0001447669-20-000156 | 10-Q | XBRL Viewer

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Fair Value Measurements - Marketable Securities (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Marketable Securities
Interest earned on marketable securities	$ 7.8	$ 2.6	$ 16.6	$ 4.1
Note receivable	$ 7.7		$ 7.7

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 475,700	$ 253,660
Short-term marketable securities	1,427,619	1,599,033
Accounts receivable, net	194,563	154,067
Prepaid expenses and other current assets	62,800	54,571
Total current assets	2,160,682	2,061,331
Restricted cash	0	75
Property and equipment, net	161,413	141,256
Operating right-of-use asset	196,647	156,741
Intangible assets, net	424,739	460,849
Goodwill	2,291,616	2,296,784
Other long-term assets	55,472	33,480
Total assets	5,290,569	5,150,516
Current liabilities:
Accounts payable	27,531	39,099
Accrued expenses and other current liabilities	197,303	147,681
Deferred revenue and customer deposits	29,111	26,362
Operating lease liability, current	35,287	27,156
Finance lease liability, current	7,134	6,924
Total current liabilities	296,366	247,222
Operating lease liability, noncurrent	172,408	139,200
Finance lease liability, noncurrent	10,116	8,746
Convertible senior notes, net	470,545	458,190
Other long-term liabilities	19,544	17,747
Total liabilities	968,979	871,105
Commitments and contingencies (Note 11)
Stockholders’ equity:
Preferred stock	0	0
Class A and Class B common stock	142	138
Additional paid-in capital	5,181,368	4,952,999
Accumulated other comprehensive income	13,606	5,086
Accumulated deficit	(873,526)	(678,812)
Total stockholders’ equity	4,321,590	4,279,411
Total liabilities and stockholders’ equity	$ 5,290,569	$ 5,150,516

Condensed Consolidated Statements of Stockholders Equity (Unaudited) - USD ($) $ in Thousands	Total	Follow-on Public Offering	Common Stock Common Class A	Common Stock Common Class A Follow-on Public Offering	Common Stock Common Class B	Additional Paid In Capital	Additional Paid In Capital Follow-on Public Offering	Accumulated Other Comprehensive Income	Accumulated Deficit
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)
Exercises of stock options (in shares)			748,679		1,023,984
Exercises of stock options	15,328		$ 1		$ 1	15,326
Vesting of restricted stock units (in shares)			641,406		39,360
Vesting of restricted stock units	0
Vesting of early exercised stock options	9					9
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	0		$ 4		$ (4)	0
Shares issued (in shares)			23,555,081
Shares issued	2,658,898		$ 24			2,658,874
Equity awards assumed in acquisition	191,620					191,620
Net unrealized (loss) gain on available-for-sale securities	1,041							1,041
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)
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 unrealized (loss) gain on available-for-sale securities	2,021
Balance (in shares) at Jun. 30, 2019			121,377,614		14,384,746
Balance at Jun. 30, 2019	4,296,860		$ 120		$ 16	4,794,177		3,303	(500,756)
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)
Balance (in shares) at Dec. 31, 2019			126,882,172		11,530,627
Balance at Dec. 31, 2019	4,279,411		$ 124		$ 14	4,952,999		5,086	(678,812)
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)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(92,579)								(92,579)
Exercises of stock options (in shares)			313,924		503,797
Exercises of stock options	9,927				$ 1	9,926
Vesting of restricted stock units (in shares)			675,028		29,576
Vesting of restricted stock units	1		$ 1			0
Value of equity awards withheld for tax liability (in shares)			(5,934)		(5,888)
Value of equity awards withheld for tax liability	(1,518)					(1,518)
Conversion of shares of Class B common stock into shares of Class A common stock (in shares)			2,172,598		(2,172,598)
Conversion of shares of Class B common stock into shares of Class A common stock	0		$ 2		$ (2)
Shares issued (in shares)				8,064,515
Shares issued		$ 980,000		$ 8			$ 979,992
Costs related to the public offering	(953)					(953)
Shares issued under ESPP (in shares)			108,895
Shares issued under ESPP	8,254					8,254
Equity awards assumed in acquisition	(7,126)					(7,126)
Net unrealized (loss) gain on available-for-sale securities	980							980
Stock-based compensation	72,361					72,361
Balance (in shares) at Jun. 30, 2019			121,377,614		14,384,746
Balance at Jun. 30, 2019	4,296,860		$ 120		$ 16	4,794,177		3,303	(500,756)
Balance (in shares) at Dec. 31, 2019			126,882,172		11,530,627
Balance at Dec. 31, 2019	4,279,411		$ 124		$ 14	4,952,999		5,086	(678,812)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(94,791)								(94,791)
Exercises of stock options (in shares)			243,029		426,001
Exercises of stock options	8,231					8,231
Vesting of restricted stock units (in shares)			849,763		23,107
Vesting of restricted stock units	1		$ 1
Value of equity awards withheld for tax liability (in shares)			(8,726)		(4,692)
Value of equity awards withheld for tax liability	(1,674)					(1,674)
Conversion of shares of Class B common stock into shares of Class A common stock (in shares)			618,103		(618,103)
Conversion of shares of Class B common stock into shares of Class A common stock	0		$ 1		$ (1)
Donated common stock (in shares)			22,102
Donated common stock	2,701					2,701
Net unrealized (loss) gain on available-for-sale securities	(9,375)							(9,375)
Stock-based compensation	72,021					72,021
Balance (in shares) at Mar. 31, 2020			128,606,443		11,356,940
Balance at Mar. 31, 2020	4,256,525		$ 126		$ 13	5,034,278		(4,289)	(773,603)
Balance (in shares) at Dec. 31, 2019			126,882,172		11,530,627
Balance at Dec. 31, 2019	4,279,411		$ 124		$ 14	4,952,999		5,086	(678,812)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net unrealized (loss) gain on available-for-sale securities	8,520
Balance (in shares) at Jun. 30, 2020			132,194,335		10,837,157
Balance at Jun. 30, 2020	4,321,590		$ 130		$ 12	5,181,368		13,606	(873,526)
Balance (in shares) at Mar. 31, 2020			128,606,443		11,356,940
Balance at Mar. 31, 2020	4,256,525		$ 126		$ 13	5,034,278		(4,289)	(773,603)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(99,923)								(99,923)
Exercises of stock options (in shares)			1,590,891		459,010
Exercises of stock options	45,232		$ 2			45,230
Vesting of restricted stock units (in shares)			807,270		4,212
Vesting of restricted stock units	1		$ 1
Value of equity awards withheld for tax liability (in shares)			(6,018)
Value of equity awards withheld for tax liability	(1,144)					(1,144)
Conversion of shares of Class B common stock into shares of Class A common stock (in shares)			983,005		(983,005)
Conversion of shares of Class B common stock into shares of Class A common stock	0		$ 1		$ (1)
Shares issued under ESPP (in shares)			190,642
Shares issued under ESPP	16,473					16,473
Donated common stock (in shares)			22,102
Donated common stock	3,972					3,972
Net unrealized (loss) gain on available-for-sale securities	17,895							17,895
Stock-based compensation	82,559					82,559
Balance (in shares) at Jun. 30, 2020			132,194,335		10,837,157
Balance at Jun. 30, 2020	$ 4,321,590		$ 130		$ 12	$ 5,181,368		$ 13,606	$ (873,526)

Notes Payable - Issuance (Details) - USD ($)	1 Months Ended
Notes Payable - Issuance (Details) - USD ($)	May 31, 2018	Jun. 30, 2020	Dec. 31, 2019
Convertible senior notes, 0.25%, due 2023
Debt Instrument [Line Items]
Aggregate principal amount	$ 550,000,000.0	$ 549,998,000	$ 549,999,000
Interest rate (as a percent)		0.25%
Net proceeds from the debt offering	537,000,000.0
Convertible senior notes, 0.25%, due 2023 - over-allotment
Debt Instrument [Line Items]
Aggregate principal amount	$ 75,000,000.0

Stock-Based Compensation - Stock Options - Unrecognized Compensation Cost (Details) $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($)
Stock Based Compensation
Weighted-average period (in years)	4 months 24 days
Stock options issued and outstanding
Stock Based Compensation
Unrecognized compensation cost, options	$ 89.0
Weighted-average period (in years)	2 years 1 month 6 days

Summary of Significant Accounting Policies	6 Months Ended
Summary of Significant Accounting Policies	Jun. 30, 2020
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 the Company's Annual Report on Form 10-K filed with the SEC on March 2, 2020 (“Annual Report”). The condensed consolidated balance sheet as of December 31, 2019, 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, stockholders' equity and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year 2020 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, 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 sales credit reserves; 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 and accounts receivable. The Company maintains cash, cash equivalents and marketable securities 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 deteriorates substantially, operating results could be adversely affected. To reduce credit risk, management performs 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 and six months ended June 30, 2020 and 2019, no customer organization accounted for more than 10% of the Company’s total revenue. As of June 30, 2020, and December 31, 2019, no customer organization represented more than 10% of the Company’s gross accounts receivable. (e)Significant Accounting Policies There have been no changes to the Company's significant accounting policies as described in its Annual Report. (f)Accounting Guidance Adopted in the Quarter In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, "Simplifying the Accounting for Income Taxes," which simplifies the accounting for income taxes by removing certain exceptions to the general principles for income taxes. The standard is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. The Company elected to early adopt this guidance effective April 1, 2020. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

Stock-Based Compensation - 2008 Stock Option Plan (Details)	Jun. 30, 2020 shares
2008 Stock Option Plan
Stock Based Compensation
Shares available for future issuance (in shares)	0

Net Loss per Share Attributable to Common Stockholders - General Information (Details) - Vote	Jun. 30, 2020	Dec. 31, 2019
Common Class A
Net Loss Per Share Attributable to Common Stockholders
Votes per share	1	1
Common Class B
Net Loss Per Share Attributable to Common Stockholders
Votes per share	10	10

Intangible Assets - Total Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Intangible Assets
2020 (remaining six months)	$ 40,376
2021	80,488
2022	77,872
2023	74,590
2024	69,311
Thereafter	76,887
Net	$ 419,524	$ 456,184

Supplemental Balance Sheet Information

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Supplemental Balance Sheet Information

A roll-forward of the Company’s reserves is as follows:

(a)Allowance for doubtful accounts:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

	(In thousands)
Balance, beginning of period	$	9,085	$	4,281	$	6,287	$	4,945
Additions	2,899		685		7,160		440

Write-offs	(1,736)		(193)		(3,199)		(612)
Balance, end of period	$	10,248	$	4,773	$	10,248	$	4,773


Percentage of revenue						3		%				2		%				1		%				1		%

(b)Customer credit reserve:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

	(In thousands)
Balance, beginning of period	$	9,687	$	2,831	$	6,784	$	3,015
Additions	13,376		2,862		21,550		5,543

Deductions against reserve	(11,532)		(2,617)		(16,803)		(5,482)
Balance, end of period	$	11,531	$	3,076	$	11,531	$	3,076


