Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 30, 2019 | |
Entity Registrant Name | TWILIO INC | |
Entity Central Index Key | 0001447669 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Common Class A | ||
Entity Common Stock, Shares Outstanding | 110,265,143 | |
Common Class B | ||
Entity Common Stock, Shares Outstanding | 16,001,547 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 377,730 | $ 487,215 |
Short-term marketable securities | 541,167 | 261,128 |
Accounts receivable, net | 105,149 | 97,712 |
Prepaid expenses and other current assets | 39,081 | 26,893 |
Total current assets | 1,063,127 | 872,948 |
Restricted cash | 1,101 | 18,119 |
Property and equipment, net | 105,158 | 63,534 |
Operating right of use asset | 156,511 | 0 |
Intangible assets, net | 503,947 | 27,558 |
Goodwill | 2,277,220 | 38,165 |
Other long-term assets | 13,009 | 8,386 |
Total assets | 4,120,073 | 1,028,710 |
Current liabilities: | ||
Accounts payable | 22,418 | 18,495 |
Accrued expenses and other current liabilities | 107,295 | 96,343 |
Deferred revenue and customer deposits | 23,348 | 22,972 |
Operating lease liability, current | 21,147 | 0 |
Financing lease liability, current | 6,044 | 0 |
Note payable, current | 2,087 | 0 |
Total current liabilities | 182,339 | 137,810 |
Operating lease liability, noncurrent | 143,950 | 0 |
Financing lease liability, noncurrent | 9,124 | 0 |
Note payable, noncurrent | 2,773 | 0 |
Convertible senior notes, net | 440,337 | 434,496 |
Other long-term liabilities | 14,037 | 18,169 |
Total liabilities | 792,560 | 590,475 |
Commitments and contingencies (Note 12) | ||
Stockholders’ equity: | ||
Preferred stock | 0 | 0 |
Class A and Class B common stock | 126 | 100 |
Additional paid-in capital | 3,733,241 | 808,527 |
Accumulated other comprehensive income | 2,323 | 1,282 |
Accumulated deficit | (408,177) | (371,674) |
Total stockholders’ equity | 3,327,513 | 438,235 |
Total liabilities and stockholders’ equity | $ 4,120,073 | $ 1,028,710 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues: | ||
Revenue | $ 233,139 | $ 129,116 |
Cost of revenue | 107,089 | 59,582 |
Gross profit | 126,050 | 69,534 |
Operating expenses: | ||
Research and development | 77,855 | 37,576 |
Sales and marketing | 71,607 | 32,822 |
General and administrative | 64,176 | 23,393 |
Total operating expenses | 213,638 | 93,791 |
Loss from operations | (87,588) | (24,257) |
Other (expenses) income, net | (636) | 665 |
Loss before benefit (provision) for income taxes | (88,224) | (23,592) |
Benefit (provision) for income taxes | 51,721 | (137) |
Net loss attributable to common stockholders | $ (36,503) | $ (23,729) |
Net loss per share attributable to common stockholders, basic and diluted (in dollars per share) | $ (0.31) | $ (0.25) |
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted | 116,590,513 | 94,673,557 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (36,503) | $ (23,729) |
Other comprehensive (loss) income: | ||
Unrealized gain (loss) on marketable securities | 1,041 | (317) |
Foreign currency translation | 0 | 731 |
Total other comprehensive (loss) income | 1,041 | 414 |
Comprehensive loss attributable to common stockholders | $ (35,462) | $ (23,315) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (36,503) | $ (23,729) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 21,248 | 5,631 |
Right-of-use asset amortization | 4,854 | 0 |
Net amortization of investment premium and discount | (1,359) | 28 |
Amortization of debt discount and issuance costs | 5,841 | 0 |
Stock-based compensation | 58,324 | 17,540 |
Amortization of deferred commissions | 670 | 0 |
Provision for doubtful accounts | 11 | 375 |
Tax benefit related to release of valuation allowance | (51,644) | 0 |
Write-off of internally developed software and intangible assets | 245 | 182 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (206) | (14,612) |
Prepaid expenses and other current assets | (9,479) | 2,512 |
Other long-term assets | (2,959) | (1,169) |
Accounts payable | 1,161 | 6,703 |
Accrued expenses and other current liabilities | 4,348 | 22,789 |
Deferred revenue and customer deposits | 377 | 1,185 |
Operating right of use liability | (1,784) | 0 |
Long-term liabilities | (2,258) | (499) |
Net cash (used in) provided by operating activities | (9,113) | 16,936 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of marketable securities | (419,498) | (42,693) |
Proceeds from sale of marketable securities | 13,708 | 0 |
Maturities of marketable securities | 126,810 | 27,600 |
Capitalized software development costs | (5,351) | (4,795) |
Purchases of property and equipment | (2,653) | (940) |
Purchases of intangible assets | 0 | (112) |
Acquisitions, net of cash acquired | 156,783 | 0 |
Net cash used in investing activities | (130,201) | (20,940) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal payments on notes payable | (494) | 0 |
Principal payments on financing leases | (961) | 0 |
Proceeds from exercises of stock options | 15,328 | 6,678 |
Value of equity awards withheld for tax liabilities | (1,062) | (371) |
Net cash provided by financing activities | 12,811 | 6,307 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 0 | 148 |
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (126,503) | 2,451 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period | 505,334 | 120,788 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH —End of period | 378,831 | 123,239 |
Cash paid for income taxes, net | (34) | 18 |
Cash paid on finance leases | 148 | 0 |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Purchases of property, equipment and intangible assets, accrued but not paid | 1,821 | 473 |
Purchases of property and equipment through finance leases | 13,616 | 0 |
Value of common stock issued and equity awards assumed in acquisition | 2,850,518 | 0 |
Stock-based compensation capitalized in software development costs | $ 1,623 | $ 1,428 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders Equity - USD ($) $ in Thousands | Total | Common StockCommon Class A | Common StockCommon Class B | Additional Paid In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit |
Balance (in shares) at Dec. 31, 2017 | 69,906,550 | 24,063,246 | ||||
Balance at Dec. 31, 2017 | $ 359,846 | $ 70 | $ 24 | $ 608,165 | $ 2,025 | $ (250,438) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (23,729) | (23,729) | ||||
Adjustment to opening retained earnings due to adoption of ASC 606 | 713 | 713 | ||||
Exercise of vested stock options (in shares) | 1,190,387 | |||||
Exercise of vested stock options | 6,678 | $ 1 | 6,677 | |||
Vesting of early exercised stock options | 21 | 21 | ||||
Vesting of restricted stock units (in shares) | 491,501 | 52,716 | ||||
Value of equity awards withheld for tax liability (in shares) | (8,352) | (4,380) | ||||
Value of equity awards withheld for tax liability | (371) | (371) | ||||
Conversion of shares of Class B common stock into shares of Class A common stock (in shares) | 1,358,716 | (1,358,716) | ||||
Conversion of shares of Class B common stock into shares of Class A common stock | $ 1 | $ (1) | ||||
Unrealized gain (loss) on marketable securities | (317) | (317) | ||||
Foreign currency translation | 731 | 731 | ||||
Stock-based compensation | 18,968 | 18,968 | ||||
Balance (in shares) at Mar. 31, 2018 | 71,748,415 | 23,943,253 | ||||
Balance at Mar. 31, 2018 | 362,540 | $ 71 | $ 24 | 633,460 | 2,439 | (273,454) |
Balance (in shares) at Dec. 31, 2018 | 80,769,763 | 19,310,465 | ||||
Balance at Dec. 31, 2018 | 438,235 | $ 80 | $ 20 | 808,527 | 1,282 | (371,674) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (36,503) | (36,503) | ||||
Exercise of vested stock options (in shares) | 748,679 | 1,023,984 | ||||
Exercise of vested stock options | 15,328 | $ 1 | $ 1 | 15,326 | ||
Vesting of early exercised stock options | 9 | 9 | ||||
Vesting of restricted stock units (in shares) | 641,406 | 39,360 | ||||
Value of equity awards withheld for tax liability (in shares) | (5,860) | (4,431) | ||||
Value of equity awards withheld for tax liability | (1,062) | (1,062) | ||||
Conversion of shares of Class B common stock into shares of Class A common stock (in shares) | 4,339,519 | (4,339,519) | ||||
Conversion of shares of Class B common stock into shares of Class A common stock | $ 4 | $ (4) | ||||
Shares issued in relation to SendGrid (in shares) | 23,555,081 | |||||
Shares issued in acquisition | 2,658,898 | $ 24 | 2,658,874 | |||
Equity awards assumed in acquisition | 191,620 | 191,620 | ||||
Unrealized gain (loss) on marketable securities | 1,041 | 1,041 | ||||
Foreign currency translation | 0 | |||||
Stock-based compensation | 59,947 | 59,947 | ||||
Balance (in shares) at Mar. 31, 2019 | 110,048,588 | 16,029,859 | ||||
Balance at Mar. 31, 2019 | $ 3,327,513 | $ 109 | $ 17 | $ 3,733,241 | $ 2,323 | $ (408,177) |
Organization and Description of
Organization and Description of Business | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | Organization and Description of Business Twilio Inc. (the “Company”) was incorporated in the state of Delaware on March 13, 2008. The Company is the leader in the Cloud Communications Platform category and enables developers to build, scale and operate real-time communications within their software applications via simple-to-use Application Programming Interfaces (“API”). The power, flexibility, and reliability offered by the Company’s software building blocks empower entities of virtually every shape and size to build world-class engagement into their customer experience. The Company’s headquarters are located in San Francisco, California, and the Company has subsidiaries in Australia, Bermuda, Colombia, Czech Republic, Estonia, Germany, Hong Kong, Ireland, Japan, the Netherlands, Singapore, Spain, Sweden, United Kingdom and the United States. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies (a) Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K filed with the SEC on March 1, 2019 (“Annual Report”). The condensed consolidated balance sheet as of December 31, 2018 , included herein, was derived from the audited financial statements as of that date, but may not include all disclosures including certain notes required by U.S. GAAP on an annual reporting basis. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year 2019 or any future period. (b) Principles of Consolidation The condensed consolidated financial statements include the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated. (c) Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are used for, but not limited to, revenue allowances and returns; recoverability of long-lived and intangible assets; capitalization and useful life of the Company’s capitalized internal-use software development costs; fair value of acquired intangible assets and goodwill; accruals and contingencies. Estimates are based on historical experience and on various assumptions that the Company believes are reasonable under current circumstances. However, future events are subject to change and best estimates and judgments may require further adjustments; therefore, actual results could differ materially from those estimates. Management periodically evaluates such estimates and they are adjusted prospectively based upon such periodic evaluation. (d) Concentration of Credit Risk Financial instruments that potentially expose the Company to a concentration of credit risk consist primarily of cash, cash equivalents, marketable securities, restricted cash and accounts receivable. The Company maintains cash, cash equivalents, marketable securities and restricted cash with financial institutions that management believes are financially sound and have minimal credit risk exposure although the balances will exceed insured limits. The Company sells its services to a wide variety of customers. If the financial condition or results of operations of any significant customers deteriorate substantially, operating results could be adversely affected. To reduce credit risk, management performs ongoing credit evaluations of the financial condition of significant customers. The Company does not require collateral from its credit customers and maintains reserves for estimated credit losses on customer accounts when considered necessary. Actual credit losses may differ from the Company’s estimates. During the three months ended March 31, 2019 and 2018 , respectively, there was no customer organization that accounted for more than 10% of the Company’s total revenue. As of March 31, 2019 and December 31, 2018 , no customer organization represented more than 10% of the Company’s gross accounts receivable. (e) Deferred Revenue and Customer Deposits Deferred revenue is recorded when cash payments are received in advance of future usage on non-cancelable contracts. Customer refundable prepayments are recorded as customer deposits. During the three months ended March 31, 2019 and 2018 , the Company recognized $10.8 million and $3.6 million of revenue that was included in the deferred revenue and customer deposits balance as of January 1, 2019 and 2018, respectively. (f) Deferred Sales Commissions The Company records an asset for the incremental costs of obtaining a contract with a customer, for example, sales commissions that are earned upon execution of contracts. The Company uses the portfolio of data method to determine the estimated period of benefit of capitalized commissions which is determined to be five years . Amortization expense related to these capitalized costs related to initial contracts, upsells and renewals, is recognized on a straight line basis over the estimated period of benefit of the capitalized commissions. Total net capitalized costs as of March 31, 2019 and December 31, 2018 were $13.3 million and $9.4 million , respectively, and are included in prepaid expenses and other current and long‑term assets in the accompanying condensed consolidated balance sheets. Amortization of these assets was $0.7 million and $0.2 million in the three months ended March 31, 2019 and 2018, respectively, and is included in sales and marketing expense in the accompanying condensed consolidated statements of operations. (g) Recently Adopted Accounting Guidance In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, "Leases (Topic 842)" , which was further clarified by ASU 2018‑10, “ Codification Improvements to Topic 842, Leases” , and ASU 2018‑11, “ Leases-Targeted Improvements” , both issued in July 2018. ASU 2018-10 provides narrow amendments to clarify how to apply certain aspects of the new lease standard and ASU 2018-11 and addresses implementation issues related to the new lease standard. The standard is effective for interim and annual reporting periods beginning after December 15, 2018. Under the new standard, lessees are required to recognize in the balance sheet the right-of-use ("ROU") assets and lease liabilities that arise from operating leases. The Company adopted the standard using the optional alternative method on a prospective basis with an effective date as of the beginning of the Company’s fiscal year, January 1, 2019, and applied it to the operating leases that existed on that date. Prior year comparative financial information was not recast under the new standard and continues to be presented under ASC 840. The Company elected to utilize the package of practical expedients available for expired or existing contracts which allowed the Company to carryforward historical assessments of (a) whether contracts are or contain leases, (b) lease classification, and (c) initial direct costs. The Company elected the use of hindsight practical expedient in determining the lease term and assessing the likelihood that lease renewal, termination or purchase option will be exercised. The Company also elected to apply the short-term lease exception for all leases. Under the short-term lease exception, the Company will not recognize ROU assets or lease liabilities for leases that, at the acquisition date, have a remaining lease term of 12 months or less. As a result of implementing this guidance, the Company recognized a $123.5 million net operating ROU asset and a $132.0 million operating lease liability in its condensed consolidated balance sheet as of January 1, 2019. The ROU asset was presented net of deferred rent of $9.0 million as of January 1, 2019, in the accompanying condensed consolidated balance sheet and as a change within operating cash flows. In addition, on February 1, 2019, the Company acquired through its business combination with SendGrid approximately $33.7 million in operating ROU assets, $32.6 million in operating lease liability, $14.2 million in finance ROU assets and $13.6 million in finance lease liability. The Company measured the lease liability at the present value of the future lease payments as of January 1, 2019. The Company used its incremental borrowing rate to discount the lease payments. The Company derived the discount rate, adjusted for differences in the term and payment patterns, from the information available at the adoption date. The right-of-use asset is valued at the amount of the lease liability adjusted for the remaining December 31, 2018, balance of unamortized lease incentives, prepaid rent and deferred rent. The lease liability is subsequently measured at the present value of unpaid future lease payments as of the reporting date with a corresponding adjustment to the right-of-use asset. Absent a lease modification, the Company will continue to utilize the January 1, 2019, incremental borrowing rate. The Company recognizes lease costs on a straight-line basis and presents these costs as operating expenses within the consolidated statements of operations and comprehensive loss. The Company presents lease payments within the cash flows from operations within the consolidated statements of cash flows. The financial results for the quarter ended March 31, 2019, are presented under the new standard, while the comparative periods presented are not adjusted and continue to be reported in accordance with the Company’s historical accounting policy. See Note 5, “Right-of-use Assets and Lease Liabilities” for further information. In March 2019, the FASB issued ASU 2019-01, “ Codification Improvements ” to Leases (Topic 842). This pronouncement did not have material impact on the Company's financial statements. (h) Recently Issued Accounting Guidance, Not yet Adopted In August 2018, the FASB issued ASU 2018‑15, “ Intangibles—Goodwill and Other—Internal‑Use Software (Subtopic 350‑40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract”. This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal‑use software. The standard is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements. In August 2018, the FASB issued ASU 2018‑13, “ Fair Value Measurement (Topic 820) Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement”. The amendments under ASU 2018‑13 remove, add and modify certain disclosure requirements on fair value measurements in ASC 820. The amendments are effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently evaluating the impact the new standard will have on its consolidated financial statements. In July 2018, the FASB issued ASU 2018-09, "Codification Improvements " , which does not prescribe any new accounting guidance, but instead makes minor improvements and clarifications of several topics. Certain updates are applicable immediately while others provide for a transition period to adopt as part of the next fiscal year beginning after December 15, 2018. The Company does not expect the adoption of this guidance to have a material impact on the Company's consolidated financial statements. In January 2017, the FASB issued ASU 2017‑04, “ Simplifying the Test for Goodwill Impairment ”, which removes the second step of the goodwill impairment test that requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This guidance is effective prospectively for interim and annual reporting periods beginning after December 15, 2019. The Company will adopt this guidance upon its effective date. The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU 2016‑13, “Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments” , which changes the impairment model for most financial assets. The new model uses a forward‑looking expected loss method, which will generally result in earlier recognition of allowances for losses. In November 2018, the FASB issued ASU 2018‑19, “ Codification Improvements to Topic 326, Financial Instruments—Credit Losses ”, which clarifies that receivables arising from operating leases are not within the scope of Topic 326, Financial Instruments—Credit Losses . Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases . In April 2019, the FASB issued ASU 2019-04, "Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments," which clarifies treatment of certain credit losses. These ASUs are effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. The Company is evaluating the impact of this guidance on its consolidated financial statements |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The following tables provide the financial assets measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2018 (in thousands): Amortized Cost or Carrying Value Gross Unrealized Gains Gross Unrealized Losses Less Than 12 Months Gross Unrealized Losses More Than 12 Months Fair Value Hierarchy as of Aggregate Fair Value Level 1 Level 2 Level 3 Financial Assets: Cash and cash equivalents: Money market funds $ 287,941 $ — $ — $ — 287,941 $ — $ — $ 287,941 Reverse repurchase agreements 25,000 25,000 25,000 Commercial paper 29,336 — — — 29,336 29,336 Total included in cash and cash equivalents 342,277 — — — 287,941 54,336 — 342,277 Marketable securities: U.S. Treasury securities 154,173 79 (2 ) 154,250 — — 154,250 Corporate debt securities, commercial paper, and certificates of deposit 386,293 729 (20 ) (85 ) 5,000 381,917 — 386,917 Total marketable securities 540,466 808 (22 ) (85 ) 159,250 381,917 — 541,167 Total financial assets $ 882,743 $ 808 $ (22 ) $ (85 ) $ 447,191 $ 436,253 $ — $ 883,444 Amortized Cost or Carrying Value Gross Unrealized Gains Gross Unrealized Losses Less Than 12 Months Gross Unrealized Losses More Than 12 Months Fair Value Hierarchy as of Aggregate Fair Value Level 1 Level 2 Level 3 Financial Assets: Cash and cash equivalents: Money market funds $ 420,234 $ — $ — $ — 420,234 $ — $ — $ 420,234 Reverse repurchase agreements 35,000 — — — — 35,000 — 35,000 Commercial paper 9,983 — — — — 9,983 — 9,983 Total included in cash and cash equivalents 465,217 — — — — 420,234 44,983 — 465,217 Marketable securities: U.S. Treasury securities 59,785 — (7 ) (9 ) 59,769 — — 59,769 Corporate debt securities and commercial paper 201,683 23 (123 ) (224 ) — 201,359 — 201,359 Total marketable securities 261,468 23 (130 ) (233 ) 59,769 201,359 — 261,128 Total financial assets $ 726,685 $ 23 $ (130 ) $ (233 ) $ 480,003 $ 246,342 $ — $ 726,345 As the Company views its marketable securities as available to support current operations, it has classified all available for sale securities as short-term. As of March 31, 2019 and December 31, 2018 , for fixed income securities that were in unrealized loss positions, the Company has determined that (i) it does not have the intent to sell any of these investments, and (ii) it is not more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis. In addition, as of March 31, 2019 and December 31, 2018 , the Company anticipates that it will recover the entire amortized cost basis of such fixed income securities and has determined that no other-than-temporary impairments associated with credit losses were required to be recognized during the three months ended March 31, 2019 . Interest earned on marketable securities was $1.5 million and $0.7 million in the three months ended March 31, 2019 and 2018 , respectively. The interest is recorded as other income (expense), net, in the accompanying condensed consolidated statements of operations. The following table summarizes the contractual maturities of marketable securities as of March 31, 2019 and December 31, 2018 (in thousands): As of March 31, 2019 As of December 31, 2018 Amortized Cost Aggregate Fair Value Amortized Cost Aggregate Fair Value Financial Assets: Less than one year $ 420,271 $ 420,342 $ 261,468 $ 261,128 One to two years 120,195 120,825 — — Total $ 540,466 $ 541,167 $ 261,468 $ 261,128 The Company enters into reverse securities repurchase agreements, primarily for short-term investments with maturities of 90 days or less. As of March 31, 2019 and December 31, 2018 , the Company was party to reverse repurchase agreements totaling $25.0 million and $35.0 million , respectively, which were reported in cash and equivalents in the accompanying condensed consolidated balance sheets. Under these reverse securities repurchase agreements, the Company typically lends available cash at a specified rate of interest and holds U.S. government securities as collateral during the term of the agreement. Collateral value is in excess of the amounts loaned under these agreements. As of March 31, 2019 , and December 31, 2018 , the fair value of the 0.25% convertible senior notes due 2023 (the “Notes”), as further described in Note 9 below, was approximately $1,060.5 million and $743.4 million , respectively. The fair value of the Notes is determined based on the closing price on the last trading day of the reporting period and is considered as Level 2 in the fair value hierarchy. As of March 31, 2019 , the note payable is recorded at its carrying amount, which approximates its fair value based on the proximity of its effective interest rate to the current market rates. The note payable is considered as Level 2 in the fair value hierarchy. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment consisted of the following (in thousands): As of As of Capitalized internal-use software development costs $ 78,950 $ 72,647 Data center equipment (1) 15,151 — Leasehold improvements 31,799 15,293 Office equipment 18,458 13,563 Furniture and fixtures (1) 6,661 4,918 Software 6,067 1,849 Total property and equipment 157,086 108,270 Less: accumulated depreciation and amortization (51,928 ) (44,736 ) Total property and equipment, net $ 105,158 $ 63,534 _______________ (1) Data center equipment and furniture and fixtures contain assets under finance leases. See Note 5 below for further detail. Depreciation and amortization expense was $7.6 million and $4.2 million for the three months ended March 31, 2019 and 2018 , respectively. The Company capitalized $7.0 million and $6.4 million in internal-use software development costs in the three months ended March 31, 2019 and 2018 , respectively of which $1.6 million and $1.4 million was stock-based compensation expense for each respective period. Amortization of capitalized software development costs was $3.8 million and $2.7 million in the three months ended March 31, 2019 and 2018 , respectively. |
Right-of-Use Asset and Lease Li
Right-of-Use Asset and Lease Liabilities | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Right-of-Use Asset and Lease Liabilities | Right-of-Use Asset and Lease Liabilities The Company determines if an arrangement is a lease at inception. The Company presents the operating leases in long-term assets and current and long-term liabilities. Finance lease assets are included in property and equipment, net, and finance lease liabilities are presented in current and long-term liabilities in the accompanying condensed consolidated balance sheet as of March 31, 2019. Right-of-use ("ROU") assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not generally provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s lease agreements may have lease and non-lease components, which the Company generally accounts for as a single lease component. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company’s lease agreements do not contain any residual value guarantees. Leases with an initial term of twelve months or less are not recorded on the balance sheet. The Company has entered into various operating lease agreements for data centers and office space, and various financing leases agreements for data center and office equipment and furniture. As of March 31, 2019, the Company had 20 leased properties, with remaining lease terms of less than one year to 10 years, some of which include options to extend the leases for up to 5 years. The components of lease expense recorded in the condensed consolidated statement of operations were as follows (in thousands): Three Months Ended Operating lease cost $ 7,173 Finance lease cost: Amortization of assets 1,163 Interest on lease liabilities 148 Short-term lease cost 1,435 Variable lease cost 487 Total net lease cost $ 10,406 Supplemental balance sheet information related to leases was as follows (in thousands): Leases Classification As of Assets: Operating lease assets Operating right of use asset (a) $ 156,511 Finance lease assets Property and equipment, net of accumulated depreciation (b) 15,476 Total leased assets $ 171,987 Liabilities: Current Operating Operating lease liability, current $ 21,147 Finance Financing lease liability, current 6,044 Noncurrent Operating Operating lease liability, noncurrent 143,950 Finance Finance lease liability, noncurrent 9,124 Total lease liabilities $ 180,265 (a) Operating lease assets are recorded net of accumulated amortization of $4.9 million as of March 31, 2019. (b) Finance lease assets are recorded net of accumulated depreciation of $1.2 million as of March 31, 2019. Supplemental cash flow and other information related to leases was as follows (in thousands): Three Months Ended Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 3,994 Operating cash flows from finance leases $ 148 Financing cash flows from finance leases $ 961 Weighted average remaining lease term (in years): Operating leases 7.1 Finance leases 3.3 Weighted average discount rate: Operating leases 5.8 % Finance leases 5.2 % M aturities of lease liabilities were as follows (in thousands): As of March 31, 2019 Operating Leases Finance Leases 2019 (remaining nine months) $ 23,869 $ 4,962 2020 29,848 6,015 2021 28,062 3,130 2022 27,602 807 2023 27,127 413 Thereafter 68,033 1,354 Total lease payments 204,541 16,681 Less: imputed interest (39,444 ) (1,513 ) Total lease obligations 165,097 15,168 Less: current obligations (21,147 ) (6,044 ) Long-term lease obligations $ 143,950 $ 9,124 Disclosures related to periods prior to adoption of the New Lease Standard Rent expense was $2.1 million for the three months ended March 31, 2018 . As of March 31, 2019, the Company had additional operating and finance lease obligations of $43.1 million and $1.1 million , respectively, related to a lease that will commence during the second quarter of fiscal year 2020 with a lease term of 6.8 years. Future minimum lease payment obligations under noncancelable operating and finance leases were as follows (in thousands): As of December 31, 2018 Operating Leases Finance Leases 2019 (remaining nine months) $ 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 lease payments $ 226,483 $ 4,528 |
Right-of-Use Asset and Lease Liabilities | Right-of-Use Asset and Lease Liabilities The Company determines if an arrangement is a lease at inception. The Company presents the operating leases in long-term assets and current and long-term liabilities. Finance lease assets are included in property and equipment, net, and finance lease liabilities are presented in current and long-term liabilities in the accompanying condensed consolidated balance sheet as of March 31, 2019. Right-of-use ("ROU") assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not generally provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s lease agreements may have lease and non-lease components, which the Company generally accounts for as a single lease component. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company’s lease agreements do not contain any residual value guarantees. Leases with an initial term of twelve months or less are not recorded on the balance sheet. The Company has entered into various operating lease agreements for data centers and office space, and various financing leases agreements for data center and office equipment and furniture. As of March 31, 2019, the Company had 20 leased properties, with remaining lease terms of less than one year to 10 years, some of which include options to extend the leases for up to 5 years. The components of lease expense recorded in the condensed consolidated statement of operations were as follows (in thousands): Three Months Ended Operating lease cost $ 7,173 Finance lease cost: Amortization of assets 1,163 Interest on lease liabilities 148 Short-term lease cost 1,435 Variable lease cost 487 Total net lease cost $ 10,406 Supplemental balance sheet information related to leases was as follows (in thousands): Leases Classification As of Assets: Operating lease assets Operating right of use asset (a) $ 156,511 Finance lease assets Property and equipment, net of accumulated depreciation (b) 15,476 Total leased assets $ 171,987 Liabilities: Current Operating Operating lease liability, current $ 21,147 Finance Financing lease liability, current 6,044 Noncurrent Operating Operating lease liability, noncurrent 143,950 Finance Finance lease liability, noncurrent 9,124 Total lease liabilities $ 180,265 (a) Operating lease assets are recorded net of accumulated amortization of $4.9 million as of March 31, 2019. (b) Finance lease assets are recorded net of accumulated depreciation of $1.2 million as of March 31, 2019. Supplemental cash flow and other information related to leases was as follows (in thousands): Three Months Ended Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 3,994 Operating cash flows from finance leases $ 148 Financing cash flows from finance leases $ 961 Weighted average remaining lease term (in years): Operating leases 7.1 Finance leases 3.3 Weighted average discount rate: Operating leases 5.8 % Finance leases 5.2 % M aturities of lease liabilities were as follows (in thousands): As of March 31, 2019 Operating Leases Finance Leases 2019 (remaining nine months) $ 23,869 $ 4,962 2020 29,848 6,015 2021 28,062 3,130 2022 27,602 807 2023 27,127 413 Thereafter 68,033 1,354 Total lease payments 204,541 16,681 Less: imputed interest (39,444 ) (1,513 ) Total lease obligations 165,097 15,168 Less: current obligations (21,147 ) (6,044 ) Long-term lease obligations $ 143,950 $ 9,124 Disclosures related to periods prior to adoption of the New Lease Standard Rent expense was $2.1 million for the three months ended March 31, 2018 . As of March 31, 2019, the Company had additional operating and finance lease obligations of $43.1 million and $1.1 million , respectively, related to a lease that will commence during the second quarter of fiscal year 2020 with a lease term of 6.8 years. Future minimum lease payment obligations under noncancelable operating and finance leases were as follows (in thousands): As of December 31, 2018 Operating Leases Finance Leases 2019 (remaining nine months) $ 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 lease payments $ 226,483 $ 4,528 |
Business Combinations
Business Combinations | 3 Months Ended |
Mar. 31, 2019 | |
Business Combinations [Abstract] | |
Business Combinations | Business Combinations Fiscal 2019 Acquisitions SendGrid, Inc. In February 2019, the Company acquired all outstanding shares of SendGrid, Inc. ("SendGrid"), the leading email API platform, by issuing 23.6 million shares of its Class A common stock with a total value of $2,658.9 million . The Company also assumed all of the outstanding stock options and restricted stock units of SendGrid as converted into stock options and restricted stock units, respectively, of the Company based on the conversion ratio provided in the Agreement and Plan of Merger and Reorganization, as amended ("Merger Agreement"). The acquisition added additional products and services to the Company's offerings for its customers. With these additional products, the Company now offers an Email API and Marketing Campaigns product leveraging the Email API. The acquisition has also added new customers, new employees, technology assets and intellectual property assets. The acquisition was accounted for as a business combination and the total purchase price was allocated to the net tangible and intangible assets and liabilities based on their fair values on the acquisition date and the excess was recorded as goodwill. The values assigned to the assets acquired and liabilities assumed are based on preliminary estimates of fair value available as of the date of this Quarterly Report on Form 10-Q, and may be adjusted during the measurement period of up to 12 months from the date of acquisition as further information becomes available. Any changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill. As of March 31, 2019, the primary areas that are not yet finalized due to information that may become available subsequently and may result in changes in the values assigned to various assets and liabilities include purchase consideration and purchase price, including related tax impact, and valuation of tangible and intangible assets. The purchase price of $2,850.5 million reflects the $2,658.9 million fair value of 23.6 million shares of the Company's Class A common stock transferred as consideration for all outstanding shares of SendGrid, and the $191.6 million fair value of the pre-combination services of SendGrid employees reflected in the equity awards assumed by the Company on the acquisition date. The fair value of the 23.6 million shares transferred as consideration was determined on the basis of the closing market price of the Company's Class A common stock on the acquisition date. The fair value of the equity awards was determined (a) for options, by using a Black-Scholes option pricing model with the applicable assumptions as of the acquisition date, and (b) for restricted stock units, by using the closing market price of the Company's Class A common stock on the acquisition date. The fair value of the unvested stock awards, for which post-combination service is required, will be recorded as share-based compensation expense over the respective vesting period of each award. The purchase price components are summarized in the following table (in thousands): Total Fair value of Class A common stock transferred $ 2,658,898 Fair value of the pre-combination service through equity awards 191,620 Total purchase price $ 2,850,518 The following table presents the preliminary purchase price allocation recorded in the Company's condensed consolidated balance sheet as of March 31, 2019 (in thousands). The Company expects to continue to obtain information to assist it in determining the fair values of the net assets acquired at the acquisition date during the measurement period: Total Cash and cash equivalents $ 156,783 Accounts receivable and other current assets 11,635 Property and equipment, net 39,188 Operating right of use asset 33,742 Intangible assets 490,000 Other assets 1,664 Goodwill 