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What changed in TWILIO INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of TWILIO INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+404 added−548 removedSource: 10-K (2026-02-24) vs 10-K (2025-02-26)

Top changes in TWILIO INC's 2025 10-K

404 paragraphs added · 548 removed · 326 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeAlthough we have works council, statutory and/or collective bargaining employee representation obligations in certain countries outside of the United States, none of our U.S. employees are represented by a labor union with respect to their employment. Employees in certain of our non-U.S. subsidiaries have the benefits of collective bargaining arrangements at the national level.
Biggest changeTwilio is an equal opportunity employer, and we are committed to ensuring that Twilio is an inclusive workplace where everyone, regardless of background, is treated fairly and has access to the opportunities, systems, and resources to do their best work. 9 Table of Contents Although we have works council, statutory and/or collective bargaining employee representation obligations in certain countries outside of the United States, none of our U.S. employees are represented by a labor union with respect to their employment.
Our voice software, which works over both the traditional public switched telephone network and over Internet Protocol (“VoIP”), allows developers to incorporate advanced voice functionality such as integrations with AI-based virtual agents, text-to-speech, global conferencing, emergency calling, call recording, and media streams, as well as address use cases such as contact centers, interactive voice response systems, call tracking, analytics solutions and anonymized communications. • Email.
Our voice software, which works over both the traditional public switched telephone network and over Internet Protocol (“VoIP”), allows developers to incorporate advanced voice functionality such as integrations with AI-based virtual agents, text-to-speech and speech-to-text, global conferencing, emergency calling, call recording, and media streams, as well as address use cases such as contact centers, interactive voice response systems, call tracking, analytics solutions and anonymized communications. • Email.
Our competitors are primarily (i) communications platform-as-a-service (“CPaaS”) companies that offer communications products and applications, (ii) other software companies that compete with portions of our communications product line, (iii) regional network service providers that offer limited developer functionality on top of their own physical infrastructure, (iv) customer relationship management and customer experience vendors and (v) standalone customer data platform vendors.
Our competitors are primarily (i) communications platform-as-a-service (“CPaaS”) companies that offer communications products and applications, (ii) regional network service providers that offer limited developer functionality on top of their own physical infrastructure, (iii) customer relationship management and customer experience vendors, (iv) standalone customer data platform vendors and (v) other software companies that compete with portions of our product line.
Furthermore, customers can engage with the wider Twilio community for guidance and assistance in resolving API-related issues. For our Communications products, we generally offer three paid tiers of support with increasing levels of availability and guaranteed response times. Our highest tier plan, intended for our largest customers, includes a technical account manager, duty manager coverage, and quarterly status reviews.
Furthermore, customers can engage with the wider Twilio community for guidance and assistance in resolving API-related issues. Additionally, we generally offer three paid tiers of support for our communications products with increasing levels of availability and guaranteed response times. Our highest tier plan, intended for our largest customers, includes a technical account manager, duty manager coverage, and quarterly status reviews.
Our platform is connected to our Super Network (“Super Network”), a software layer that enables our customers’ applications to communicate with devices globally. The Super Network interconnects communications networks and inbox services providers around the world and continually analyzes billions of data points to optimize the quality and cost of communications that flow through our platform.
Our platform is connected to our Super Network, a software layer that enables our customers’ applications to communicate with devices globally. The Super Network interconnects communications networks and inbox services providers around the world and continually analyzes billions of data points to optimize the quality and cost of communications that flow through our platform.
As of such date, we also had 40 issued patents in foreign jurisdictions, all of which are related to our U.S. patents and patent applications. We have also filed various applications for protection of certain aspects of our intellectual property in the United States and internationally.
As of such date, we also had 49 issued patents in foreign jurisdictions, all of which are related to our U.S. patents and patent applications. We have also filed various applications for protection of certain aspects of our intellectual property in the United States and internationally.
