479

TWILIO INC.

Consolidated Statements of Comprehensive Loss


		Year Ended December 31,							Year Ended December 31,
		2020		2019		2018			2021		2020		2019
		(In thousands)							(In thousands)
Net loss	Net loss	$	(490,979)	$	(307,063)	$	(121,949)	Net loss	$	(949,900)	$	(490,979)	$	(307,063)
Other comprehensive income (loss):
Unrealized gain on marketable securities		3,674		3,804		258
Other comprehensive (loss) income:								Other comprehensive (loss) income:
Unrealized (loss) gain on marketable securities								Unrealized (loss) gain on marketable securities	(27,215)		3,674		3,804
Foreign currency translation	Foreign currency translation	286		0		(1,001)		Foreign currency translation	(266)		286		—
Total other comprehensive income (loss), net of tax		3,960		3,804		(743)
Net change in market value of effective foreign currency forward exchange contracts								Net change in market value of effective foreign currency forward exchange contracts	294		—		—
Total other comprehensive (loss) income								Total other comprehensive (loss) income	(27,187)		3,960		3,804
Comprehensive loss attributable to common stockholders	Comprehensive loss attributable to common stockholders	$	(487,019)	$	(303,259)	$	(122,692)	Comprehensive loss attributable to common stockholders	$	(977,087)	$	(487,019)	$	(303,259)

TWILIO, INC.

Consolidated Statements of ~~Stockholders'~~Stockholder's Equity

Common Stock
Class A Common Stock
Class B Additional Paid In Capital Accumulated Other Comprehensive Income Accumulated Deficit Total Stockholders' Equity
Shares Amount Shares Amount
(In thousands, except share amounts)
Balance as of December 31, 2017 69,906,550 70 24,063,246 24 608,165 2,025 (250,438) 359,846
Net loss — — — — — — (121,949) (121,949)
Adjustment to opening retained earnings due to adoption of ASC 606 — — — — — — 713 713
Exercises of vested stock options 0 0 3,625,991 4 29,732 — — 29,736
Vesting of early exercised stock options — — — — 36 — — 36
Vesting of restricted stock units 1,970,565 2 172,211 — — — — 2
Value of equity awards withheld for tax liability (25,932) — (22,044) — (2,654) — — (2,654)
Exercises of unvested stock options — — 2,041 — — — — —
Conversion of shares of Class B common stock into shares of Class A common stock 8,530,980 8 (8,530,980) (8) — — — —
Shares issued under ESPP 325,262 — — — 10,122 — — 10,122
Issuance of debt conversion option — — — — 119,435 — — 119,435
Debt conversion option issuance costs — — — — (2,819) — — (2,819)
Capped call option issuance costs — — — — (58,465) — — (58,465)
Donated common stock 62,338 — — — 5,996 — — 5,996
Unrealized gain on marketable securities — — — — — 258 — 258
Foreign currency translation — — — — — (1,001) — (1,001)
Stock-based compensation — — — — 98,979 — — 98,979
Balance as of December 31, 2018 80,769,763 80 19,310,465 20 808,527 1,282 (371,674) 438,235
Net loss — — — — — — (307,063) (307,063)
Exercises of vested stock options 1,466,813 1 2,154,053 2 37,739 — — 37,742
Recapitalization of a subsidiary — — — — 75 — (75) 0
Vesting of early exercised stock options — — — — 21 — — 21
Vesting of restricted stock units 2,775,788 2 117,331 1 — — — 3
Value of equity awards withheld for tax liability (23,543) — (22,095) — (5,412) — — (5,412)
Conversion of shares of Class B common stock into shares of Class A common stock 10,029,127 9 (10,029,127) (9) — — — —
Shares issued under ESPP 244,628 — — — 19,738 — — 19,738
Issuance of common stock in connection with a follow-on public offering, net of underwriter discounts 8,064,515 8 — — 979,992 980,000
Costs related to the follow-on public offering — — — — (953) — — (953)
Shares issued in acquisition 23,555,081 24 — — 2,658,874 — — 2,658,898
Value of equity awards assumed in acquisition — — — — 182,554 — — 182,554
Unrealized gain on marketable securities — — — — — 3,804 — 3,804
Stock-based compensation — — — — 271,844 — — 271,844
Balance as of December 31, 2019 126,882,172 $ 124 11,530,627 $ 14 $ 4,952,999 $ 5,086 $ (678,812) $ 4,279,411


	Common Stock Class A			Common Stock Class B			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
	(In thousands, except share amounts)
Balance as of December 31, 2020	153,496,222	$	151	10,551,302	$	13	$	9,613,246	$	9,046	$	(1,169,791)	$	8,452,665
Net loss	—	—		—	—		—		—		(949,900)		(949,900)
Exercises of stock options	1,779,320	2		509,499	—		87,693		—		—		87,695
Vesting of restricted stock units	3,515,913	4		—	—		(4)		—		—		—
Value of equity awards withheld for tax liability	(32,002)	—		—	—		(10,388)		—		—		(10,388)


Conversion of shares of Class B common stock into shares of Class A common stock	1,218,696	1		(1,218,696)	(1)		—		—		—		—
Equity component from partial settlement and redemption of convertible senior notes due 2023	4,846,965	5		—	—		335,637		—		—		335,642
Settlement of capped call, net of related costs	—	—		—	—		225,233		—		—		225,233
Shares of Class A common stock issued under ESPP	198,926	—		—	—		48,465		—		—		48,465
Shares of Class A common stock donated to charity	88,408	—		—	—		31,169		—		—		31,169
Issuance of shares of Class A common stock in connection with a follow-on public offering, net of underwriters' discounts and issuance costs	4,312,500	4		—	—		1,765,709		—		—		1,765,713

Shares of Class A common stock issued in acquisition	1,116,816	1		—	—		419,169		—		—		419,170
Value of equity awards assumed in acquisition	—	—		—	—		1,511		—		—		1,511
Shares of Class A common stock subject to future vesting	84,230	—		—	—		—		—		—		—
Unrealized loss on marketable securities	—	—		—	—		—		(27,215)		—		(27,215)
Foreign currency translation	—	—		—	—		—		(266)		—		(266)
Net change in market value of effective foreign currency forward exchange contracts	—	—		—	—		—		294		—		294
Stock-based compensation	—	—		—	—		651,678		—		—		651,678
Balance as of December 31, 2021	170,625,994	$	168	9,842,105	$	12	$	13,169,118	$	(18,141)	$	(2,119,691)	$	11,031,466

~~TWILIO INC.~~

~~Consolidated Statements of Stockholders' Equity~~

See accompanying notes to consolidated financial statements.