2,239,055 Accounts payable and other liabilities (11,114 ) Operating lease liability (32,568 ) Financing lease liability (13,616 ) Note payable (5,387 ) Deferred tax liability (58,864 ) Total purchase price $ 2,850,518 The Company acquired a net deferred tax liability of $58.9 million in this business combination that is included in long-term liabilities in the accompanying condensed consolidated balance sheet. This amount was offset by a release of a valuation allowance on deferred tax assets of $49.2 million . Identifiable intangible assets are comprised of the following (in thousands): Total Estimated life Developed technology and software $ 301,000 7 Customer relationships 169,000 7 Trade names 20,000 5 Total intangible assets acquired $ 490,000 Developed technology consists of software products and domain knowledge around email delivery developed by SendGrid, which enables the delivery of email reliably and at scale. Customer relationships consists of contracts with platform users that purchase SendGrid’s products and services that carry distinct value. Trade names represent the Company’s right to the SendGrid trade names and associated design, as it exists as of the acquisition closing date. The goodwill is primarily attributable to the future cash flows to be realized from the acquired platform technology, acquired intangibles, assembled workforce and operational synergies. Goodwill is not deductible for tax purposes. The estimated fair value of the intangible assets acquired was determined by the Company, and the Company considered or relied in part upon a valuation report of a third‑party expert. The Company used an income approach to estimate the fair values of the developed technology, an incremental income approach to estimate the value of the customer relationships and a relief from royalty method to estimate the fair value of the trade name. Net tangible assets were valued at their respective carrying amounts as of the acquisition date, as the Company believes that these amounts approximate their current fair values. The acquired entity's results of operations were included in the Company's condensed consolidated financial statements from the date of acquisition, February 1, 2019. For the period from February 1, 2019, through March 31, 2019, SendGrid contributed net operating revenue of $28.6 million which is reflected in the accompanying condensed consolidated statement of operations for the three month ended March 31, 2019. Due to the integrated nature of the Company's operations, the Company believes that it is not practicable to separately identify earnings of SendGrid on a stand-alone basis. During the three months ended March 31, 2019 , the Company incurred costs related to this acquisition of $12.4 million that were expensed as incurred and recorded in general and administrative expenses in the accompanying condensed consolidated statement of operations. The following pro forma condensed combined financial information gives effect to the acquisition of SendGrid as if it were consummated on January 1, 2018 (the beginning of the comparable prior reporting period), and includes pro forma adjustments related to the amortization of acquired intangible assets, share-based compensation expense and direct and incremental transaction costs reflected in the historical financial statements. The Company's and SendGrid's direct and incremental transaction costs of $39.4 million are excluded from pro forma condensed combined net loss for the three month period ended March 31, 2019, presented below. The Company's direct and incremental transaction costs of $12.4 million are included in the pro forma condensed combined net loss for the three month period ended March 31, 2018 , presented below. The pro forma condensed combined net loss includes reversal of the valuation allowance release of $49.2 million in the three month period ended March 31, 2019, and a tax benefit of $56.1 million that would have resulted from the acquisition in the three month period ended March 31, 2018. The pro forma condensed combined financial information is presented for informational purposes only. The pro forma condensed combined financial information is not intended to represent or be indicative of the results of operations that would have been reported had the acquisition occurred on January 1, 2018, and should not be taken as representative of future results of operations of the combined company. The following table presents the pro forma condensed combined financial information (in thousands): Three Months Ended March 31, 2019 2018 Revenue $ 246,885 $ 161,685 Net loss attributable to common stockholders $ (72,960 ) $ (19,481 ) |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and intangible assets | Goodwill and Intangible Assets Goodwill Goodwill balance as of March 31, 2019 and December 31, 2018 was as follows (in thousands): Total Balance as of December 31, 2018 $ 38,165 Goodwill additions related to 2019 acquisition 2,239,055 Balance as of March 31, 2019 $ 2,277,220 Intangible assets Intangible assets consisted of the following (in thousands): As of Gross Accumulated Net Amortizable intangible assets: Developed technology $ 329,209 $ (18,806 ) $ 310,403 Customer relationships 177,154 (6,889 ) 170,265 Supplier relationships 2,696 (1,107 ) 1,589 Trade names 20,060 (727 ) 19,333 Patent 2,262 (200 ) 2,062 Total amortizable intangible assets 531,381 (27,729 ) 503,652 Non-amortizable intangible assets: Domain names 32 — 32 Trademarks 263 — 263 Total $ 531,676 $ (27,729 ) $ 503,947 As of Gross Accumulated Net Amortizable intangible assets: Developed technology $ 28,209 $ (10,497 ) $ 17,712 Customer relationships 8,153 (2,411 ) 5,742 Supplier relationships 2,696 (973 ) 1,723 Trade name 60 (60 ) — Patent 2,264 (178 ) 2,086 Total amortizable intangible assets 41,382 (14,119 ) 27,263 Non-amortizable intangible assets: Domain names 32 — 32 Trademarks 263 — 263 Total $ 41,677 $ (14,119 ) $ 27,558 Amortization expense was $13.6 million and $1.4 million in the three months ended March 31, 2019 and 2018 , respectively. Total estimated future amortization expense was as follows (in thousands): As of 2019 (remaining nine months) $ 56,796 2020 83,027 2021 81,516 2022 80,123 2023 68,435 Thereafter 133,755 Total $ 503,652 |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 3 Months Ended |
Mar. 31, 2019 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
Accrued Expenses and Other Liabilities | Accrued Expenses and Other Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): As of As of Accrued payroll and related $ 16,858 $ 9,886 Accrued bonus and commission 8,130 8,564 Accrued cost of revenue 27,554 29,901 Sales and other taxes payable 26,578 23,631 ESPP contributions 6,501 2,672 Deferred rent — 1,418 VAT liability 2,129 2,217 Acquisition holdback 2,000 — Accrued other expense 17,545 18,054 Total accrued expenses and other current liabilities $ 107,295 $ 96,343 Other long-term liabilities consisted of the following (in thousands): As of As of Deferred rent $ — $ 7,569 Deferred tax liability 11,734 5,181 Acquisition holdback 290 2,290 Capital lease obligation — 2,170 Accrued other expense 2,013 959 Total other long-term liabilities $ 14,037 $ 18,169 |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2019 | |
Long-term Debt, Unclassified [Abstract] | |
Notes Payable | Notes Payable (a) Convertible Senior Notes and Capped Call Transactions In May 2018, the Company issued $550.0 million aggregate principal amount of 0.25% convertible senior notes due 2023 in a private placement, including $75.0 million aggregate principal amount of such Notes pursuant to the exercise in full of the over-allotment options of the initial purchasers (collectively, the “Notes”). The interest on the Notes is payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2018. The Notes may bear special interest under specified circumstances relating to the Company’s failure to comply with its reporting obligations under the indenture relating to the issuance of Notes (the “indenture”) or if the Notes are not freely tradeable as required by the indenture. The Notes will mature on June 1, 2023, unless earlier repurchased or redeemed by the Company or converted pursuant to their terms. The total net proceeds from the debt offering, after deducting initial purchaser discounts and debt issuance costs, paid or payable by us, were approximately $537.0 million . Each $1,000 principal amount of the Notes is initially convertible into 14.1040 shares of the Company’s Class A common stock par value $0.001 , which is equivalent to an initial conversion price of approximately $70.90 per share. The conversion rate is subject to adjustment upon the occurrence of certain specified events but will not be adjusted for any accrued and unpaid special interest. In addition, upon the occurrence of a make-whole fundamental change, as defined in the indenture, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its Notes in connection with such make-whole fundamental change or during the relevant redemption period. Prior to the close of business on the business day immediately preceding March 1, 2023, the Notes may be convertible at the option of the holders only under the following circumstances: (1) during any calendar quarter commencing after September 30, 2018, and only during such calendar quarter, if the last reported sale price of the Class A common stock for at least 20 trading days (whether or not consecutive) in a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is more than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business days period after any five consecutive trading day period in which, for each trading day of that period, the trading price per $1,000 principal amount of Notes for such trading day was less than 98% of the product of the last reported sale price of the Class A common stock and the conversion rate on each such trading day; (3) upon the Company’s notice that it is redeeming any or all of the Notes; or (4) upon the occurrence of specified corporate events. On or after March 1, 2023, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the Notes may, at their option, convert all or a portion of their Notes regardless of the foregoing conditions. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of Class A common stock, or a combination of cash and shares of Class A Common Stock, at the Company’s election. It is the Company’s current intent to settle the principal amount of the Notes with cash. During the three months ended March 31, 2019 , the conditional conversion feature of the Notes was triggered as the last reported sale price of the Company's Class A common stock was more than or equal to 130% of the conversion price for at least 20 trading days (whether or not consecutive) in the period of 30 consecutive trading days ending on March 29, 2019 (the last trading day of the calendar quarter), and therefore the Notes are currently convertible, in whole or in part, at the option of the holders between April 1, 2019 through June 30, 2019. Whether the Notes will be convertible following such period will depend on the continued satisfaction of this condition or another conversion condition in the future. The Company may redeem the Notes, in whole or in part, at its option, on or after June 1, 2021 but before the 35th scheduled trading day before the maturity date, at a cash redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, if the last reported sale price of the Class A Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading days ending on, and including, the trading day immediately before the date the redemption notices were sent; and the trading day immediately before such notices were sent. No sinking fund is provided for the Notes. Upon the occurrence of a fundamental change (as defined in the indenture) prior to the maturity date, holders may require the Company to repurchase all or a portion of the Notes for cash at a price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The Notes are senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment with the Company’s existing and future liabilities that are not so subordinated; effectively subordinated to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of current or future subsidiaries of the Company. The foregoing description is qualified in its entirety by reference to the text of the indenture and the form of 0.25% convertible senior notes due 2023, which were filed as exhibits to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 and are incorporated herein by reference. In accounting for the issuance of the Notes, the Company separated the Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was $119.4 million and was determined by deducting the fair value of the liability component from the par value of the Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount, or the debt discount, is amortized to interest expense at an annual effective interest rate of 5.7% over the contractual terms of the Notes. In accounting for the transaction costs related to the Notes, the Company allocated the total amount incurred to the liability and equity components of the Notes based on the proportion of the proceeds allocated to the debt and equity components. Issuance costs attributable to the liability component were approximately $10.2 million , were recorded as an additional debt discount and are amortized to interest expense using the effective interest method over the contractual terms of the Notes. Issuance costs attributable to the equity component were netted with the equity component in stockholders’ equity. The net carrying amount of the liability component of the Notes was as follows (in thousands): As of As of December 31, 2018 Principal $ 550,000 $ 550,000 Unamortized discount (101,101 ) (106,484 ) Unamortized issuance costs (8,562 ) (9,020 ) Net carrying amount $ 440,337 $ 434,496 The net carrying amount of the equity component of the Notes was as follows (in thousands): As of As of December 31, 2018 Proceeds allocated to the conversion options (debt discount) $ 119,435 $ 119,435 Issuance costs (2,819 ) (2,819 ) Net carrying amount $ 116,616 $ 116,616 The following table sets forth the interest expense recognized related to the Notes (in thousands): Three Months Ended Contractual interest expense $ 344 Amortization of debt issuance costs 458 Amortization of debt discount 5,383 Total interest expense related to the Notes $ 6,185 In connection with the offering of the Notes, the Company entered into privately-negotiated capped call transactions with certain counterparties (the “capped calls”). The capped calls each have an initial strike price of approximately $70.90 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Notes. The capped calls have initial cap prices of $105.04 per share, subject to certain adjustments. The capped calls cover, subject to anti-dilution adjustments, approximately 7,757,200 shares of Class A Common Stock. The capped calls are generally intended to reduce or offset the potential dilution to the Class A Common Stock upon any conversion of the Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. The capped calls expire on the earlier of (i) the last day on which any convertible securities remain outstanding and (ii) June 1, 2023, subject to earlier exercise. The capped calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting the Company, including a merger event, a tender offer, and a nationalization, insolvency or delisting involving the Company. In addition, the capped calls are subject to certain specified additional disruption events that may give rise to a termination of the capped calls, including changes in law, insolvency filings, and hedging disruptions. The capped call transactions are recorded in stockholders’ equity and are not accounted for as derivatives. The net cost of $58.5 million incurred to purchase the capped call transactions was recorded as a reduction to additional paid-in capital in the accompanying condensed consolidated balance sheet. (b) Note Payable In connection with the SendGrid acquisition, the Company assumed a note payable that was an arrangement of SendGrid with a financing company to acquire software and related professional services in exchange for a note payable. As of March 31, 2019, the outstanding balance on the note payable was $4.9 million and is recorded in the current and long term liabilities and the related software is included in property and equipment, net, in the accompanying condensed consolidated balance sheet. The note payable bears effective interest at 6.6% per annum compounded monthly and matures in August 2021. Principal and interest payments of are as follows: Year Ending December 31: Principal Interest 2019 (remaining nine months) $ 1,533 $ 214 2020 2,165 165 2021 1,162 28 Total minimum payments $ 4,860 $ 407 |
Supplemental Balance Sheet Info
Supplemental Balance Sheet Information | 3 Months Ended |
Mar. 31, 2019 | |
Receivables [Abstract] | |
Supplemental Balance Sheet Information | Supplemental Balance Sheet Information A roll‑forward of the Company’s reserves for the three months ended March 31, 2019 and 2018 is as follows (in thousands): (a) Allowance for doubtful accounts: Three Months Ended 2019 2018 Balance, beginning of period $ 4,945 $ 1,033 Additions (304 ) 375 Assumed in acquisition 59 — Write-offs (419 ) (4 ) Balance, end of period $ 4,281 $ 1,404 (b) Sales credit reserve: Three Months Ended 2019 2018 Balance, beginning of period $ 3,015 $ 1,761 Additions 2,404 1,107 Assumed in acquisition 277 — Deductions against reserve (2,865 ) (1,166 ) Balance, end of period $ 2,831 $ 1,702 |
Revenue by Geographic Area
