UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________
FORM 8-K/A
________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 30, 2019
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(Exact name of registrant as specified in its charter)
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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(Address of principal executive offices)
(415 ) 390-2337
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading symbol(s)
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Name of each exchange on which registered
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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*
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Explanatory Note
Twilio Inc. (the “Company” or "Twilio") is filing this Current Report on Form 8-K/A solely to update the Company's full year 2019 non-GAAP diluted earnings per share guidance as disclosed in a press release issued on October 30, 2019 announcing the Company's financial results for the quarterly period ended September 30, 2019 (the "Original Press Release") due to a calculation error. Full year 2019 non-GAAP diluted earnings per share guidance is expected to be $0.12 to $0.13, instead of $0.16 to $0.17.
The Company has not made changes to the other information furnished with the original Form 8-K.
Item 2.02 Results of Operations and Financial Condition
On October 30, 2019, the Company issued the Original Press Release announcing its financial results for the quarterly period ended September 30, 2019. A copy of the press release, as corrected, is furnished hereto as Exhibit 99.1.
The information furnished under this Item 2.02 and in the accompanying Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
Exhibit No. Description
99.1 Press Release issued by Twilio Inc. dated October 30, 2019, as corrected
Forward-Looking Statements
This report contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this report include, but are not limited to, statements about: Twilio’s outlook for the full year ending December 31, 2019, Twilio’s expectations regarding its products and solutions, and Twilio’s acquisition of SendGrid. You should not rely upon forward-looking statements as predictions of future events. The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties, and other factors that may cause Twilio’s actual results, performance, or achievements to differ materially from those described in the forward-looking statements, including, among other things: adverse changes in general economic or market conditions; changes in the market for communications; Twilio’s ability to adapt its products to meet evolving market and customer demands and rapid technological change; Twilio’s ability to comply with modified or new industry standards, laws and regulations applying to its business; Twilio’s ability to generate sufficient revenues to achieve or sustain profitability; Twilio’s ability to retain customers and attract new customers; Twilio’s ability to effectively manage its growth; Twilio’s ability to compete effectively in an intensely competitive market, and risks that the anticipated benefits of the acquisition of SendGrid may not be fully realized or may take longer to realize than expected. The forward-looking statements contained in this report are also subject to additional risks, uncertainties, and factors, including those more fully described in Twilio’s most recent filings with the Securities and Exchange Commission, including its Form 10-Q for the quarter ended June 30, 2019 filed on August 2, 2019. Further information on potential risks that could affect actual results will be included in the subsequent periodic and current reports and other filings that Twilio makes with the Securities and Exchange Commission from time to time. Moreover, Twilio operates in a very competitive and rapidly changing environment, and new risks and uncertainties may emerge that could have an impact on the forward-looking statements contained in this press release. Forward-looking statements represent Twilio’s management’s beliefs and assumptions only as of the date such statements are made. Twilio undertakes no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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TWILIO INC.
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November 1, 2019
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By:
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/s/ Khozema Shipchandler
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Name:
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Khozema Shipchandler
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Title:
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Chief Financial Officer
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Exhibit 99.1
Twilio Announces Third Quarter 2019 Results
Q3 Total Revenue
of $295.1 million, up 75% year-over-year
Q3 Base Revenue of $275.5 million, up 79% year-over-year
Q3 Dollar-Based Net Expansion
Rate of 132%
Corrected Press Release 1
SAN FRANCISCO
(BUSINESS WIRE)--October 30, 2019--Twilio (NYSE: TWLO), the leading cloud communications platform,
today reported financial results for its third quarter ended September 30, 2019.
“We delivered another quarter of incredible growth at scale
with revenue growth of 75% year-over-year,” said Jeff Lawson, Twilio’s Co-Founder and Chief Executive
Officer. “Every company needs to focus on building great digital experiences for their customers, and Twilio
is becoming the modern customer engagement platform for our customers. Our announcements at our SIGNAL conference
this past quarter further drive our vision of fueling the future of communications.”
Third Quarter 2019 Financial Highlights
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•
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Total revenue of $295.1 million for the third quarter of 2019, up 75% from the third quarter of 2018 and 7% sequentially from the second quarter of 2019. Total revenue includes revenue from Twilio SendGrid
starting on February 1, 2019 (the date of acquisition).
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•
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Base revenue of $275.5 million for the third quarter of 2019, up 79% from the third quarter of 2018 and 7% sequentially from the second quarter of 2019. Base revenue includes revenue from Twilio SendGrid
starting on February 1, 2019 (the date of acquisition).
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•
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GAAP loss from operations of $94.7 million for the third quarter of 2019, compared with GAAP loss from operations of $25.0 million for the third quarter of 2018. Non-GAAP loss from operations of $3.6 million for the third quarter of 2019, compared with non-GAAP income from operations of $4.3 million for the third quarter of 2018.