Information about Geographic Revenue Information about geographic revenue is set forth in Note 16 of our Notes to Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
Information about Geographic Revenue Information about geographic revenue is set forth in Note 17 of our Notes to Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
This is a direct sales motion and is supported by sales development, field marketing, and solution engineers. This model emphasizes value-based discovery, technical proof of concept, and building strong customer relationships. Our sales organization targets technical, marketing, and business leaders who are seeking to leverage software to drive superior customer engagement and competitive differentiation.
This is a direct sales motion and is supported by sales development, field marketing, solution engineers, and other specialized sales teams. This model emphasizes value-based discovery, technical proof of concept, and building strong customer relationships. Our sales organization targets technical, marketing, and business leaders who are seeking to leverage software to drive superior customer engagement and competitive differentiation.
We offer communications application programming interfaces (“APIs”) that enable developers to embed numerous forms of messaging, voice, email, and video interactions into their customer-facing applications, as well as software products that target specific engagement needs, including our customer data platform, digital engagement centers, marketing campaigns, and user authentication and identity solutions.
We offer highly customizable communications application programming interfaces (“APIs”) that enable developers to embed numerous forms of messaging, voice, email, and video interactions into their customer-facing applications, as well as software products that target specific engagement needs, including our digital engagement centers, marketing campaigns, and user authentication and identity solutions.
Segment helps businesses create precise audiences, continuous experiences, and contextual personalization with a unified view of the customer, seamless journey orchestration, and easy-to-use AI based on data that can be trusted to save time and achieve results.
Segment helps businesses create precise audiences, continuous experiences, and contextual personalization with a unified view of the customer, seamless journey orchestration, and easy-to-use AI based on trusted data to save time and achieve results.
We also offer solutions for user authentication and identity, and advanced compliance and regulatory management software to support success within a changing ecosystem of regulations. Additionally, our customer data platform enables businesses to collect, contextualize, and leverage first-party and real-time customer data to create highly personalized experiences and campaigns across multiple channels.
We also offer solutions for user authentication and identity, and advanced compliance and regulatory management software to support success within a changing ecosystem of regulations. Additionally, our customer data capabilities enable businesses to collect, contextualize, and leverage first-party and real-time customer data to create highly personalized experiences and campaigns across multiple channels.
As of December 31, 2024, we had 2,294 employees in our sales and marketing organization. Customer Support and Services To make learning how to use our products straightforward, we provide all users with comprehensive documentation, how-to guides, and tutorials. These resources are further enriched by contributions from our active customer community.
As of December 31, 2025, we had 2,265 employees in our sales and marketing organization. Customer Support and Services To make learning how to use our products straightforward, we provide all users with comprehensive documentation, how-to guides, and tutorials. These resources are further enriched by contributions from our active customer community.
It also allows businesses to break down data silos across their organizations and to leverage a single unified source of customer data for their various business teams. Our products can be used individually or in combination to enable more personalized, timely, and impactful communications and engagements across the customer journey.
They also allow businesses to break down data silos across their organizations and to leverage a single unified source of customer data for their various business teams. Our products can be used individually or in combination to enable more personalized, timely, and impactful communications and engagements across the customer journey.
We are continuing to invest in AI-powered capabilities, which we believe have the potential to enhance our offerings’ value to customers, as well as to automate processes and help our business run more efficiently. As of December 31, 2024, we had 2,581 employees in our research and development organization.
We are continuing to invest in AI-powered capabilities, which we believe have the potential to enhance our offerings’ value to customers, as well as to automate processes and help our business run more efficiently. As of December 31, 2025, we had 2,632 employees in our research and development organization.
We have experienced substantial growth in our business since inception, and as of December 31, 2024, we had over 325,000 Active Customer Accounts representing organizations from small and medium-sized businesses to large enterprises across a broad range of industries.
We have experienced substantial growth in our business since inception, and as of December 31, 2025, we had over 402,000 Active Customer Accounts representing organizations from small and medium-sized businesses to large enterprises across a broad range of industries.
Additionally, Twilio Lookup API provides real-time mobile-based identity intelligence that can reduce fraud risks and improve message delivery. 6 Table of Contents • Segment. Twilio Segment is a leading customer data platform that provides businesses with the tools to harness the power of contextual data by unifying real-time information collected throughout each customer’s journey into a unique profile.