Percentage of revenue						3		%				1		%				2		%				1		%

Stockholders' Equity - Common Stock (Details) - $ / shares	Jun. 30, 2020	Dec. 31, 2019	May 31, 2018
Common Stock
Common stock, par value (in dollars per share)	$ 0.001	$ 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
Common stock, issued (in shares)	132,194,335	126,882,172
Common stock, outstanding (in shares)	132,194,335	126,882,172
Common Class B
Common Stock
Common stock, authorized (in shares)	100,000,000	100,000,000
Common stock, issued (in shares)	10,837,157	11,530,627
Common stock, outstanding (in shares)	10,837,157	11,530,627

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ 294	$ (2,033)	$ 1,271	$ (53,754)
Business Acquisition [Line Items]
Release of valuation allowance		1,100		52,700
SendGrid
Business Acquisition [Line Items]
Release of valuation allowance		$ 49,200		$ 49,200

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Notes Payable - Terms (Details) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended
	May 31, 2018 USD ($) D class $ / shares	Jun. 30, 2020 USD ($) $ / shares	Dec. 31, 2019 USD ($) $ / shares
Debt Instrument [Line Items]
Common stock, par value (in dollars per share)		$ 0.001	$ 0.001
Effective percentage		5.70%
Common Class A
Debt Instrument [Line Items]
Common stock, par value (in dollars per share)	$ 0.001
Convertible senior notes, 0.25%, due 2023
Debt Instrument [Line Items]
Threshold trading days \| D	20
Consecutive trading period \| class	30
Minimum sale price of stock as a percentage of the conversion price	130.00%
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%
Carrying amount of equity component \| $	$ 119,400	$ 119,435	$ 119,435
Debt issuance costs \| $	$ 10,200	$ 6,193	$ 7,162
Convertible senior notes, 0.25%, due 2023 \| Common Class A
Debt Instrument [Line Items]
Conversion ratio	14.104
Capped calls
Debt Instrument [Line Items]
Initial strike price (in dollars per share)	$ 70.90

Stock-Based Compensation - 2016 Employee Stock Purchase Plan (Details) - USD ($) $ in Millions			3 Months Ended			6 Months Ended
	Jan. 01, 2020	Jan. 01, 2019	Dec. 31, 2020	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 21, 2016
Stock Based Compensation
Increase in shares available for grant (in shares)	1,384,128	1,000,802
Stock plan offering period						6 months
Unrecognized compensation cost, other than options				$ 5.0		$ 5.0
Weighted-average period (in years)						4 months 24 days
Class A common stock committed under 2016 ESPP
Stock Based Compensation
Maximum automatic annual increase (in shares)				1,800,000		1,800,000
Maximum automatic annual increase as a percentage of outstanding common shares				1.00%		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%
Purchase price, percentage of fair market value (as a percent)						85.00%
Shares purchased in period (in shares)				190,642	108,895
Common Class A \| Class A common stock committed under 2016 ESPP \| Forecast
Stock Based Compensation
Shares purchased in period (in shares)			103,132

Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2020

Property, Plant and Equipment [Abstract]

Schedule of property and equipment

Property and equipment consisted of the following:


	As of		As of
	June 30,		December 31,
	2020		2019

	(In thousands)
Capitalized internal-use software development costs	$	122,673	$	100,155
Data center equipment ⁽¹⁾	27,473		22,009
Leasehold improvements	65,846		55,886
Office equipment	29,553		25,083
Furniture and fixtures ⁽¹⁾	10,519		10,095
Software	9,909		9,176
Total property and equipment	265,973		222,404
Less: accumulated depreciation and amortization	(104,560)		(81,148)
Total property and equipment, net	$	161,413	$	141,256

____________________
⁽¹⁾ Data center equipment and furniture and fixtures contain assets under finance leases. See Note 5 for further detail.

Right-of-Use Asset and Lease Liabilities - Supplemental Cash Flows (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in operating leases	$ 22,199	$ 12,145
Operating cash flows used in finance leases (interest)	392	337
Financing cash flows used in finance leases	$ 3,718	$ 2,463
Weighted Average Remaining Lease Term [Abstract]
Operating leases	5 years 9 months 18 days	6 years 9 months 18 days
Finance leases	3 years 2 months 12 days	3 years 1 month 6 days
Weighted Average Discount Rate [Abstract]
Operating leases	5.40%	5.80%
Finance leases	4.80%	5.20%

Stockholders' Equity - Common Stock Shares Reserved (Details) - shares	Jun. 30, 2020	Dec. 31, 2019
Stockholders' Equity
Total (in shares)	49,856,548	46,270,890
2016 Stock Option and Incentive Plan
Stockholders' Equity
Stock-based awards available for grant under 2016 Plan (in shares)	19,440,819	14,957,734
Common Class A
Stockholders' Equity
Class A common stock reserved for Twilio.org (in shares)	751,469	795,673
Class A common stock reserved for the convertible senior notes (in shares)	10,472,165	10,472,165
Stock options issued and outstanding
Stockholders' Equity
Stock options issued and outstanding (in shares)	5,357,728	7,705,848
Nonvested restricted stock units issued and outstanding
Stockholders' Equity
Nonvested restricted stock units issued and outstanding (in shares)	8,791,928	8,490,517
Class A common stock committed under 2016 ESPP
Stockholders' Equity
Stock-based awards available for grant under 2016 Plan (in shares)	5,042,439	3,848,953

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2020

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:


	Amortized Cost or Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value Hierarchy as of June 30, 2020									Aggregate Fair Value
													Level 1		Level 2		Level 3

Financial Assets:	(In thousands)
Cash and cash equivalents:
Money market funds	$	362,357	$	—	$	—	$	362,357	$	—	$	—	$	362,357

Commercial paper	7,499		—		—		—		7,499		—		7,499
Total included in cash and cash equivalents	369,856		—		—		362,357		7,499		—		369,856
Marketable securities:
U.S. Treasury securities	169,738		1,111		—		170,849		—		—		170,849
Corporate debt securities and commercial paper	1,244,662		12,490		(382)		13,000		1,243,770		—		1,256,770
Total marketable securities	1,414,400		13,601		(382)		183,849		1,243,770		—		1,427,619
Strategic investments	7,718		—		—		—		—		7,718		7,718
Total financial assets	$	1,791,974	$	13,601	$	(382)	$	546,206	$	1,251,269	$	7,718	$	1,805,193


	Amortized Cost or Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value Hierarchy as of December 31, 2019									Aggregate Fair Value
													Level 1		Level 2		Level 3

Financial Assets:	(In thousands)
Cash and cash equivalents:
Money market funds	$	153,252	$	—	$	—	$	153,252	$	—	$	—	$	153,252
Reverse repurchase agreements	35,800		—		—		—		35,800		—		35,800

Total included in cash and cash equivalents	189,052		—		—		153,252		35,800		—		189,052
Marketable securities:
U.S. Treasury securities	215,847		241		(3)		216,085		—		—		216,085
Corporate debt securities and commercial paper	1,378,487		4,516		(55)		5,000		1,377,948		—		1,382,948
Total marketable securities	1,594,334		4,757		(58)		221,085		1,377,948		—		1,599,033
Strategic investments	5,500		—		—		—		—		5,500		5,500
Total financial assets	$	1,788,886	$	4,757	$	(58)	$	374,337	$	1,413,748	$	5,500	$	1,793,585

Schedule of contractual maturities of marketable securities

The following table summarizes the contractual maturities of marketable securities:


	As of June 30, 2020						As of December 31, 2019
	Amortized Cost		Aggregate Fair Value		Amortized Cost		Aggregate Fair Value

Financial Assets:	(In thousands)
Less than one year	$	827,075	$	831,425	$	859,996	$	861,181
One to three years	587,325		596,194		734,338		737,852
Total	$	1,414,400	$	1,427,619	$	1,594,334	$	1,599,033

Accrued Expenses and Other Liabilities - Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Accrued Liabilities and Other Liabilities [Abstract]
Accrued payroll and related	$ 30,766	$ 20,462
Accrued bonus and commission	23,083	12,898
Accrued cost of revenue	62,510	47,563
Sales and other taxes payable	41,161	33,430
ESPP contributions	4,195	4,023
Accrued other expense	35,588	29,305
Total accrued expenses and other current liabilities	$ 197,303	$ 147,681

Notes Payable - Interest Expense (Details) - Convertible senior notes, 0.25%, due 2023 - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Interest expense recognized related to the Notes
Contractual interest expense	$ 344	$ 344	$ 688	$ 688
Amortization of debt issuance costs	484	458	968	916
Amortization of debt discount	5,694	5,383	11,388	10,766
Total interest expense related to the Notes	$ 6,522	$ 6,185	$ 13,044	$ 12,370

Notes Payable - Capped Calls (Details) - Capped calls $ / shares in Units, $ in Millions	1 Months Ended
	May 31, 2018 USD ($) $ / shares shares
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	7,757,158
Net cost to purchase the transactions \| $	$ 58.5

Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Amortizable intangible assets:
Gross	$ 547,713	$ 543,442
Accumulated Amortization	(128,189)	(87,258)
Net	419,524	456,184
Intangible assets, gross	552,928	548,107
Total	424,739	460,849
Telecommunication licenses
Amortizable intangible assets:
Non-amortizable intangible assets:	4,920	4,370
Trademarks and other
Amortizable intangible assets:
Non-amortizable intangible assets:	295	295
Developed technology
Amortizable intangible assets:
Gross	334,599	333,980
Accumulated Amortization	(79,593)	(55,390)
Net	255,006	278,590
Customer relationships
Amortizable intangible assets:
Gross	185,594	182,339
Accumulated Amortization	(40,214)	(26,347)
Net	145,380	155,992
Supplier relationships
Amortizable intangible assets:
Gross	4,356	4,356
Accumulated Amortization	(2,343)	(1,532)
Net	2,013	2,824
Trade names
Amortizable intangible assets:
Gross	20,060	20,060
Accumulated Amortization	(5,727)	(3,727)
Net	14,333	16,333
Patent
Amortizable intangible assets:
Gross	3,104	2,707
Accumulated Amortization	(312)	(262)
Net	$ 2,792	$ 2,445

Commitments and Contingencies - Indemnification Agreements (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Indemnification Agreements
Loss Contingencies [Line Items]
Amount accrued	$ 0	$ 0

Stock-Based Compensation - Performance-Based Stock Options (Details) $ / shares in Units, $ in Thousands		6 Months Ended	12 Months Ended
	Feb. 28, 2017 USD ($) award $ / shares shares	Jun. 30, 2020 USD ($) $ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares
Performance-based stock options
Stock-Based Compensation
Number of distinct awards \| award	3
Total grant value \| $	$ 5,900
Vesting period upon satisfaction of performance condition	24 months
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)		3 years 7 months 28 days	4 years 1 month 28 days
Aggregate intrinsic value \| $		$ 104,174	$ 36,941
Options vested and exercisable
Options vested and exercisable - number of options outstanding (in shares) \| shares		485,625
Options vested and exercisable - weighted-average exercise price (in dollars per share)		$ 31.72
Options vested and exercisable - weighted-average remaining contractual term		3 years 7 months 28 days
Options vested and exercisable - aggregate intrinsic value \| $		$ 91,152
$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 10 months 24 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 4 months 24 days

Stockholders' Equity

6 Months Ended

Jun. 30, 2020

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholders’ Equity

Preferred Stock

As of June 30, 2020 and December 31, 2019, the Company had authorized 100,000,000 shares of preferred stock, par value $0.001, of which no shares were issued and outstanding.