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•
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GAAP net loss per share attributable to common
stockholders, basic and diluted, of $0.64 based on 136.4 million weighted average shares outstanding in
the third quarter of 2019, compared with GAAP net loss per share attributable to
common stockholders, basic and diluted, of $0.28 based on 98.0 million weighted average shares outstanding in
the third quarter of 2018.
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•
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Non-GAAP net income per share attributable to common
stockholders, diluted, of $0.03 based on 150.0 million non-GAAP weighted average shares outstanding in
the third quarter of 2019, compared with non-GAAP net income per share
attributable to common stockholders, diluted, of $0.07 based on 109.8 million weighted average shares outstanding in
the third quarter of 2018.
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Key Metrics and Recent Business Highlights
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•
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172,092 Active Customer Accounts as of September 30, 2019, compared to 61,153 Active Customer Accounts as of September 30, 2018. Active Customer Accounts in the current period include
the contribution from Twilio SendGrid customer accounts.
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•
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Dollar-Based Net Expansion Rate was 132% for the third quarter of 2019, compared to 145% for the third quarter of 2018. Twilio SendGrid results do not impact the calculation
of this metric in the current period.
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2,676 employees as of September 30, 2019.
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Introduced Twilio Conversations, allowing developers to
leverage a unified API to engage with their customers in group conversations across multiple messaging
channels, including SMS, MMS, WhatsApp and Chat.
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•
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Announced Twilio SendGrid Ads, giving marketers the tools
to extend their existing email campaigns to build highly targeted display and social ad campaigns on
Facebook, Instagram and Google -- all within the Twilio SendGrid email platform.
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Introduced Twilio Media Streams, an API that improves
customer support by allowing businesses to access, analyze, and act on the tone and quality of voice
calls in real time, instead of relying on after-the-fact recordings or manual human intervention. With
Media Streams, developers can easily layer AI solutions, like natural language processing, keyword
spotting, and sentiment analysis, on top of live voice calls.
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•
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Announced Verified by Twilio which allows businesses to
place trusted, branded phone calls to their customers by identifying themselves with their name and/or
logo on the recipient's screen.
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1
Outlook
Twilio is providing guidance for the fourth quarter
and full year ending December 31, 2019 as follows (guidance includes outlook for Twilio SendGrid from
February 1, 2019, the date of acquisition):
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Quarter ending December 31,
2019:
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||||||
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Total
Revenue (millions)
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$311
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to
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$314
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Base
Revenue (millions)
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$300
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to
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$302
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Non-GAAP
loss from operations (millions)
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($6)
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to
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($5)
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Non-GAAP
earnings per share
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$0.01
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to
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$0.02
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Non-GAAP
weighted average shares outstanding (millions)
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148
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Non-GAAP
income tax rate
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25%
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25%
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Full year ending December 31,
2019:
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Total
Revenue (millions)
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$1,114
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to
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$1,117
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Base
Revenue (millions)
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$1,053
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to
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$1,055
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Non-GAAP
loss from operations (millions)
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($5)
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to
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($4)
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Non-GAAP
earnings per share
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$0.12
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to
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$0.13
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Non-GAAP
weighted average shares outstanding (millions)
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143
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Non-GAAP
income tax rate
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25%
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25%
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Conference Call Information
Twilio will host a conference call today, October 30, 2019, to
discuss third quarter financial results, as well as the fourth quarter and
full year 2019 outlook, at 2:00 p.m. (PT) / 5:00 p.m. (ET). The conference call can be accessed at (844) 453-4207
(United States) and at +1 (647) 253-8638 (non-U.S.), entering passcode 4938469. A live webcast of the conference
call, as well as a replay of the call, will be available at https://investors.twilio.com. Following the completion of the call through 11:59 p.m. (ET) on
November 6, 2019, a replay will be available by dialing (800) 585-8367 or +1 (416) 621-4642 (outside the U.S. and
Canada) and entering passcode 49384649. Twilio has used, and intends to continue to use, its investor relations
website as a means of disclosing material non-public information and for complying with its disclosure obligations
under Regulation FD.
1 Twilio is updating its press release issued October 30, 2019 to
correct the following: Full year 2019 non–GAAP diluted earnings per share guidance is expected to be $0.12 to
$0.13, instead of $0.16 to $0.17.
About Twilio Inc.
Millions of developers around the world have used Twilio to unlock
the magic of communications to improve any human experience. Twilio has democratized communications channels like
voice, text, chat, video and email by virtualizing the world’s communications infrastructure through APIs that
are simple enough for any developer to use, yet robust enough to power the world’s most demanding
applications. By making communications a part of every software developer's toolkit, Twilio is enabling innovators
across every industry — from emerging leaders to the world’s largest organizations — to reinvent
how companies engage with their customers.