Additionally, Twilio Lookup API provides real-time mobile-based identity intelligence that can reduce fraud risks and improve message delivery. • Segment. Twilio Segment (“Segment”) is our customer data platform that provides businesses with the tools to harness the power of contextual data by unifying real-time information collected throughout each customer’s journey into a unique profile.
Twilio Programmable Messaging and Conversations (“Messaging”) are APIs to send and receive SMS, MMS, RCS, and over-the-top (e.g., WhatsApp and Facebook Messenger) messages globally over a variety of sender types. Messaging uses intelligent sending features to ensure messages reliably reach end users wherever they are.
Twilio Programmable Messaging (“Messaging”) is an API to send and receive SMS, MMS, RCS, and over-the-top (e.g., WhatsApp and Facebook Messenger) messages globally over a variety of sender types. Messaging uses intelligent sending features to ensure messages reliably reach end users wherever they are.
This combination of flexible APIs and software solutions helps businesses of all sizes and across numerous industries to benefit from smarter and more streamlined engagement at every step of the customer journey, including reduced customer acquisition costs, lasting loyalty, and increased customer value.
This combination of flexible APIs and software solutions, together with our customer data capabilities, helps businesses of all sizes and across numerous industries to benefit from smarter and more streamlined engagement at every step of the customer journey, including reduced customer acquisition costs, lasting loyalty, and increased customer value.
Our Employees and Human Capital Resources We believe that our employees are critical to our success, and in the importance of making sure they are equipped, enabled and empowered to have an impact. As of December 31, 2024, we had a total of 5,535 employees, including 2,470 employees located outside of the United States.
Our Employees and Human Capital Resources We believe that our employees are critical to our success, and in the importance of making sure they are equipped, enabled and empowered to have an impact. As of December 31, 2025, we had a total of 5,587 employees, including 2,738 employees located outside of the United States.
We also rely on a number of registered trademarks, applications for trademarks and common law protections afforded to certain unregistered trademarks to protect our brand. As of December 31, 2024, in the United States, we have been issued 320 patents, which expire between 2029 and 2043.
We also rely on a number of registered trademarks, applications for trademarks and common law protections afforded to certain unregistered trademarks to protect our brand. As of December 31, 2025, in the United States, we have been issued 382 patents, which expire between 2029 and 2044.
Additionally, we offer support options tailored to meet individual customer needs including both free and paid personalized plans. All customers receive free support through our chatbots, Help Center Assistant, and access to technical documentation.
Additionally, we offer support options tailored to meet individual customer needs including both free and paid personalized plans. All customers receive free support, including through our AI agents, Help Center Assistant, customer service representatives and access to technical documentation.
These self-service customers can then provide their billing information to either make an upfront prepayment that is drawn down as they use our products, or subscribe to a plan, depending on the product they deploy. Our enterprise and commercial customers have access to our sales and solutions team to support their businesses across their customer journey.
These self-service customers can then provide their billing information to either make an upfront prepayment that is drawn down as they use our products, or subscribe to a plan, depending on the product they deploy. Enterprises and other organizations with complex, high-scale business needs have access to our sales and solutions team to support their businesses across their customer journey.
As of December 31, 2024, 353,633 shares of Twilio Class A common stock were set aside for Twilio.org charitable activities. In 2024, over 25,000 social impact customers used Twilio products and funding to reach more than 716 million people worldwide.
As of December 31, 2025, 265,225 shares of Twilio Class A common stock were set aside for Twilio.org charitable activities. In 2025, over 30,000 social impact customers used Twilio products and funding to reach more than 803 million people worldwide.
Sales and Marketing Our sales and marketing teams work closely together to drive awareness and adoption of our platform. We leverage our brand, marketing programs, developer network, and conferences, such as SIGNAL, to expand our go-to-market motions. Our go-to-market model has three motions: self-service, sales-led, and partner-led.