Common Stock

As of June 30, 2020 and December 31, 2019, 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 June 30, 2020, 132,194,335 shares of Class A common stock and 10,837,157 shares of Class B common stock were issued and outstanding. As of December 31, 2019, 126,882,172 shares of Class A common stock and 11,530,627 shares of Class B common stock were issued and outstanding.

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


	As of	As of
	June 30,	December 31,
	2020	2019

Stock options issued and outstanding	5,357,728	7,705,848
Nonvested restricted stock units issued and outstanding	8,791,928	8,490,517
Class A common stock reserved for Twilio.org	751,469	795,673
Stock-based awards available for grant under 2016 Plan	19,440,819	14,957,734
Stock-based awards available for grant under 2016 ESPP	5,042,439	3,848,953
Class A common stock reserved for the convertible senior notes	10,472,165	10,472,165
Total	49,856,548	46,270,890

Intangible Assets - Amortization Expense (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 20.6	$ 19.3	$ 40.9	$ 32.9

Accrued Expenses and Other Liabilities

6 Months Ended

Jun. 30, 2020

Accrued Liabilities and Other Liabilities [Abstract]

Accrued Expenses and Other Liabilities

Accrued expenses and other current liabilities consisted of the following:


	As of		As of
	June 30,		December 31,
	2020		2019

	(In thousands)
Accrued payroll and related	$	30,766	$	20,462
Accrued bonus and commission	23,083		12,898
Accrued cost of revenue	62,510		47,563
Sales and other taxes payable	41,161		33,430
ESPP contributions	4,195		4,023




Accrued other expense	35,588		29,305
Total accrued expenses and other current liabilities	$	197,303	$	147,681

Other long-term liabilities consisted of the following:


	As of		As of
	June 30,		December 31,
	2020		2019

	(In thousands)

Deferred tax liability	$	6,622	$	7,535



Accrued other expenses	12,922		10,212
Total other long-term liabilities	$	19,544	$	17,747

Net Loss Per Share Attributable to Common Stockholders - Anti-Dilutive Securities (Details) - $ / shares	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Anti-dilutive securities
Antidilutive securities (in shares)	19,336,101	22,557,419
Conversion price (in dollars per share)	$ 70.90
Stock options issued and outstanding
Anti-dilutive securities
Antidilutive securities (in shares)	5,357,728	9,125,950
Nonvested restricted stock units issued and outstanding
Anti-dilutive securities
Antidilutive securities (in shares)	8,791,928	8,926,529
Class A common stock reserved for Twilio.org
Anti-dilutive securities
Antidilutive securities (in shares)	751,469	776,334
Class A common stock committed under 2016 ESPP
Anti-dilutive securities
Antidilutive securities (in shares)	103,132	101,885
Conversion spread
Anti-dilutive securities
Antidilutive securities (in shares)	4,331,844	3,626,721

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2020
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The Company recorded an income tax provision of $0.3 million and $1.3 million for the three and six months ended June 30, 2020, respectively, and an income tax benefit of $2.0 million and $53.8 million for the three and six months ended June 30, 2019, respectively. The Company continues to maintain a valuation allowance for its U.S. federal and state net deferred tax assets. The provision for income taxes recorded in the three and six months ended June 30, 2020, consists primarily of income taxes and withholding taxes in foreign jurisdictions in which the Company conducts business. The Company's U.S. operations have been in a loss position and the Company maintains a full valuation allowance against its U.S. deferred tax assets. The tax benefit for the three and six months ended June 30, 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. As a result, during the three and six months ended June 30, 2019, the Company released a total of $1.1 million and $52.7 million, respectively, of its U.S. valuation allowance. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security ("CARES") Act was enacted and signed into U.S. law to provide economic relief to individuals and businesses facing economic hardship as a result of the COVID-19 pandemic. Changes in tax laws or rates are accounted for in the period of enactment. The income tax provisions of the CARES Act do not have a significant impact on the Company's current taxes, deferred taxes or uncertain tax positions. On June 7, 2019, a three-judge panel from the U.S. Court of Appeals for the Ninth Circuit overturned the U.S. Tax Court's decision in Altera Corp. v. Commissioner and upheld the portion of the Treasury regulations under Section 482 of the Internal Revenue Code that requires related parties in a cost-sharing arrangement to share expenses related to share-based compensation. As a result of this decision, the Company's gross unrecognized tax benefits increased to reflect the impact of including share-based compensation in cost-sharing arrangements. Recognizing the gross unrecognized tax benefits would not affect the Company's effective tax rate as their recognition would be offset by the reversal of the related deferred tax assets, which are subject to a full valuation allowance. On July 22, 2019, the taxpayer in the case filed a petition for a rehearing before the full Ninth Circuit and the request was denied on November 12, 2019. On February 10, 2020, the taxpayer in the case filed a petition to appeal the decision to the Supreme Court and on June 22, 2020 the Supreme Court denied the petition. There is no impact on the Company's effective tax rate for the three and six months ended June 30, 2020 due to the full valuation allowance against its deferred tax assets. The Company will continue to monitor future developments.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

Notes Payable

6 Months Ended

Jun. 30, 2020

Long-term Debt, Unclassified [Abstract]

Notes Payable

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 by us were $537.0 million.

Each $1,000 principal amount of the Notes is initially convertible into 14.104 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 June 30, 2020, 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 June 30, 2020 (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 July 1, 2020 through September 30, 2020. 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 continues to classify the Notes as a long-term liability in its condensed consolidated balance sheet as of June 30, 2020, based on contractual settlement provisions. 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:


	As of		As of
	June 30,		December 31,
	2020		2019

	(In thousands)
Principal	$	549,998	$	549,999
Unamortized discount	(73,260)		(84,647)
Unamortized issuance costs	(6,193)		(7,162)
Net carrying amount	$	470,545	$	458,190

The net carrying amount of the equity component of the Notes was as follows:


	As of		As of
	June 30,		December 31,
	2020		2019

	(In thousands)
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:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

	(In thousands)
Contractual interest expense	$	344	$	344	$	688	$	688
Amortization of debt issuance costs	484		458		968		916
Amortization of debt discount	5,694		5,383		11,388		10,766
Total interest expense related to the Notes	$	6,522	$	6,185	$	13,044	$	12,370

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 7,757,158 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.

Stock-Based Compensation - Valuation Assumptions (Details) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Employee stock options
Valuation Assumptions
Fair value of common stock (in dollars per share)		$ 128.0
Expected term (in years)	6 years 29 days	6 years 29 days	6 years 29 days
Expected volatility, low end of range (as a percent)	54.70%		51.90%	48.30%
Expected volatility, high end of range (as a percent)	56.00%	49.20%	56.00%	66.50%
Risk-free interest rate, low end of range (as a percent)			0.40%	2.40%
Risk-free interest rate, high end of range (as a percent)	0.40%	2.40%	1.40%	2.50%
Dividend rate	0.00%	0.00%	0.00%	0.00%
Class A common stock committed under 2016 ESPP
Valuation Assumptions
Expected term (in years)	6 months	6 months	6 months	6 months
Expected volatility, high end of range (as a percent)	72.10%	50.30%	72.10%	50.30%
Risk-free interest rate, high end of range (as a percent)	0.20%	2.40%	0.20%	2.40%
Dividend rate	0.00%	0.00%	0.00%	0.00%
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)	$ 31.7		$ 31.7
Minimum \| Employee stock options
Valuation Assumptions
Fair value of common stock (in dollars per share)	108.4		108.4	$ 111.3
Expected term (in years)				3 months 29 days
Maximum \| Employee stock options
Valuation Assumptions
Fair value of common stock (in dollars per share)	$ 191.9		$ 191.9	$ 130.7
Expected term (in years)				6 years 29 days

Notes Payable - Net Carrying Amount (Details) - USD ($)	3 Months Ended	6 Months Ended	12 Months Ended
Notes Payable - Net Carrying Amount (Details) - USD ($)	Jun. 30, 2019	Jun. 30, 2020	Dec. 31, 2019	May 31, 2018
Net carrying amount of the equity component of the Notes
Issuance costs	$ (953,000)
Convertible senior notes, 0.25%, due 2023
Net carrying amount of the liability component of the Notes
Aggregate principal amount		$ 549,998,000	$ 549,999,000	$ 550,000,000.0
Unamortized discount		(73,260,000)	(84,647,000)
Unamortized issuance costs		(6,193,000)	(7,162,000)	(10,200,000)
Net carrying amount		470,545,000	458,190,000
Net carrying amount of the equity component of the Notes
Proceeds allocated to the conversion options (debt discount)		119,435,000	119,435,000	$ 119,400,000
Issuance costs		(2,819,000)	(2,819,000)
Net carrying amount		$ 116,616,000	$ 116,616,000

Property and Equipment - Depreciation and Amortization Expense (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Property, Plant and Equipment [Abstract]
Depreciation and amortization	$ 11.9	$ 9.1	$ 23.9	$ 16.7

Fair Value Measurements - Assets Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Fair Value Measurements, Financial Assets
Total amortized cost	$ 1,414,400	$ 1,594,334
Marketable securities, accumulated gross unrealized gain, before tax	13,601	4,757
Marketable securities, gross unrealized losses less than 12 months	(382)	(58)
Marketable securities, aggregate fair value	1,427,619	1,599,033
Strategic investments, gross unrealized gains	0	0
Strategic investments, gross unrealized losses	0	0
Strategic investments	7,718	5,500
Total gross unrealized gains	13,601	4,757
Total gross unrealized losses	(382)	(58)
Total financial assets	1,805,193	1,793,585
U.S. Treasury securities
Fair Value Measurements, Financial Assets
Marketable securities, accumulated gross unrealized gain, before tax	1,111	241
Marketable securities, gross unrealized losses less than 12 months	0	(3)
Marketable securities, aggregate fair value	170,849	216,085
Corporate debt securities and commercial paper
Fair Value Measurements, Financial Assets
Marketable securities, accumulated gross unrealized gain, before tax	12,490	4,516
Marketable securities, gross unrealized losses less than 12 months	(382)	(55)
Marketable securities, aggregate fair value	1,256,770	1,382,948
Level 1
Fair Value Measurements, Financial Assets
Marketable securities, aggregate fair value	183,849	221,085
Strategic investments	0	0
Total financial assets	546,206	374,337
Level 1 \| U.S. Treasury securities
Fair Value Measurements, Financial Assets
Marketable securities, aggregate fair value	170,849	216,085
Level 1 \| Corporate debt securities and commercial paper
Fair Value Measurements, Financial Assets
Marketable securities, aggregate fair value	13,000	5,000
Level 2
Fair Value Measurements, Financial Assets
Marketable securities, aggregate fair value	1,243,770	1,377,948
Strategic investments	0	0
Total financial assets	1,251,269	1,413,748
Level 2 \| U.S. Treasury securities
Fair Value Measurements, Financial Assets
Marketable securities, aggregate fair value	0	0
Level 2 \| Corporate debt securities and commercial paper
Fair Value Measurements, Financial Assets
Marketable securities, aggregate fair value	1,243,770	1,377,948
Level 3
Fair Value Measurements, Financial Assets
Strategic investments	7,718	5,500
Total financial assets	7,718	5,500
Carrying Value
Fair Value Measurements, Financial Assets
Cash and cash equivalents	369,856	189,052
Total amortized cost	1,414,400	1,594,334
Strategic investments, amortized cost	7,718	5,500
Total financial assets, amortized cost or carrying value	1,791,974	1,788,886
Carrying Value \| U.S. Treasury securities
Fair Value Measurements, Financial Assets
Total amortized cost	169,738	215,847
Carrying Value \| Corporate debt securities and commercial paper
Fair Value Measurements, Financial Assets
Total amortized cost	1,244,662	1,378,487
Carrying Value \| Money market funds
Fair Value Measurements, Financial Assets
Cash and cash equivalents	362,357	153,252
Carrying Value \| Commercial paper
Fair Value Measurements, Financial Assets
Cash and cash equivalents	7,499
Carrying Value \| Reverse repurchase agreements
Fair Value Measurements, Financial Assets
Cash and cash equivalents		35,800
Aggregate Fair Value
Fair Value Measurements, Financial Assets
Cash and cash equivalents	369,856	189,052
Marketable securities, aggregate fair value	1,427,619	1,599,033
Aggregate Fair Value \| Money market funds
Fair Value Measurements, Financial Assets
Cash and cash equivalents	362,357	153,252
Aggregate Fair Value \| Commercial paper
Fair Value Measurements, Financial Assets
Cash and cash equivalents	7,499
Aggregate Fair Value \| Reverse repurchase agreements
Fair Value Measurements, Financial Assets
Cash and cash equivalents		35,800
Aggregate Fair Value \| Level 1
Fair Value Measurements, Financial Assets
Cash and cash equivalents	362,357	153,252
Aggregate Fair Value \| Level 1 \| Money market funds
Fair Value Measurements, Financial Assets
Cash and cash equivalents	362,357	153,252
Aggregate Fair Value \| Level 1 \| Reverse repurchase agreements
Fair Value Measurements, Financial Assets
Cash and cash equivalents		0
Aggregate Fair Value \| Level 2
Fair Value Measurements, Financial Assets
Cash and cash equivalents	7,499	35,800
Aggregate Fair Value \| Level 2 \| Money market funds
Fair Value Measurements, Financial Assets
Cash and cash equivalents	0	0
Aggregate Fair Value \| Level 2 \| Commercial paper
Fair Value Measurements, Financial Assets
Cash and cash equivalents	$ 7,499
Aggregate Fair Value \| Level 2 \| Reverse repurchase agreements
Fair Value Measurements, Financial Assets
Cash and cash equivalents		$ 35,800