Forward-Looking Statements
This press release and the accompanying conference call contain
forward-looking statements within the meaning of the federal securities laws, which statements involve substantial
risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or
operating performance. In some cases, you can identify forward-looking statements because they contain words such as
“may,” “will,” “should,” “expects,” “plans,” “anticipates,”
“could,” “intends,” “target,” “projects,” “contemplates,”
“believes,” “estimates,” “predicts,” “potential” or “continue”
or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans
or intentions. Forward-looking statements contained in this press release include, but are not limited to,
statements about: Twilio’s outlook for the quarter ending December 31, 2019 and full year ending December 31, 2019, Twilio’s expectations regarding its products and solutions,
and Twilio’s acquisition of SendGrid. You should not rely upon forward-looking statements as predictions of
future events.
The outcome of the events described in these forward-looking
statements is subject to known and unknown risks, uncertainties, and other factors that may cause Twilio’s
actual results, performance, or achievements to differ materially from those described in the forward-looking
statements, including, among other things: adverse changes in general economic or market conditions; changes in the
market for communications; Twilio’s ability to adapt its products to meet evolving market and customer demands
and rapid technological change; Twilio’s ability to comply with modified or new industry standards, laws and
regulations applying to its business; Twilio’s ability to generate sufficient revenues to achieve or sustain
profitability; Twilio’s ability to retain customers and attract new customers; Twilio’s ability to
effectively manage its growth; Twilio’s ability to compete effectively in an intensely competitive market, and
risks that the anticipated benefits of the acquisition of SendGrid may not be fully realized or may take longer to
realize than expected.
The forward-looking statements contained in this press release are
also subject to additional risks, uncertainties, and factors, including those more fully described in Twilio’s
most recent filings with the Securities and Exchange Commission, including its Form 10-Q for the quarter ended June
30, 2019 filed on August 2, 2019. Further information on potential risks that could affect actual results will be
included in the subsequent periodic and current reports and other filings that Twilio makes with the Securities and
Exchange Commission from time to time. Moreover, Twilio operates in a very competitive and rapidly changing
environment, and new risks and uncertainties may emerge that could have an impact on the forward-looking statements
contained in this press release.
2
Forward-looking statements represent Twilio’s management’s
beliefs and assumptions only as of the date such statements are made. Twilio undertakes no obligation to update any
forward-looking statements made in this press release to reflect events or circumstances after the date of this
press release or to reflect new information or the occurrence of unanticipated events, except as required by
law.
Use of Non-GAAP Financial Measures
To provide investors and others with additional information regarding
Twilio’s results, the following non-GAAP financial measures are disclosed: non-GAAP gross profit and gross
margin, non-GAAP operating expenses, non-GAAP income (loss) from operations and operating margin, non-GAAP net
income (loss) attributable to common stockholders, and non-GAAP net income (loss) per share attributable to common
stockholders, basic and diluted.
Non-GAAP Gross Profit and Non-GAAP
Gross Margin. For the periods presented, Twilio defines
non-GAAP gross profit and non-GAAP gross margin as GAAP gross profit and GAAP gross margin, respectively, adjusted
to exclude stock-based compensation, amortization of acquired intangibles, and payroll taxes related to stock-based
compensation.
Non-GAAP Operating
Expenses. For the periods presented, Twilio defines
non-GAAP operating expenses (including categories of operating expenses) as GAAP operating expenses (and categories
of operating expenses) adjusted to exclude, as applicable, stock-based compensation, amortization of acquired
intangibles, acquisition-related expenses, legal settlements/accruals, charitable contributions, and payroll taxes
related to stock-based compensation.
Non-GAAP Income (Loss) from
Operations and Non-GAAP Operating Margin. For the
periods presented, Twilio defines non-GAAP income (loss) from operations and non-GAAP operating margin as GAAP loss
from operations and GAAP operating margin, respectively, adjusted to exclude stock-based compensation, amortization
of acquired intangibles, acquisition-related expenses, legal settlements/accruals, charitable contributions, and
payroll taxes related to stock-based compensation.
Non-GAAP Net Income (Loss)
Attributable to Common Stockholders and Non-GAAP Net Income (Loss) Per Share Attributable to Common Stockholders,
Basic and Diluted. For the periods presented, Twilio
defines non-GAAP net income (loss) attributable to common stockholders and non-GAAP net income (loss) per share
attributable to common stockholders, basic and diluted, as GAAP net loss attributable to common stockholders and
GAAP net loss per share attributable to common stockholders, basic and diluted, respectively, adjusted to exclude
stock-based compensation, amortization of acquired intangibles, acquisition-related expenses, legal
settlements/accruals, charitable contributions, payroll taxes related to stock-based compensation, amortization of
debt discount and issuance costs, income tax benefit related to acquisition, provision for income tax effects
related to Non-GAAP adjustments, and dilutive securities, as applicable.
Twilio’s management uses the foregoing non-GAAP financial
information, collectively, to evaluate its ongoing operations and for internal planning and forecasting purposes.