Sales and Marketing Our sales and marketing teams work closely together to drive awareness and adoption of our platform. We leverage our brand, marketing programs, and conferences, such as SIGNAL, to expand our go-to-market motions.
Our customers use these APIs to address numerous use cases, including account notifications, marketing, mass alerts, and order confirmations, as well as multi-party and conversational use cases, such as conversational marketing, sales support, and customer care. • Voice.
Our customers use Messaging across numerous use cases, including account notifications, marketing, mass alerts, and order confirmations, as well as multi-party and conversational use cases, such as conversational marketing, sales support, and customer care. 5 Table of Contents • Voice.
Using Verify for two-factor authentication, businesses can add an extra layer of security to their applications with passwords sent to users via SMS, voice, email, or push notifications, as well as passkeys. Verify includes Fraud Guard, which is aimed at automatically blocking fraudulent messages resulting from artificially inflated traffic or SMS pumping.
Using Verify, businesses can add an extra layer of security to their applications through a range of secure authentication methods, including one-time passwords over SMS, voice, email, push-based authentication, as well as phishing resistant authentication with passkeys. Verify includes Fraud Guard, which is aimed at automatically blocking fraudulent messages resulting from artificially inflated traffic or SMS pumping.
We currently, and will continue to, seek to protect our intellectual property and other proprietary rights by, among other things, implementing, maintaining, and enforcing a policy that requires our employees, independent contractors and certain suppliers involved in developing intellectual property for us or on our behalf to enter into agreements acknowledging that all work product or other forms of intellectual property generated, created, reduced to practice, conceived, or otherwise developed by them on our behalf are owned by us such that we can use the intellectual property they develop for our business purposes. 9 Table of Contents Regulatory We are subject to a number of U.S. federal, U.S. state and foreign laws and regulations that involve matters central to our business.
In addition, as of December 31, 2025, we had 53 registered trademarks in the United States and 749 registered trademarks in foreign jurisdictions. 8 Table of Contents We seek to protect our intellectual property and other proprietary rights by, among other things, implementing, maintaining, and enforcing a policy that requires our employees, independent contractors and certain suppliers involved in developing intellectual property for us or on our behalf to enter into agreements acknowledging that all work product or other forms of intellectual property generated, created, reduced to practice, conceived, or otherwise developed by them on our behalf are owned by us such that we can use the intellectual property they develop for our business purposes.
We consider our relations with our employees to be good and have not experienced interruptions of operations or work stoppages due to labor disagreements. 10 Table of Contents Corporate Information Twilio Inc. was incorporated in Delaware in March 2008.
Employees in certain of our non-U.S. subsidiaries have the benefits of collective bargaining arrangements at the national level. We consider our relations with our employees to be good and have not experienced interruptions of operations or work stoppages due to labor disagreements. Corporate Information Twilio Inc. was incorporated in Delaware in March 2008.
The value proposition of our offerings has become stronger and our products have become more strategic to our customers as businesses are increasingly prioritizing building more personalized and differentiated customer engagement experiences through digital channels. On January 1, 2025, we realigned our business unit structure into a functional support model under one organization.
The value proposition of our offerings has become stronger and our products have become more strategic to our customers as businesses are increasingly prioritizing building more personalized and differentiated customer engagement experiences through digital channels.
The application and interpretation of these laws and regulations often are uncertain, particularly in the new and rapidly evolving industry in which we operate. Compliance with current and future laws and regulations, and changes in their enforcement and interpretation, may significantly increase our compliance costs and otherwise adversely affect our business and results of operations.
Compliance with current and future laws and regulations, and changes in their enforcement and interpretation, may significantly increase our compliance costs and otherwise adversely affect our business and results of operations.
Developers, marketers, and other technical users are able to access our easy-to-configure APIs and tools along with our extensive self-service documentation and customer support team, to embed our products into their applications.
Our go-to-market model has three motions: self-service, sales-led, and partner-led. 7 Table of Contents Developers and other technical customers are able to access our easy-to-configure APIs and tools along with our extensive self-service documentation and customer support team, to embed our products into their applications.