Right-of-Use Asset and Lease Liabilities - Narrative (Details)	6 Months Ended
	Jun. 30, 2020 property
Lessee, Lease, Description [Line Items]
Number of leased properties	22
Renewal option	5 years
Minimum
Lessee, Lease, Description [Line Items]
Term of lease	1 year
Maximum
Lessee, Lease, Description [Line Items]
Term of lease	9 years

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2020	Jul. 27, 2020
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2020
Document Transition Report	false
Entity File Number	001-37806
Entity Registrant Name	TWILIO INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	26-2574840
Entity Address, Address Line One	101 Spear Street
Entity Address, Address Line Two	First Floor
Entity Address, City or Town	San Francisco
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94105
City Area Code	415
Local Phone Number	390-2337
Title of 12(b) Security	Class A Common Stock, par value $0.001 per share
Trading Symbol	TWLO
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0001447669
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY
Common Class A
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		132,340,556
Common Class B
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		10,793,764

Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2020

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
	June 30,	December 31,
	2020	2019

Stock options issued and outstanding	5,357,728	7,705,848
Nonvested restricted stock units issued and outstanding	8,791,928	8,490,517
Class A common stock reserved for Twilio.org	751,469	795,673
Stock-based awards available for grant under 2016 Plan	19,440,819	14,957,734
Stock-based awards available for grant under 2016 ESPP	5,042,439	3,848,953
Class A common stock reserved for the convertible senior notes	10,472,165	10,472,165
Total	49,856,548	46,270,890

Net Loss Per Share Attributable to Common Stockholders

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

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 10 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:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

Net loss attributable to common stockholders (in thousands)	$	(99,923)	$	(92,579)	$	(194,714)	$	(129,082)
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted	141,618,541		129,310,641		140,512,351		122,985,716
Net loss per share attributable to common stockholders, basic and diluted	$	(0.71)	$	(0.72)	$	(1.39)	$	(1.05)

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 June 30,
	2020	2019

Stock options issued and outstanding	5,357,728	9,125,950
Nonvested restricted stock units issued and outstanding	8,791,928	8,926,529
Class A common stock reserved for Twilio.org	751,469	776,334
Class A common stock committed under 2016 ESPP	103,132	101,885
Conversion spread ⁽¹⁾	4,331,844	3,626,721

Total	19,336,101	22,557,419

____________________
⁽¹⁾ 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.

Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Stock-Based Compensation Expense
Stock-based compensation expense	$ 79,387	$ 70,740	$ 148,412	$ 129,064
Cost of revenue
Stock-Based Compensation Expense
Stock-based compensation expense	2,143	1,623	3,980	3,432
Research and development
Stock-Based Compensation Expense
Stock-based compensation expense	39,841	33,701	73,050	59,040
Sales and marketing
Stock-Based Compensation Expense
Stock-based compensation expense	23,086	14,564	43,029	26,313
General and administrative
Stock-Based Compensation Expense
Stock-based compensation expense	$ 14,317	$ 20,852	$ 28,353	$ 40,279

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Statement [Abstract]
Revenue	$ 400,849	$ 275,039	$ 765,717	$ 508,178
Cost of revenue	191,718	125,024	363,051	232,113
Gross profit	209,131	150,015	402,666	276,065
Operating expenses:
Research and development	120,701	98,783	235,040	176,638
Sales and marketing	129,823	90,421	246,545	162,028
General and administrative	61,251	54,543	116,421	118,719
Total operating expenses	311,775	243,747	598,006	457,385
Loss from operations	(102,644)	(93,732)	(195,340)	(181,320)
Other income (expenses), net	3,015	(880)	1,897	(1,516)
Loss before (provision) benefit for income taxes	(99,629)	(94,612)	(193,443)	(182,836)
(Provision) benefit for income taxes	(294)	2,033	(1,271)	53,754
Net loss attributable to common stockholders	$ (99,923)	$ (92,579)	$ (194,714)	$ (129,082)
Net loss per share attributable to common stockholders, basic and diluted (in dollars per share)	$ (0.71)	$ (0.72)	$ (1.39)	$ (1.05)
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted (in shares)	141,618,541	129,310,641	140,512,351	122,985,716

Organization and Description of Business	6 Months Ended
Organization and Description of Business	Jun. 30, 2020
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, Brazil, Colombia, Czech Republic, Estonia, France, Germany, Hong Kong, India, Ireland, Japan, the Netherlands, Singapore, Spain, Sweden, the United Kingdom and the United States.

Property and Equipment - Property and Equipment, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Property and Equipment
Total property and equipment	$ 265,973	$ 222,404
Less: accumulated depreciation and amortization	(104,560)	(81,148)
Total property and equipment, net	161,413	141,256
Capitalized internal-use software development costs
Property and Equipment
Total property and equipment	122,673	100,155
Data center equipment
Property and Equipment
Total property and equipment	27,473	22,009
Leasehold improvements
Property and Equipment
Total property and equipment	65,846	55,886
Office equipment
Property and Equipment
Total property and equipment	29,553	25,083
Furniture and fixtures
Property and Equipment
Total property and equipment	10,519	10,095
Software
Property and Equipment
Total property and equipment	$ 9,909	$ 9,176

Right-of-Use Asset and Lease Liabilities (Tables)

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Lease, Cost

The components of the lease expense recorded in the accompanying condensed consolidated statements of operations were as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

	(In thousands)
Operating lease cost	$	12,497	$	8,273	$	22,921	$	15,446
Finance lease cost:
Amortization of assets	1,830		1,526		3,734		2,689
Interest on lease liabilities	194		189		392		337
Short-term lease cost	1,091		1,905		2,503		3,340
Variable lease cost	1,884		1,080		3,180		1,567
Total net lease cost	$	17,496	$	12,973	$	32,730	$	23,379

Supplemental cash flow and other information related to leases was as follows:


	Six Months Ended June 30,
	2020			2019

Cash paid for amounts included in the measurement of lease liabilities:	(In thousands)
Operating cash flows used in operating leases	$	22,199		$	12,145
Operating cash flows used in finance leases (interest)	$	392		$	337
Financing cash flows used in finance leases	$	3,718		$	2,463

Weighted average remaining lease term (in years):
Operating leases	5.8			6.8
Finance leases	3.2			3.1

Weighted average discount rate:
Operating leases	5.4		%	5.8		%
Finance leases	4.8		%	5.2		%

Assets and Liabilities, Lessee

Supplemental balance sheet information related to leases was as follows:


		As of		As of
		June 30,		December 31,
Leases	Classification	2020		2019

Assets:		(In thousands)
Operating lease assets	Operating right-of-use asset, net of accumulated amortization ⁽¹⁾	$	196,647	$	156,741
Finance lease assets	Property and equipment, net of accumulated depreciation ⁽²⁾	16,333		14,770
Total leased assets		$	212,980	$	171,511

Liabilities:
Current
Operating	Operating lease liability, current	$	35,287	$	27,156
Finance	Financing lease liability, current	7,134		6,924
Noncurrent
Operating	Operating lease liability, noncurrent	172,408		139,200
Finance	Finance lease liability, noncurrent	10,116		8,746
Total lease liabilities		$	224,945	$	182,026

____________________

⁽¹⁾ Operating lease assets are recorded net of accumulated amortization of $41.0 million and $23.2 million as of June 30, 2020 and December 31, 2019, respectively.

⁽²⁾ Finance lease assets are recorded net of accumulated depreciation of $9.7 million and $6.0 million as of June 30, 2020 and December 31, 2019, respectively.