8782

TWILIO INC.

Consolidated Statements of Cash Flows


		Year Ended December 31,							Year Ended December 31,
		2020		2019		2018			2021		2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:	(In thousands)						CASH FLOWS FROM OPERATING ACTIVITIES:	(In thousands)
Net loss	Net loss	$	(490,979)	$	(307,063)	$	(121,949)	Net loss	$	(949,900)	$	(490,979)	$	(307,063)
Adjustments to reconcile net loss to net cash provided by operating activities:
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:								Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	Depreciation and amortization	149,660		110,430		26,095		Depreciation and amortization	258,378		149,660		110,430
Non-cash reduction to the right-of-use asset	Non-cash reduction to the right-of-use asset	38,395		23,193		0		Non-cash reduction to the right-of-use asset	48,786		38,395		23,193

Net amortization of investment premium and discount	Net amortization of investment premium and discount	6,789		(4,501)		(1,496)		Net amortization of investment premium and discount	36,158		6,789		(4,501)

Impairment of operating right-of-use assets								Impairment of operating right-of-use assets	8,854		—		—
Amortization of debt discount and issuance costs	Amortization of debt discount and issuance costs	23,759		23,696		14,053		Amortization of debt discount and issuance costs	5,827		23,759		23,696
Stock-based compensation	Stock-based compensation	360,936		264,318		93,273		Stock-based compensation	632,285		360,936		264,318
Amortization of deferred commissions	Amortization of deferred commissions	13,322		4,511		1,350		Amortization of deferred commissions	31,541		13,322		4,511

Tax benefit related to release of valuation allowance	Tax benefit related to release of valuation allowance	(16,459)		(55,745)		0		Tax benefit related to release of valuation allowance	(17,236)		(16,459)		(55,745)
Allowance for credit losses		13,239		2,491		1,515
Value of donated common stock		18,993		0		5,996

Value of shares of Class A common stock donated to charity								Value of shares of Class A common stock donated to charity	31,169		18,993		—

Loss on extinguishment of debt	Loss on extinguishment of debt	12,863		0		0		Loss on extinguishment of debt	28,965		12,863		—
Other adjustments	Other adjustments	(477)		674		3,963		Other adjustments	12,094		12,762		3,165
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:							Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(81,303)		(51,357)		(58,234)		Accounts receivable	(117,943)		(81,303)		(51,357)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(11,636)		(20,316)		(8,739)		Prepaid expenses and other current assets	(78,012)		(11,636)		(20,316)
Other long-term assets	Other long-term assets	(81,908)		(18,021)		(5,305)		Other long-term assets	(121,225)		(81,908)		(18,021)
Accounts payable	Accounts payable	10,060		17,255		6,980		Accounts payable	10,191		10,060		17,255
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	88,340		46,154		45,120		Accrued expenses and other current liabilities	127,554		88,340		46,154
Deferred revenue and customer deposits	Deferred revenue and customer deposits	13,824		2,968		5,958		Deferred revenue and customer deposits	45,634		13,824		2,968
Operating lease liabilities	Operating lease liabilities	(33,938)		(21,138)		0		Operating lease liabilities	(49,046)		(33,938)		(21,138)
Other long-term liabilities	Other long-term liabilities	(826)		(3,501)		(597)		Other long-term liabilities	(2,266)		(826)		(3,501)
Net cash provided by operating activities		32,654		14,048		7,983
Net cash (used in) provided by operating activities								Net cash (used in) provided by operating activities	(58,192)		32,654		14,048
CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:							CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired and other related payments	Acquisitions, net of cash acquired and other related payments	(333,591)		122,749		(30,574)		Acquisitions, net of cash acquired and other related payments	(491,522)		(333,591)		122,749
Purchases of marketable securities and other investments	Purchases of marketable securities and other investments	(1,636,590)		(2,038,422)		(279,687)		Purchases of marketable securities and other investments	(3,523,232)		(1,636,590)		(2,038,422)
Proceeds from sales and maturities of marketable securities	Proceeds from sales and maturities of marketable securities	1,183,459		697,171		195,497		Proceeds from sales and maturities of marketable securities	1,614,779		1,183,459		697,171

Capitalized software development costs	Capitalized software development costs	(33,328)		(21,922)		(19,546)		Capitalized software development costs	(43,973)		(33,328)		(21,922)
Purchases of long-lived and intangible assets	Purchases of long-lived and intangible assets	(25,805)		(45,368)		(5,109)		Purchases of long-lived and intangible assets	(46,048)		(25,805)		(45,368)
Net cash used in investing activities	Net cash used in investing activities	(845,855)		(1,285,792)		(139,419)		Net cash used in investing activities	(2,489,996)		(845,855)		(1,285,792)
CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:							CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from a public offering, net of underwriting discount and issuance costs		1,408,113		979,123		0
Proceeds from public offerings, net of underwriters' discount and issuance costs								Proceeds from public offerings, net of underwriters' discount and issuance costs	1,765,713		1,408,113		979,123

Proceeds from issuance of convertible senior notes		0		0		550,000
Proceeds from issuance of senior notes due 2029 and 2031								Proceeds from issuance of senior notes due 2029 and 2031	987,500		—		—
Payment of debt issuance costs	Payment of debt issuance costs	0		0		(12,941)		Payment of debt issuance costs	(2,777)		—		—
Purchase of capped call		0		0		(58,465)