Twilio’s management believes that non-GAAP financial information, when taken collectively, may be helpful to
investors because it provides consistency and comparability with past financial performance, facilitates
period-to-period comparisons of results of operations, and assists in comparisons with other companies, many of
which use similar non-GAAP financial information to supplement their GAAP results. Non-GAAP financial information is
presented for supplemental informational purposes only and should not be considered a substitute for financial
information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by
other companies. Whenever Twilio uses a non-GAAP financial measure, a reconciliation is provided to the most
directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related
GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly
comparable GAAP financial measures.
With respect to Twilio’s guidance as provided under “Outlook”
above, Twilio has not reconciled its expectations as to non-GAAP income (loss) from operations to GAAP loss from
operations or non-GAAP net income (loss) per share to GAAP net loss per share because stock-based compensation
expense cannot be reasonably calculated or predicted at this time. Accordingly, a reconciliation is not available
without unreasonable effort.
Operating Metrics
Twilio reviews a number of operating metrics to evaluate its
business, measure performance, identify trends, formulate business plans, and make strategic decisions. These
include the number of Active Customer Accounts, Base Revenue, and Dollar-Based Net Expansion Rate.
Number of Active Customer
Accounts. Twilio believes that the number of Active
Customer Accounts is an important indicator of the growth of its business, the market acceptance of its platform and
future revenue trends. Twilio defines an Active Customer Account at the end of any period as an individual account,
as identified by a unique account identifier, for which Twilio has recognized at least $5 of revenue in the last
month of the period. Twilio believes that use of its platform by customers at or above the $5 per month threshold is
a stronger indicator of potential future engagement than trial usage of its platform or usage at levels below $5 per
month. A single organization may constitute multiple unique Active Customer Accounts if it has multiple account
identifiers, each of which is treated as a separate Active Customer Account.
Base Revenue. Base Revenue consists of all revenue other than revenue from
large Active Customer Accounts that have never entered into 12-month minimum revenue commitment contracts with
Twilio, which the Company refers to as Variable Customer Accounts. While almost all of Twilio’s customers
exhibit some level of variability in the usage of its products, based on the experience of Twilio’s
management, Twilio believes that Variable Customer Accounts are more likely to have significant fluctuations in
usage of its products from period to period, and therefore that revenue from Variable Customer Accounts may also
fluctuate significantly from period to period. This behavior is best evidenced by the decision of such customers not
to enter into contracts with Twilio that contain minimum revenue commitments, even though they may spend significant
amounts on the use of the Company’s products, and they may be foregoing more favorable terms often available
to customers that enter into committed contracts with Twilio. With the growth of the Company's business in recent
years, including through revenue contribution from the acquisition of SendGrid, revenue from Variable Customer
Accounts has become less meaningful as a percentage of total revenue. As a result, for reporting periods starting
with the three months ending March 31, 2020, the Company will only disclose Total Revenue and will cease to disclose
Base Revenue as an operating metric.
For historical periods through March 31, 2016, Twilio defined a
Variable Customer Account as an Active Customer Account that (i) had never signed a minimum revenue commitment
contract with the Company for a term of at least 12 months and (ii) has met or exceeded 1% of the Company’s
revenue in any quarter in the periods presented through March 31, 2016. To allow for consistent period-to-period
comparisons, in the event a customer account qualified as a Variable Customer Account as of March 31, 2016, or a
previously Variable Customer Account ceased to be an Active Customer Account as of such date, Twilio included such
customer account as a Variable Customer Account in all periods presented. For reporting periods starting with the
three months ended June 30, 2016, Twilio defines a Variable Customer Account as a customer account that (a) has been
categorized as a Variable Customer Account in any prior quarter, as well as (b) any new customer account that (i) is
with a customer that has never signed a minimum revenue commitment contract with Twilio for a term of at least 12
months and (ii) meets or exceeds 1% of the Company’s revenue in a quarter. Once a customer account is deemed
to be a Variable Customer Account in any period, they remain a Variable Customer Account in subsequent periods
unless they enter into a minimum revenue commitment contract with Twilio for a term of at least 12 months.
3
Dollar-Based Net Expansion Rate. Twilio’s ability to drive growth and generate incremental
revenue depends, in part, on the Company’s ability to maintain and grow its relationships with existing Active
Customer Accounts and to increase their use of the platform. An important way in which Twilio tracks its performance
in this area is by measuring the Dollar-Based Net Expansion Rate for Active Customer Accounts, other than Variable
Customer Accounts. Twilio’s Dollar-Based Net Expansion Rate increases when such Active Customer Accounts
increase their usage of a product, extend their usage of a product to new applications or adopt a new product.
Twilio’s Dollar-Based Net Expansion Rate decreases when such Active Customer Accounts cease or reduce their
usage of a product or when the Company lowers usage prices on a product. As our customers grow their businesses and
extend the use of our platform, they sometimes create multiple customer accounts with us for operational or other
reasons. As such, for reporting periods starting with the three months ended December 31, 2016, when we identify a
significant customer organization (defined as a single customer organization generating more than 1% of revenue in a
quarterly reporting period) that has created a new Active Customer Account, this new Active Customer Account is tied
to, and revenue from this new Active Customer Account is included with, the original Active Customer Account for the
purposes of calculating this metric. Twilio believes that measuring Dollar-Based Net Expansion Rate on revenue
generated from Active Customer Accounts, other than Variable Customer Accounts, provides a more meaningful
indication of the performance of the Company’s efforts to increase revenue from existing customers.