Lessee, Operating Lease, Liability, Maturity

Maturities of lease liabilities were as follows:


	As of June 30, 2020
	Operating Leases		Finance Leases

Year ended December 31,	(In thousands)
2020 (remaining six months)	$	21,421	$	4,267
2021	43,868		6,000
2022	44,978		3,677
2023	39,553		2,930
2024	33,544		957
Thereafter	59,893		833
Total lease payments	243,257		18,664
Less: imputed interest	(35,562)		(1,414)
Total lease obligations	207,695		17,250
Less: current obligations	(35,287)		(7,134)
Long-term lease obligations	$	172,408	$	10,116

Finance Lease, Liability, Maturity

Maturities of lease liabilities were as follows:


	As of June 30, 2020
	Operating Leases		Finance Leases

Year ended December 31,	(In thousands)
2020 (remaining six months)	$	21,421	$	4,267
2021	43,868		6,000
2022	44,978		3,677
2023	39,553		2,930
2024	33,544		957
Thereafter	59,893		833
Total lease payments	243,257		18,664
Less: imputed interest	(35,562)		(1,414)
Total lease obligations	207,695		17,250
Less: current obligations	(35,287)		(7,134)
Long-term lease obligations	$	172,408	$	10,116

Net Loss Per Share Attributable to Common Stockholders (Tables)

6 Months Ended

Jun. 30, 2020

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:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

Net loss attributable to common stockholders (in thousands)	$	(99,923)	$	(92,579)	$	(194,714)	$	(129,082)
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted	141,618,541		129,310,641		140,512,351		122,985,716
Net loss per share attributable to common stockholders, basic and diluted	$	(0.71)	$	(0.72)	$	(1.39)	$	(1.05)

Schedule of common stock equivalents excluded from the computation of the diluted net loss per share attributable to common stockholders


	As of June 30,
	2020	2019

Stock options issued and outstanding	5,357,728	9,125,950
Nonvested restricted stock units issued and outstanding	8,791,928	8,926,529
Class A common stock reserved for Twilio.org	751,469	776,334
Class A common stock committed under 2016 ESPP	103,132	101,885
Conversion spread ⁽¹⁾	4,331,844	3,626,721

Total	19,336,101	22,557,419

____________________
⁽¹⁾ 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.

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and ContingenciesLease and Other CommitmentsThe Company entered into various non-cancelable operating lease agreements for its facilities with remaining lease terms from less than one year to slightly over nine years. See Note 5 to these unaudited condensed consolidated financial statements for additional detail on the Company's operating and finance lease commitments.In the three and six months ended June 30, 2020, the Company entered into several non-cancelable vendor agreements with terms up to two years for a total purchase commitment of $6.1 millionLegal 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 were transferred to the United States District Court, Northern District of California. The patent infringement allegations in the lawsuit related to the Company's two-factor authentication use case, Authy, and an API tool to find information about a phone number. Telesign sought, among other things, to enjoin the Company 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. On January 9, 2020, the Federal Circuit Court affirmed the district court’s judgment. The deadline for Telesign to seek rehearing or further appeal passed on June 8. 2020, and the judgment is now final. 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 infringement of United States Patent No. 8,306,021 (“021”), United States Patent No. 8,837,465 (“465”), United States Patent No. 8,755,376 (“376”), United States Patent No. 8,736,051 (“051”), United States Patent No. 8,737,962 (“962”), United States Patent No. 9,270,833 (“833”), and United States Patent No. 9,226,217 (“217”). Telesign filed a motion to dismiss the complaint on January 25, 2017. In two orders, issued on March 31, 2017 and April 17, 2017, the court granted Telesign’s motion to dismiss with respect to the ‘962, ‘833, ‘051 and ‘217 patents, but denied Telesign’s motion to dismiss as to the ‘021, ‘465 and ‘376 patents. On August 23, 2017, Telesign petitioned the U.S. Patent and Trademark Office (“U.S. PTO”) for inter partes review of the ‘021, ‘465, and ‘376 patents. On March 9, 2018, the 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 appealed the decisions to the United States Court of Appeals for the Federal Circuit who, on June 10, 2020, affirmed the PTAB rulings. Telesign III has been stayed pending resolution of the inter partes reviews (and appeals from them) of the ‘465 and ‘376 patents. If the Company does not appeal further, the case will be remanded to the district court and will proceed on the '021 patent. 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. 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 the Company, its partners and its customers by determining the scope, enforceability and validity of third-party proprietary rights, or to establish our proprietary rights. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on 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. 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 and in connection with our financing and business combinations transactions, 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 June 30, 2020 and December 31, 2019, no amounts were accruedOther TaxesThe Company conducts operations in many tax jurisdictions within and outside the United States. In many of these jurisdictions, non-income-based taxes, such as sales, use, telecommunications and other local 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 had 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 to collect taxes in most jurisdictions where the Company operates. The Company is also in discussions with certain jurisdictions regarding its prior sales and other taxes, if any, that the Company may owe. In the event any of these jurisdictions disagree with management’s assumptions and analysis, the assessment of the Company's tax exposure could differ materially from management's current estimates. For example, one jurisdiction has assessed the Company for $38.8 million in taxes, including interest and penalties, which exceeded the $11.5 million the Company had accrued as of June 30, 2020. The Company believes this assessment is overstated and has disputed it, paid the full amount as required by law, and is seeking a refund. The payment made in excess of the accrued amount will be reflected as a deposit in the Company's balance sheet in the future periods. If the jurisdiction denies the Company’s refund claim, the Company will challenge the jurisdiction’s denial in court. However, litigation is uncertain and a ruling against the Company may adversely affect its financial position and results of operation. As of June 30, 2020 and December 31, 2019, the liability recorded for these taxes was $28.1 million and $27.0 million, respectively.

Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of intangible assets

Intangible assets consisted of the following:


	As of June 30, 2020
	Gross		Accumulated Amortization		Net

Amortizable intangible assets:	(In thousands)
Developed technology	$	334,599	$	(79,593)	$	255,006
Customer relationships	185,594		(40,214)		145,380
Supplier relationships	4,356		(2,343)		2,013
Trade names	20,060		(5,727)		14,333
Patent	3,104		(312)		2,792
Total amortizable intangible assets	547,713		(128,189)		419,524
Non-amortizable intangible assets:
Telecommunication licenses	4,920		—		4,920

Trademarks and other	295		—		295
Total	$	552,928	$	(128,189)	$	424,739


	As of December 31, 2019
	Gross		Accumulated Amortization		Net

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

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

Schedule of total estimated future amortization expense

Total estimated future amortization expense is as follows:


	As of
	June 30,
	2020

Year Ended December 31,	(In thousands)
2020 (remaining six months)	$	40,376
2021	80,488
2022	77,872
2023	74,590
2024	69,311
Thereafter	76,887
Total	$	419,524

Revenue by Geographic Area

6 Months Ended

Jun. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenue by Geographic Area

Revenue by geographic area is based on the IP address or the mailing address at the time of registration. The following table sets forth revenue by geographic area:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

Revenue by geographic area:	(In thousands)
United States	$	292,115	$	194,998	$	553,928	$	361,551
International	108,734		80,041		211,789		146,627
Total	$	400,849	$	275,039	$	765,717	$	508,178


Percentage of revenue by geographic area:
United States	73	%	71	%	72	%	71	%
International	27	%	29	%	28	%	29	%

Long-lived assets outside the United States were not significant.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
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+ Details

Summary of Significant Accounting Policies (Policies)	6 Months Ended
Summary of Significant Accounting Policies (Policies)	Jun. 30, 2020
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 the Company's Annual Report on Form 10-K filed with the SEC on March 2, 2020 (“Annual Report”). The condensed consolidated balance sheet as of December 31, 2019, 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, stockholders' equity and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year 2020 or any future period.
Principles of Consolidation	Principles of ConsolidationThe 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 EstimatesThe 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, 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 sales credit reserves; 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 RiskFinancial instruments that potentially expose the Company to a concentration of credit risk consist primarily of cash, cash equivalents, marketable securities and accounts receivable. The Company maintains cash, cash equivalents and marketable securities 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 deteriorates substantially, operating results could be adversely affected. To reduce credit risk, management performs 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.
Accounting Guidance Adopted in the Quarter	Accounting Guidance Adopted in the QuarterIn December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, "Simplifying the Accounting for Income Taxes," which simplifies the accounting for income taxes by removing certain exceptions to the general principles for income taxes. The standard is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. The Company elected to early adopt this guidance effective April 1, 2020. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Statement of Comprehensive Income [Abstract]
Net loss	$ (99,923)	$ (92,579)	$ (194,714)	$ (129,082)
Other comprehensive income (loss):
Net unrealized gain on marketable securities, net of tax	17,895	980	8,520	2,021
Comprehensive loss attributable to common stockholders	$ (82,028)	$ (91,599)	$ (186,194)	$ (127,061)

- Definition

Amount, after deduction of tax, noncontrolling interests, dividends on preferred stock and participating securities; of income (loss) available to common shareholders.

+ References

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+ Details

Supplemental Balance Sheet Information - Sales Credit Reserve (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Sales credit reserve
Balance, beginning of period	$ 9,687	$ 2,831	$ 6,784	$ 3,015
Additions	13,376	2,862	21,550	5,543
Deductions against reserve	(11,532)	(2,617)	(16,803)	(5,482)
Balance, end of period	$ 11,531	$ 3,076	$ 11,531	$ 3,076
Sales credit reserve, percent of revenue	3.00%	1.00%	2.00%	1.00%

Stock-Based Compensation - Restricted Stock Units - Unrecognized Compensation Cost (Details) $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($)
Stock Based Compensation
Unrecognized compensation cost, other than options	$ 5.0
Weighted-average period (in years)	4 months 24 days
Nonvested restricted stock units issued and outstanding
Stock Based Compensation
Unrecognized compensation cost, other than options	$ 831.4
Weighted-average period (in years)	2 years 8 months 12 days

Stock-Based Compensation - Stock Option Activity (Details) - Employee and nonemployee stock options $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2020 USD ($) $ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares
Number of options outstanding
Outstanding options as of the beginning of the period (in shares) \| shares	7,150,848
Granted (in shares) \| shares	599,909
Exercised (in shares) \| shares	(2,718,931)
Forfeited and cancelled (in shares) \| shares	(229,098)
Outstanding options as of the end of the period (in shares) \| shares	4,802,728	7,150,848
Weighted- average exercise price (Per share)
Outstanding options as of the beginning of the period (in dollars per share) \| $ / shares	$ 28.79
Granted (in dollars per share) \| $ / shares	127.74
Exercised (in dollars per share) \| $ / shares	19.67
Forfeited and cancelled (in dollars per share) \| $ / shares	73.02
Outstanding options as of the end of the period (in dollars per share) \| $ / shares	$ 44.20	$ 28.79
Weighted- average remaining contractual term (In years)
Weighted-average remaining contractual term (in years)	6 years 10 months 13 days	6 years 5 months 19 days
Aggregate intrinsic value \| $	$ 841,534	$ 511,971
Options vested and exercisable and options vested and expected to vest
Options vested and exercisable - number of options outstanding (in shares) \| shares	2,821,212
Options vested and exercisable - weighted-average exercise price (in dollars per share) \| $ / shares	$ 17.47
Options vested and exercisable - weighted-average remaining contractual term	5 years 8 months 4 days
Options vested and exercisable - aggregate intrinsic value \| $	$ 569,740

Stock-Based Compensation

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

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, 2020 and 2019, the shares available for grant under the 2016 Plan were automatically increased by 6,920,640 and 5,004,011 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, Inc. ("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. Additionally, the Company assumed shares of SendGrid common stock that were reserved and available for issuance under SendGrid's 2017 Equity Incentive Plan, on an as converted basis. These shares can be utilized for future equity grants under the Company’s 2016 Plan, to the extent permitted by New York Stock Exchange rules.

2016 Employee Stock Purchase Plan

The Company’s Employee Stock Purchase Plan (“2016 ESPP”), as amended, initially 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 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, 2020 and 2019, the shares available for grant under the 2016 ESPP were automatically increased by 1,384,128 and 1,000,802 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. The 2016 ESPP provides for separate six-month offering periods beginning in May and November of each fiscal year.

On each purchase date, eligible employees 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 June 30, 2020 and 2019, 190,642 and 108,895 shares of Class A common stock were purchased under the 2016 ESPP, respectively, and 103,132 shares are expected to be purchased in the fourth quarter of 2020. As of June 30, 2020, total unrecognized compensation cost related to the 2016 ESPP was $5.0 million, which will be amortized over a weighted-average period of 0.4 years.