Principal payments on debt and finance leases	Principal payments on debt and finance leases	(10,784)		(11,046)		0		Principal payments on debt and finance leases	(8,295)		(10,784)		(11,046)

Proceeds from exercises of stock options and shares issued in ESPP		104,760		57,480		39,879
Proceeds from exercises of stock options and shares of Class A common stock issued under ESPP								Proceeds from exercises of stock options and shares of Class A common stock issued under ESPP	136,160		104,760		57,480

Proceeds from settlements of capped call, net of settlement costs								Proceeds from settlements of capped call, net of settlement costs	228,412		—		—
Value of equity awards withheld for tax liabilities	Value of equity awards withheld for tax liabilities	(8,778)		(5,412)		(2,654)		Value of equity awards withheld for tax liabilities	(10,388)		(8,778)		(5,412)

Net cash provided by financing activities	Net cash provided by financing activities	1,493,311		1,020,145		515,819		Net cash provided by financing activities	3,096,325		1,493,311		1,020,145
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	40		0		163		Effect of exchange rate changes on cash, cash equivalents and restricted cash	(191)		40		—
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	680,150		(251,599)		384,546		NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	547,946		680,150		(251,599)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of year	CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of year	253,735		505,334		120,788		CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of year	933,885		253,735		505,334
CASH, CASH EQUIVALENTS AND RESTRICTED CASH —End of year	CASH, CASH EQUIVALENTS AND RESTRICTED CASH —End of year	$	933,885	$	253,735	$	505,334	CASH, CASH EQUIVALENTS AND RESTRICTED CASH —End of year	$	1,481,831	$	933,885	$	253,735
Cash paid for income taxes, net	Cash paid for income taxes, net	$	3,092	$	1,368	$	564	Cash paid for income taxes, net	$	6,147	$	3,092	$	1,368
Cash paid for interest	Cash paid for interest	$	2,139	$	2,290	$	741	Cash paid for interest	$	20,637	$	2,139	$	2,290

NON-CASH INVESTING AND FINANCING ACTIVITIES:	NON-CASH INVESTING AND FINANCING ACTIVITIES:							NON-CASH INVESTING AND FINANCING ACTIVITIES:

Finance lease right-of-use assets assumed in a business combination		$	0	$	14,173	$	0

Purchases of property and equipment through finance leases	Purchases of property and equipment through finance leases	$	20,108	$	5,848	$	2,478	Purchases of property and equipment through finance leases	$	22,157	$	20,108	$	5,848
Acquisition holdback		$	5,000	$	7,980	$	2,290
Value of common stock issued and stock awards assumed in acquisition		$	2,571,328	$	2,841,452	$	0
Value of common stock issued to settle convertible senior notes		$	892,640	$	0	$	0
Stock-based compensation capitalized in software development costs		$	13,897	$	7,777	$	5,706

Value of common stock issued and equity awards assumed in acquisition								Value of common stock issued and equity awards assumed in acquisition	$	420,681	$	2,571,328	$	2,841,452
Value of common stock issued to settle convertible senior notes due 2023								Value of common stock issued to settle convertible senior notes due 2023	$	1,704,969	$	892,640	$	—

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS								RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS
Cash and cash equivalents								Cash and cash equivalents	$	1,479,452	$	933,885	$	253,735
Restricted cash in other current assets								Restricted cash in other current assets	1,536		—		—
Restricted cash in other long-term assets								Restricted cash in other long-term assets	843		—		—
Total cash, cash equivalents and restricted cash								Total cash, cash equivalents and restricted cash	$	1,481,831	$	933,885	$	253,735

Table of ~~the underwriters' option to purchase additional shares. The Company received total proceeds of $1.8 billion, net of offering expenses paid or payable by the Company.~~
Contents

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and ~~Chief~~our Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Annual Report on Form 10-K.

Based on this evaluation, our Chief Executive Officer and ~~Chief~~our Principal Financial Officer concluded that, as of December 31, ~~2020,~~2021, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and ~~Chief~~our Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

~~125~~

~~Table of Contents~~

(b) Management's Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our Chief Executive Officer and our ~~Chief~~Principal Financial Officer, to provide reasonable assurance regarding the reliability of ~~financing~~financial reporting and the preparation of financial statements for external purposes in accordance with U.S generally accepted accounting principles.

Under the supervision and with the participation of our Chief Executive Officer and our ~~Chief~~Principal Financial Officer and oversight of the board of directors, our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, ~~2020,~~2021, based on the criteria set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, ~~2020.~~2021.

~~The~~On July 14, 2021 the Company acquired ~~Segment.io,~~Zipwhip, Inc. ~~("Segment"~~(“Zipwhip”) ~~on November 2, 2020.~~. Management excluded ~~Segment~~Zipwhip from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2020. Segment's~~2021. Zipwhip's total assets excluded from this assessment was ~~$253.6~~$51.9 million, representing 3%0.4% of the Company’s consolidated total assets as of December 31, ~~2020,~~2021, and ~~Segment's~~Zipwhip's total revenue of ~~$23.0~~$55.4 million represented 1%2% of the Company’s consolidated revenue for the year ended December 31, ~~2020.~~2021.

The effectiveness of our internal control over financial reporting as of December 31, ~~2020~~2021 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which is included in Part II, Item 8, ~~"Financial~~“Financial Statements and Supplementary ~~Data"~~Data”, of this Annual Report on Form 10-K.

117

Table of Contents

On ~~November 2, 2020,~~July 14, 2021, the Company acquired ~~Segment.~~Zipwhip. As a result of this acquisition, the Company is reviewing the internal controls of ~~Segment~~Zipwhip and is making appropriate changes as deemed necessary. Except for the changes in internal controls related to ~~Segment,~~Zipwhip, there were no changes in our internal control over financial reporting in connection with the evaluation required by Rule 13a-15 (d) and 15d-15 (d) of the Exchange Act that occurred during the quarter ended December 31, ~~2020~~2021, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

(d) Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and ~~Chief~~our Principal Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost‑effective control system, misstatements due to error or fraud may occur and not be detected.