For historical periods through September 30, 2019 and the three
months ending December 31, 2019, Twilio’s Dollar-Based Net Expansion Rate compares the revenue from Active
Customer Accounts, other than Variable Customer Accounts, in a quarter to the same quarter in the prior year. For
reporting periods starting with the three months ended March 31, 2020, Twilio's Dollar-Based Net Expansion Rate will
compare the revenue from all Active Customer Accounts, including Variable Customer Accounts, in a quarter to the
same quarter in the prior year. To calculate the Dollar-Based Net Expansion Rate, the Company first identifies the
cohort of Active Customer Accounts (other than Variable Customer Accounts through December 31, 2019) that were
Active Customer Accounts through in the same quarter of the prior year. The Dollar-Based Net Expansion Rate is the
quotient obtained by dividing the revenue generated from that cohort in a quarter, by the revenue generated from
that same cohort in the corresponding quarter in the prior year. When Twilio calculates Dollar-Based Net Expansion
Rate for periods longer than one quarter, it uses the average of the applicable quarterly Dollar-Based Net Expansion
Rates for each of the quarters in such period.
Source: Twilio Inc.
4
TWILIO
INC.
Condensed Consolidated
Statements of Operations
(In
thousands, except share and per share amounts)
(Unaudited)
|
Three Months Ended
September 30, |
||||||||
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2019
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2018
|
|||||||
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Revenue
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$
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295,066
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$
|
168,895
|
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||
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Cost
of revenue
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136,904
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|
77,031
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||||
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Gross
profit
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158,162
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|
91,864
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|
||||
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Operating
expenses:
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||||||||
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Research
and development
|
104,481
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|
42,340
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||||
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Sales
and marketing
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100,657
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|
45,949
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||||
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General
and administrative
|
47,690
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|
28,608
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||||
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Total
operating expenses
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252,828
|
|
116,897
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|
||||
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Loss
from operations
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(94,666
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)
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(25,033
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)
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||||
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Other
income (expense), net
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4,377
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(1,939
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)
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||||
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Loss
before provision for income taxes
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(90,289
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)
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(26,972
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)
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||||
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Income
tax benefit (provision)
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2,555
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(84
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)
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||||
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Net
loss attributable to common stockholders
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$
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(87,734
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)
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$
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(27,056
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)
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||
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Net
loss per share attributable to common stockholders, basic and diluted
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$
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(0.64
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)
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$
|
(0.28
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)
|
||
|
Weighted-average
shares used in computing net loss per share attributable to common stockholders, basic and diluted
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136,400,739
|
|
98,019,629
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5
TWILIO
INC.
Condensed Consolidated
Balance Sheets
(In
thousands)
(Unaudited)
|
As
of
September 30, |
As
of
December 31, |
|||||||
|
2019
|
2018
|
|||||||
|
ASSETS
|
|
|
|
|
||||
|
Current
assets:
|
|
|
|
|
||||
|
Cash
and cash equivalents
|
$
|
330,601
|
|
$
|
487,215
|
|
||
|
Short-term
marketable securities
|
1,551,175
|
|
261,128
|
|
||||
|
Accounts
receivable, net
|
131,193
|
|
97,712
|
|
||||
|
Prepaid
expenses and other current assets
|
55,455
|
|
26,893
|
|
||||
|
Total
current assets
|
2,068,424
|
|
872,948
|
|
||||
|
Restricted
cash
|
75
|
|
18,119
|
|
||||
|
Property
and equipment, net
|
118,481
|
|
63,534
|
|
||||
|
Operating
right of use asset
|
148,069
|
|
—
|
|
||||
|
Intangible
assets, net
|
465,255
|
|
27,558
|
|
||||
|
Goodwill
|
2,283,387
|
|
38,165
|
|
||||
|
Other
long-term assets
|
26,477
|
|
8,386
|
|
||||
|
Total
assets
|
$
|
5,110,168
|
|
$
|
1,028,710
|
|
||
|
LIABILITIES AND STOCKHOLDERS’
EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$
|
25,949
|
|
$
|
18,495
|
|
||
|
Accrued
expenses and other current liabilities
|
135,544
|
|
96,343
|
|
||||
|
Deferred
revenue and customer deposits
|
26,015
|
|
22,972
|
|
||||
|
Operating
lease liability, current
|
22,211
|
|
—
|
|
||||
|
Financing
lease liability, current
|
6,509
|
|
—
|
|
||||
|
Total
current liabilities
|
216,228
|
|
137,810
|
|
||||
|
Operating
lease liability, noncurrent
|
134,755
|
|
—
|
|
||||
|
Financing
lease liability, noncurrent
|
8,174
|
|
—
|
|
||||
|
Note
payable, noncurrent
|
—
|
|
—
|
|
||||
|
Convertible
senior notes, net
|
452,184
|
|
434,496
|
|
||||
|
Other
long-term liabilities
|
14,341
|
|
18,169
|
|
||||
|
Total
liabilities
|
825,682
|
|
590,475
|
|
||||
|
Commitments
and contingencies
|
||||||||
|
Stockholders’
equity:
|
||||||||
|
Preferred
stock
|
—
|
|
—
|
|
||||
|
Class A
and Class B common stock
|
137
|
|
100
|
|
||||
|
Additional
paid-in capital
|
4,868,261
|
|
808,527
|
|
||||
|
Accumulated
other comprehensive income
|
4,578
|
|
1,282
|
|
||||
|
Accumulated
deficit
|
(588,490
|
)
|
(371,674
|
)
|
||||
|
Total
stockholders’ equity
|
4,284,486
|
|
438,235
|
|
||||
|
Total
liabilities and stockholders’ equity
|
$
|
5,110,168
|
|
$
|
1,028,710
|
|
||
6
TWILIO
INC.
