| Stockholders' Equity | 12. Stockholders’ Equity
(a) Convertible Preferred
Stock
As of December 31, 2014 and 2015, the Company had outstanding
Series A, B, C, D, E and T convertible preferred stock
(individually referred to as “Series A, B, C, D, E or
T” or collectively “Preferred Stock”) as follows
(in thousands, except share data):
As of December 31,
2014
Shares Authorized Shares Issued and Aggregate Proceeds, Net
Series A 13,173,240 13,173,240 $ 4,624 $ 4,624
Series B 11,416,062 11,416,062 12,000 11,941
Series C 8,466,254 8,452,864 25,250 25,196
Series D 9,440,324 9,440,324 70,000 69,930
Series T 5,000,000 — — —
Total 47,495,880 42,482,490 $ 111,874 $ 111,691
As of December 31,
2015
Shares Shares Issued and Aggregate Proceeds, Net
Series A 13,173,240 13,076,491 $ 4,590 $ 4,592
Series B 11,416,062 11,146,895 11,717 11,658
Series C 8,452,864 8,452,864 25,250 25,196
Series D 9,440,324 9,440,324 70,000 69,930
Series E 11,494,249 11,494,249 130,000 125,448
Series T 5,000,000 897,618 (1) 9 — (2)
Total 58,976,739 54,508,441 $ 241,566 $ 236,824
(1) The outstanding shares include
687,885 shares held in escrow as of December 31, 2015 related
to the Authy acquisition. Of these shares, 507,885 shares are
subject to graded vesting over a period of 3.6 years, as amended,
and have a fair value of $4.0 million as of December 31, 2015.
A total of 127,054 shares are subject to performance conditions and
can be relinquished, if the performance conditions are not
met.
(2) 389,733 shares were issued as part of
the purchase price for Authy acquisition and had a fair value of
$3.1 million on the acquisition closing date.
Immediately prior to the completion of the IPO, all shares of
convertible preferred stock then outstanding were automatically
converted into 54,508,441 shares of common stock on a one-to-one
basis, and then reclassified as shares of Class B common
stock.
The holders of the Company’s Preferred Stock had the
following rights, preferences and privileges:
Conversion
At any time following the date of issuance, each share of Preferred
Stock is convertible, at the option of its holder, into the number
of shares of common stock which results from dividing the
applicable original issue price per share for each series by the
applicable conversion price per share for such series, on the date
of conversion. As of December 31, 2014 and 2015, the initial
conversion prices per share of all series of preferred stock were
equal to the original issue prices of each series and therefore the
conversion ratio was 1:1.
Each share of preferred stock shall be automatically converted into
shares of common stock immediately upon the earlier of (i) the
consummation of a firmly underwritten public offering pursuant to
the Securities Act of 1933, as amended, the public offering price
of which is not less than $50.0 million in aggregate; or
(ii) the date specified by the written consent of holders of a
majority of the outstanding shares of preferred stock, voting
together as a class of shares on an as-converted
A Liquidation Event includes (i) a sale, lease or other
disposition of all or substantially all of the Company’s
assets, (ii) a merger or consolidation of the Company into
another entity (except where the merger results in the holders of
the Company’s stock prior to merger continuing to hold at
least 50% of the voting power of the capital stock of the Company
or the surviving or acquiring entity), (iii) the transfer of
the Company’s securities to a person, or a group of
affiliated persons, if, after such a transfer, such person or group
of persons holds 50% or more of the outstanding voting stock of the
Company, (iv) the grant of an exclusive, irrecoverable license
to all or substantially all of the Company’s intellectual
property or (v) a liquidation, dissolution or winding up of
the Company.
In the event the Company issues any additional stock, as defined in
the Company’s Certificate of Incorporation, after the
preferred stock original issue date, without consideration or for a
consideration per share less than the conversion price applicable
to a series of preferred stock in effect immediately prior to such
issuance, the conversion price for such series in effect
immediately prior to each such issuance shall be adjusted according
to a formula set forth in the Company’s Certificate of
Incorporation.
Voting
The holders of Preferred Stock and the holders of common stock vote
together and not as separate classes, except in cases specifically
provided for in the Certificate of Incorporation or as provided by
law.
The holders of each share of Preferred Stock has the right to one
vote for each share of common stock into which such Preferred Stock
could be converted, and, with respect to such vote, holders of
Preferred Stock have full voting rights and powers equal to the
voting rights and powers of the holders of common stock, with the
exception of voting for the election of directors referred to
below.
As long as a majority of the shares of Series A preferred
stock originally issued remain outstanding, the holders of such
shares, voting as a separate class, shall be entitled to elect one
director. As long as a majority of the shares of Series B
preferred stock originally issued remain outstanding, the holders
of such shares, voting as a separate class, shall be entitled to
elect one director. As long as at least 2,000,000 shares of
Series D preferred stock are outstanding, the holders of such
shares, voting as a separate class, shall be entitled to elect one
director. The holders of common stock, voting as a separate class,
shall be entitled to elect two directors. The holders of shares of
Preferred Stock and common stock, voting together as a single class
on an as-converted
Dividends
The holders of convertible preferred stock are entitled to receive,
when and if declared by the board of directors, out of any assets
legally available therefor, any dividends as may be declared from
time to time by the board of directors. No dividend may be declared
or paid on the common stock unless any and all such dividends are
distributed among all holders of common stock and preferred stock
on a pro rata pari passu non-cumulative.