Revenue by Geographic Area | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue by Geographic Area | Revenue by Geographic Area Revenue by geographic area is based on the IP address at the time of registration. The following table sets forth revenue by geographic area (in thousands): Three Months Ended 2019 2018 Revenue by geographic area: United States $ 166,553 $ 98,635 International 66,586 30,481 Total $ 233,139 $ 129,116 Percentage of revenue by geographic area: United States 71 % 76 % International 29 % 24 % Long-lived assets outside the United States were not significant. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies (a) Lease and Other Commitments The Company entered into various non-cancelable operating lease agreements for its facilities that expire over the next ten years. See Note 5 to these condensed consolidated financial statements for additional detail on the Company's operating and finance lease commitments. In the three months ended March 31, 2019, the Company entered into a 24 month non-cancelable agreement with a cloud services vendor for a total commitment of $1.4 million . Additionally, as a result of its acquisition of SendGrid, the Company assumed a non-cancelable cloud services vendor contract with a remaining value of $22.4 million and a remaining term of three years. (b) Legal Matters On April 30, 2015 and March 28, 2016, Telesign Corporation ("Telesign") filed lawsuits (which were subsequently consolidated) against the Company in the United States District Court, Central District of California (“Telesign I/II”). Telesign alleges in Telesign I/II that the Company is infringing four U.S. patents that it holds: U.S. Patent No. 7,945,034 (“034”), U.S. Patent No. 8,462,920 (“920”), U.S. Patent No. 8,687,038 (“038”) and U.S. Patent No. 9,300,792 (“792”). The consolidated Telesign I/II actions have been transferred to the United States District Court, Northern District. The patent infringement allegations in the lawsuit relate to the Company’s two-factor authentication use case, Authy and an API tool to find information about a phone number. Telesign seeks, among other things, to enjoin us from allegedly infringing the patents, along with damages for lost profits and damages based on a reasonable royalty. On March 8, 2017, in response to a petition by the Company, the U.S. Patent and Trademark Officer (“PTO”) issued an order instituting an inter partes review for the ‘792 patent. On March 6, 2018, the PTO found all claims challenged by the Company in the inter partes review unpatentable. Telesign did not appeal the PTO’s decision, and it is final. On October 19, 2018, the district court granted the Company's motion that all remaining asserted claims of the asserted patents are invalid under 35 U.S.C. §101 and entered judgment in the Company’s favor. On November 8, 2018, Telesign appealed the judgment to the United States Court of Appeals for the Federal Circuit where the case is now pending. Based on, among other things, final judgment being entered by the district court in the Company’s favor, the Company does not believe a loss is reasonably possible or estimable. On December 1, 2016, the Company filed a patent infringement lawsuit against Telesign in the United States District Court, Northern District of California (“Telesign III”), alleging indirect 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 PTO for inter partes review of the ‘021, ‘465, and ‘376 patents. On March 9, 2018, the 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 PTO found all claims challenged by Telesign in the inter partes review unpatentable. The company has appealed the decisions to the United States Court of Appeals for the Federal Circuit. Telesign III is currently stayed pending resolution of the inter partes reviews (and appeals from them) of the ‘465 and ‘376 patents. The Company is seeking a judgment of infringement, a judgment of willful infringement, monetary and injunctive relief, enhanced damages, and an award of costs and expenses against Telesign. On February 18, 2016, a putative class action complaint was filed in the Alameda County Superior Court in California, entitled Angela Flowers v. Twilio Inc. The complaint alleges that the Company’s products permit the interception, recording and disclosure of communications at a customer’s request and are in violation of the California Invasion of Privacy Act. The complaint seeks injunctive relief as well as monetary damages. On January 2, 2018, the court issued an order granting in part and denying in part the plaintiff’s class certification motion. The court certified two classes of individuals who, during specified time periods, allegedly sent or received certain communications involving the accounts of three of the Company’s customers that were recorded. Following mediation, on January 7, 2019, the parties signed a long form settlement agreement, providing for a payment of $10 million into a common fund and injunctive relief involving certain updates to Twilio’s Acceptable Use Policy and customer documentation. On January 15, 2019, the court entered an order granting preliminary approval of the settlement, and the parties signed an amended settlement agreement to conform to the court’s order. A final approval hearing is scheduled for June 11, 2019. Given insurance coverage, the Company continues to estimate its potential liability in the Flowers matter to be $1.7 million and carries this reserved amount in its condensed consolidated balance sheet as of March 31, 2019 , presented elsewhere in this Quarterly Report on Form 10‑Q. On September 1, 2015, Twilio was named as a defendant in a First Amended Complaint in a putative class action captioned Jeremy Bauman v. David Saxe, et al. pending in the United States District Court, District of Nevada relating to the alleged sending of unsolicited text messages to the plaintiffs and putative class members. The Company filed a motion to dismiss, which was granted, and on September 20, 2016 the plaintiff filed a Second Amended Complaint with additional allegations that the Company violated the Telephone Consumer Protection Act (“TCPA”), and the Nevada Deceptive Trade Practices Act (“NDTPA”), NRS 41.600(2)(e). On January 10, 2019, the court granted Plaintiffs’ motion for class certification under the TCPA and denied plaintiff’s request to certify a class under the NDTPA. On February 13, 2019, the court issued an order denying the Company’s motion to dismiss as to Plaintiffs’ TCPA claim and granting dismissal as to Plaintiffs’ NDTPA claim. The Company intends to vigorously defend itself against and believes it has meritorious defenses to this lawsuit. It is too early in these matters to reasonably predict the probability of the outcomes or to estimate the range of possible loss, if any. SendGrid Stockholder Litigation On December 5, 2018, purported stockholders of SendGrid filed putative class action complaints in the United States District Court for the District of Delaware, Rosenblatt v. SendGrid, Inc., et al., Case No. 1:18‑cv‑01931‑UNA (the “Rosenblatt Complaint”), and in the United States District Court for the District of Colorado, Chen v. SendGrid, Inc., et al., Case No. 1:18‑cv‑03131‑MEH (the “Chen Complaint”), against SendGrid, the individual members of the SendGrid board of directors (the “Individual Defendants”), Twilio and Topaz Merger Subsidiary, Inc. Thereafter, on December 19, 2018 and January 3, 2019, purported stockholders of SendGrid filed putative class action complaints against SendGrid and the Individual Defendants in the United States District Court for the District of Colorado, respectively, Bushansky v. SendGrid, Inc., et al., 1:18‑cv‑03260‑SKC (the “Bushansky Complaint”), and Conner v. SendGrid, Inc., et al., 1:19‑cv‑00016‑PAB‑SKC (the “Conner Complaint”). As of February 11, 2019, all four complaints have been voluntarily dismissed. Among other things, the Rosenblatt Complaint alleged that SendGrid and the Individual Defendants misrepresented and/or omitted material information in a registration statement on Form S‑4, rendering it false and misleading and in violation of the Exchange Act and related regulations. In addition, the Rosenblatt Complaint alleged that the Individual Defendants and Twilio acted as controlling persons within the meaning and in violation of Section 20(a) of the Exchange Act to influence and control the dissemination of the allegedly defective registration statement on Form S‑4. The Rosenblatt Complaint sought, among other things, rescission of the merger or rescissory damages, an order directing the SendGrid board of directors to file a registration statement on Form S‑4 that does not contain any untrue statements of material fact and states all material facts, a declaration that the defendants violated Sections 14(a) and/or 20(a) of the Exchange Act and Rule 14a‑9 promulgated thereunder and an award of plaintiff costs, including reasonable attorneys’ and experts’ fees. On February 11, 2019, the Rosenblatt Complaint was voluntarily dismissed. Among other things, the Chen Complaint alleged that the defendants misrepresented and/or omitted material information in a registration statement on Form S‑4, rendering it false and misleading and in violation of the Exchange Act and related regulations. In addition, the Chen Complaint alleged that the Individual Defendants acted as controlling persons within the meaning and in violation of Section 20(a) of the Exchange Act to influence and control the dissemination of the allegedly defective Form S‑4. The Chen Complaint also alleged that the Individual Defendants breached their fiduciary duties to SendGrid stockholders, and that the other defendants aided and abetted such breaches, by seeking to sell SendGrid through an allegedly unfair process and for an unfair price and on unfair terms, and by failing to disclose all material information. The Chen Complaint sought, among other things, rescission of the merger or rescissory damages, an order directing the SendGrid board of directors to commence a new sale process, a declaration that the merger agreement was agreed to in breach of the Individual Defendants’ fiduciary duties and is therefore unlawful and unenforceable, an order directing the defendants to account to the putative class for damages allegedly sustained, and an award of plaintiff costs, including reasonable attorneys’ and experts’ fees. On February 4, 2019, the Chen Complaint was voluntarily dismissed. Among other things, the Bushansky and Conner Complaints alleged that SendGrid and the Individual Defendants misrepresented and/or omitted material information in a Schedule 14A Definitive Proxy Statement, rendering it false and misleading and in violation of the Exchange Act and related regulations. In addition, the Bushansky and Conner Complaints alleged that the Individual Defendants acted as controlling persons within the meaning and in violation of Section 20(a) of the Exchange Act to influence and control the dissemination of the allegedly defective Schedule 14A Definitive Proxy Statement. The Bushansky and Conner Complaints sought, among other things, rescission of the merger or rescissory damages, and an award of plaintiff costs, including reasonable attorneys’ and experts’ fees. On February 4, 2019, the Bushansky Complaint was voluntarily dismissed. On February 11, 2019, the Conner Complaint was voluntarily dismissed. In addition to the litigation discussed above, from time to time, the Company may be subject to legal actions and claims in the ordinary course of business. The Company has 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 itself, its partners and its customers by determining the scope, enforceability and validity of third‑party proprietary rights, or to establish its 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 the Company because of defense and settlement costs, diversion of management resources, and other factors. Legal fees and other costs related to litigation and other legal proceedings are expensed as incurred and are included in general and administrative expenses in the accompanying condensed consolidated statements of operations. (c) Indemnification Agreements The Company has signed indemnification agreements with all of its board members and executive officers. The agreements indemnify the board members and executive officers from claims and expenses on actions brought against the individuals separately or jointly with the Company for certain indemnifiable events. Indemnifiable Events generally mean any event or occurrence related to the fact that the board member or the executive officer was or is acting in his or her capacity as a board member or an executive officer for the Company or was or is acting or representing the interests of the Company. In the ordinary course of business, the Company enters into contractual arrangements under which it agrees to provide indemnification of varying scope and terms to business partners, customers and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, intellectual property infringement claims made by third parties and other liabilities relating to or arising from the Company’s various products, or its acts or omissions. In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. Further, the Company’s obligations under these agreements may be limited in terms of time and/or amount, and in some instances, the Company may have recourse against third parties for certain payments. The terms of such obligations may vary. As of March 31, 2019 and December 31, 2018 , no amounts were accrued. (d) Other Taxes The Company conducts operations in many tax jurisdictions throughout the United States. In many of these jurisdictions, non-income-based taxes, such as sales and use and telecommunications taxes are assessed on the Company’s operations. Prior to March 2017, the Company had not billed nor collected these taxes from its customers and, in accordance with U.S. GAAP, recorded a provision for its tax exposure in these jurisdictions when it was both probable that a liability had been incurred and the amount of the exposure could be reasonably estimated. These estimates included several key assumptions including, but not limited to, the taxability of the Company’s services, the jurisdictions in which its management believes it has nexus, and the sourcing of revenues to those jurisdictions. Starting in March 2017, the Company began collecting these taxes from customers in certain jurisdictions, and since then, has expanded the number of jurisdictions where these taxes are being collected. Effective January 2018, the Company began to collect taxes in one additional jurisdiction and accordingly, from January 2018, the Company is not recording an additional provision for its exposure for new activities in that jurisdiction. The Company expects to continue to expand the number of jurisdictions where these taxes will be collected in the future. Simultaneously, the Company was and continues to be in discussions with certain states regarding its prior state sales and other taxes, if any, that the Company may owe. As of March 31, 2019 and December 31, 2018 , the liability recorded for these taxes was $25.2 million and $22.6 million , respectively. In the event other jurisdictions challenge management’s assumptions and analysis, the actual exposure could differ materially from the current estimates. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity (a) Preferred Stock As of March 31, 2019 and December 31, 2018 , the Company had authorized 100,000,000 shares of preferred stock, par value $0.001 , of which no shares were issued and outstanding. (b) Common Stock As of March 31, 2019 and December 31, 2018 , 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. As of March 31, 2019 and December 31, 2018 , 110,048,588 shares and 80,769,763 shares of Class A common stock and 16,029,859 shares and 19,310,465 shares of 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. The Company had reserved shares of common stock for issuance as follows: As of As of Stock options issued and outstanding 10,045,155 7,978,369 Nonvested restricted stock units issued and outstanding 8,813,737 8,262,902 Class A common stock reserved for Twilio.org 776,334 572,676 Stock-based awards available for grant under 2016 Plan 16,496,032 9,313,354 Stock-based awards available for grant under 2016 ESPP 4,093,581 3,092,779 Class A common stock reserved for the convertible senior notes 10,472,165 10,472,165 Total 50,697,004 39,692,245 |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation 2008 Stock Option Plan The Company maintained a stock plan, the 2008 Stock Option Plan, as amended and restated (the “2008 Plan”), which allowed the Company to grant incentive (“ISO”), non‑statutory (“NSO”) stock options and restricted stock units (“RSU”) to its employees, directors and consultants to participate in the Company’s future performance through stock‑based awards at the discretion of the board of directors. Under the 2008 Plan, options to purchase the Company’s common stock could not be granted at a price less than fair value in the case of ISOs and NSOs. Fair value was determined by the board of directors, in good faith, with input from valuation consultants. On June 22, 2016, the plan was terminated in connection with the Company’s IPO. Accordingly, no shares are available for future issuance under the 2008 Plan. The 2008 Plan continues to govern outstanding equity awards granted thereunder. The Company’s right of first refusal for outstanding equity awards granted under the 2008 Plan terminated upon completion of the IPO. Options granted include provisions for early exercisability. 2016 Stock Option Plan The Company’s 2016 Stock Option and Incentive Plan (the “2016 Plan”) became effective on June 21, 2016. The 2016 Plan provides for the grant of ISOs, NSOs, restricted stock, RSUs, stock appreciation rights, unrestricted stock awards, performance share awards, dividend equivalent rights and cash-based awards to employees, directors and consultants of the Company. A total of 11,500,000 shares of the Company’s Class A common stock were initially reserved for issuance under the 2016 Plan. These available shares automatically increase each January 1, beginning on January 1, 2017, by 5% of the number of shares of the Company’s Class A and Class B common stock outstanding on the immediately preceding December 31, or such lesser number of shares as determined by the Company’s compensation committee. On January 1, 2019 and 2018, the shares available for grant under the 2016 Plan were automatically increased by 5,004,011 shares and 4,698,490 shares, respectively. Under the 2016 Plan, the stock options are granted at a price per share not less than 100% of the fair market value per share of the underlying common stock on the date of grant. Under both plans, stock options generally expire 10 years from the date of grant and vest over periods determined by the board of directors. The vesting period for new-hire options and restricted stock units is generally a four -year term from the date of grant, at a rate of 25% after one year, then monthly or quarterly, respectively, on a straight-line basis thereafter. In July 2017, the Company began granting restricted stock units to existing employees that vest in equal quarterly installments over a four year service period. SendGrid Equity Awards Assumed in Acquisition In connection with its acquisition of SendGrid, the Company assumed all stock options and restricted stock units issued under SendGrid’s 2009, 2012 or 2017 Stock Incentive Plans that were outstanding on the date of acquisition. The assumed equity awards will continue to be outstanding and will be governed by the provisions of their respective plans. 