Condensed Consolidated
Statements of Cash Flows
(In
thousands)
(Unaudited)
|
Nine Months Ended
September 30, |
||||||||
|
2019
|
2018
|
|||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
|
Net
loss
|
$
|
(216,816
|
)
|
$
|
(74,791
|
)
|
||
|
Adjustments
to reconcile net loss to net cash provided by operating activities:
|
||||||||
|
Depreciation
and amortization
|
79,295
|
|
18,246
|
|
||||
|
Right-of-use
asset amortization
|
16,732
|
|
—
|
|
||||
|
Net
amortization of investment premium and discount
|
(4,163
|
)
|
(845
|
)
|
||||
|
Amortization
of debt discount and issuance costs
|
17,689
|
|
8,374
|
|
||||
|
Stock-based
compensation
|
197,332
|
|
61,287
|
|
||||
|
Tax
benefit related to release of valuation allowance
|
(55,999
|
)
|
—
|
|
||||
|
Other
adjustments
|
3,981
|
|
5,198
|
|
||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Accounts
receivable
|
(27,619
|
)
|
(39,643
|
)
|
||||
|
Prepaid
expenses and other current assets
|
(20,743
|
)
|
(6,600
|
)
|
||||
|
Other
long-term assets
|
(10,756
|
)
|
(3,681
|
)
|
||||
|
Accounts
payable
|
4,333
|
|
1,641
|
|
||||
|
Accrued
expenses and other current liabilities
|
33,826
|
|
39,732
|
|
||||
|
Deferred
revenue and customer deposits
|
3,043
|
|
5,092
|
|
||||
|
Operating
right of use liability
|
(15,397
|
)
|
—
|
|
||||
|
Long-term
liabilities
|
(2,714
|
)
|
(1,177
|
)
|
||||
|
Net
cash provided by operating activities
|
2,024
|
|
12,833
|
|
||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
|
Acquisitions,
net of cash acquired
|
146,957
|
|
(29,662
|
)
|
||||
|
Purchases
of marketable securities and other investments
|
(1,769,125
|
)
|
(213,533
|
)
|
||||
|
Proceeds
from sales and maturities of marketable securities
|
475,260
|
|
113,497
|
|
||||
|
Capitalized
software development costs
|
(16,809
|
)
|
(15,276
|
)
|
||||
|
Purchases
of long-lived assets
|
(18,994
|
)
|
(3,428
|
)
|
||||
|
Net
cash used in investing activities
|
(1,182,711
|
)
|
(148,402
|
)
|
||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Proceeds
from a public offering, net of underwriting discount
|
980,000
|
|
—
|
|
||||
|
Payments
of costs related to the public offering
|
(850
|
)
|
—
|
|
||||
|
Proceeds
from issuance of convertible senior notes
|
—
|
|
550,000
|
|
||||
|
Payment
of debt issuance costs
|
—
|
|
(12,877
|
)
|
||||
|
Purchase
of capped call
|
—
|
|
(58,465
|
)
|
||||
|
Principal
payments on notes payable
|
(5,400
|
)
|
—
|
|
||||
|
Principal
payments on finance leases
|
(3,927
|
)
|
—
|
|
||||
|
Proceeds
from exercises of stock options and issuances under ESPP
|
40,354
|
|
27,052
|
|
||||
|
Value
of equity awards withheld for tax liabilities
|
(4,148
|
)
|
(1,720
|
)
|
||||
|
Net
cash provided by financing activities
|
1,006,029
|
|
503,990
|
|
||||
|
Effect
of exchange rate changes on cash, cash equivalents and restricted cash
|
—
|
|
105
|
|
||||
|
NET
(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
(174,658
|
)
|
368,526
|
|
||||
|
CASH,
CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period
|
505,334
|
|
120,788
|
|
||||
|
CASH,
CASH EQUIVALENTS AND RESTRICTED CASH —End of period
|
$
|
330,676
|
|
$
|
489,314
|
|
||
7
TWILIO
INC.
