Twilio Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

twlo-20200630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________

FORM 10-Q

_____________________________________________


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

For the quarterly period ended June 30, 2020


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

Commission File Number: 001-37806

TWILIO INC.

(Exact name of registrant as specified in its charter)

_____________________________________________


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

101 Spear Street, First Floor

San Francisco, California 94105

(Address of principal executive offices) (Zip Code)

(415) 390-2337

(Registrant’s telephone number, including area code)

____________________________________________

Securities registered pursuant to Section 12(b) of the act:


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

As of July 27, 2020, 132,340,556 shares of the registrant’s Class A common stock and 10,793,764 shares of registrant’s Class B common stock were outstanding.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

TWILIO INC.

Quarterly Report on Form 10-Q

For the Three Months Ended June 30, 2020

TABLE OF CONTENTS


		Page
	PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)	4

	Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019	4

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30 , 2020 and 2019	5

	Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30 , 2020 and 2019	6

	Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30 , 2020 and 2019	7

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30 , 2020 and 2019	9

	Notes to Condensed Consolidated Financial Statements	10

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	29

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43

Item 4.	Controls and Procedures	43

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	44

Item 1A.	Risk Factors	44

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	77

Item 5.	Other Information	77

Item 6.	Exhibits	78

	Signatures	79

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “can,” “will,” “would,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “forecasts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•the impact of the COVID-19 pandemic on the global economy, our customers, employees and business;

•our future financial performance, including our revenue, cost of revenue, gross margin and operating expenses, ability to generate positive cash flow and ability to achieve and sustain profitability;

•anticipated technology trends, such as the use of and demand for cloud communications;

•our ability to continue to build and maintain credibility with the global software developer community;

•our ability to attract and retain customers to use our products;

•the evolution of technology affecting our products and markets;

•our ability to introduce new products and enhance existing products;

•our ability to comply with modified or new industry standards, laws and regulations applying to our business, including the General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act of 2018 and other privacy regulations that may be implemented in the future, and Signature-based Handling of Asserted Information Using toKENs ("SHAKEN") and Secure Telephone Identity Revisited ("STIR") standards (together, "SHAKEN/STIR") and other robocalling prevention and anti-spam standards and increased costs associated with such compliance;

•our ability to optimize our network service provider coverage and connectivity;

•our ability to manage changes in network service provider fees that we pay in connection with the delivery of communications on our platform;

•our ability to work closely with email inbox service providers to maintain deliverability rates;

•our ability to pass on our savings associated with our platform optimization efforts to our customers;

•the impact and expected results from changes in our relationship with our larger customers;

•our ability to attract and retain enterprises and international organizations as customers for our products;

•our ability to form and expand partnerships with technology partners and consulting partners;

•our ability to successfully enter into new markets and manage our international expansion;

•the attraction and retention of qualified employees and key personnel;

•our ability to effectively manage our growth and future expenses and maintain our corporate culture;

•our ability to compete effectively in an intensely competitive market;

•the sufficiency of our cash and cash equivalents to meet our liquidity needs;

•our anticipated investments in sales and marketing, research and development and additional systems and processes to support our growth;

•our ability to maintain, protect and enhance our intellectual property;

•our ability to successfully defend litigation brought against us;

•our ability to service the interest on our convertible notes and repay such notes, to the extent required;

•our customers' and other platform users' violation of our policies or other misuse of our platform;

•our expectations about the impact of natural disasters and public health epidemics, such as the coronavirus on our business, results of operations, financial condition and on our customers, employees, vendors and partners; and

•our ability to successfully integrate and realize the benefits of our past or future strategic acquisitions or investments.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in Part II, Item 1A, “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

TWILIO INC.

Condensed Consolidated Balance Sheets

(Unaudited)


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

	(In thousands)
ASSETS
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	—		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
LIABILITIES AND STOCKHOLDERS’ EQUITY
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	—		—
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

See accompanying notes to condensed consolidated financial statements.