Stock Options

Stock option activity under the Company's 2008 Plan and 2016 Plan as well as respective Stock Incentive Plans assumed in the SendGrid acquisition was as follows:


	Number of options outstanding	Weighted- average exercise price (Per share)		Weighted- average remaining contractual term (In years)	Aggregate intrinsic value (In thousands)

Outstanding options as of December 31, 2019	7,150,848	$	28.79	6.47	$	511,971
Granted	599,909	127.74

Exercised	(2,718,931)	19.67
Forfeited and canceled	(229,098)	73.02
Outstanding options as of June 30, 2020	4,802,728	$	44.20	6.87	$	841,534
Options vested and exercisable as of June 30, 2020	2,821,212	$	17.47	5.68	$	569,740


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

	(In thousands, except per share amounts)
Aggregate intrinsic value of stock options exercised ⁽¹⁾	$	338,031	$	100,808	$	406,390	$	287,824
Total estimated grant date fair value of options vested	$	17,684	$	19,507	$	41,020	$	42,503
Weighted-average grant date fair value per share of options granted	$	93.37	$	63.42	$	64.06	$	58.16
____________________
⁽¹⁾ 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.

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 two year period. All performance conditions have been met. The stock options are amortized over a derived service period, as adjusted, of 3.1 years, 3.9 years and 4.4 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 options outstanding	Weighted- average exercise price (Per share)		Weighted- average remaining contractual term (In years)	Aggregate intrinsic value (In thousands)

Outstanding options as of December 31, 2019	555,000	$	31.72	4.16	$	36,941
Granted	—	—

Exercised	—	—
Forfeited and canceled	—	—
Outstanding options as of June 30, 2020	555,000	$	31.72	3.66	$	104,174
Options vested and exercisable as of June 30, 2020	485,625	$	31.72	3.66	$	91,152

As of June 30, 2020, total unrecognized compensation cost related to nonvested stock options was $89.0 million, which will be amortized on a ratable basis over a weighted-average period of 2.1 years.

Restricted Stock Units


	Number of awards outstanding	Weighted- average grant date fair value (Per share)		Aggregate intrinsic value (In thousands)

Nonvested RSUs as of December 31, 2019	8,490,517	$	74.21	$	830,167
Granted	2,513,586	166.49

Vested	(1,684,352)	65.75
Forfeited and canceled	(527,823)	83.58
Nonvested RSUs as of June 30, 2020	8,791,928	$	103.08	$	1,923,190

As of June 30, 2020, total unrecognized compensation cost related to nonvested RSUs was $831.4 million, which will be amortized over a weighted-average period of 2.7 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 June 30,			Six Months Ended June 30,
Employee Stock Options:	2020	2019	2020	2019

Fair value of common stock	$108.4 - $191.9	$128.0	$108.4 - $191.9	$111.3 - $130.7
Expected term (in years)	6.08	6.08	6.08	0.33 - 6.08
Expected volatility	54.7% - 56.0%	49.2%	51.9% - 56.0%	48.3% - 66.5%
Risk-free interest rate	0.4%	2.4%	0.4% - 1.4%	2.4% - 2.5%
Dividend rate	—%	—%	—%	—%


	Three Months Ended June 30,			Six Months Ended June 30,
Employee Stock Purchase Plan:	2020	2019	2020	2019

Expected term (in years)	0.50	0.50	0.50	0.50
Expected volatility	72.1%	50.3%	72.1%	50.3%
Risk-free interest rate	0.2%	2.4%	0.2%	2.4%
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						$31.7

Stock-Based Compensation Expense

The Company recorded the total stock-based compensation expense as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

	(In thousands)
Cost of revenue	$	2,143	$	1,623	$	3,980	$	3,432
Research and development	39,841		33,701		73,050		59,040
Sales and marketing	23,086		14,564		43,029		26,313
General and administrative	14,317		20,852		28,353		40,279
Total	$	79,387	$	70,740	$	148,412	$	129,064

Revenue by Geographic Area - Percentage of Revenue by Geographic Area (Details) - Revenue from Contract with Customer Benchmark - Geographic Concentration Risk	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
United States
Risks and Uncertainties [Abstract]
Percentage of revenue (as a percent)	73.00%	71.00%	72.00%	71.00%
International
Risks and Uncertainties [Abstract]
Percentage of revenue (as a percent)	27.00%	29.00%	28.00%	29.00%

Notes Payable (Tables)

6 Months Ended

Jun. 30, 2020

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:


	As of		As of
	June 30,		December 31,
	2020		2019

	(In thousands)
Principal	$	549,998	$	549,999
Unamortized discount	(73,260)		(84,647)
Unamortized issuance costs	(6,193)		(7,162)
Net carrying amount	$	470,545	$	458,190

The net carrying amount of the equity component of the Notes was as follows:


	As of		As of
	June 30,		December 31,
	2020		2019

	(In thousands)
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:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

	(In thousands)
Contractual interest expense	$	344	$	344	$	688	$	688
Amortization of debt issuance costs	484		458		968		916
Amortization of debt discount	5,694		5,383		11,388		10,766
Total interest expense related to the Notes	$	6,522	$	6,185	$	13,044	$	12,370

Fair Value Measurements

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

Financial Assets

The following tables provide the financial assets measured at fair value on a recurring basis:


	Amortized Cost or Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value Hierarchy as of June 30, 2020									Aggregate Fair Value
													Level 1		Level 2		Level 3

Financial Assets:	(In thousands)
Cash and cash equivalents:
Money market funds	$	362,357	$	—	$	—	$	362,357	$	—	$	—	$	362,357

Commercial paper	7,499		—		—		—		7,499		—		7,499
Total included in cash and cash equivalents	369,856		—		—		362,357		7,499		—		369,856
Marketable securities:
U.S. Treasury securities	169,738		1,111		—		170,849		—		—		170,849
Corporate debt securities and commercial paper	1,244,662		12,490		(382)		13,000		1,243,770		—		1,256,770
Total marketable securities	1,414,400		13,601		(382)		183,849		1,243,770		—		1,427,619
Strategic investments	7,718		—		—		—		—		7,718		7,718
Total financial assets	$	1,791,974	$	13,601	$	(382)	$	546,206	$	1,251,269	$	7,718	$	1,805,193


	Amortized Cost or Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value Hierarchy as of December 31, 2019									Aggregate Fair Value
													Level 1		Level 2		Level 3

Financial Assets:	(In thousands)
Cash and cash equivalents:
Money market funds	$	153,252	$	—	$	—	$	153,252	$	—	$	—	$	153,252
Reverse repurchase agreements	35,800		—		—		—		35,800		—		35,800

Total included in cash and cash equivalents	189,052		—		—		153,252		35,800		—		189,052
Marketable securities:
U.S. Treasury securities	215,847		241		(3)		216,085		—		—		216,085
Corporate debt securities and commercial paper	1,378,487		4,516		(55)		5,000		1,377,948		—		1,382,948
Total marketable securities	1,594,334		4,757		(58)		221,085		1,377,948		—		1,599,033
Strategic investments	5,500		—		—		—		—		5,500		5,500
Total financial assets	$	1,788,886	$	4,757	$	(58)	$	374,337	$	1,413,748	$	5,500	$	1,793,585

The Company's primary objective when investing excess cash is preservation of capital, hence the Company's marketable securities consist primarily of US Treasury securities, high credit quality corporate debt securities and commercial paper. As the Company views its marketable securities as available to support its current operations, it has classified all available for sale securities as short-term. As of June 30, 2020, 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 June 30, 2020, the Company anticipates that it will recover the entire amortized cost basis of such fixed income securities before maturity.

The Company regularly reviews the changes to the rating of its debt securities by rating agencies as well as reasonably monitors the surrounding economic conditions to assess the risk of expected credit losses. As of June 30, 2020, the risk of expected credit losses was not significant.

Interest earned on marketable securities was $7.8 million and $16.6 million in the three and six months ended June 30, 2020, respectively, and $2.6 million and $4.1 million in the three and six months ended June 30, 2019, respectively. The interest is recorded as other income (expenses), net, in the accompanying condensed consolidated statements of operations.

The following table summarizes the contractual maturities of marketable securities:


	As of June 30, 2020						As of December 31, 2019
	Amortized Cost		Aggregate Fair Value		Amortized Cost		Aggregate Fair Value

Financial Assets:	(In thousands)
Less than one year	$	827,075	$	831,425	$	859,996	$	861,181
One to three years	587,325		596,194		734,338		737,852
Total	$	1,414,400	$	1,427,619	$	1,594,334	$	1,599,033

The Company holds strategic investments with a fair value of $7.7 million in debt and equity securities of privately held companies in which the Company does not have a controlling interest or significant influence. These securities are recorded as other long-term assets in the accompanying condensed consolidated balance sheets. The Company classifies its strategic investments as Level 3 within the fair value hierarchy based on the nature of the fair value inputs and judgment involved in the valuation process.

Financial Liabilities

As of June 30, 2020, and December 31, 2019, the fair value of the 0.25% convertible senior notes due 2023 (the “Notes”), as further described in Note 8, was approximately $1,718.2 million and $841.3 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 classified as a Level 2 security within the fair value hierarchy.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Right-of-Use Asset and Lease Liabilities

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

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 sheets.

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 accounts for as a single lease component. When estimating the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain such options will be exercised. Lease expense for lease payments is recognized on a straight-line basis over the lease term and variable payments are recognized in the period they are incurred. The Company’s lease agreements do not contain any residual value guarantees. Leases with an initial term of 12 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 June 30, 2020, the Company had 22 leased properties with remaining lease terms from less than one year to nine years, some of which include options to extend the leases for up to 5.0 years.

The components of the lease expense recorded in the accompanying condensed consolidated statements of operations were as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

	(In thousands)
Operating lease cost	$	12,497	$	8,273	$	22,921	$	15,446
Finance lease cost:
Amortization of assets	1,830		1,526		3,734		2,689
Interest on lease liabilities	194		189		392		337
Short-term lease cost	1,091		1,905		2,503		3,340
Variable lease cost	1,884		1,080		3,180		1,567
Total net lease cost	$	17,496	$	12,973	$	32,730	$	23,379

Supplemental balance sheet information related to leases was as follows:


		As of		As of
		June 30,		December 31,
Leases	Classification	2020		2019

Assets:		(In thousands)
Operating lease assets	Operating right-of-use asset, net of accumulated amortization ⁽¹⁾	$	196,647	$	156,741
Finance lease assets	Property and equipment, net of accumulated depreciation ⁽²⁾	16,333		14,770
Total leased assets		$	212,980	$	171,511

Liabilities:
Current
Operating	Operating lease liability, current	$	35,287	$	27,156
Finance	Financing lease liability, current	7,134		6,924
Noncurrent
Operating	Operating lease liability, noncurrent	172,408		139,200
Finance	Finance lease liability, noncurrent	10,116		8,746
Total lease liabilities		$	224,945	$	182,026

____________________

⁽¹⁾ Operating lease assets are recorded net of accumulated amortization of $41.0 million and $23.2 million as of June 30, 2020 and December 31, 2019, respectively.

⁽²⁾ Finance lease assets are recorded net of accumulated depreciation of $9.7 million and $6.0 million as of June 30, 2020 and December 31, 2019, respectively.