Reconciliation to Non-GAAP
Financial Measures
(In thousands, except shares, per share amounts and
percentages)
(Unaudited)
|
Three Months Ended
September 30, |
||||||||
|
2019
|
2018
|
|||||||
|
Gross profit
|
$
|
158,162
|
|
$
|
91,864
|
|
||
|
Non-GAAP
adjustments:
|
||||||||
|
Stock-based
compensation
|
1,674
|
|
284
|
|
||||
|
Amortization
of acquired intangibles
|
12,549
|
|
1,396
|
|
||||
|
Payroll
taxes related to stock-based compensation
|
29
|
|
—
|
|
||||
|
Non-GAAP
gross profit
|
$
|
172,414
|
|
$
|
93,544
|
|
||
|
Non-GAAP
gross margin
|
58
|
%
|
55
|
%
|
||||
|
Research and development
|
$
|
104,481
|
|
$
|
42,340
|
|
||
|
Non-GAAP
adjustments:
|
||||||||
|
Stock-based
compensation
|
(34,348
|
)
|
(10,879
|
)
|
||||
|
Payroll
taxes related to stock-based compensation
|
(1,272
|
)
|
(748
|
)
|
||||
|
Non-GAAP
research and development
|
$
|
68,861
|
|
$
|
30,713
|
|
||
|
Non-GAAP
research and development as a % of revenue
|
23
|
%
|
18
|
%
|
||||
|
Sales and marketing
|
$
|
100,657
|
|
$
|
45,949
|
|
||
|
Non-GAAP
adjustments:
|
||||||||
|
Stock-based
compensation
|
(16,143
|
)
|
(5,246
|
)
|
||||
|
Amortization
of acquired intangibles
|
(7,322
|
)
|
(390
|
)
|
||||
|
Payroll
taxes related to stock-based compensation
|
(635
|
)
|
(339
|
)
|
||||
|
Non-GAAP
sales and marketing
|
$
|
76,557
|
|
$
|
39,974
|
|
||
|
Non-GAAP
sales and marketing as a % of revenue
|
26
|
%
|
24
|
%
|
||||
|
General and
administrative
|
$
|
47,690
|
|
$
|
28,608
|
|
||
|
Non-GAAP
adjustments:
|
||||||||
|
Stock-based
compensation
|
(16,103
|
)
|
(6,332
|
)
|
||||
|
Amortization
of acquired intangibles
|
(121
|
)
|
(20
|
)
|
||||
|
Acquisition-related
expenses
|
(371
|
)
|
(1,554
|
)
|
||||
|
Legal
settlements/accruals
|
—
|
|
(1,510
|
)
|
||||
|
Charitable
contributions
|
—
|
|
(175
|
)
|
||||
|
Payroll
taxes related to stock-based compensation
|
(479
|
)
|
(411
|
)
|
||||
|
Non-GAAP
general and administrative
|
$
|
30,616
|
|
$
|
18,606
|
|
||
|
Non-GAAP
general and administrative as a % of revenue
|
10
|
%
|
11
|
%
|
||||
|
Loss from operations
|
$
|
(94,666
|
)
|
$
|
(25,033
|
)
|
||
|
Non-GAAP
adjustments:
|
||||||||
|
Stock-based
compensation
|
68,268
|
|
22,741
|
|
||||
|
Amortization
of acquired intangibles
|
19,992
|
|
1,806
|
|
||||
|
Acquisition-related
expenses
|
371
|
|
1,554
|
|
||||
|
Legal
settlements/accruals
|
—
|
|
1,510
|
|
||||
|
Charitable
contributions
|
—
|
|
175
|
|
||||
|
Payroll
taxes related to stock-based compensation
|
2,415
|
|
1,498
|
|
||||
|
Non-GAAP
(loss) income from operations
|
$
|
(3,620
|
)
|
$
|
4,251
|
|
||
|
Non-GAAP
operating margin
|
(1
|
)%
|
3
|
%
|
||||
8
TWILIO
INC.