2016 Employee Stock Purchase Plan The Company’s Employee Stock Purchase Plan (“2016 ESPP”) became effective on June 21, 2016. A total of 2,400,000 shares of the Company’s Class A common stock were initially reserved for issuance under the 2016 ESPP. These available shares will automatically increase each January 1, beginning on January 1, 2017, by the lesser of 1,800,000 shares of the common stock, 1% of the number of shares of the Company’s Class A and Class B common stock outstanding on the immediately preceding December 31 or such lesser number of shares as determined by the Company’s compensation committee. On January 1, 2019 and 2018, the shares available for grant under the 2016 Plan were automatically increased by 1,000,802 shares and 939,698 shares, respectively. The 2016 ESPP allows eligible employees to purchase shares of the Company’s Class A common stock at a discount of up to 15% through payroll deductions of their eligible compensation, subject to any plan limitations. Except for the initial offering period, the 2016 ESPP provides for separate six-month offering periods beginning in May and November of each fiscal year, starting in May 2017. On each purchase date, eligible employees will purchase the Company’s stock at a price per share equal to 85% of the lesser of (i) the fair market value of the Company’s Class A common stock on the offering date or (ii) the fair market value of the Company’s Class A common stock on the purchase date. In the three months ended March 31, 2019 and 2018 , no shares of Class A common stock were purchased under the 2016 ESPP, and 113,959 shares are expected to be purchased in the second quarter of 2019. As of March 31, 2019 , total unrecognized compensation cost related to the 2016 ESPP was $0.8 million , which will be amortized over a weighted-average period of 0.1 years . Stock options activity under the 2008 Plan and 2016 Plan was as follows: Stock Options Number of Weighted- Weighted- Aggregate Outstanding options as of December 31, 2018 7,423,369 $ 16.07 6.80 $ 534,640 Granted 878,414 $ 118.12 Assumed in acquisition 2,978,555 $ 14.91 Exercised (1,772,663 ) $ 8.65 Forfeited and canceled (17,520 ) $ 20.07 Outstanding options as of March 31, 2019 9,490,155 $ 26.53 7.23 $ 974,515 Options vested and exercisable as of March 31, 2019 4,985,915 $ 10.59 6.17 $ 591,279 Aggregate intrinsic value represents the difference between the fair value of the Company’s Class A common stock as reported on the New York Stock Exchange and the exercise price of outstanding “in-the-money” options. The aggregate intrinsic value of stock options exercised was $187.0 million and $31.1 million in the three months ended March 31, 2019 and 2018 . The total estimated grant date fair value of options vested was $55.3 million and $7.8 million in the three months ended March 31, 2019 and 2018 , respectively. The weighted-average grant-date fair value of options granted was $58.00 and $15.24 in the three months ended March 31, 2019 and 2018 , respectively. On February 28, 2017, the Company granted a total of 555,000 shares of performance-based stock options in three distinct awards to an employee with grant date fair values of $13.48 , $10.26 and $8.41 per share for a total grant value of $5.9 million . The first half of each award vests upon satisfaction of a performance condition and the remainder vests thereafter in equal monthly installments over a 24 -month period. The achievement window expires after 4.3 years from the date of grant and the stock options expire seven years after the date of grant. The stock options are amortized over a derived service period, as adjusted, of 3.1 years, 3.9 years and 4.6 years, respectively. The stock options value and the derived service period were estimated using the Monte-Carlo simulation model. The following table summarizes the details of the performance options: Number of Weighted- Weighted- Aggregate Outstanding options as of December 31, 2018 555,000 $ 31.72 6.00 — Granted — $ — Exercised — $ — Forfeited and canceled — $ — Outstanding options as of March 31, 2019 555,000 $ 31.72 4.92 $ 54,090 Options vested and exercisable as of March 31, 2019 242,812 $ 31.72 4.92 $ 18,030 As of March 31, 2019 , total unrecognized compensation cost related to nonvested stock options was $176.1 million , which will be amortized on a ratable basis over a weighted-average period of 2.3 years. Restricted Stock Units Number of Weighted- Aggregate Nonvested RSUs as of December 31, 2018 8,262,902 $ 42.70 $ 729,373 Granted 822,800 $ 115.03 Assumed in acquisition 561,999 $ 112.88 Vested (680,766 ) $ 34.64 Forfeited and canceled (153,198 ) $ 69.98 Nonvested RSUs as of March 31, 2019 8,813,737 $ 55.05 $ 1,138,559 As of March 31, 2019 , total unrecognized compensation cost related to nonvested RSUs was $447.2 million , which will be amortized over a weighted-average period of 2.9 years. Valuation Assumptions The fair value of employee stock options was estimated on the date of grant using the following assumptions in the Black-Scholes option pricing model: Three Months Ended 2019 2018 Fair value of common stock $111.3 - $130.7 $33.01 Expected term (in years) 0.33 - 6.08 6.08 Expected volatility 48.3% - 66.5% 44.09% Risk-free interest rate 2.4% - 2.5% 2.74% Dividend rate —% —% The following assumptions were used in the Monte Carlo simulation model to estimate the grant date fair value and the derived service period of the performance options: Asset volatility 40% Equity volatility 45% Discount rate 14% Stock price at grant date $31.72 Stock-Based Compensation Expense The Company recorded the total stock-based compensation expense as follows (in thousands). In the three months ended March 31, 2019, the stock-based compensation expense associated with awards assumed in SendGrid acquisition was $20.7 million . Three Months Ended 2019 2018 Cost of revenue $ 1,809 $ 222 Research and development 25,339 7,872 Sales and marketing 11,749 3,859 General and administrative 19,427 5,587 Total $ 58,324 $ 17,540 |
Net Loss Per Share Attributable
Net Loss Per Share Attributable to Common Stockholders | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share Attributable to Common Stockholders | Net Loss Per Share Attributable to Common Stockholders Basic and diluted net loss per common share is presented in conformity with the two-class method required for participating securities. Class A and Class B common stock are the only outstanding equity in the Company. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to ten votes per share. Shares of Class B common stock may be converted into Class A common stock at any time at the option of the stockholder and are automatically converted into Class A common stock upon sale or transfer, subject to certain limited exceptions. Basic net loss per share attributable to common stockholders is computed using the weighted-average number of common shares outstanding during the period. Diluted net loss per share attributable to common stockholders is computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. The dilutive effect of these potential common shares is reflected in diluted earnings per share by application of the treasury stock method. The following table sets forth the calculation of basic and diluted net loss per share attributable to common stockholders during the periods presented (in thousands, except share and per share data): Three Months Ended 2019 2018 Net loss attributable to common stockholders $ (36,503 ) $ (23,729 ) Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted 116,590,513 94,673,557 Net loss per share attributable to common stockholders, basic and diluted $ (0.31 ) $ (0.25 ) The following outstanding shares of common stock equivalents were excluded from the calculation of the diluted net loss per share attributable to common stockholders because their effect would have been anti-dilutive: As of March 31, 2019 2018 Stock options issued and outstanding 10,045,155 10,392,199 Nonvested restricted stock units issued and outstanding 8,813,737 7,106,203 Class A common stock reserved for Twilio.org 776,334 635,014 Class A common stock committed under 2016 ESPP 113,959 249,730 Conversion spread* 2,873,836 — Unvested shares subject to repurchase 1,250 767 Total 22,624,271 18,383,913 * Since the Company expects to settle the principal amount of its outstanding convertible senior notes in cash and any excess in shares of the Company's Class A common stock, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The conversion spread will have a dilutive impact on diluted net income per share of Class A common stock when the average market price of the Company's Class A common stock for a given period exceeds the conversion price of $70.90 per share for the Notes. The conversion spread is calculated using the average market price of Class A common stock during the period, consistent with the treasury stock method. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company recorded an income tax benefit of $51.7 million and income tax provision of $0.1 million for the three months ended March 31, 2019 and 2018, respectively. The tax benefit for the three months ended March 31, 2019, was primarily related to a partial release of valuation allowance, of which $49.2 million was directly related to the day one impact from the acquisition of SendGrid. In connection with the SendGrid acquisition, the Company recorded a net deferred tax liability which provides an additional source of taxable income to support the realization of the pre-existing deferred tax assets and, accordingly, during the three months ended March 31, 2019, the Company released a total of $51.6 million of its U.S. valuation allowance. The Company continues to maintain a valuation allowance for its U.S. Federal and state net deferred tax assets. The tax expense for the three months ended March 31, 2018 was primarily due to foreign and state income tax expense. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K filed with the SEC on March 1, 2019 (“Annual Report”). The condensed consolidated balance sheet as of December 31, 2018 , included herein, was derived from the audited financial statements as of that date, but may not include all disclosures including certain notes required by U.S. GAAP on an annual reporting basis. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year 2019 or any future period. |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are used for, but not limited to, revenue allowances and returns; recoverability of long-lived and intangible assets; capitalization and useful life of the Company’s capitalized internal-use software development costs; fair value of acquired intangible assets and goodwill; accruals and contingencies. Estimates are based on historical experience and on various assumptions that the Company believes are reasonable under current circumstances. However, future events are subject to change and best estimates and judgments may require further adjustments; therefore, actual results could differ materially from those estimates. Management periodically evaluates such estimates and they are adjusted prospectively based upon such periodic evaluation. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially expose the Company to a concentration of credit risk consist primarily of cash, cash equivalents, marketable securities, restricted cash and accounts receivable. The Company maintains cash, cash equivalents, marketable securities and restricted cash with financial institutions that management believes are financially sound and have minimal credit risk exposure although the balances will exceed insured limits. The Company sells its services to a wide variety of customers. If the financial condition or results of operations of any significant customers deteriorate substantially, operating results could be adversely affected. To reduce credit risk, management performs ongoing credit evaluations of the financial condition of significant customers. The Company does not require collateral from its credit customers and maintains reserves for estimated credit losses on customer accounts when considered necessary. Actual credit losses may differ from the Company’s estimates. During the three months ended March 31, 2019 and 2018 , respectively, there was no customer organization that accounted for more than 10% of the Company’s total revenue. As of March 31, 2019 and December 31, 2018 , no customer organization represented more than 10% of the Company’s gross accounts receivable. |
Deferred Revenue and Customer Deposits and Deferred Sales Commissions | Deferred Revenue and Customer Deposits Deferred revenue is recorded when cash payments are received in advance of future usage on non-cancelable contracts. Customer refundable prepayments are recorded as customer deposits. During the three months ended March 31, 2019 and 2018 , the Company recognized $10.8 million and $3.6 million of revenue that was included in the deferred revenue and customer deposits balance as of January 1, 2019 and 2018, respectively. (f) Deferred Sales Commissions The Company records an asset for the incremental costs of obtaining a contract with a customer, for example, sales commissions that are earned upon execution of contracts. The Company uses the portfolio of data method to determine the estimated period of benefit of capitalized commissions which is determined to be five years . Amortization expense related to these capitalized costs related to initial contracts, upsells and renewals, is recognized on a straight line basis over the estimated period of benefit of the capitalized commissions. |
Recently Accounting Guidance | Recently Adopted Accounting Guidance In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, "Leases (Topic 842)" , which was further clarified by ASU 2018‑10, “ Codification Improvements to Topic 842, Leases” , and ASU 2018‑11, “ Leases-Targeted Improvements” , both issued in July 2018. ASU 2018-10 provides narrow amendments to clarify how to apply certain aspects of the new lease standard and ASU 2018-11 and addresses implementation issues related to the new lease standard. The standard is effective for interim and annual reporting periods beginning after December 15, 2018. Under the new standard, lessees are required to recognize in the balance sheet the right-of-use ("ROU") assets and lease liabilities that arise from operating leases. The Company adopted the standard using the optional alternative method on a prospective basis with an effective date as of the beginning of the Company’s fiscal year, January 1, 2019, and applied it to the operating leases that existed on that date. Prior year comparative financial information was not recast under the new standard and continues to be presented under ASC 840. The Company elected to utilize the package of practical expedients available for expired or existing contracts which allowed the Company to carryforward historical assessments of (a) whether contracts are or contain leases, (b) lease classification, and (c) initial direct costs. The Company elected the use of hindsight practical expedient in determining the lease term and assessing the likelihood that lease renewal, termination or purchase option will be exercised. The Company also elected to apply the short-term lease exception for all leases. Under the short-term lease exception, the Company will not recognize ROU assets or lease liabilities for leases that, at the acquisition date, have a remaining lease term of 12 months or less. As a result of implementing this guidance, the Company recognized a $123.5 million net operating ROU asset and a $132.0 million operating lease liability in its condensed consolidated balance sheet as of January 1, 2019. The ROU asset was presented net of deferred rent of $9.0 million as of January 1, 2019, in the accompanying condensed consolidated balance sheet and as a change within operating cash flows. In addition, on February 1, 2019, the Company acquired through its business combination with SendGrid approximately $33.7 million in operating ROU assets, $32.6 million in operating lease liability, $14.2 million in finance ROU assets and $13.6 million in finance lease liability. The Company measured the lease liability at the present value of the future lease payments as of January 1, 2019. The Company used its incremental borrowing rate to discount the lease payments. The Company derived the discount rate, adjusted for differences in the term and payment patterns, from the information available at the adoption date. The right-of-use asset is valued at the amount of the lease liability adjusted for the remaining December 31, 2018, balance of unamortized lease incentives, prepaid rent and deferred rent. The lease liability is subsequently measured at the present value of unpaid future lease payments as of the reporting date with a corresponding adjustment to the right-of-use asset. Absent a lease modification, the Company will continue to utilize the January 1, 2019, incremental borrowing rate. The Company recognizes lease costs on a straight-line basis and presents these costs as operating expenses within the consolidated statements of operations and comprehensive loss. The Company presents lease payments within the cash flows from operations within the consolidated statements of cash flows. The financial results for the quarter ended March 31, 2019, are presented under the new standard, while the comparative periods presented are not adjusted and continue to be reported in accordance with the Company’s historical accounting policy. See Note 5, “Right-of-use Assets and Lease Liabilities” for further information. In March 2019, the FASB issued ASU 2019-01, “ Codification Improvements ” to Leases (Topic 842). This pronouncement did not have material impact on the Company's financial statements. (h) Recently Issued Accounting Guidance, Not yet Adopted In August 2018, the FASB issued ASU 2018‑15, “ Intangibles—Goodwill and Other—Internal‑Use Software (Subtopic 350‑40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract”. This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal‑use software. The standard is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements. In August 2018, the FASB issued ASU 2018‑13, “ Fair Value Measurement (Topic 820) Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement”. The amendments under ASU 2018‑13 remove, add and modify certain disclosure requirements on fair value measurements in ASC 820. The amendments are effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently evaluating the impact the new standard will have on its consolidated financial statements. In July 2018, the FASB issued ASU 2018-09, "Codification Improvements " , which does not prescribe any new accounting guidance, but instead makes minor improvements and clarifications of several topics. Certain updates are applicable immediately while others provide for a transition period to adopt as part of the next fiscal year beginning after December 15, 2018. The Company does not expect the adoption of this guidance to have a material impact on the Company's consolidated financial statements. In January 2017, the FASB issued ASU 2017‑04, “ Simplifying the Test for Goodwill Impairment ”, which removes the second step of the goodwill impairment test that requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This guidance is effective prospectively for interim and annual reporting periods beginning after December 15, 2019. The Company will adopt this guidance upon its effective date. The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU 2016‑13, “Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments” , which changes the impairment model for most financial assets. The new model uses a forward‑looking expected loss method, which will generally result in earlier recognition of allowances for losses. In November 2018, the FASB issued ASU 2018‑19, “ Codification Improvements to Topic 326, Financial Instruments—Credit Losses ”, which clarifies that receivables arising from operating leases are not within the scope of Topic 326, Financial Instruments—Credit Losses . Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases . In April 2019, the FASB issued ASU 2019-04, "Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments," which clarifies treatment of certain credit losses. These ASUs are effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. The Company is evaluating the impact of this guidance on its consolidated financial statements |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of financial assets measured at fair value on a recurring basis | The following tables provide the financial assets measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2018 (in thousands): Amortized Cost or Carrying Value Gross Unrealized Gains Gross Unrealized Losses Less Than 12 Months Gross Unrealized Losses More Than 12 Months Fair Value Hierarchy as of Aggregate Fair Value Level 1 Level 2 Level 3 Financial Assets: Cash and cash equivalents: Money market funds $ 287,941 $ — $ — $ — 287,941 $ — $ — $ 287,941 Reverse repurchase agreements 25,000 25,000 25,000 Commercial paper 29,336 — — — 29,336 29,336 Total included in cash and cash equivalents 342,277 — — — 287,941 54,336 — 342,277 Marketable securities: U.S. Treasury securities 154,173 79 (2 ) 154,250 — — 154,250 Corporate debt securities, commercial paper, and certificates of deposit 386,293 729 (20 ) (85 ) 5,000 381,917 — 386,917 Total marketable securities 540,466 808 (22 ) (85 ) 159,250 381,917 — 541,167 Total financial assets $ 882,743 $ 808 $ (22 ) $ (85 ) $ 447,191 $ 436,253 $ — $ 883,444 Amortized Cost or Carrying Value Gross Unrealized Gains Gross Unrealized Losses Less Than 12 Months Gross Unrealized Losses More Than 12 Months Fair Value Hierarchy as of Aggregate Fair Value Level 1 Level 2 Level 3 Financial Assets: Cash and cash equivalents: Money market funds $ 420,234 $ — $ — $ — 420,234 $ — $ — $ 420,234 Reverse repurchase agreements 35,000 — — — — 35,000 — 35,000 Commercial paper 9,983 — — — — 9,983 — 9,983 Total included in cash and cash equivalents 465,217 — — — — 420,234 44,983 — 465,217 Marketable securities: U.S. Treasury securities 59,785 — (7 ) (9 ) 59,769 — — 59,769 Corporate debt securities and commercial paper 201,683 23 (123 ) (224 ) — 201,359 — 201,359 Total marketable securities 261,468 23 (130 ) (233 ) 59,769 201,359 — 261,128 Total financial assets $ 726,685 $ 23 $ (130 ) $ (233 ) $ 480,003 $ 246,342 $ — $ 726,345 |