Liquidation Preference
In the event of any Liquidation Event of the Company, the holders
of Series A, Series B, Series C, Series D and
Series E preferred stock (“senior preferred
stock”) shall be entitled to receive, in preference to any
distribution of the proceeds to the holders of Series T
preferred stock or common stock, an amount per share equal to the
sum of the applicable original issue price for each series of
preferred stock (as adjusted for stock splits and combinations as
described in the Certificate of Incorporation), plus declared but
unpaid dividends on such share. Upon completion of this
distribution, the holders of Series T preferred stock shall be
entitled to receive in preference to any distribution of the
proceeds to the holders of common stock an amount per share equal
to the sum of the applicable original issue price for Series T
preferred stock, plus declared but unpaid dividends on such share.
If the proceeds thus distributed among the holders of the preferred
stock are insufficient to permit payment to such holders of the
full preferential amounts, then the entire proceeds available for
distribution shall be distributed ratably first among the holders
of the senior preferred stock in proportion to the full
preferential amount that each holder is otherwise entitled to. The
original issue price per share of Series A, Series B,
Series C, Series D, Series E and Series T
convertible preferred stock is equal to $0.35, $1.05, $2.99, $7.42,
$11.31 and $0.01, respectively.
Upon completion of the distribution referred to above, all the
remaining proceeds available for distribution shall be distributed
to the holders of the Company’s common stock pro rata based
on the number of common stock held by each.
The Company classified the Preferred Stock within
shareholders’ equity since the shares are not redeemable, and
the holders of the Preferred Stock cannot effect a deemed
liquidation of the Company outside of the Company control.
(b) Preferred Stock
As of June 30, 2016 (unaudited), the Company had authorized
100,000,000 shares of undesignated preferred stock, par value
$0.001, of which no shares were outstanding.
(c) Common Stock
As of December 31, 2014 and 2015, there were 17,446,051 and
17,324,003 shares of common stock, respectively, issued and
outstanding.
Immediately prior to the completion of the IPO, all shares of
common stock then outstanding were reclassified as Class B
common stock. Shares offered and sold in the IPO were the newly
authorized shares of Class A common stock.
As of June 30, 2016, the Company had authorized 1,000,000,000
shares of Class A common stock and 100,000,000 shares of
Class B common stock, each par value $0.001 per share, of
which 11,647,711 shares and 72,878,382 shares of Class A and
Class B common stock, respectively, were issued and
outstanding. Holders of Class A and Class B common
stock are entitled to one vote per share and 10 votes per share,
respectively, and the shares of Class A common stock and
Class B common stock are identical, except for voting and
conversion rights. As of June 30, 2016 (unaudited), the
outstanding Class B common stock included 617,634 shares
related to the Authy acquisition that were held in escrow.
The Company had reserved shares of common stock for issuance as
follows:
As of December 31, As of 2016
2014 2015
(Unaudited)
Convertible preferred stock outstanding 42,482,490 54,508,441 (1) —
Stock options issued and outstanding 13,141,311 16,883,837 16,918,789
Nonvested restricted stock units issued and outstanding — 71,000 891,008
Common stock reserved for Twilio.org — 888,022 780,397
Stock-based 575,554 14,920 —
Stock-based — — 11,446,750
Common stock reserved for issuance under 2016 ESPP — — 2,400,000
Total 56,199,355 72,366,220 32,436,944
(1) Includes 687,885 shares of
Series T convertible preferred stock related to the Authy
acquisition held in escrow as of December 31, 2015.
(d) Stock Repurchases
Following the closing of the Series D convertible preferred
stock financing, on May 20, 2013, the Company repurchased an
aggregate of 1,498,464 shares of common stock from three founders
for $10.0 million in cash, which transaction is referred to as
the 2013 Repurchase. The 2013 Repurchase was conducted at a price
in excess of the fair value of the Company’s common stock at
the date of repurchase. No special rights or privileges were
conveyed to the founders as part of this transaction. However, no
other stockholders were given the opportunity to participate in the
2013 Repurchase. The Company recorded a compensation expense in the
amount of $5.0 million, which represented the excess of the
common stock repurchase price above the fair value of the common
stock on the date of repurchase. Of this expense, $1.9 million
and $3.1 million were classified as research and development
and general and administrative expenses, respectively, in the
accompanying consolidated statement of operations. The Company
retired the shares repurchased from the founders as of May 20,
2013.
Following the closing of the Series E convertible preferred
stock financing, on August 21, 2015, the Company repurchased
an aggregate of 365,916 shares of Series A preferred stock and
Series B preferred stock from certain preferred stockholders,
and repurchased an aggregate of 1,869,156 shares of common stock
from certain current and former employees for $22.8 million in
cash, which transaction is referred to as the 2015 Repurchase. The
2015 Repurchase was conducted at a price in excess of the fair
value of the Company’s common stock at the date of
repurchase. No special rights or privileges were conveyed to the
employees and former employees. However, not all employees were
invited to participate in the 2015 Repurchase. The Company recorded
a compensation expense in the amount of $2.0 million for the
year ended December 31, 2015, which was the excess of the
common stock repurchase price above the fair value of the common
stock on the date of repurchase. Of this expense,
$0.8 million, $0.1 million and $1.1 million were
classified as research and development, sales and marketing and
general and administrative expenses, respectively, in the
accompanying consolidated statement of operations. The excess of
the preferred stock repurchase price above the carrying value of
the preferred stock was recorded as a deemed dividend in the year
ended December 31, 2015. The Company retired the shares
repurchased in the 2015 Repurchase as of August 21, 2015.
(e) Stock Split
On July 9, 2014, the Company’s board of directors and
stockholders approved and the Company effected, a 2-for-1
(f) Twilio.org
On September 2, 2015, the Company’s board of directors
approved the establishment of Twilio.org as a donor-advised as-converted
Twilio.org is a part of the Company and not a separate legal
entity. The objective for Twilio.org is to further the
philanthropic goals of the Company. As of December 31, 2015
and June 30, 2016 (unaudited), none of the reserved shares were
issued and outstanding. |