Reconciliation to Non-GAAP
Financial Measures
(In thousands, except shares, per share amounts and
percentages)
(Unaudited)
|
Three Months Ended
September 30, |
||||||||
|
2019
|
2018
|
|||||||
|
Net loss attributable to common
stockholders
|
$
|
(87,734
|
)
|
$
|
(27,056
|
)
|
||
|
Non-GAAP
adjustments:
|
||||||||
|
Stock-based
compensation
|
68,268
|
|
22,741
|
|
||||
|
Amortization
of acquired intangibles
|
19,992
|
|
1,806
|
|
||||
|
Acquisition-related
expenses
|
371
|
|
1,554
|
|
||||
|
Legal
settlements/accruals
|
—
|
|
1,510
|
|
||||
|
Charitable
contributions
|
—
|
|
175
|
|
||||
|
Payroll
taxes related to stock-based compensation
|
2,415
|
|
1,498
|
|
||||
|
Amortization
of debt discount and issuance costs
|
6,007
|
|
5,679
|
|
||||
|
Income
tax benefit related to acquisition
|
(2,497
|
)
|
—
|
|
||||
|
Provision
for income tax effects related to Non-GAAP adjustments **
|
(1,691
|
)
|
—
|
|
||||
|
Non-GAAP
net income attributable to common stockholders
|
$
|
5,131
|
|
$
|
7,907
|
|
||
|
Non-GAAP
net income attributable to common stockholders as a % of revenue
|
2
|
%
|
5
|
%
|
||||
|
Net loss per share attributable
to common shareholders, basic *
|
$
|
(0.64
|
)
|
$
|
(0.28
|
)
|
||
|
Non-GAAP
adjustments:
|
||||||||
|
Stock-based
compensation
|
0.46
|
|
0.21
|
|
||||
|
Amortization
of acquired intangibles
|
0.13
|
|
0.02
|
|
||||
|
Acquisition-related
expenses
|
—
|
|
0.01
|
|
||||
|
Legal
settlements/accruals
|
—
|
|
0.01
|
|
||||
|
Charitable
contributions
|
—
|
|
0.00
|
|
||||
|
Payroll
taxes related to stock-based compensation
|
0.02
|
|
0.01
|
|
||||
|
Amortization
of debt discount and issuance costs
|
0.04
|
|
0.05
|
|
||||
|
Income
tax benefit related to acquisition
|
(0.02
|
)
|
—
|
|
||||
|
Provision
for income tax effects related to Non-GAAP adjustments **
|
(0.01
|
)
|
—
|
|
||||
|
Dilutive
securities
|
0.05
|
|
0.03
|
|
||||
|
Non-GAAP
net income per share attributable to common shareholders, diluted
|
$
|
0.03
|
|
$
|
0.07
|
|
||
|
GAAP weighted-average shares
used to compute net loss per share attributable to common stockholders, basic
|
136,400,739
|
98,019,629
|
||||||
|
Effect of dilutive securities
(stock options and restricted stock units)
|
13,558,751
|
11,801,023
|
||||||
|
Non-GAAP weighted-average shares
used to compute Non-GAAP net income per share attributable to common stockholders,
diluted
|
149,959,490
|
109,820,652
|
||||||
* Some
columns may not add due to rounding
**
Represents the tax effect of the non-GAAP adjustments based on the estimated annual effective tax rate
of 25%
9
TWILIO
INC.
Key Metrics
(Unaudited)
|
Three Months Ended
|
||||||||||||||||||||||||||||||||||||
|
Sep 30,
2017 |
Dec 31,
2017 |
Mar 31,
2018 |
Jun 30,
2018 |
Sep 30,
2018 |
Dec 31,
2018 |
Mar 31,
2019 |
Jun 30,
2019 |
Sep 30,
2019 |
||||||||||||||||||||||||||||
|
Number
of Active Customers
(as of period end date) |
46,489
|
|
48,979
|
|
53,985
|
|
57,350
|
|
61,153
|
|
64,286
|
|
154,797
|
|
161,869
|
|
172,092
|
|
||||||||||||||||||
|
Base
Revenue
(in thousands) |
$
|
91,965
|
|
$
|
105,299
|
|
$
|
117,507
|
|
$
|
135,004
|
|
$
|
154,348
|
|
$
|
186,158
|
|
$
|
220,885
|
|
$
|
256,737
|
|
$
|
275,548
|
|
|||||||||
|
Base Revenue Growth Rate, Year
Over Year
|
43
|
%
|
40
|
%
|
46
|
%
|
54
|
%
|
68
|
%
|
77
|
%
|
88
|
%
|
90
|
%
|
79
|
%
|
||||||||||||||||||
|
Dollar-Based
Net Expansion Rate |
122
|
%
|
118
|
%
|
132
|
%
|
137
|
%
|
145
|
%
|
147
|
%
|
146
|
%
|
140
|
%
|
132
|
%
|
||||||||||||||||||
|
Total
Revenue
|
$
|
100,542
|
|
$
|
115,236
|
|
$
|
129,116
|
|
$
|
147,754
|
|
$
|
168,895
|
|
$
|
204,302
|
|
$
|
233,139
|
|
$
|
275,039
|
|
$
|
295,066
|
|
|||||||||
|
Total Revenue Growth Rate, Year
over Year
|
41
|
%
|
41
|
%
|
48
|
%
|
54
|
%
|
68
|
%
|
77
|
%
|
81
|
%
|
86
|
%
|
75
|
%
|
||||||||||||||||||
CONTACT:
Investor Contact:
Andrew Zilli
ir@Twilio.com
or
Media Contact:
Caitlin Epstein
press@Twilio.com
10