Schedule of contractual maturities of marketable securities | The following table summarizes the contractual maturities of marketable securities as of March 31, 2019 and December 31, 2018 (in thousands): As of March 31, 2019 As of December 31, 2018 Amortized Cost Aggregate Fair Value Amortized Cost Aggregate Fair Value Financial Assets: Less than one year $ 420,271 $ 420,342 $ 261,468 $ 261,128 One to two years 120,195 120,825 — — Total $ 540,466 $ 541,167 $ 261,468 $ 261,128 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consisted of the following (in thousands): As of As of Capitalized internal-use software development costs $ 78,950 $ 72,647 Data center equipment (1) 15,151 — Leasehold improvements 31,799 15,293 Office equipment 18,458 13,563 Furniture and fixtures (1) 6,661 4,918 Software 6,067 1,849 Total property and equipment 157,086 108,270 Less: accumulated depreciation and amortization (51,928 ) (44,736 ) Total property and equipment, net $ 105,158 $ 63,534 _______________ (1) Data center equipment and furniture and fixtures contain assets under finance leases. See Note 5 below for further detail. |
Right-of-Use Asset and Lease _2
Right-of-Use Asset and Lease Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Lease, Cost | The components of lease expense recorded in the condensed consolidated statement of operations were as follows (in thousands): Three Months Ended Operating lease cost $ 7,173 Finance lease cost: Amortization of assets 1,163 Interest on lease liabilities 148 Short-term lease cost 1,435 Variable lease cost 487 Total net lease cost $ 10,406 Supplemental cash flow and other information related to leases was as follows (in thousands): Three Months Ended Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 3,994 Operating cash flows from finance leases $ 148 Financing cash flows from finance leases $ 961 Weighted average remaining lease term (in years): Operating leases 7.1 Finance leases 3.3 Weighted average discount rate: Operating leases 5.8 % Finance leases 5.2 % |
Assets and Liabilities, Lessee | Supplemental balance sheet information related to leases was as follows (in thousands): Leases Classification As of Assets: Operating lease assets Operating right of use asset (a) $ 156,511 Finance lease assets Property and equipment, net of accumulated depreciation (b) 15,476 Total leased assets $ 171,987 Liabilities: Current Operating Operating lease liability, current $ 21,147 Finance Financing lease liability, current 6,044 Noncurrent Operating Operating lease liability, noncurrent 143,950 Finance Finance lease liability, noncurrent 9,124 Total lease liabilities $ 180,265 (a) Operating lease assets are recorded net of accumulated amortization of $4.9 million as of March 31, 2019. (b) Finance lease assets are recorded net of accumulated depreciation of $1.2 million as of March 31, 2019. |
Lessee, Operating Lease, Liability, Maturity | M aturities of lease liabilities were as follows (in thousands): As of March 31, 2019 Operating Leases Finance Leases 2019 (remaining nine months) $ 23,869 $ 4,962 2020 29,848 6,015 2021 28,062 3,130 2022 27,602 807 2023 27,127 413 Thereafter 68,033 1,354 Total lease payments 204,541 16,681 Less: imputed interest (39,444 ) (1,513 ) Total lease obligations 165,097 15,168 Less: current obligations (21,147 ) (6,044 ) Long-term lease obligations $ 143,950 $ 9,124 |
Finance Lease, Liability, Maturity | M aturities of lease liabilities were as follows (in thousands): As of March 31, 2019 Operating Leases Finance Leases 2019 (remaining nine months) $ 23,869 $ 4,962 2020 29,848 6,015 2021 28,062 3,130 2022 27,602 807 2023 27,127 413 Thereafter 68,033 1,354 Total lease payments 204,541 16,681 Less: imputed interest (39,444 ) (1,513 ) Total lease obligations 165,097 15,168 Less: current obligations (21,147 ) (6,044 ) Long-term lease obligations $ 143,950 $ 9,124 |
Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum lease payment obligations under noncancelable operating and finance leases were as follows (in thousands): As of December 31, 2018 Operating Leases Finance Leases 2019 (remaining nine months) $ 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 lease payments $ 226,483 $ 4,528 |
Schedule of Future Minimum Lease Payments for Capital Leases | Future minimum lease payment obligations under noncancelable operating and finance leases were as follows (in thousands): As of December 31, 2018 Operating Leases Finance Leases 2019 (remaining nine months) $ 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 lease payments $ 226,483 $ 4,528 |
Business Combinations (Tables)
Business Combinations (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Business Combinations [Abstract] | |
Purchase price components | The purchase price components are summarized in the following table (in thousands): Total Fair value of Class A common stock transferred $ 2,658,898 Fair value of the pre-combination service through equity awards 191,620 Total purchase price $ 2,850,518 |
Schedule of purchase price allocation | The following table presents the preliminary purchase price allocation recorded in the Company's condensed consolidated balance sheet as of March 31, 2019 (in thousands). The Company expects to continue to obtain information to assist it in determining the fair values of the net assets acquired at the acquisition date during the measurement period: Total Cash and cash equivalents $ 156,783 Accounts receivable and other current assets 11,635 Property and equipment, net 39,188 Operating right of use asset 33,742 Intangible assets 490,000 Other assets 1,664 Goodwill 2,239,055 Accounts payable and other liabilities (11,114 ) Operating lease liability (32,568 ) Financing lease liability (13,616 ) Note payable (5,387 ) Deferred tax liability (58,864 ) Total purchase price $ 2,850,518 |
Schedule of identifiable finite-lived intangible assets | Identifiable intangible assets are comprised of the following (in thousands): Total Estimated life Developed technology and software $ 301,000 7 Customer relationships 169,000 7 Trade names 20,000 5 Total intangible assets acquired $ 490,000 |
Schedule of pro forma information | The following table presents the pro forma condensed combined financial information (in thousands): Three Months Ended March 31, 2019 2018 Revenue $ 246,885 $ 161,685 Net loss attributable to common stockholders $ (72,960 ) $ (19,481 ) |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill balance | Goodwill balance as of March 31, 2019 and December 31, 2018 was as follows (in thousands): Total Balance as of December 31, 2018 $ 38,165 Goodwill additions related to 2019 acquisition 2,239,055 Balance as of March 31, 2019 $ 2,277,220 |
Schedule of intangible assets | Intangible assets consisted of the following (in thousands): As of Gross Accumulated Net Amortizable intangible assets: Developed technology $ 329,209 $ (18,806 ) $ 310,403 Customer relationships 177,154 (6,889 ) 170,265 Supplier relationships 2,696 (1,107 ) 1,589 Trade names 20,060 (727 ) 19,333 Patent 2,262 (200 ) 2,062 Total amortizable intangible assets 531,381 (27,729 ) 503,652 Non-amortizable intangible assets: Domain names 32 — 32 Trademarks 263 — 263 Total $ 531,676 $ (27,729 ) $ 503,947 As of Gross Accumulated Net Amortizable intangible assets: Developed technology $ 28,209 $ (10,497 ) $ 17,712 Customer relationships 8,153 (2,411 ) 5,742 Supplier relationships 2,696 (973 ) 1,723 Trade name 60 (60 ) — Patent 2,264 (178 ) 2,086 Total amortizable intangible assets 41,382 (14,119 ) 27,263 Non-amortizable intangible assets: Domain names 32 — 32 Trademarks 263 — 263 Total $ 41,677 $ (14,119 ) $ 27,558 |
Schedule of total estimated future amortization expense | Total estimated future amortization expense was as follows (in thousands): As of 2019 (remaining nine months) $ 56,796 2020 83,027 2021 81,516 2022 80,123 2023 68,435 Thereafter 133,755 Total $ 503,652 |
Accrued Expenses and Other Li_2
Accrued Expenses and Other Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consisted of the following (in thousands): As of As of Accrued payroll and related $ 16,858 $ 9,886 Accrued bonus and commission 8,130 8,564 Accrued cost of revenue 27,554 29,901 Sales and other taxes payable 26,578 23,631 ESPP contributions 6,501 2,672 Deferred rent — 1,418 VAT liability 2,129 2,217 Acquisition holdback 2,000 — Accrued other expense 17,545 18,054 Total accrued expenses and other current liabilities $ 107,295 $ 96,343 |
Schedule of other long-term liabilities | Other long-term liabilities consisted of the following (in thousands): As of As of Deferred rent $ — $ 7,569 Deferred tax liability 11,734 5,181 Acquisition holdback 290 2,290 Capital lease obligation — 2,170 Accrued other expense 2,013 959 Total other long-term liabilities $ 14,037 $ 18,169 |
Notes Payable (Tables)
Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Long-term Debt, Unclassified [Abstract] | |
Schedule of net carrying amount of the liability and equity components of the Notes | The net carrying amount of the liability component of the Notes was as follows (in thousands): As of As of December 31, 2018 Principal $ 550,000 $ 550,000 Unamortized discount (101,101 ) (106,484 ) Unamortized issuance costs (8,562 ) (9,020 ) Net carrying amount $ 440,337 $ 434,496 The net carrying amount of the equity component of the Notes was as follows (in thousands): As of As of December 31, 2018 Proceeds allocated to the conversion options (debt discount) $ 119,435 $ 119,435 Issuance costs (2,819 ) (2,819 ) Net carrying amount $ 116,616 $ 116,616 |
Schedule of interest expense recognized related to the Notes | The following table sets forth the interest expense recognized related to the Notes (in thousands): Three Months Ended Contractual interest expense $ 344 Amortization of debt issuance costs 458 Amortization of debt discount 5,383 Total interest expense related to the Notes $ 6,185 |
Schedule of principal and interest payments | Principal and interest payments of are as follows: Year Ending December 31: Principal Interest 2019 (remaining nine months) $ 1,533 $ 214 2020 2,165 165 2021 1,162 28 Total minimum payments $ 4,860 $ 407 |
Supplemental Balance Sheet In_2
Supplemental Balance Sheet Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Receivables [Abstract] | |
Schedule of the allowance for doubtful accounts | Allowance for doubtful accounts: Three Months Ended 2019 2018 Balance, beginning of period $ 4,945 $ 1,033 Additions (304 ) 375 Assumed in acquisition 59 — Write-offs (419 ) (4 ) Balance, end of period $ 4,281 $ 1,404 |
Schedule of the sales credit reserve | Sales credit reserve: Three Months Ended 2019 2018 Balance, beginning of period $ 3,015 $ 1,761 Additions 2,404 1,107 Assumed in acquisition 277 — Deductions against reserve (2,865 ) (1,166 ) Balance, end of period $ 2,831 $ 1,702 |
Revenue by Geographic Area (Tab
Revenue by Geographic Area (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of revenue by geographic area | Revenue by geographic area is based on the IP address at the time of registration. The following table sets forth revenue by geographic area (in thousands): Three Months Ended 2019 2018 Revenue by geographic area: United States $ 166,553 $ 98,635 International 66,586 30,481 Total $ 233,139 $ 129,116 Percentage of revenue by geographic area: United States 71 % 76 % International 29 % 24 % |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Schedule of reserved shares of common stock for issuance | The Company had reserved shares of common stock for issuance as follows: As of As of Stock options issued and outstanding 10,045,155 7,978,369 Nonvested restricted stock units issued and outstanding 8,813,737 8,262,902 Class A common stock reserved for Twilio.org 776,334 572,676 Stock-based awards available for grant under 2016 Plan 16,496,032 9,313,354 Stock-based awards available for grant under 2016 ESPP 4,093,581 3,092,779 Class A common stock reserved for the convertible senior notes 10,472,165 10,472,165 Total 50,697,004 39,692,245 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Stock-Based Compensation | |
Schedule of restricted stock unit activity | Number of Weighted- Aggregate Nonvested RSUs as of December 31, 2018 8,262,902 $ 42.70 $ 729,373 Granted 822,800 $ 115.03 Assumed in acquisition 561,999 $ 112.88 Vested (680,766 ) $ 34.64 Forfeited and canceled (153,198 ) $ 69.98 Nonvested RSUs as of March 31, 2019 8,813,737 $ 55.05 $ 1,138,559 |
Schedule of stock based compensation expense | The Company recorded the total stock-based compensation expense as follows (in thousands). In the three months ended March 31, 2019, the stock-based compensation expense associated with awards assumed in SendGrid acquisition was $20.7 million . Three Months Ended 2019 2018 Cost of revenue $ 1,809 $ 222 Research and development 25,339 7,872 Sales and marketing 11,749 3,859 General and administrative 19,427 5,587 Total $ 58,324 $ 17,540 |
Employee and nonemployee stock options | |
Stock-Based Compensation | |
Schedule of stock options activity | Stock Options Number of Weighted- Weighted- Aggregate Outstanding options as of December 31, 2018 7,423,369 $ 16.07 6.80 $ 534,640 Granted 878,414 $ 118.12 Assumed in acquisition 2,978,555 $ 14.91 Exercised (1,772,663 ) $ 8.65 Forfeited and canceled (17,520 ) $ 20.07 Outstanding options as of March 31, 2019 9,490,155 $ 26.53 7.23 $ 974,515 Options vested and exercisable as of March 31, 2019 4,985,915 $ 10.59 6.17 $ 591,279 |
Performance-based stock options | |
Stock-Based Compensation | |
Schedule of stock options activity | The following table summarizes the details of the performance options: Number of Weighted- Weighted- Aggregate Outstanding options as of December 31, 2018 555,000 $ 31.72 6.00 — Granted — $ — Exercised — $ — Forfeited and canceled — $ — Outstanding options as of March 31, 2019 555,000 $ 31.72 4.92 $ 54,090 Options vested and exercisable as of March 31, 2019 242,812 $ 31.72 4.92 $ 18,030 |
Schedule of valuation assumptions | The following assumptions were used in the Monte Carlo simulation model to estimate the grant date fair value and the derived service period of the performance options: Asset volatility 40% Equity volatility 45% Discount rate 14% Stock price at grant date $31.72 |
Employee stock options | |
Stock-Based Compensation | |
Schedule of valuation assumptions | The fair value of employee stock options was estimated on the date of grant using the following assumptions in the Black-Scholes option pricing model: Three Months Ended 2019 2018 Fair value of common stock $111.3 - $130.7 $33.01 Expected term (in years) 0.33 - 6.08 6.08 Expected volatility 48.3% - 66.5% 44.09% Risk-free interest rate 2.4% - 2.5% 2.74% Dividend rate —% —% |
Net Loss Per Share Attributab_2
Net Loss Per Share Attributable to Common Stockholders (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of the calculation of basic and diluted net loss per share attributable to common stockholders | The following table sets forth the calculation of basic and diluted net loss per share attributable to common stockholders during the periods presented (in thousands, except share and per share data): Three Months Ended 2019 2018 Net loss attributable to common stockholders $ (36,503 ) $ (23,729 ) Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted 116,590,513 94,673,557 Net loss per share attributable to common stockholders, basic and diluted $ (0.31 ) $ (0.25 ) |
Schedule of common stock equivalents excluded from the computation of the diluted net loss per share attributable to common stockholders | The following outstanding shares of common stock equivalents were excluded from the calculation of the diluted net loss per share attributable to common stockholders because their effect would have been anti-dilutive: As of March 31, 2019 2018 Stock options issued and outstanding 10,045,155 10,392,199 Nonvested restricted stock units issued and outstanding 8,813,737 7,106,203 Class A common stock reserved for Twilio.org 776,334 635,014 Class A common stock committed under 2016 ESPP 113,959 249,730 Conversion spread* 2,873,836 — Unvested shares subject to repurchase 1,250 767 Total 22,624,271 18,383,913 * Since the Company expects to settle the principal amount of its outstanding convertible senior notes in cash and any excess in shares of the Company's Class A common stock, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The conversion spread will have a dilutive impact on diluted net income per share of Class A common stock when the average market price of the Company's Class A common stock for a given period exceeds the conversion price of $70.90 per share for the Notes. The conversion spread is calculated using the average market price of Class A common stock during the period, consistent with the treasury stock method. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Accounting Policies [Abstract] | ||
Revenue recognized out of adjusted deferred revenue balance | $ 10.8 | $ 3.6 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Deferred Sales Commissions (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Deferred Sales Commissions | |||
Total net capitalized costs | $ 13.3 | $ 9.4 | |
Amortization of capitalized costs of obtaining a contract | $ 0.7 | $ 0.2 | |
Incremental commission costs of obtaining new contracts | |||
Deferred Sales Commissions | |||
Amortization period for deferred incremental commission costs of obtaining new contracts | 5 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Recent Accounting Guidance (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Feb. 28, 2019 | Feb. 01, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Business Acquisition [Line Items] | |||||
Operating right of use asset | $ 156,511 | $ 123,500 | $ 0 | ||
Total lease obligations | $ 165,097 | 132,000 | |||
Deferred rent credit | $ 9,000 | ||||
SendGrid | |||||
Business Acquisition [Line Items] | |||||
Operating right of use asset | $ 33,742 | $ 33,700 | |||
Operating lease liability | 32,568 | 32,600 | |||
Finance lease right of use asset | 14,200 | ||||
Financing lease liability | $ 13,616 | $ 13,600 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Fair Value Measurements, Financial Assets | ||
Marketable securities, Aggregate Fair Value | $ 541,167 | $ 261,128 |
Total Amortized Cost | 540,466 | 261,468 |
Marketable Securities, Accumulated Gross Unrealized Gain, before Tax | 808 | 23 |