Item 9B. Other Information

Not applicable.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

PART III

~~126~~

~~Table of Contents~~

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this item is incorporated by reference to our Proxy Statement relating to our ~~2021~~2022 Annual Meeting of Stockholders. The Proxy Statement will be filed with the Securities and Exchange Commission within 120 days of the fiscal year ended December 31, ~~2020.~~2021.

Codes of Business Conduct and Ethics

Our board of directors has adopted a Code of Business Conduct and Ethics that applies to all officers, directors and employees, which is available on our website at (investors.twilio.com) under ~~"Governance Documents"~~“Governance Documents”. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendments to, or waiver from, a provision of our Code of Business Conduct and Ethics and by posting such information on the website address and location specified above.

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

118

Table of Contents

Item 13. Certain Relationships and Related Transactions and Director Independence

Item 14. Principal Accountant Fees and Services

PART IV

~~127~~

~~Table of Contents~~

Item 15. Exhibits and Financial Statement Schedules

(a)The following documents are filed as part of this report:

1. Financial Statements

See Index to Financial Statements at Item 8 herein.

2. Financial Statement Schedules

Schedules not listed above have been omitted because they are not required, not applicable, or the required information is otherwise included.

3. Exhibits

The exhibits listed below are filed as part of this Annual Report on Form 10-K or are incorporated herein by reference, in each case as indicated below.

EXHIBIT INDEX


Exhibit Number	Exhibit Number		Incorporated by Reference				Exhibit Number		Incorporated by Reference
		Description	Form	File No.	Exhibit	Filing Date		Description	Form	File No.	Exhibit	Filing Date
2.1+		Agreement and Plan of Merger and Reorganization, dated October 15, 2018, by and among Twilio Inc., a Delaware corporation, SendGrid, Inc., a Delaware corporation, and Topaz Merger Subsidiary, Inc., a Delaware corporation	8-K	011-37806	2.1	October 16, 2018
2.1							2.1	Agreement and Plan of Merger and Reorganization, dated as of May 16, 2021, by and among Twilio Inc., a Delaware corporation, Zeus Merger Sub I, Inc., a Delaware corporation, Zeus Merger Sub II, LLC, a Delaware limited liability company, Zipwhip, Inc., a Delaware corporation and Fortis Advisors LLC, a Delaware limited liability company	10-Q	001-37806	2.1	July 30, 2021
2.2	2.2	First Amendment to Agreement and Plan of Merger and Reorganization, dated December 13, 2018, by and among Twilio Inc., a Delaware corporation, SendGrid, Inc., a Delaware corporation, and Topaz Merger Subsidiary, Inc., a Delaware corporation	10-K	001-37806	2.2	March 1, 2019	2.2	Agreement and Plan of Reorganization, dated October 12, 2020, by and among Twilio Inc., a Delaware corporation, Scorpio Merger Sub, Inc., a Delaware corporation, Segment,io, Inc., a Delaware corporation, and Shareholder Representative Services LLC, a Colorado limited liability company	S-3	333-249889	2.1	November 5, 2020
2.3	2.3	Agreement and Plan of Reorganization, dated October 12, 2020, by and among Twilio Inc., a Delaware corporation, Scorpio Merger Sub, Inc., a Delaware corporation, Segment,io, Inc., a Delaware corporation, and Shareholder Representative Services LLC, a Colorado limited liability company	S-3	333-249889	2.1	November 5, 2020	2.3	Framework Agreement Letter Agreement , dated as of August 16, 2021 , by and among Twilio Inc., a Delaware corporation, Carlyle Partners V Holdings, L.P., a Delaw are limited partnership, and Syniverse Corp oration, a Delaware corporation	8-K	001-37806	2.1	August 17, 2021
3.1	3.1	Amended and Restated Certificate of Incorporation of Twilio Inc.	S-1A	333-211634	3.1	June 13, 2016	3.1	Amended and Restated Certificate of Incorporation of Twilio Inc.	S-1A	333-211634	3.1	June 13, 2016
3.2	3.2	Second Amended and Restated Bylaws of Twilio Inc.	10-Q	001-37806	3.1	August 4, 2020	3.2	Second Amended and Restated Bylaws of Twilio Inc.	10-Q	001-37806	3.1	August 4, 2020
4.1	4.1	Form of Class A Common Stock Certificate of Twilio Inc.	S-1	333-211634	4.1	May 26, 2016	4.1	Form of Class A Common Stock Certificate of Twilio Inc.	S-1	333-211634	4.1	May 26, 2016
4.2	4.2	Amended and Restated Investors' Rights Agreement, dated April 24, 2015, between Twilio Inc. and certain of its stockholders	S-1	333-211634	4.2	May 26, 2016	4.2	Amended and Restated Investors' Rights Agreement, dated April 24, 2015, between Twilio Inc. and certain of its stockholders	S-1	333-211634	4.2	May 26, 2016
4.3	4.3	Indenture, dated as of May 17, 2018, between Twilio Inc. and Wilmington Trust, National Association, as trustee	8-K	001-37806	4.1	May 18, 2018	4.3	Indenture, dated as of May 17, 2018, between Twilio Inc. and Wilmington Trust, National Association, as trustee	8-K	001-37806	4.1	May 18, 2018
4.4	4.4	Form of 0.25% Convertible Senior Notes due 2023 (included in Exhibit 4.3)	8-K	001-37806	4.2	May 18, 2018	4.4	Form of 0.25% Convertible Senior Notes due 2023 (included in Exhibit 4.3)	8-K	001-37806	4.2	May 18, 2018
4.5	4.5	Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934				Filed herewith	4.5	Indenture, dated as of March 9, 2021 by and between Twilio Inc. and U.S. Bank National Association, as Trustee	8-K	001-37806	4.1	March 9, 2021
10.1*		Form of Indemnification Agreement				Filed herewith
10.2*		Twilio Inc. Amended and Restated 2008 Stock Option Plan and forms of Stock Option Agreement and form of Stock Option Grant Notice				Filed herewith
10.3*		Twilio Inc. Amended and Restated 2016 Stock Option and Incentive Plan, and forms of Agreements thereunder				Filed herewith
10.4*		Twilio Inc. 2019 France Sub-Plan to the 2016 Stock Option and Incentive Plan	10-Q	001-37806	10.2	October 31, 2019
10.5*		Segment.io, Inc. Fifth Amended and Restated 2013 Stock Option and Grant Plan and related form agreements				Filed herewith
10.6*		SendGrid, Inc. Amended and Restated 2012 Equity Incentive Plan				Filed herewith
10.7*		SendGrid, Inc. Amended and Restated 2017 Equity Incentive Plan				Filed herewith
10.8*		Twilio Inc. Amended and Restated 2016 Employee Stock Purchase Plan	10-Q	001-37806	10.1	October 31, 2019