Supplemental cash flow and other information related to leases was as follows:


	Six Months Ended June 30,
	2020			2019

Cash paid for amounts included in the measurement of lease liabilities:	(In thousands)
Operating cash flows used in operating leases	$	22,199		$	12,145
Operating cash flows used in finance leases (interest)	$	392		$	337
Financing cash flows used in finance leases	$	3,718		$	2,463

Weighted average remaining lease term (in years):
Operating leases	5.8			6.8
Finance leases	3.2			3.1

Weighted average discount rate:
Operating leases	5.4		%	5.8		%
Finance leases	4.8		%	5.2		%

Maturities of lease liabilities were as follows:


	As of June 30, 2020
	Operating Leases		Finance Leases

Year ended December 31,	(In thousands)
2020 (remaining six months)	$	21,421	$	4,267
2021	43,868		6,000
2022	44,978		3,677
2023	39,553		2,930
2024	33,544		957
Thereafter	59,893		833
Total lease payments	243,257		18,664
Less: imputed interest	(35,562)		(1,414)
Total lease obligations	207,695		17,250
Less: current obligations	(35,287)		(7,134)
Long-term lease obligations	$	172,408	$	10,116

As of June 30, 2020, the Company had no additional operating or finance leases with future commencement dates.

Right-of-Use Asset and Lease Liabilities

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 June 30, 2020, the Company had 22 leased properties with remaining lease terms from less than one year to nine years, some of which include options to extend the leases for up to 5.0 years.

The components of the lease expense recorded in the accompanying condensed consolidated statements of operations were as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

	(In thousands)
Operating lease cost	$	12,497	$	8,273	$	22,921	$	15,446
Finance lease cost:
Amortization of assets	1,830		1,526		3,734		2,689
Interest on lease liabilities	194		189		392		337
Short-term lease cost	1,091		1,905		2,503		3,340
Variable lease cost	1,884		1,080		3,180		1,567
Total net lease cost	$	17,496	$	12,973	$	32,730	$	23,379

Supplemental balance sheet information related to leases was as follows:


		As of		As of
		June 30,		December 31,
Leases	Classification	2020		2019

Assets:		(In thousands)
Operating lease assets	Operating right-of-use asset, net of accumulated amortization ⁽¹⁾	$	196,647	$	156,741
Finance lease assets	Property and equipment, net of accumulated depreciation ⁽²⁾	16,333		14,770
Total leased assets		$	212,980	$	171,511

Liabilities:
Current
Operating	Operating lease liability, current	$	35,287	$	27,156
Finance	Financing lease liability, current	7,134		6,924
Noncurrent
Operating	Operating lease liability, noncurrent	172,408		139,200
Finance	Finance lease liability, noncurrent	10,116		8,746
Total lease liabilities		$	224,945	$	182,026

____________________

⁽¹⁾ Operating lease assets are recorded net of accumulated amortization of $41.0 million and $23.2 million as of June 30, 2020 and December 31, 2019, respectively.

⁽²⁾ Finance lease assets are recorded net of accumulated depreciation of $9.7 million and $6.0 million as of June 30, 2020 and December 31, 2019, respectively.

Supplemental cash flow and other information related to leases was as follows:


	Six Months Ended June 30,
	2020			2019

Cash paid for amounts included in the measurement of lease liabilities:	(In thousands)
Operating cash flows used in operating leases	$	22,199		$	12,145
Operating cash flows used in finance leases (interest)	$	392		$	337
Financing cash flows used in finance leases	$	3,718		$	2,463

Weighted average remaining lease term (in years):
Operating leases	5.8			6.8
Finance leases	3.2			3.1

Weighted average discount rate:
Operating leases	5.4		%	5.8		%
Finance leases	4.8		%	5.2		%

Maturities of lease liabilities were as follows:


	As of June 30, 2020
	Operating Leases		Finance Leases

Year ended December 31,	(In thousands)
2020 (remaining six months)	$	21,421	$	4,267
2021	43,868		6,000
2022	44,978		3,677
2023	39,553		2,930
2024	33,544		957
Thereafter	59,893		833
Total lease payments	243,257		18,664
Less: imputed interest	(35,562)		(1,414)
Total lease obligations	207,695		17,250
Less: current obligations	(35,287)		(7,134)
Long-term lease obligations	$	172,408	$	10,116

As of June 30, 2020, the Company had no additional operating or finance leases with future commencement dates.

Revenue by Geographic Area - Revenue by Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Disaggregation of Revenue [Abstract]
Revenue	$ 400,849	$ 275,039	$ 765,717	$ 508,178
United States
Disaggregation of Revenue [Abstract]
Revenue	292,115	194,998	553,928	361,551
International
Disaggregation of Revenue [Abstract]
Revenue	$ 108,734	$ 80,041	$ 211,789	$ 146,627

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8906-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 4
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130543-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130545-203045

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 924
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-URI http://asc.fasb.org/extlink&oid=6472922&loc=d3e499488-122856

+ Details

Right-of-Use Asset and Lease Liabilities - Lease Maturities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Maturity Of Operating Lease Liabilities
2020	$ 21,421
2021	43,868
2022	44,978
2023	39,553
2024	33,544
Thereafter	59,893
Total lease payments	243,257
Less: imputed interest	(35,562)
Total lease obligations	207,695
Less: current obligations	(35,287)	$ (27,156)
Long-term lease obligations	172,408	139,200
Maturity Of Finance Lease Liabilities
2020	4,267
2021	6,000
2022	3,677
2023	2,930
2024	957
Thereafter	833
Total lease payments	18,664
Less: imputed interest	(1,414)
Total lease obligations	17,250
Less: current obligations	(7,134)	(6,924)
Long-term lease obligations	$ 10,116	$ 8,746

Supplemental Balance Sheet Information (Tables)

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Schedule of the allowance for doubtful accounts

Allowance for doubtful accounts:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

	(In thousands)
Balance, beginning of period	$	9,085	$	4,281	$	6,287	$	4,945
Additions	2,899		685		7,160		440

Write-offs	(1,736)		(193)		(3,199)		(612)
Balance, end of period	$	10,248	$	4,773	$	10,248	$	4,773


Percentage of revenue						3		%				2		%				1		%				1		%

Schedule of the sales credit reserve

Customer credit reserve:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

	(In thousands)
Balance, beginning of period	$	9,687	$	2,831	$	6,784	$	3,015
Additions	13,376		2,862		21,550		5,543

Deductions against reserve	(11,532)		(2,617)		(16,803)		(5,482)
Balance, end of period	$	11,531	$	3,076	$	11,531	$	3,076


Percentage of revenue						3		%				1		%				2		%				1		%

Supplemental Balance Sheet Information - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Allowance for doubtful accounts
Balance, beginning of period	$ 9,085	$ 4,281	$ 6,287	$ 4,945
Additions	2,899	685	7,160	440
Write-offs	(1,736)	(193)	(3,199)	(612)
Deductions against reserve	(11,532)	(2,617)	(16,803)	(5,482)
Balance, end of period	$ 10,248	$ 4,773	$ 10,248	$ 4,773
Reserve for allowance for doubtful account	3.00%	2.00%	1.00%	1.00%

Accrued Expenses and Other Liabilities (Tables)

6 Months Ended

Jun. 30, 2020

Accrued Liabilities and Other Liabilities [Abstract]

Schedule of accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following:


	As of		As of
	June 30,		December 31,
	2020		2019

	(In thousands)
Accrued payroll and related	$	30,766	$	20,462
Accrued bonus and commission	23,083		12,898
Accrued cost of revenue	62,510		47,563
Sales and other taxes payable	41,161		33,430
ESPP contributions	4,195		4,023




Accrued other expense	35,588		29,305
Total accrued expenses and other current liabilities	$	197,303	$	147,681

Schedule of other long-term liabilities

Other long-term liabilities consisted of the following:


	As of		As of
	June 30,		December 31,
	2020		2019

	(In thousands)

Deferred tax liability	$	6,622	$	7,535



Accrued other expenses	12,922		10,212
Total other long-term liabilities	$	19,544	$	17,747

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (194,714)	$ (129,082)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	64,772	49,610
Non-cash reduction to the right-of-use asset	17,804	10,707
Amortization of debt discount and issuance costs	12,356	11,682
Stock-based compensation	148,412	129,064
Tax benefit related to release of valuation allowance	(357)	(53,502)
Allowance for credit losses	7,115	697
Value of donated common stock	6,673	0
Other adjustments	6,857	(1,286)
Changes in operating assets and liabilities:
Accounts receivable	(47,766)	(22,523)
Prepaid expenses and other current assets	(12,001)	(15,688)
Other long-term assets	(19,774)	(5,969)
Accounts payable	(11,523)	8,306
Accrued expenses and other current liabilities	47,435	13,976
Deferred revenue and customer deposits	2,994	1,927
Operating lease liability	(16,340)	(9,367)
Long-term liabilities	1,968	(2,371)
Net cash provided by (used in) operating activities	13,911	(13,819)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired, and other related payments	(2,725)	146,957
Purchases of marketable securities and other investments	(443,816)	(1,377,072)
Proceeds from sales and maturities of marketable securities	621,754	286,653
Capitalized software development costs	(17,651)	(10,520)
Purchases of long-lived assets	(12,797)	(7,882)
Net cash provided by (used in) investing activities	144,765	(961,864)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from a public offering, net of underwriting discount	0	980,000
Payments of costs related to public offerings	0	(347)
Principal payments on finance leases and notes payable	(3,829)	(3,460)
Proceeds from exercises of stock options and shares issued under ESPP	69,936	33,509
Value of equity awards withheld for tax liabilities	(2,818)	(2,580)
Net cash provided by financing activities	63,289	1,007,122
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	221,965	31,439
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period	253,735	505,334
CASH, CASH EQUIVALENTS AND RESTRICTED CASH —End of period	475,700	536,773
Cash paid for income taxes, net	(1,022)	(48)
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Purchases of property, equipment and intangible assets, accrued but not paid	(4,545)	(1,831)
Purchases of property and equipment through finance leases	(5,366)	(13,616)
Value of common stock issued and stock awards assumed in acquisition	0	2,843,392
Stock-based compensation capitalized in software development costs	$ 7,015	$ 3,244

Property and Equipment - Capitalized Software Development Costs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Property, Plant and Equipment [Abstract]
Capitalized internal use software development costs	$ 12,600	$ 6,700	$ 24,600	$ 13,700
Stock-based compensation capitalized in software development costs	3,600	1,600	7,015	3,244
Amortization of capitalized software development costs	$ 4,400	$ 4,300	$ 9,000	$ 8,100

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

Schedule of stock options activity

Stock option activity under the Company's 2008 Plan and 2016 Plan as well as respective Stock Incentive Plans assumed in the SendGrid acquisition was as follows:


	Number of options outstanding	Weighted- average exercise price (Per share)		Weighted- average remaining contractual term (In years)	Aggregate intrinsic value (In thousands)

Outstanding options as of December 31, 2019	7,150,848	$	28.79	6.47	$	511,971
Granted	599,909	127.74

Exercised	(2,718,931)	19.67
Forfeited and canceled	(229,098)	73.02
Outstanding options as of June 30, 2020	4,802,728	$	44.20	6.87	$	841,534
Options vested and exercisable as of June 30, 2020	2,821,212	$	17.47	5.68	$	569,740

The following table summarizes the details of the performance options:


	Number of options outstanding	Weighted- average exercise price (Per share)		Weighted- average remaining contractual term (In years)	Aggregate intrinsic value (In thousands)

Outstanding options as of December 31, 2019	555,000	$	31.72	4.16	$	36,941
Granted	—	—

Exercised	—	—
Forfeited and canceled	—	—
Outstanding options as of June 30, 2020	555,000	$	31.72	3.66	$	104,174
Options vested and exercisable as of June 30, 2020	485,625	$	31.72	3.66	$	91,152

Schedule of weighted average grant date fair value


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

	(In thousands, except per share amounts)
Aggregate intrinsic value of stock options exercised ⁽¹⁾	$	338,031	$	100,808	$	406,390	$	287,824
Total estimated grant date fair value of options vested	$	17,684	$	19,507	$	41,020	$	42,503
Weighted-average grant date fair value per share of options granted	$	93.37	$	63.42	$	64.06	$	58.16
____________________
⁽¹⁾ 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.