Marketable securities, Gross Unrealized Losses Less Than 12 Months | (22) | (130) |
Marketable securities, Gross Unrealized Losses More Than 12 Months | (85) | (233) |
Total financial assets, Amortized Cost or Carrying Value | 882,743 | 726,685 |
Total financial assets | 883,444 | 726,345 |
U.S. Treasury securities | ||
Fair Value Measurements, Financial Assets | ||
Marketable securities, Aggregate Fair Value | 154,250 | 59,769 |
Total Amortized Cost | 154,173 | 59,785 |
Marketable Securities, Accumulated Gross Unrealized Gain, before Tax | 79 | |
Marketable securities, Gross Unrealized Losses Less Than 12 Months | (2) | (7) |
Marketable securities, Gross Unrealized Losses More Than 12 Months | (9) | |
Corporate debt securities, commercial paper, and certificates of deposit | ||
Fair Value Measurements, Financial Assets | ||
Marketable securities, Aggregate Fair Value | 386,917 | 201,359 |
Total Amortized Cost | 386,293 | 201,683 |
Marketable Securities, Accumulated Gross Unrealized Gain, before Tax | 729 | 23 |
Marketable securities, Gross Unrealized Losses Less Than 12 Months | (20) | (123) |
Marketable securities, Gross Unrealized Losses More Than 12 Months | (85) | (224) |
Level 1 | ||
Fair Value Measurements, Financial Assets | ||
Marketable securities, Aggregate Fair Value | 159,250 | 59,769 |
Total financial assets | 447,191 | 480,003 |
Level 1 | U.S. Treasury securities | ||
Fair Value Measurements, Financial Assets | ||
Marketable securities, Aggregate Fair Value | 154,250 | 59,769 |
Level 1 | Corporate debt securities, commercial paper, and certificates of deposit | ||
Fair Value Measurements, Financial Assets | ||
Marketable securities, Aggregate Fair Value | 5,000 | |
Level 2 | ||
Fair Value Measurements, Financial Assets | ||
Marketable securities, Aggregate Fair Value | 381,917 | 201,359 |
Total financial assets | 436,253 | 246,342 |
Level 2 | U.S. Treasury securities | ||
Fair Value Measurements, Financial Assets | ||
Marketable securities, Aggregate Fair Value | 0 | |
Level 2 | Corporate debt securities, commercial paper, and certificates of deposit | ||
Fair Value Measurements, Financial Assets | ||
Marketable securities, Aggregate Fair Value | 381,917 | 201,359 |
Carrying Value | ||
Fair Value Measurements, Financial Assets | ||
Cash and cash equivalents | 342,277 | 465,217 |
Carrying Value | Money market funds | ||
Fair Value Measurements, Financial Assets | ||
Cash and cash equivalents | 287,941 | 420,234 |
Carrying Value | Reverse repurchase agreements | ||
Fair Value Measurements, Financial Assets | ||
Cash and cash equivalents | 25,000 | 35,000 |
Carrying Value | Commercial paper | ||
Fair Value Measurements, Financial Assets | ||
Cash and cash equivalents | 29,336 | 9,983 |
Aggregate Fair Value | ||
Fair Value Measurements, Financial Assets | ||
Cash and cash equivalents | 342,277 | 465,217 |
Aggregate Fair Value | Money market funds | ||
Fair Value Measurements, Financial Assets | ||
Cash and cash equivalents | 287,941 | 420,234 |
Aggregate Fair Value | Reverse repurchase agreements | ||
Fair Value Measurements, Financial Assets | ||
Cash and cash equivalents | 25,000 | 35,000 |
Aggregate Fair Value | Commercial paper | ||
Fair Value Measurements, Financial Assets | ||
Cash and cash equivalents | 29,336 | 9,983 |
Aggregate Fair Value | Level 1 | ||
Fair Value Measurements, Financial Assets | ||
Cash and cash equivalents | 287,941 | 420,234 |
Aggregate Fair Value | Level 1 | Money market funds | ||
Fair Value Measurements, Financial Assets | ||
Cash and cash equivalents | 287,941 | 420,234 |
Aggregate Fair Value | Level 2 | ||
Fair Value Measurements, Financial Assets | ||
Cash and cash equivalents | 54,336 | 44,983 |
Aggregate Fair Value | Level 2 | Reverse repurchase agreements | ||
Fair Value Measurements, Financial Assets | ||
Cash and cash equivalents | 25,000 | 35,000 |
Aggregate Fair Value | Level 2 | Commercial paper | ||
Fair Value Measurements, Financial Assets | ||
Cash and cash equivalents | $ 29,336 | $ 9,983 |
Fair Value Measurements - Marke
Fair Value Measurements - Marketable Securities (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Marketable Securities | |||
Other-than-temporary impairments associated with credit losses | $ 0 | ||
Interest earned on marketable securities | 1,500,000 | $ 700,000 | |
Aggregate Fair Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | 342,277,000 | $ 465,217,000 | |
Aggregate Fair Value | Reverse repurchase agreements | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | $ 25,000,000 | $ 35,000,000 |
Fair Value Measurements - Contr
Fair Value Measurements - Contractual Maturities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Fair Value Disclosures [Abstract] | ||
Less than one year, Amortized Cost | $ 420,271 | $ 261,468 |
One to two years, Amortized Cost | 120,195 | 0 |
Total Amortized Cost | 540,466 | 261,468 |
Less than one year, Aggregate Fair Value | 420,342 | 261,128 |
One to two years, Aggregate Fair Value | 120,825 | 0 |
Total Aggregate Fair Value | $ 541,167 | $ 261,128 |
Fair Value Measurements - Conve
Fair Value Measurements - Convertible Senior Notes (Details) - Convertible senior notes, 0.25%, due 2023 - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 | May 31, 2018 |
Fair Value Measurements, Liabilities | |||
Interest rate (as a percent) | 0.25% | 0.25% | |
Level 2 | |||
Fair Value Measurements, Liabilities | |||
Fair value of the notes | $ 1,060.5 | $ 743.4 |
Property and Equipment - Proper
Property and Equipment - Property and Equipment, Net (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Property and Equipment | ||
Total property and equipment | $ 157,086 | $ 108,270 |
Less: accumulated depreciation and amortization | (51,928) | (44,736) |
Total property and equipment, net | 105,158 | 63,534 |
Capitalized internal-use software development costs | ||
Property and Equipment | ||
Total property and equipment | 78,950 | 72,647 |
Data center equipment | ||
Property and Equipment | ||
Total property and equipment | 15,151 | 0 |
Leasehold improvements | ||
Property and Equipment | ||
Total property and equipment | 31,799 | 15,293 |
Office equipment | ||
Property and Equipment | ||
Total property and equipment | 18,458 | 13,563 |
Furniture and fixtures | ||
Property and Equipment | ||
Total property and equipment | 6,661 | 4,918 |
Software | ||
Property and Equipment | ||
Total property and equipment | $ 6,067 | $ 1,849 |
Property and Equipment - Deprec
Property and Equipment - Depreciation and Amortization Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization | $ 7.6 | $ 4.2 |
Property and Equipment - Capita
Property and Equipment - Capitalized Software Development Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Property and Equipment | ||
Capitalized software development costs | $ 7,000 | $ 6,400 |
Stock-based compensation capitalized in software development costs | 1,623 | 1,428 |
Amortization of capitalized software development costs | $ 3,800 | $ 2,700 |
Right-of-Use Asset and Lease _3
Right-of-Use Asset and Lease Liabilities - Narrative (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2019USD ($)property | Mar. 31, 2018USD ($) | |
Lessee, Lease, Description [Line Items] | ||
Number of leased properties | property | 20 | |
Term of lease | 10 years | |
Renewal option | 5 years | |
Operating leases, rent expense | $ 2.1 | |
Operating lease not yet commenced, liability | $ 43.1 | |
Finance lease not yet commenced, liability | $ 1.1 | |
Lease not yet commenced, term of contract | 6 years 9 months 18 days | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Term of lease | 1 year | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Term of lease | 10 years |
Right-of-Use Asset and Lease _4
Right-of-Use Asset and Lease Liabilities - Components of Lease Expense (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Leases [Abstract] | |
Operating lease cost | $ 7,173 |
Finance Lease, Cost [Abstract] | |
Amortization of assets | 1,163 |
Interest on lease liabilities | 148 |
Short-term lease cost | 1,435 |
Variable lease cost | 487 |
Total net lease cost | $ 10,406 |
Right-of-Use Asset and Lease _5
Right-of-Use Asset and Lease Liabilities - Balance Sheet Classification of Lease Assets and Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
ASSETS | |||
Operating lease assets | $ 156,511 | $ 123,500 | $ 0 |
Finance lease assets | 15,476 | ||
Total leased assets | 171,987 | ||
Current liabilities: | |||
Operating | 21,147 | 0 | |
Finance | 6,044 | 0 | |
Liabilities, Noncurrent [Abstract] | |||
Operating | 143,950 | 0 | |
Finance | 9,124 | $ 0 | |
Total lease liabilities | 180,265 | ||
Operating lease accumulated amortization | 4,900 | ||
Finance lease accumulated depreciation | $ 1,200 |
Right-of-Use Asset and Lease _6
Right-of-Use Asset and Lease Liabilities - Supplemental Cash Flows (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows from operating leases | $ 3,994 |
Operating cash flows from finance leases | 148 |
Financing cash flows from finance leases | $ 961 |
Operating leases | 7 years 1 month 6 days |
Finance leases | 3 years 3 months 18 days |
Operating leases | 5.80% |
Finance leases | 5.20% |
Right-of-Use Asset and Lease _7
Right-of-Use Asset and Lease Liabilities - Lease Maturities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Maturity Of Operating Lease Liabilities | |||
2019 (remaining nine months) | $ 23,869 | ||
2020 | 29,848 | ||
2021 | 28,062 | ||
2022 | 27,602 | ||
2023 | 27,127 | ||
2024 and thereafter | 68,033 | ||
Total lease payments | 204,541 | ||
Less: Imputed interest | (39,444) | ||
Total lease obligations | 165,097 | $ 132,000 | |
Less: Current obligations | (21,147) | $ 0 | |
Long-term lease obligations | 143,950 | 0 | |
Maturity Of Finance Lease Liabilities | |||
2019 (remaining nine months) | 4,962 | ||
2020 | 6,015 | ||
2021 | 3,130 | ||
2022 | 807 | ||
2023 | 413 | ||
2024 and thereafter | 1,354 | ||
Total lease payments | 16,681 | ||
Less: Imputed interest | (1,513) | ||
Total lease obligations | 15,168 | ||
Less: Current obligations | (6,044) | 0 | |
Long-term lease obligations | $ 9,124 | $ 0 |
Right-of-Use Asset and Lease _8
Right-of-Use Asset and Lease Liabilities - Lease Maturities Prior To Adoption of New Lease Standard (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Operating Leases | |
2019 | $ 24,128 |
2020 | 29,527 |
2021 | 30,898 |
2022 | 30,492 |
2023 | 30,122 |
Thereafter | 81,316 |
Total minimum lease payments | 226,483 |
Finance Leases | |
2019 | 306 |
2020 | 512 |
2021 | 573 |
2022 | 590 |
2023 | 608 |
Thereafter | 1,939 |
Total minimum lease payments | $ 4,528 |
Business Combinations - Conside
Business Combinations - Consideration (Details) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended |
Feb. 28, 2019 | Mar. 31, 2019 | Mar. 31, 2019 | |
Acquisition | |||
Fair value of the pre-combination service through equity awards | $ 191,600 | $ 191,620 | |
Release of valuation allowance on deferred tax assets | $ 49,200 | ||
SendGrid | |||
Acquisition | |||
Shares issuable as part of acquisition (in shares) | 23,555,081 | ||
Total purchase price | $ 2,850,518 | ||
Fair value of Class A common stock transferred | 2,658,898 | ||
Fair value of the pre-combination service through equity awards | 191,620 | ||
Net deferred tax liability | $ 58,864 | ||
Revenues | $ 28,600 | ||
General and administrative | SendGrid | |||
Acquisition | |||
Acquisition related costs | $ 12,400 |
Business Combinations - Purchas
Business Combinations - Purchase Price Allocation (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Feb. 28, 2019 | Feb. 01, 2019 | Dec. 31, 2018 |
Acquisition | ||||
Goodwill | $ 2,277,220 | $ 38,165 | ||
SendGrid | ||||
Acquisition | ||||
Cash and cash equivalents | $ 156,783 | |||
Accounts receivable and other current assets | 11,635 | |||
Property and equipment, net | 39,188 | |||
Operating right of use asset | 33,742 | $ 33,700 | ||
Intangible assets | $ 490,000 | 490,000 | ||
Other assets | 1,664 | |||
Goodwill | 2,239,055 | |||
Accounts payable and other liabilities | (11,114) | |||
Operating lease liability | (32,568) | (32,600) | ||
Financing lease liability | (13,616) | $ (13,600) | ||
Note payable | (5,387) | |||
Deferred tax liability | (58,864) | |||
Total purchase price | $ 2,850,518 |
Business Combinations - Identif
Business Combinations - Identifiable Finite-lived Intangible Assets (Details) - SendGrid - USD ($) $ in Thousands | 1 Months Ended | |
Feb. 28, 2019 | Mar. 31, 2019 | |
Acquisition | ||
Intangible assets | $ 490,000 | $ 490,000 |
Developed technology | ||
Acquisition | ||
Intangible assets | 301,000 | |
Estimated life (in years) | 7 years | |
Customer relationships | ||
Acquisition | ||
Intangible assets | 169,000 | |
Estimated life (in years) | 7 years | |
Trade names | ||
Acquisition | ||
Intangible assets | $ 20,000 | |
Estimated life (in years) | 5 years |
Business Combinations - Pro For
Business Combinations - Pro Forma Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Feb. 28, 2019 | |
Release of valuation allowance on deferred tax assets | $ 49,200 | ||
Valuation allowance | $ 51,644 | $ 0 | |
SendGrid | |||
Transaction costs | 39,000 | ||
Valuation allowance | 56,100 | ||
Revenue | 246,885 | 161,685 | |
Net loss attributable to common stockholders | (72,960) | $ (19,481) | |
General and administrative | SendGrid | |||
Acquisition related costs | $ 12,400 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill Rollforward (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Goodwill | |
Balance (beginning of period) | $ 38,165 |
Goodwill additions related to 2019 acquisition | 2,239,055 |
Balance (end of period) | $ 2,277,220 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Amortizable intangible assets: | ||
Gross | $ 531,381 | $ 41,382 |
Accumulated Amortization | (27,729) | (14,119) |
Net | 503,652 | 27,263 |
Intangible Assets, Gross | 531,676 | 41,677 |
Total | 503,947 | 27,558 |
Domain names | ||
Amortizable intangible assets: | ||
Non-amortizable intangible assets: | 32 | 32 |
Trademarks | ||
Amortizable intangible assets: | ||
Non-amortizable intangible assets: | 263 | 263 |
Developed technology | ||
Amortizable intangible assets: | ||
Gross | 329,209 | 28,209 |
Accumulated Amortization | (18,806) | (10,497) |
Net | 310,403 | 17,712 |
Customer relationships | ||
Amortizable intangible assets: | ||
Gross | 177,154 | 8,153 |
Accumulated Amortization | (6,889) | (2,411) |
Net | 170,265 | 5,742 |
Supplier relationships | ||
Amortizable intangible assets: | ||
Gross | 2,696 | 2,696 |
Accumulated Amortization | (1,107) | (973) |
Net | 1,589 | 1,723 |
Trade names | ||
Amortizable intangible assets: | ||
Gross | 20,060 | 60 |
Accumulated Amortization | (727) | (60) |
Net | 19,333 | |
Patent | ||
Amortizable intangible assets: | ||
Gross | 2,262 | 2,264 |
Accumulated Amortization | (200) | (178) |
Net | $ 2,062 | $ 2,086 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Amortization Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 13.6 | $ 1.4 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Total Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Intangible Assets | ||
2019 (remaining nine months) | $ 56,796 | |
2020 | 83,027 | |
2021 | 81,516 | |
2022 | 80,123 | |
2023 | 68,435 | |
Thereafter | 133,755 | |
Net | $ 503,652 | $ 27,263 |
Accrued Expenses and Other Li_3
Accrued Expenses and Other Liabilities - Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Accrued Liabilities and Other Liabilities [Abstract] | ||
Accrued payroll and related | $ 16,858 | $ 9,886 |
Accrued bonus and commission | 8,130 | 8,564 |
Accrued cost of revenue | 27,554 | 29,901 |
Sales and other taxes payable | 26,578 | 23,631 |
ESPP contributions | 6,501 | 2,672 |
Deferred rent | 0 | 1,418 |
VAT liability | 2,129 | 2,217 |
Acquisition holdback | 2,000 | 0 |
Accrued other expense | 17,545 | 18,054 |
Total accrued expenses and other current liabilities | $ 107,295 | $ 96,343 |
Accrued Expenses and Other Li_4
Accrued Expenses and Other Liabilities - Long-term Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Accrued Liabilities and Other Liabilities [Abstract] | ||
Deferred rent | $ 0 | $ 7,569 |
Deferred tax liability | 11,734 | 5,181 |
Acquisition holdback | 290 | 2,290 |
Capital lease obligation | 0 | 2,170 |
Accrued other expense | 2,013 | 959 |
Total other long-term liabilities | $ 14,037 | $ 18,169 |
Notes Payable - Issuance (Detai
Notes Payable - Issuance (Details) - USD ($) | 1 Months Ended | |
May 31, 2018 | Mar. 31, 2019 | |
Convertible senior notes, 0.25%, due 2023 | ||
Debt Instrument [Line Items] | ||
Interest rate (as a percent) | 0.25% | 0.25% |
Net proceeds from the debt offering | $ 537,000,000 | |
Convertible senior notes, 0.25%, due 2023 - initial private placement | ||
Debt Instrument [Line Items] | ||
Aggregate principal amount | 550,000,000 | |
Convertible senior notes, 0.25%, due 2023 - over-allotment | ||
Debt Instrument [Line Items] | ||
Aggregate principal amount | $ 75,000,000 |
Notes Payable - Terms (Details)
Notes Payable - Terms (Details) | 1 Months Ended | 3 Months Ended | |
May 31, 2018$ / shares | Mar. 31, 2019D$ / shares | Dec. 31, 2018$ / shares | |
Debt Instrument [Line Items] | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | ||
Conversion price (in dollars per share) | $ / shares | $ 70.90 | ||
Effective percentage | 5.70% | ||
Common Class A | |||
Debt Instrument [Line Items] | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 |
Convertible senior notes, 0.25%, due 2023 | |||
Debt Instrument [Line Items] | |||
Conversion price (in dollars per share) | $ / shares | $ 70.90 | ||
Threshold trading days | D | 20 | ||
Consecutive trading period | D | 30 | ||
Minimum sale price of stock as a percentage of the conversion price | 130.00% | ||
Number of business days of conversion eligibility following period of threshold Notes trading price | D | 5 | ||
Number of consecutive trading days of threshold Notes trading price for conversion eligibility to follow | D | 5 | ||
Trading price as a percentage of the product of common stock sale price and conversion rate | 98.00% | ||
Percentage of principal amount of the Notes | 100.00% | ||
Interest rate (as a percent) | 0.25% | 0.25% | |
Convertible senior notes, 0.25%, due 2023 | Common Class A | |||
Debt Instrument [Line Items] | |||
Conversion ratio | 14.1040 |
Notes Payable - Net Carrying Am
Notes Payable - Net Carrying Amount (Details) - Convertible senior notes, 0.25%, due 2023 - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | May 31, 2018 | |
Net carrying amount of the liability component of the Notes | |||
Principal | $ 550,000 | $ 550,000 | |
Unamortized discount | (101,101) | (106,484) | |
Unamortized issuance costs | (8,562) | (9,020) | $ (10,200) |
Net carrying amount | 440,337 | 434,496 | |
Net carrying amount of the equity component of the Notes | |||
Proceeds allocated to the conversion options (debt discount) | 119,435 | 119,435 | $ 119,400 |
Issuance costs | (2,819) | (2,819) | |
Net carrying amount | $ 116,616 | $ 116,616 |
Notes Payable - Interest Expens
Notes Payable - Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Interest expense recognized related to the Notes | ||
Amortization of debt issuance costs | $ 5,841 | $ 0 |
Convertible senior notes, 0.25%, due 2023 | ||
Interest expense recognized related to the Notes | ||
Contractual interest expense | 344 | |
Amortization of debt issuance costs | 458 | |
Amortization of debt discount | 5,383 | |
Total interest expense related to the Notes | $ 6,185 |
Notes Payable - Capped Calls (D
Notes Payable - Capped Calls (Details) - Capped calls $ / shares in Units, $ in Millions | 1 Months Ended |