Delaware						26-2574840
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.001 per share	TWLO	~~The~~ New York Stock Exchange
		Long-Term Stock Exchange


Capitalized internal-use software development costs						3 years
Data center equipment						2 - 4 years
Office equipment						3 years
Furniture and fixtures						5 years
Software						3 years
Assets under financing lease						5 years or remaining lease term
Leasehold improvements						5 years or remaining lease term


Developed technology						3 - 7 years
Customer relationships						2 - 810 years
Supplier relationships						2 - 5 years
Trade names						5 years
Order backlog						1 year
Patents						20 years
Telecommunication licenses						Indefinite
Trademarks						Indefinite
Domain names						Indefinite


		Amortized Cost or Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value Hierarchy as of December 31, 2020							Aggregate Fair Value				Amortized Cost or Carrying Value			Gross Unrealized Gains		Gross Unrealized Losses				Fair Value Hierarchy as of December 31, 2021							Aggregate Fair Value
								Level 1	Level 2		Level 3		Aggregate Fair Value						Amortized Cost or Carrying Value								Level 2	Level 3			Aggregate Fair Value
Financial Assets:	Financial Assets:	(In thousands)													Financial Assets:			(In thousands)
Cash and cash equivalents:	Cash and cash equivalents:																					Cash and cash equivalents:
Money market funds	Money market funds	$	656,749	$	—	$	—		$	656,749	$	—	$	—		$	656,749		Money market funds	$	786,548		$	—	$	—			$	786,548		$	—	$	—	$	786,548

Commercial paper	Commercial paper	2,000		—		—			—		2,000		—			2,000			Commercial paper	46,076			—		—				—			46,076		—		46,076
Total included in cash and cash equivalents	Total included in cash and cash equivalents	658,749		—		—			656,749		2,000		—			658,749			Total included in cash and cash equivalents	832,624			—		—				786,548			46,076		—		832,624
Marketable securities:	Marketable securities:																		Marketable securities:
U.S. Treasury securities	U.S. Treasury securities	223,247		389		(1)			223,635		0		—			223,635			U.S. Treasury securities	375,305			6		(2,561)				372,750			—		—		372,750
Non-U.S. government securities																			Non-U.S. government securities	221,641			—		(1,355)				220,286			—		—		220,286
Corporate debt securities and commercial paper	Corporate debt securities and commercial paper	1,874,257		8,149		(135)			50,000		1,832,271		—			1,882,271			Corporate debt securities and commercial paper	3,300,326			960		(15,892)				31,000			3,254,394		—		3,285,394
Total marketable securities	Total marketable securities	2,097,504		8,538		(136)			273,635		1,832,271		—			2,105,906			Total marketable securities	3,897,272			966		(19,808)				624,036			3,254,394		—		3,878,430

Total financial assets	Total financial assets	$	2,756,253	$	8,538	$	(136)		$	930,384	$	1,834,271	$	0		$	2,764,655		Total financial assets	$	4,729,896		$	966	$	(19,808)			$	1,410,584		$	3,300,470	$	—	$	4,711,054


☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


		Page
	PART I
Item 1.	Business	5
Item 1A.	Risk Factors	18
Item 1B.	Unresolved Staff Comments	53
Item 2.	Properties	53
Item 3.	Legal Proceedings	5453
Item 4.	Mine Safety Disclosures	54
	PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	55
Item 6.	~~Selected Financial Data~~[R e s e rv ed ]	5857
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	6157
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	7772
Item 8.	Financial Statements and Supplementary Data	7974
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	~~125~~117
Item 9A.	Controls and Procedures	~~125~~117
Item 9B.	Other Information	~~126~~118
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	118
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	~~127~~118
Item 11.	Executive Compensation	~~127~~118
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~127~~118
Item 13.	Certain Relationships and Related Transactions and Director Independence	~~127~~118
Item 14.	Principal Accountant Fees and Services	~~127~~118
	PART IV
Item 15.	Exhibits, Financial Statement Schedules	~~128~~119
Item 16.	Form 10-K Summary	~~129~~121


						Three Months Ended
Dec 31, 2019		Sep 30, 2019		Jun 30, 2019		Mar 31, 2019		Dec 31, 2018		Sep 30, 2018		Jun 30, 2018		Mar 31, 2018
125	%	132	%	141	%	142	%	150	%	147	%	138	%	138	%

						Three Months Ended
Dec 31, 2017		Sep 30, 2017		Jun 30, 2017		Mar 31, 2017		Dec 31, 2016		Sep 30, 2016		Jun 30, 2016
123	%	125	%	132	%	128	%	141	%	140	%	148	%