Schedule of restricted stock unit activity


	Number of awards outstanding	Weighted- average grant date fair value (Per share)		Aggregate intrinsic value (In thousands)

Nonvested RSUs as of December 31, 2019	8,490,517	$	74.21	$	830,167
Granted	2,513,586	166.49

Vested	(1,684,352)	65.75
Forfeited and canceled	(527,823)	83.58
Nonvested RSUs as of June 30, 2020	8,791,928	$	103.08	$	1,923,190

Schedule of valuation assumptions, options

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 June 30,			Six Months Ended June 30,
Employee Stock Options:	2020	2019	2020	2019

Fair value of common stock	$108.4 - $191.9	$128.0	$108.4 - $191.9	$111.3 - $130.7
Expected term (in years)	6.08	6.08	6.08	0.33 - 6.08
Expected volatility	54.7% - 56.0%	49.2%	51.9% - 56.0%	48.3% - 66.5%
Risk-free interest rate	0.4%	2.4%	0.4% - 1.4%	2.4% - 2.5%
Dividend rate	—%	—%	—%	—%


	Three Months Ended June 30,			Six Months Ended June 30,
Employee Stock Purchase Plan:	2020	2019	2020	2019

Expected term (in years)	0.50	0.50	0.50	0.50
Expected volatility	72.1%	50.3%	72.1%	50.3%
Risk-free interest rate	0.2%	2.4%	0.2%	2.4%
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						$31.7

Schedule of stock based compensation expense

The Company recorded the total stock-based compensation expense as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

	(In thousands)
Cost of revenue	$	2,143	$	1,623	$	3,980	$	3,432
Research and development	39,841		33,701		73,050		59,040
Sales and marketing	23,086		14,564		43,029		26,313
General and administrative	14,317		20,852		28,353		40,279
Total	$	79,387	$	70,740	$	148,412	$	129,064

Right-of-Use Asset and Lease Liabilities - Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Leases [Abstract]
Operating lease cost	$ 12,497	$ 8,273	$ 22,921	$ 15,446
Finance lease cost:
Amortization of assets	1,830	1,526	3,734	2,689
Interest on lease liabilities	194	189	392	337
Short-term lease cost	1,091	1,905	2,503	3,340
Variable lease cost	1,884	1,080	3,180	1,567
Total net lease cost	$ 17,496	$ 12,973	$ 32,730	$ 23,379

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		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Net Loss Per Share Attributable to Common Stockholders
Net loss attributable to common stockholders (in thousands)	$ (99,923)	$ (92,579)	$ (194,714)	$ (129,082)
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted (in shares)	141,618,541	129,310,641	140,512,351	122,985,716
Net loss per share attributable to common stockholders, basic and diluted (in dollars per share)	$ (0.71)	$ (0.72)	$ (1.39)	$ (1.05)

- Definition

Amount, after deduction of tax, noncontrolling interests, dividends on preferred stock and participating securities; of income (loss) available to common shareholders.

+ References

+ Details

Stockholders' Equity - Preferred Stock (Details) - $ / shares	Jun. 30, 2020	Dec. 31, 2019
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

Fair Value Measurements - Contractual Maturities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Less than one year, amortized cost	$ 827,075	$ 859,996
One to three years, amortized cost	587,325	734,338
Total amortized cost	1,414,400	1,594,334
Total aggregate fair value	1,427,619	1,599,033
Aggregate Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Less than one year, aggregate fair value	831,425	861,181
One to three years, aggregate fair value	596,194	737,852
Total aggregate fair value	$ 1,427,619	$ 1,599,033

Accrued Expenses and Other Liabilities - Long-term Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Accrued Liabilities and Other Liabilities [Abstract]
Deferred tax liability	$ 6,622	$ 7,535
Accrued other expenses	12,922	10,212
Total other long-term liabilities	$ 19,544	$ 17,747

Commitments and Contingencies - Other Commitments (Details) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)
Long-term Purchase Commitment [Line Items]
Purchase commitment	$ 6.1	$ 22.9
Minimum
Long-term Purchase Commitment [Line Items]
Term of lease	1 year	1 year
Maximum
Long-term Purchase Commitment [Line Items]
Term of lease	9 years	9 years
Term of non-cancellable agreement		2 years

Property and Equipment

6 Months Ended

Jun. 30, 2020

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and equipment consisted of the following:


	As of		As of
	June 30,		December 31,
	2020		2019

	(In thousands)
Capitalized internal-use software development costs	$	122,673	$	100,155
Data center equipment ⁽¹⁾	27,473		22,009
Leasehold improvements	65,846		55,886
Office equipment	29,553		25,083
Furniture and fixtures ⁽¹⁾	10,519		10,095
Software	9,909		9,176
Total property and equipment	265,973		222,404
Less: accumulated depreciation and amortization	(104,560)		(81,148)
Total property and equipment, net	$	161,413	$	141,256

____________________
⁽¹⁾ Data center equipment and furniture and fixtures contain assets under finance leases. See Note 5 for further detail.

Depreciation and amortization expense was $11.9 million and $23.9 million for the three and six months ended June 30, 2020, respectively, and $9.1 million and $16.7 million for the three and six months ended June 30, 2019, respectively.

The Company capitalized $12.6 million and $24.6 million in internal-use software development costs in the three and six months ended June 30, 2020, respectively, and $6.7 million and $13.7 million in the three and six months ended June 30, 2019, respectively. Of this amount, stock-based compensation was $3.6 million and $7.0 million in the three and six months ended June 30, 2020, respectively, and $1.6 million and $3.2 million in the three and six months ended June 30, 2019, respectively. Amortization of capitalized software development costs was $4.4 million and $9.0 million in the three and six months ended June 30, 2020, respectively, and $4.3 million and $8.1 million in the three and six months ended June 30, 2019, respectively.

Fair Value Measurements - Convertible Senior Notes (Details) - Convertible senior notes, 0.25%, due 2023 - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Fair Value Measurements, Liabilities
Interest rate (as a percent)	0.25%
Level 2
Fair Value Measurements, Liabilities
Fair value of the notes	$ 1,718.2	$ 841.3

Stock-Based Compensation - 2016 Stock Option Plan (Details) - shares			6 Months Ended
	Jan. 01, 2020	Jan. 01, 2019	Jun. 30, 2020	Jun. 21, 2016
Stock Based Compensation
Increase in shares available for grant (in shares)	1,384,128	1,000,802
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
Percentage of vesting rights			25.00%
Vesting period			1 year
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
Percentage of vesting rights			25.00%
Vesting period			1 year
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)	6,920,640	5,004,011
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%

Commitments and Contingencies - Other taxes (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
Taxes payable, jurisdictional estimate	$ 38,800
Accrued taxes	11,500
Liability for uncertain tax positions	$ 28,100	$ 27,000

Revenue by Geographic Area (Tables)

6 Months Ended

Jun. 30, 2020

Revenue from Contract with Customer [Abstract]

Schedule of revenue by geographic area

Revenue by geographic area is based on the IP address or the mailing address at the time of registration. The following table sets forth revenue by geographic area:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

Revenue by geographic area:	(In thousands)
United States	$	292,115	$	194,998	$	553,928	$	361,551
International	108,734		80,041		211,789		146,627
Total	$	400,849	$	275,039	$	765,717	$	508,178


Percentage of revenue by geographic area:
United States	73	%	71	%	72	%	71	%
International	27	%	29	%	28	%	29	%

Intangible Assets

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible assets consisted of the following:


	As of June 30, 2020
	Gross		Accumulated Amortization		Net

Amortizable intangible assets:	(In thousands)
Developed technology	$	334,599	$	(79,593)	$	255,006
Customer relationships	185,594		(40,214)		145,380
Supplier relationships	4,356		(2,343)		2,013
Trade names	20,060		(5,727)		14,333
Patent	3,104		(312)		2,792
Total amortizable intangible assets	547,713		(128,189)		419,524
Non-amortizable intangible assets:
Telecommunication licenses	4,920		—		4,920

Trademarks and other	295		—		295
Total	$	552,928	$	(128,189)	$	424,739


	As of December 31, 2019
	Gross		Accumulated Amortization		Net

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

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

Amortization expense was $20.6 million and $40.9 million for the three and six months ended June 30, 2020, respectively, and $19.3 million and $32.9 million for the three and six months ended June 30, 2019, respectively.

Total estimated future amortization expense is as follows:


	As of
	June 30,
	2020

Year Ended December 31,	(In thousands)
2020 (remaining six months)	$	40,376
2021	80,488
2022	77,872
2023	74,590
2024	69,311
Thereafter	76,887
Total	$	419,524

Right-of-Use Asset and Lease Liabilities - Balance Sheet Classification of Lease Assets and Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
ASSETS
Operating lease assets	$ 196,647	$ 156,741
Finance lease assets	16,333	14,770
Total leased assets	212,980	171,511
Current liabilities:
Operating	35,287	27,156
Finance	7,134	6,924
Noncurrent liabilities
Operating	172,408	139,200
Finance	10,116	8,746
Total lease liabilities	224,945	182,026
Operating lease accumulated amortization	41,000	23,200
Finance lease accumulated amortization	$ 9,700	$ 6,000
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	us-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization

Stock-Based Compensation - Restricted Stock Units Activity (Details) - Nonvested restricted stock units issued and outstanding - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Number of awards outstanding
Nonvested RSUs at the beginning of the period (in shares)	8,490,517
Granted (in shares)	2,513,586
Vested (in shares)	(1,684,352)
Forfeited and canceled (in shares)	(527,823)
Nonvested RSUs at the end of the period (in shares)	8,791,928
Weighted- average grant date fair value (Per share)
Nonvested RSUs at the beginning of the period (in dollars per share)	$ 74.21
Granted (in dollars per share)	166.49
Vested (in dollars per share)	65.75
Forfeited and canceled (in dollars per share)	83.58
Nonvested RSUs at the end of the period (in dollars per share)	$ 103.08
Aggregate intrinsic value (In thousands)
Aggregate intrinsic value	$ 1,923,190	$ 830,167

Stock-Based Compensation - Stock Options - Additional Information (Details) - Employee and nonemployee stock options - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Stock Based Compensation
Aggregate intrinsic value of stock options exercised	$ 338,031	$ 100,808	$ 406,390	$ 287,824
Total estimated grant date fair value of options vested	$ 17,684	$ 19,507	$ 41,020	$ 42,503
Weighted-average grant date fair value per share of options granted (in dollars per share)	$ 93.37	$ 63.42	$ 64.06	$ 58.16