May 31, 2018USD ($)$ / sharesshares | |
Capped calls | |
Initial strike price (in dollars per share) | $ 70.90 |
Initial cap price (in dollars per share) | $ 105.04 |
Number of shares covered | shares | 7,757,200 |
Net cost to purchase the transactions | $ | $ 58.5 |
Notes Payable - Note Payable (D
Notes Payable - Note Payable (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Debt Instrument [Line Items] | |
Effective percentage | 5.70% |
SendGrid | |
Debt Instrument [Line Items] | |
Note payable | $ 4,900 |
Effective percentage | 6.60% |
Notes Payable | |
Principal | |
2019 (remaining nine months) | $ 1,533 |
2020 | 2,165 |
2021 | 1,162 |
Net carrying amount | 4,860 |
Interest | |
2019 (remaining nine months) | 214 |
2020 | 165 |
2021 | 28 |
Total interest | $ 407 |
Supplemental Balance Sheet In_3
Supplemental Balance Sheet Information - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Allowance for doubtful accounts | ||
Balance, beginning of period | $ 4,945 | $ 1,033 |
Additions | (304) | 375 |
Assumed in acquisition | 59 | 0 |
Write-offs | (419) | (4) |
Balance, end of period | $ 4,281 | $ 1,404 |
Supplemental Balance Sheet In_4
Supplemental Balance Sheet Information - Sales Credit Reserve (Details) - Sales credit reserve - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Sales credit reserve | ||
Balance, beginning of period | $ 3,015 | $ 1,761 |
Additions | 2,404 | 1,107 |
Assumed in acquisition | 277 | 0 |
Deductions against reserve | (2,865) | (1,166) |
Balance, end of period | $ 2,831 | $ 1,702 |
Revenue by Geographic Area - Re
Revenue by Geographic Area - Revenue by Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue by geographic area | ||
Revenue | $ 233,139 | $ 129,116 |
United States | ||
Revenue by geographic area | ||
Revenue | 166,553 | 98,635 |
International | ||
Revenue by geographic area | ||
Revenue | $ 66,586 | $ 30,481 |
Revenue by Geographic Area - Pe
Revenue by Geographic Area - Percentage of Revenue by Geographic Area (Details) - Revenue - Geographic Concentration Risk | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
United States | ||
Percentage of revenue by geographic area | ||
Percentage of revenue (as a percent) | 71.00% | 76.00% |
International | ||
Percentage of revenue by geographic area | ||
Percentage of revenue (as a percent) | 29.00% | 24.00% |
Commitments and Contingencies -
Commitments and Contingencies - Other Commitments (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended |
Feb. 28, 2019 | Mar. 31, 2019 | |
Long-term Purchase Commitment [Line Items] | ||
Term of lease | 10 years | |
Term of non-cancellable agreement | 24 months | |
Total purchase commitments | $ 1.4 | |
SendGrid | ||
Long-term Purchase Commitment [Line Items] | ||
Term of non-cancellable agreement | 3 years | |
Purchase obligation | $ 22.4 |
Commitments and Contingencies_2
Commitments and Contingencies - Legal Matters (Details) $ in Millions | Jan. 07, 2019USD ($) | Mar. 31, 2019USD ($) | Jan. 02, 2018class |
Legal Matters | |||
Settlement awarded to other party | $ 10 | ||
Estimated probable loss | $ 1.7 | ||
Pending Litigation | |||
Legal Matters | |||
Number of classes of individuals who allegedly sent or received certain communications | class | 2 | ||
Number of customers' accounts involved in the complaint | 3 |
Commitments and Contingencies_3
Commitments and Contingencies - Indemnification Agreements (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Indemnification Agreements | ||
Loss Contingencies [Line Items] | ||
Amount accrued | $ 0 | $ 0 |
Commitments and Contingencies_4
Commitments and Contingencies - Other taxes (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Commitments and Contingencies Disclosure [Abstract] | ||
Liability for uncertain tax positions | $ 25.2 | $ 22.6 |
Stockholders' Equity - Preferre
Stockholders' Equity - Preferred Stock (Details) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
Preferred Stock | ||
Preferred stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock (Details) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 | May 31, 2018 |
Common Stock | |||
Common stock, par value (in dollars per share) | $ 0.001 | ||
Common Class A | |||
Common Stock | |||
Common stock, authorized (in shares) | 1,000,000,000 | 1,000,000,000 | |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, issued (in shares) | 110,048,588 | 80,769,763 | |
Common stock, outstanding (in shares) | 110,048,588 | 80,769,763 | |
Common Class B | |||
Common Stock | |||
Common stock, authorized (in shares) | 100,000,000 | 100,000,000 | |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |
Common stock, issued (in shares) | 16,029,859 | 19,310,465 | |
Common stock, outstanding (in shares) | 16,029,859 | 19,310,465 |
Stockholders' Equity - Common_2
Stockholders' Equity - Common Stock Shares Reserved (Details) - shares | Mar. 31, 2019 | Dec. 31, 2018 |
Stockholders' Equity | ||
Total | 50,697,004 | 39,692,245 |
2016 Stock Option and Incentive Plan | ||
Stockholders' Equity | ||
Stock-based awards available for grant under 2016 Plan | 16,496,032 | 9,313,354 |
Common Class A | ||
Stockholders' Equity | ||
Class A common stock reserved for Twilio.org | 776,334 | 572,676 |
Class A common stock reserved for the convertible senior notes | 10,472,165 | 10,472,165 |
Stock options issued and outstanding | ||
Stockholders' Equity | ||
Stock options issued and outstanding | 10,045,155 | 7,978,369 |
Nonvested restricted stock units issued and outstanding | ||
Stockholders' Equity | ||
Nonvested restricted stock units issued and outstanding | 8,813,737 | 8,262,902 |
Class A common stock committed under 2016 ESPP | ||
Stockholders' Equity | ||
Stock-based awards available for grant under 2016 Plan | 4,093,581 | 3,092,779 |
Stock-Based Compensation - 2008
Stock-Based Compensation - 2008 Stock Option Plan (Details) | Mar. 31, 2019shares |
2008 Stock Option Plan | |
Stock Based Compensation | |
Shares available for future issuance (in shares) | 0 |
Stock-Based Compensation - 2016
Stock-Based Compensation - 2016 Stock Option Plan (Details) - shares | Jan. 01, 2019 | Jan. 01, 2018 | Mar. 31, 2019 | Jun. 21, 2016 |
Stock Based Compensation | ||||
Increase in shares available for grant (in shares) | 1,000,802 | 939,698 | ||
Employee and nonemployee stock options | ||||
Stock Based Compensation | ||||
Expiration term | 10 years | |||
Employee and nonemployee stock options | New Hires | ||||
Stock Based Compensation | ||||
Vesting period | 4 years | |||
Employee and nonemployee stock options | First vesting | New Hires | ||||
Stock Based Compensation | ||||
Vesting period | 1 year | |||
Percentage of vesting rights | 25.00% | |||
Nonvested restricted stock units issued and outstanding | ||||
Stock Based Compensation | ||||
Vesting period | 4 years | |||
Nonvested restricted stock units issued and outstanding | First vesting | New Hires | ||||
Stock Based Compensation | ||||
Vesting period | 1 year | |||
Percentage of vesting rights | 25.00% | |||
2016 Stock Option and Incentive Plan | ||||
Stock Based Compensation | ||||
Maximum automatic annual increase as a percentage of outstanding common shares | 5.00% | |||
Increase in shares available for grant (in shares) | 5,004,011 | 4,698,490 | ||
2016 Stock Option and Incentive Plan | Common Class A | ||||
Stock Based Compensation | ||||
Shares reserved for issuance (in shares) | 11,500,000 | |||
2016 Stock Option and Incentive Plan | Employee and nonemployee stock options | ||||
Stock Based Compensation | ||||
Minimum grant price as a percentage of fair market value per share of the underlying common stock on the date of grant (as a percent) | 100.00% |
Stock-Based Compensation - 20_2
Stock-Based Compensation - 2016 Employee Stock Purchase Plan (Details) - USD ($) $ in Millions | Jan. 01, 2019 | Jan. 01, 2018 | Jun. 30, 2019 | Mar. 31, 2019 | Mar. 31, 2018 | Jun. 21, 2016 |
Stock Based Compensation | ||||||
Increase in shares available for grant (in shares) | 1,000,802 | 939,698 | ||||
Unrecognized compensation cost, other than options | $ 0.8 | |||||
Weighted-average period (in years) | 1 month 13 days | |||||
Class A common stock committed under 2016 ESPP | ||||||
Stock Based Compensation | ||||||
Maximum automatic annual increase (in shares) | 1,800,000 | |||||
Maximum automatic annual increase as a percentage of outstanding common shares | 1.00% | |||||
Common Class A | Class A common stock committed under 2016 ESPP | ||||||
Stock Based Compensation | ||||||
Shares reserved for issuance (in shares) | 2,400,000 | |||||
Discount from market price, offering date (as a percent) | 15.00% | |||||
Discount from market price, purchase date (as a percent) | 15.00% | |||||
Purchase price, percentage of fair market value (as a percent) | 85.00% | |||||
Shares purchased (in shares) | 0 | 0 | ||||
Scenario, Forecast | ||||||
Stock Based Compensation | ||||||
Shares purchased (in shares) | 113,959 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Details) - Employee and nonemployee stock options - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Number of options outstanding | ||
Outstanding options as of the beginning of the period (in shares) | 7,423,369 | |
Granted (in shares) | 878,414 | |
Assumed in acquisition (in shares) | 2,978,555 | |
Exercised (in shares) | (1,772,663) | |
Forfeited and cancelled (in shares) | (17,520) | |
Outstanding options as of the end of the period (in shares) | 9,490,155 | 7,423,369 |
Weighted- average exercise price (per share) | ||
Outstanding options as of the beginning of the period (in dollars per share) | $ 16.07 | |
Granted (in dollars per share) | 118.12 | |
Assumed in acquisition (in dollars per share) | 14.91 | |
Exercised (in dollars per share) | 8.65 | |
Forfeited and cancelled (in dollars per share) | 20.07 | |
Outstanding options as of the end of the period (in dollars per share) | $ 26.53 | $ 16.07 |
Weighted- average remaining contractual term (in years) | ||
Weighted-average remaining contractual term (in years) | 7 years 2 months 23 days | 6 years 9 months 20 days |
Aggregate intrinsic value | $ 974,515 | $ 534,640 |
Options vested and exercisable and options vested and expected to vest | ||
Options vested and exercisable - number of options outstanding (in shares) | 4,985,915 | |
Options vested and exercisable - weighted-average exercise price (in dollars per share) | $ 10.59 | |
Options vested and exercisable - weighted-average remaining contractual term | 6 years 2 months 3 days | |
Options vested and exercisable - aggregate intrinsic value | $ 591,279 |
Stock-Based Compensation - St_2
Stock-Based Compensation - Stock Options - Additional Information (Details) - Employee and nonemployee stock options - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Stock Based Compensation | ||
Aggregate intrinsic value of stock options exercised | $ 187 | $ 31.1 |
Grant date fair value of options vested | $ 55.3 | $ 7.8 |
Weighted-average grant date fair value of options granted (in dollars per share) | $ 58 | $ 15.24 |
Stock-Based Compensation - Perf
Stock-Based Compensation - Performance-Based Stock Options (Details) $ / shares in Units, $ in Thousands | Feb. 28, 2017USD ($)$ / sharesshares | Mar. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2018$ / sharesshares |
Performance-based stock options | |||
Stock-Based Compensation | |||
Number of distinct awards | 3 | ||
Total grant value | $ | $ 5,900 | ||
Vesting period upon satisfaction of performance condition | 24 months | ||
Performance condition achievement window | 4 years 3 months 18 days | ||
Expiration term | 7 years | ||
Number of options outstanding | |||
Outstanding options as of the beginning of the period (in shares) | shares | 555,000 | ||
Granted (in shares) | shares | 555,000 | 0 | |
Exercised (in shares) | shares | 0 | ||
Forfeited and cancelled (in shares) | shares | 0 | ||
Outstanding options as of the end of the period (in shares) | shares | 555,000 | 555,000 | |
Weighted- average exercise price (per share) | |||
Outstanding options as of the beginning of the period (in dollars per share) | $ 31.72 | ||
Granted (in dollars per share) | 0 | ||
Exercised (in dollars per share) | 0 | ||
Forfeited and cancelled (in dollars per share) | 0 | ||
Outstanding options as of the end of the period (in dollars per share) | $ 31.72 | $ 31.72 | |
Weighted-average remaining contractual term | |||
Weighted-average remaining contractual term (in years) | 4 years 11 months | 6 years | |
Aggregate intrinsic value | $ | $ 54,090 | ||
Options vested and exercisable | |||
Options vested and exercisable - number of options outstanding (in shares) | shares | 242,812 | ||
Options vested and exercisable - weighted-average exercise price (in dollars per share) | $ 31.72 | ||
Options vested and exercisable - weighted-average remaining contractual term | 4 years 11 months | ||
Options vested and exercisable - aggregate intrinsic value | $ | $ 18,030 | ||
$13.48 grant date fair value | |||
Stock-Based Compensation | |||
Grant date fair value (in dollars per share) | $ 13.48 | ||
Derived service period as adjusted | 3 years 1 month 6 days | ||
$10.26 grant date fair value | |||
Stock-Based Compensation | |||
Grant date fair value (in dollars per share) | $ 10.26 | ||
Derived service period as adjusted | 3 years 11 months 2 days | ||
$8.41 grant date fair value | |||
Stock-Based Compensation | |||
Grant date fair value (in dollars per share) | $ 8.41 | ||
Derived service period as adjusted | 4 years 7 months 2 days |
Stock-Based Compensation - St_3
Stock-Based Compensation - Stock Options - Unrecognized Compensation Cost (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Stock Based Compensation | |
Weighted-average period (in years) | 1 month 13 days |
Stock options issued and outstanding | |
Stock Based Compensation | |
Unrecognized compensation cost, options | $ 176.1 |
Weighted-average period (in years) | 2 years 3 months |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units Activity (Details) - Nonvested restricted stock units issued and outstanding - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Number of awards outstanding | ||
Nonvested RSUs at the beginning of the period (in shares) | 8,262,902 | |
Granted (in shares) | 822,800 | |
Assumed in SendGrid acquisition (in shares) | 561,999 | |
Vested (in shares) | (680,766) | |
Forfeited and canceled (in shares) | (153,198) | |
Nonvested RSUs at the end of the period (in shares) | 8,813,737 | |
Weighted- average grant date fair value (per share) | ||
Nonvested RSUs at the beginning of the period (in dollars per share) | $ 42.70 | |
Granted (in dollars per share) | 115.03 | |
Assumed in SendGrid acquisition (in dollars per share) | 112.88 | |
Vested (in dollars per share) | 34.64 | |
Forfeited and canceled (in dollars per share) | 69.98 | |
Nonvested RSUs at the end of the period (in dollars per share) | $ 55.05 | |
Aggregate intrinsic value (in thousands) | ||
Aggregate intrinsic value | $ 1,138,559 | $ 729,373 |
Stock-Based Compensation - Re_2
Stock-Based Compensation - Restricted Stock Units - Unrecognized Compensation Cost (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Stock Based Compensation | |
Unrecognized compensation cost, other than options | $ 0.8 |
Weighted-average period (in years) | 1 month 13 days |
Nonvested restricted stock units issued and outstanding | |
Stock Based Compensation | |
Unrecognized compensation cost, other than options | $ 447.2 |
Weighted-average period (in years) | 2 years 10 months 15 days |
Stock-Based Compensation - Valu
Stock-Based Compensation - Valuation Assumptions (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Valuation Assumptions | ||
Dividend rate (as a percent) | 0.00% | 0.00% |
Employee stock options | ||
Valuation Assumptions | ||
Expected volatility, low end of range (as a percent) | 48.30% | 44.09% |
Expected volatility, high end of range (as a percent) | 66.50% | 44.09% |
Risk-free interest rate, low end of range (as a percent) | 2.40% | 2.74% |
Risk-free interest rate, high end of range (as a percent) | 2.50% | 2.74% |
Performance-based stock options | ||
Valuation Assumptions | ||
Asset volatility (as a percent) | 40.00% | |
Equity volatility (as a percent) | 45.00% | |
Discount rate (as a percent) | 14.00% | |
Stock price at grant date (in dollars per share) | $ 31.72 | |
Minimum | ||
Valuation Assumptions | ||
Expected term (in years) | 3 months 29 days | 6 years 29 days |
Minimum | Employee stock options | ||
Valuation Assumptions | ||
Fair value of common stock (in dollars per share) | $ 111.30 | $ 33.01 |
Maximum | ||
Valuation Assumptions | ||
Expected term (in years) | 6 years 29 days | 6 years 29 days |
Maximum | Employee stock options | ||
Valuation Assumptions | ||
Fair value of common stock (in dollars per share) | $ 130.70 | $ 33.01 |
Stock-Based Compensation - St_4
Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Stock-Based Compensation Expense | ||
Stock-based compensation expense | $ 58,324 | $ 17,540 |
Cost of revenue | ||
Stock-Based Compensation Expense | ||
Stock-based compensation expense | 1,809 | 222 |
Research and development | ||
Stock-Based Compensation Expense | ||
Stock-based compensation expense | 25,339 | 7,872 |
Sales and marketing | ||
Stock-Based Compensation Expense | ||
Stock-based compensation expense | 11,749 | 3,859 |
General and administrative | ||
Stock-Based Compensation Expense | ||
Stock-based compensation expense | 19,427 | $ 5,587 |
SendGrid | ||
Stock-Based Compensation Expense | ||
Stock-based compensation expense | $ 20,700 |
Net Loss per Share Attributab_3
Net Loss per Share Attributable to Common Stockholders - General Information (Details) | Mar. 31, 2019Vote |
Common Class A | |
Net Loss Per Share Attributable to Common Stockholders | |
Votes per share | 1 |
Common Class B | |
Net Loss Per Share Attributable to Common Stockholders | |
Votes per share | 10 |
Net Loss Per Share Attributab_4
Net Loss Per Share Attributable to Common Stockholders - Basic and Diluted Net Loss per Share Attributable to Common Stockholders (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Net Loss Per Share Attributable to Common Stockholders | ||
Net loss attributable to common stockholders | $ (36,503) | $ (23,729) |
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted | 116,590,513 | 94,673,557 |
Net loss per share attributable to common stockholders, basic and diluted (in dollars per share) | $ (0.31) | $ (0.25) |
Net Loss Per Share Attributab_5
Net Loss Per Share Attributable to Common Stockholders - Anti-Dilutive Securities (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Anti-dilutive securities | ||
Total | 22,624,271 | 18,383,913 |
Conversion price (in dollars per share) | $ 70.90 | |
Stock options issued and outstanding | ||
Anti-dilutive securities | ||
Total | 10,045,155 | 10,392,199 |
Nonvested restricted stock units issued and outstanding | ||
Anti-dilutive securities | ||
Total | 8,813,737 | 7,106,203 |
Class A common stock reserved for Twilio.org | ||
Anti-dilutive securities | ||
Total | 776,334 | 635,014 |
Class A common stock committed under 2016 ESPP | ||
Anti-dilutive securities | ||
Total | 113,959 | 249,730 |
Conversion spread | ||
Anti-dilutive securities | ||
Total | 2,873,836 | 0 |
Unvested shares subject to repurchase | ||
Anti-dilutive securities | ||
Total | 1,250 | 767 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Feb. 28, 2019 | |
Income Tax Disclosure [Abstract] | |||
(Benefit) provision for income taxes | $ (51,721) | $ 137 | |
Release of valuation allowance on deferred tax assets | $ 49,200 | ||
Decrease in valuation allowance | $ 51,600 |