	Three Months Ended
	Mar 31, 2019		Jun 30, 2019		Sep 30, 2019		Dec 31, 2019		Mar 31, 2020		Jun 30, 2020		Sep 30, 2020		Dec 31, 2020
	(Unaudited, in thousands)
Revenue	$	233,139	$	275,039	$	295,066	$	331,224	$	364,868	$	400,849	$	447,969	$	548,090
Cost of revenue (1) (2)	107,089		125,024		136,904		156,534		171,333		191,718		217,095		265,969
Gross profit	126,050		150,015		158,162		174,690		193,535		209,131		230,874		282,121
Operating expenses:
Research and development (1) (2)	77,855		98,783		104,481		110,236		114,339		120,701		136,652		158,856
Sales and marketing (1) (2)	71,607		90,421		100,657		106,394		116,722		129,823		140,875		179,987
General and administrative (1) (2)	64,176		54,543		47,690		51,859		55,170		61,251		65,617		128,569
Total operating expenses	213,638		243,747		252,828		268,489		286,231		311,775		343,144		467,412
Loss from operations	(87,588)		(93,732)		(94,666)		(93,799)		(92,696)		(102,644)		(112,270)		(185,291)
Other (expenses) income, net	(636)		(880)		4,377		4,708		(1,118)		3,015		(3,996)		(9,426)
Loss before benefit (provision) for income taxes	(88,224)		(94,612)		(90,289)		(89,091)		(93,814)		(99,629)		(116,266)		(194,717)
Benefit (provision) for income taxes	51,721		2,033		2,555		(1,156)		(977)		(294)		(648)		15,366
Net loss attributable to common stockholders	$	(36,503)	$	(92,579)	$	(87,734)	$	(90,247)	$	(94,791)	$	(99,923)	$	(116,914)	$	(179,351)


	Less Than One Year		One to Three Years		Three to Five Years		Five Years or More		Total Payments
	(In thousands)
Operating leases (1)	$	60,220	$	109,281	$	76,664	$	75,410	$	321,575
Finance leases (2)	9,866		14,429		3,920		518		28,733
Convertible senior notes (3)	—		343,702		—		—		343,702
Noncancelable purchase obligations (4)	81,988		57,049		—		—		139,037
Total payments	$	152,074	$	524,461	$	80,584	$	75,928	$	833,047


	Common Stock Class A		Common Stock Class B		Additional Paid In Capital	Accumulated Other Comprehensive Income	Accumulated Deficit	Total Stockholders' Equity
	Shares	Amount	Shares	Amount
	(In thousands, except share amounts)
Balance as of December 31, 2017	69,906,550	70	24,063,246	24	608,165	2,025	(250,438)	359,846
Net loss	—	—	—	—	—	—	(121,949)	(121,949)
Adjustment to opening retained earnings due to adoption of ASC 606	—	—	—	—	—	—	713	713
Exercises of vested stock options	0	0	3,625,991	4	29,732	—	—	29,736
Vesting of early exercised stock options	—	—	—	—	36	—	—	36
Vesting of restricted stock units	1,970,565	2	172,211	—	—	—	—	2
Value of equity awards withheld for tax liability	(25,932)	—	(22,044)	—	(2,654)	—	—	(2,654)
Exercises of unvested stock options	—	—	2,041	—	—	—	—	—
Conversion of shares of Class B common stock into shares of Class A common stock	8,530,980	8	(8,530,980)	(8)	—	—	—	—
Shares issued under ESPP	325,262	—	—	—	10,122	—	—	10,122
Issuance of debt conversion option	—	—	—	—	119,435	—	—	119,435
Debt conversion option issuance costs	—	—	—	—	(2,819)	—	—	(2,819)
Capped call option issuance costs	—	—	—	—	(58,465)	—	—	(58,465)
Donated common stock	62,338	—	—	—	5,996	—	—	5,996
Unrealized gain on marketable securities	—	—	—	—	—	258	—	258
Foreign currency translation	—	—	—	—	—	(1,001)	—	(1,001)
Stock-based compensation	—	—	—	—	98,979	—	—	98,979
Balance as of December 31, 2018	80,769,763	80	19,310,465	20	808,527	1,282	(371,674)	438,235


	As of December 31, 2020				As of December 31, 2019
	Amortized Cost		Aggregate Fair Value		Amortized Cost		Aggregate Fair Value
Financial Assets:	(In thousands)
Less than one year	$	1,126,091	$	1,128,927	$	859,996	$	861,181
One to three years	971,413		976,979		734,338		737,852
Total	$	2,097,504	$	2,105,906	$	1,594,334	$	1,599,033


	As of December 31, 2021				As of December 31, 2020
	Amortized Cost		Aggregate Fair Value		Amortized Cost		Aggregate Fair Value
Financial Assets:	(In thousands)
Less than one year	$	1,084,751	$	1,085,006	$	1,126,091	$	1,128,927
One to three years	2,812,521		2,793,424		971,413		976,979
Total	$	3,897,272	$	3,878,430	$	2,097,504	$	2,105,906


	Consolidated Statement of Operations and Statement of Comprehensive Loss	Year Ended December 31,
			2021
			(In thousands)
Gains recognized in OCI	Net change in market value of effective foreign currency forward exchange contracts		$	294
Losses recognized in income due to instruments maturing	Cost of revenue		$	7,545


		As of December 31,
Leases	Classification	2020		2019
Assets:		(In thousands)
Operating lease assets	Operating right-of-use asset, net of accumulated amortization (1)	$	258,610	$	156,741
Finance lease assets	Property and equipment, net of accumulated depreciation (2)	25,771		14,770
Total leased assets		$	284,381	$	171,511

Liabilities:
Current
Operating	Operating lease liability, current	$	48,338	$	27,156
Finance	Financing lease liability, current	9,062		6,924
Noncurrent
Operating	Operating lease liability, noncurrent	229,905		139,200
Finance	Finance lease liability, noncurrent	17,856		8,746
Total lease liabilities		$	305,161	$	182,026


	As of December 31, 2020
	Operating Leases		Finance Leases
Year Ended December 31,	(In thousands)
2021	$	60,220	$	9,866
2022	60,258		7,588
2023	49,023		6,841
2024	44,439		3,604
2025	32,225		316
Thereafter	75,410		518
Total lease payments	321,575		28,733
Less: imputed interest	(43,332)		(1,815)
Total lease obligations	278,243		26,918
Less: current obligations	(48,338)		(9,062)
Long-term lease obligations	$	229,905	$	17,856