TWILIO INC.

Condensed Consolidated Statements of Operations

(Unaudited)


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

	(In thousands, except share and per share amounts)
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	$	(0.71)	$	(0.72)	$	(1.39)	$	(1.05)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	141,618,541		129,310,641		140,512,351		122,985,716

See accompanying notes to condensed consolidated financial statements.

TWILIO INC.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)


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

	(In thousands)
Net loss	$	(99,923)	$	(92,579)	$	(194,714)	$	(129,082)
Other comprehensive income:
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)

See accompanying notes to condensed consolidated financial statements.

TWILIO INC.

Condensed Consolidated Statements of Stockholders' Equity

(Unaudited)


	Common Stock Class A				Common Stock Class B						Additional Paid In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit	Total Stockholders' Equity
	Shares	Amount		Shares	Amount

	(In thousands, except share amounts)
Balance as of December 31, 2019	126,882,172	$	124	11,530,627	$	14	$	4,952,999	$	5,086	$	(678,812)	$	4,279,411
Net loss	—	—		—	—		—		—		(94,791)		(94,791)
Exercises of stock options	243,029	—		426,001	—		8,231		—		—		8,231


Vesting of restricted stock units	849,763	1		23,107	—		—		—		—		1
Value of equity awards withheld for tax liability	(8,726)	—		(4,692)	—		(1,674)		—		—		(1,674)

Conversion of shares of Class B common stock into shares of Class A	618,103	1		(618,103)	(1)		—		—		—		—

Donated common stock	22,102	—		—	—		2,701		—		—		2,701



Net unrealized loss on available-for-sale securities	—	—		—	—		—		(9,375)		—		(9,375)

Stock-based compensation	—	—		—	—		72,021		—		—		72,021
Balance as of March 31, 2020	128,606,443	$	126	11,356,940	$	13	$	5,034,278	$	(4,289)	$	(773,603)	$	4,256,525
Net loss	—	—		—	—		—		—		(99,923)		(99,923)
Exercises of stock options	1,590,891	2		459,010	—		45,230		—		—		45,232
Vesting of restricted stock units	807,270	1		4,212	—		—		—		—		1
Value of equity awards withheld for tax liability	(6,018)	—		—	—		(1,144)		—		—		(1,144)
Conversion of shares of Class B common stock into shares of Class A	983,005	1		(983,005)	(1)		—		—		—		—
Shares issued under ESPP	190,642	—		—	—		16,473		—		—		16,473
Donated common stock	22,102	—		—	—		3,972		—		—		3,972
Net unrealized gain on available-for-sale securities	—	—		—	—		—		17,895		—		17,895
Stock-based compensation	—	—		—	—		82,559		—		—		82,559
Balance as of June 30, 2020	132,194,335	$	130	10,837,157	$	12	$	5,181,368	$	13,606	$	(873,526)	$	4,321,590

See accompanying notes to condensed consolidated financial statements.

TWILIO INC.

Condensed Consolidated Statements of Stockholders' Equity, continued

(Unaudited)


	Common Stock Class A				Common Stock Class B						Additional Paid In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit	Total Stockholders' Equity
	Shares	Amount		Shares	Amount

	(In thousands, except share amounts)
Balance as of December 31, 2018	80,769,763	$	80	19,310,465	$	20	$	808,527	$	1,282	$	(371,674)	$	438,235
Net loss	—	—		—	—		—		—		(36,503)		(36,503)

Exercises of stock options	748,679	1		1,023,984	1		15,326		—		—		15,328
Vesting of early exercised stock options	—	—		—	—		9		—		—		9
Vesting of restricted stock units	641,406	—		39,360	—		—		—		—		—
Value of equity awards withheld for tax liability	(5,860)	—		(4,431)	—		(1,062)		—		—		(1,062)

Conversion of shares of Class B common stock into shares of Class A	4,339,519	4		(4,339,519)	(4)		—		—		—		—