	Total
	(In thousands)
Fair value of Class A common stock transferred	$	419,197
Cash consideration	418,073
Fair value of the pre-combination service through equity awards	1,511
Total purchase price	$	838,781


	Total		Estimated life
	(In thousands)		(In years)
Developed technology	$	56,800	7
Customer relationships	147,700		10
Supplier relationships	39,600		5
Trade names	400		5
Total intangible assets acquired	$	244,500


	As of December 31, 2018
	Operating Leases		Financing Leases
Year Ended December 31,	(In thousands)
2019	$	24,128	$	306
2020	29,527		512
2021	30,898		573
2022	30,492		590
2023	30,122		608
Thereafter	81,316		1,939
Total minimum lease payments	$	226,483	$	4,528


	Total
	~~(In thousands)~~
~~Net liabilities~~	$	~~(45)~~
~~Intangible assets~~ ~~(1)~~	~~4,250~~
~~Goodwill~~	~~8,835~~
~~Total preliminary purchase price~~	$	~~13,040~~


	~~Total~~
	(In thousands)
~~Fair value of Class A common stock transferred~~	$	~~2,658,898~~
~~Fair value of the pre-combination service through equity awards~~	~~182,554~~
~~Total purchase price, as adjusted~~	$	~~2,841,452~~


	~~Total~~
	~~(In thousands)~~
~~Cash and cash equivalents~~	$	~~156,783~~
~~Accounts receivable and other current assets~~	~~11,635~~
~~Property and equipment, net~~	~~38,350~~
~~Operating right-of-use asset~~	~~33,742~~
~~Intangible assets~~ ~~(1)~~	~~483,000~~
~~Other assets~~	~~1,664~~
~~Goodwill~~	~~2,235,193~~
~~Accounts payable and other liabilities~~	~~(11,114)~~
~~Operating lease liability~~	~~(32,568)~~
~~Finance lease liability~~	~~(13,616)~~
~~Note payable~~	~~(5,387)~~
~~Deferred tax liability~~	~~(56,230)~~
~~Total purchase price~~	$	~~2,841,452~~


	~~Total~~
	~~(In thousands)~~
~~Balance as of December 31, 2018~~	$	~~38,165~~
~~Goodwill additions related to 2019 acquisitions~~	~~2,262,622~~
~~Measurement period adjustments~~	~~(4,003)~~

Balance as of December 31, 2019	$	2,296,784
Goodwill additions related to 2020 acquisitions	2,303,780
Measurement period adjustments	(5,170)

Balance as of December 31, 2020	$	4,595,394
Goodwill additions related to 2021 acquisitions	663,599
Measurement period adjustments	4,173
Balance as of December 31, 2021	$	5,263,166


		As of December 31, 2020							As of December 31, 2021
		Gross		Accumulated Amortization		Net			Gross		Accumulated Amortization		Net
Amortizable intangible assets:	Amortizable intangible assets:	(In thousands)						Amortizable intangible assets:	(In thousands)
Developed technology	Developed technology	$	724,599	$	(113,282)	$	611,317	Developed technology	$	794,831	$	(222,765)	$	572,066
Customer relationships	Customer relationships	379,344		(59,574)		319,770		Customer relationships	538,264		(128,035)		410,229
Supplier relationships	Supplier relationships	4,356		(3,044)		1,312		Supplier relationships	51,671		(9,491)		42,180
Trade names	Trade names	25,560		(7,921)		17,639		Trade names	30,669		(13,874)		16,795
Order backlog	Order backlog	10,000		(1,667)		8,333		Order backlog	10,000		(10,000)		—
Patent	Patent	3,360		(373)		2,987		Patent	4,035		(508)		3,527

Total amortizable intangible assets	Total amortizable intangible assets	1,147,219		(185,861)		961,358		Total amortizable intangible assets	1,429,470		(384,673)		1,044,797
Non-amortizable intangible assets:	Non-amortizable intangible assets:							Non-amortizable intangible assets:
Telecommunication licenses	Telecommunication licenses	4,920		—		4,920		Telecommunication licenses	4,920		—		4,920

Trademarks and other	Trademarks and other	295		—		295		Trademarks and other	295		—		295
Total	Total	$	1,152,434	$	(185,861)	$	966,573	Total	$	1,434,685	$	(384,673)	$	1,050,012


	As of December 31, 2019
	Gross		Accumulated Amortization		Net
Amortizable intangible assets:	(In thousands)
Developed technology	$	333,980	$	(55,390)	$	278,590
Customer relationships	182,339		(26,347)		155,992
Supplier relationships	4,356		(1,532)		2,824
Trade name	20,060		(3,727)		16,333
Patent	2,707		(262)		2,445
Total amortizable intangible assets	543,442		(87,258)		456,184
Non-amortizable intangible assets:
Telecommunication licenses	4,370		—		4,370

Trademarks and other	295		—		295
Total	$	548,107	$	(87,258)	$	460,849


		As of December 31, 2020			As of December 31, 2021
Year Ended December 31,	Year Ended December 31,	(In thousands)		Year Ended December 31,	(In thousands)
2021		$	171,530
2022	2022	168,563		2022	$	204,837
2023	2023	164,122		2023	201,527
2024	2024	162,154		2024	195,953
2025	2025	156,480		2025	192,379
2026				2026	119,045
Thereafter	Thereafter	138,509		Thereafter	131,056
Total	Total	$	961,358	Total	$	1,044,797


Percentage of revenue by geographic area:	Percentage of revenue by geographic area:							Percentage of revenue by geographic area:
United States	United States	73	%	71	%	75	%	United States	66	%	73	%	71	%
International	International	27	%	29	%	25	%	International	34	%	27	%	29	%


	As of December 31, 2020
Year Ending December 31,	(In thousands)
2021	$	81,988
2022	27,958
2023	29,091



Total payments	$	139,037


		Number of options outstanding	Weighted- average exercise price (Per share)		Weighted- average remaining contractual term (In years)	Aggregate intrinsic value (In thousands)			Number of options outstanding	Weighted- average exercise price (Per share)		Weighted- average remaining contractual term (In years)	Aggregate intrinsic value (In thousands)
Outstanding options as of December 31, 2019		7,150,848	$	28.79	6.47	$	511,971
Outstanding options as of December 31, 2020								Outstanding options as of December 31, 2020	5,070,735	$	51.71	6.85	$	1,454,222
Granted	Granted	692,797	151.06					Granted	350,208	343.94
Assumed in acquisition	Assumed in acquisition	1,030,638	67.61					Assumed in acquisition	83,539	49.26
Exercised	Exercised	(3,495,728)	20.74					Exercised	(1,733,819)	40.44
Forfeited and canceled	Forfeited and canceled	(307,820)	73.46					Forfeited and canceled	(419,350)	131.01
Outstanding options as of December 31, 2020		5,070,735	$	51.71	6.85	$	1,454,222
Options vested and exercisable as of December 31, 2020		2,760,433	$	23.51	5.53	$	869,502
Outstanding options as of December 31, 2021								Outstanding options as of December 31, 2021	3,351,313	$	78.10	6.09	$	646,760
Options vested and exercisable as of December 31, 2021								Options vested and exercisable as of December 31, 2021	2,152,819	$	37.21	4.92	$	490,502


		Number of awards outstanding	Weighted- average grant date fair value (Per share)		Aggregate intrinsic value (In thousands)			Number of awards outstanding	Weighted- average grant date fair value (Per share)		Aggregate intrinsic value (In thousands)
Nonvested RSUs as of December 31, 2019		8,490,517	$	74.21	$	830,167
Unvested RSUs as of December 31, 2020							Unvested RSUs as of December 31, 2020	7,523,882	$	131.76	$	2,542,858
Granted	Granted	3,285,382	196.80				Granted	3,465,980	328.38
Assumed in acquisition		158,593	273.38
Vested	Vested	(3,557,147)	73.67				Vested	(3,493,652)	114.70
Forfeited and canceled	Forfeited and canceled	(853,463)	$	92.71			Forfeited and canceled	(1,020,510)	$	188.76
Nonvested RSUs as of December 31, 2020		7,523,882	$	131.76	$	2,542,858
Unvested RSUs as of December 31, 2021							Unvested RSUs as of December 31, 2021	6,475,700	$	237.22	$	1,705,311


		Year Ended December 31,				Year Ended December 31,
Employee Stock Options:	Employee Stock Options:	2020	2019	2018	Employee Stock Options:	2021	2020	2019
Fair value of common stock	Fair value of common stock	$108.37 - $301.72	$103.70 - $130.70	$33.01 - $76.63	Fair value of common stock	$268.55 - $409.21	$108.37 - $301.72	$103.70 - $130.70
Expected term (in years)	Expected term (in years)	0.52 - 6.08	0.33 - 6.08	1.00 - 6.08	Expected term (in years)	0.30 - 6.39	0.52 - 6.08	0.33 - 6.08
Expected volatility	Expected volatility	51.9% - 65.1%	49.0% - 66.5%	38.6% - 44.2%	Expected volatility	42.9% - 61.5%	51.9% - 65.1%	49.0% - 66.5%
Risk-free interest rate	Risk-free interest rate	0.1% - 1.4%	1.6% - 2.5%	2.9% - 3.0%	Risk-free interest rate	0.1% - 1.4%	0.1% - 1.4%	1.6% - 2.5%
Dividend rate	Dividend rate	0%	0%	0%	Dividend rate	—%	—%	—%


		Year Ended December 31,				Year Ended December 31,
Employee Stock Purchase Plan:	Employee Stock Purchase Plan:	2020	2019	2018	Employee Stock Purchase Plan:	2021	2020	2019
Expected term (in years)	Expected term (in years)	0.50	0.49 - 0.50	0.50	Expected term (in years)	0.50	0.50	0.49 - 0.50
Expected volatility	Expected volatility	54.4% - 72.1%	43.1% - 50.3%	39.8% - 47.5%	Expected volatility	46.4% - 58.7%	54.4% - 72.1%	43.1% - 50.3%
Risk-free interest rate	Risk-free interest rate	0.1% - 0.2%	1.6% - 2.4%	2.1% - 2.5%	Risk-free interest rate	—% - 0.1%	0.1% - 0.2%	1.6% - 2.4%
Dividend rate	Dividend rate	0%	0%	0%	Dividend rate	—%	—%	—%


						Twilio Inc.
February ~~25, 2021~~22, 2022						/s/ JEFF LAWSON
						Jeff Lawson Director and Chief Executive Officer (Principal Executive Officer)

February ~~25, 2021~~22, 2022						/s/ KHOZEMA Z. SHIPCHANDLER
						Khozema Z. Shipchandler Chief ~~Financial~~Operating Officer (Principal Accounting and Financial Officer)

February ~~25, 2021~~22, 2022						/s/ RICHARD L. DALZELL
						Richard L. Dalzell Director

February ~~25, 2021~~22, 2022						/s/ BYRON B. DEETER
						Byron B. Deeter Director

February ~~25, 2021~~22, 2022						/s/ ELENA A. DONIO
						Elena A. Donio Director

February ~~25, 2021~~22, 2022						/s/ DONNA L. DUBINSKY
						Donna L. Dubinsky Director

February ~~25, 2021~~22, 2022						/s/ ~~JEFFREY~~JEFF EPSTEIN
						~~Jeffrey~~Jeff Epstein Director

February ~~25, 2021~~22, 2022						/s/ JEFFREY R. IMMELT
						Jeffrey R. Immelt Director

February ~~25, 2021~~22, 2022						/s/ DEVAL L. PATRICK
						Deval L. Patrick Director

February ~~25, 2021~~22, 2022						/s/ ERIKA ROTTENBERG
						Erika Rottenberg Director