Shares issued in acquisition	23,555,081	24		—	—		2,658,874		—		—		2,658,898
Equity awards assumed in acquisition	—	—		—	—		191,620		—		—		191,620
Net unrealized gain on available-for-sale securities	—	—		—	—		—		1,041		—		1,041

Stock-based compensation	—	—		—	—		59,947		—		—		59,947
Balance as of March 31, 2019	110,048,588	$	109	16,029,859	$	17	$	3,733,241	$	2,323	$	(408,177)	$	3,327,513
Net loss	—	—		—	—		—		—		(92,579)		(92,579)
Issuance of common stock in connection with a public offering, net of underwriter discounts	8,064,515	8		—	—		979,992		—		—		980,000
Costs related to the public offering	—	—		—	—		(953)		—		—		(953)
Exercises of stock options	313,924	—		503,797	1		9,926		—		—		9,927
Vesting of restricted stock units	675,028	1		29,576	—		—		—		—		1
Value of equity awards withheld for tax liability	(5,934)	—		(5,888)	—		(1,518)		—		—		(1,518)
Conversion of shares of Class B common stock into shares of Class A	2,172,598	2		(2,172,598)	(2)		—		—		—		—
Shares issued under ESPP	108,895	—		—	—		8,254		—		—		8,254
Equity awards assumed in acquisition (measurement period adjustment)	—	—		—	—		(7,126)		—		—		(7,126)
Net unrealized gain on available-for-sale securities	—	—		—	—		—		980		—		980
Stock-based compensation	—	—		—	—		72,361		—		—		72,361

Price	99.93	EPS	-2
Shares	140	P/E	-45
MCap	13,962	P/FCF	994
Net Debt	-1,395	EBIT	-362
TEV	12,567	TEV/EBIT	-35
TTM 2019-12-31, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-08-04
10-Q	2020-03-31	Filed 2020-05-07
10-K	2019-12-31	Filed 2020-03-02
10-Q	2019-09-30	Filed 2019-10-31
10-Q	2019-06-30	Filed 2019-08-02
10-Q	2019-03-31	Filed 2019-05-09
10-K	2018-12-31	Filed 2019-03-01
10-Q	2018-09-30	Filed 2018-11-08
10-Q	2018-06-30	Filed 2018-08-08
10-Q	2018-03-31	Filed 2018-05-10
10-K	2017-12-31	Filed 2018-03-01
10-Q	2017-09-30	Filed 2017-11-14
10-Q	2017-06-30	Filed 2017-08-11
10-Q	2017-03-31	Filed 2017-05-10
10-K	2016-12-31	Filed 2017-02-22
10-Q	2016-09-30	Filed 2016-11-07
10-Q	2016-06-30	Filed 2016-08-09

8-K	2020-08-06	Enter Agreement, Exhibits
8-K	2020-08-05	Other Events, Exhibits
8-K	2020-08-04	Earnings, Exhibits
8-K	2020-06-03
8-K	2020-05-06
8-K	2020-02-05
8-K	2019-10-30
8-K	2019-07-31
8-K	2019-06-19
8-K	2019-06-18
8-K	2019-05-30
8-K	2019-05-29
8-K	2019-04-30
8-K	2019-02-12
8-K	2019-02-01
8-K	2019-01-30
8-K	2018-11-20
8-K	2018-11-09
8-K	2018-11-06
8-K	2018-10-24
8-K	2018-10-15
8-K	2018-08-06
8-K	2018-06-14
8-K	2018-05-30
8-K	2018-05-14
8-K	2018-05-14
8-K	2018-05-08
8-K	2018-02-13

EX-3.1	twlo-2020x0630xex31.htm
EX-31.1	twlo-2020x0630xex311.htm
EX-31.2	twlo-2020x0630ex312.htm
EX-32.1	twlo-2020x0630xex321.htm

TWLO 10Q Quarterly Report

Twilio Earnings 2020-06-30