Twilio.org Communications play a critical role in solving some of the world’s toughest social challenges—it is the foundation for engaging individuals or communities and guiding them toward the resources they need.
Our values, which we call the Twilio Magic, remind us every day who we are at our core and guide how we act and how we make decisions. Twilio.org Communications play a critical role in solving some of the world’s toughest social challenges—it is the foundation for engaging individuals or communities and guiding them toward the resources they need.
By combining our leading communications capabilities, plus rich contextual data, plus generative and predictive artificial intelligence (“AI”), we enable businesses of all sizes to revolutionize how they engage with their customers by delivering seamless, trusted, and personalized customer experiences at scale.
Item 1. Business Overview We envision a world in which every digital interaction is amazing. By combining our leading communications capabilities with rich contextual data and artificial intelligence (“AI”), we provide the infrastructure for businesses of all sizes to revolutionize how they engage with their customers by delivering seamless, trusted, and personalized customer experiences at scale.
These laws and regulations may involve privacy, data protection, data security, intellectual property, competition, telecommunications, broadband, VoIP, consumer protection, export controls, economic sanctions, anti-bribery, anti-corruption, anti-money laundering, taxation, or other subjects. Many of the laws and regulations to which we are subject are still evolving and we expect to become subject to additional laws and regulations in the future.
Regulatory We are subject to a number of U.S. federal, U.S. state and foreign laws and regulations that involve matters central to our business. These laws and regulations may involve privacy, data protection, data security, intellectual property, competition, telecommunications, broadband, VoIP, consumer protection, export controls, economic sanctions, anti-bribery, anti-corruption, anti-money laundering, taxation, or other subjects.
For our other Communications products, offerings include email implementation and deliverability, and configuration and integration of our communications channels.
For Segment, offerings include services for implementing digital engagement center solutions and customer data platform design. For other products, offerings include email implementation and deliverability, and configuration and integration of our communications channels.
We believe AI and ML have the potential to increase the value and reach of our platform capabilities, and make every customer interaction more personalized and intelligent.
We believe AI and ML have the potential to increase the value and reach of our platform capabilities, and make every customer interaction more personalized and intelligent. We are continuing to invest in AI-enabled products and features for our customers, as well as internal applications to automate processes and help our business run more efficiently.
Our sales and solutions teams also support our ISV partners, who leverage our APIs to build software and services that they can resell to their customers across a varying number of use cases and verticals. 8 Table of Contents When potential customers do not have the available developer resources or expertise to build our products into their own applications, we refer them to one of our partners to help deliver their solution.
When potential customers do not have the available developer resources or expertise to build our products into their own applications, we refer them to one of our partners to help deliver their solution.
We also offer professional services which provide in-depth, hands-on, fee-based packages of advisory, software architecture, integration and coding services to existing and prospective customers and partners to optimize their use of the Twilio platform. For Flex and Segment, offerings include services for implementing digital engagement center solutions and customer data platform design.
Similarly, our subscription products generally feature a base level of customer support plus premium, paid support options. Our support model is global, with coverage available 24x7. We also offer professional services which provide in-depth, hands-on, fee-based packages of advisory, software architecture, integration and coding services to existing and prospective customers and partners to optimize their use of the Twilio platform.
We experience seasonal trends due to increased consumer activity in the fourth quarter. Our Strategy Our strategy is rooted in simplifying our offerings to deliver a trusted, intuitive customer and end-consumer experience.
Revenue generated from Messaging, Voice, and User Authentication and Identity is primarily recognized on a usage basis. Revenue generated from Email and Segment is primarily recognized on a subscription basis. We experience seasonal trends due to increased consumer activity in the fourth quarter. Our Strategy Our strategy is rooted in streamlining our platform and delivering a trusted, intuitive customer experience.
We are harnessing Twilio’s foundational strengths in communication channel offerings, global scale, developer loyalty, and contextual data assets to deliver a more holistic, trusted, simple, and smart platform. Our investments in innovation now include vertical products along with the components and characteristics of a horizontal platform, including cross-channel orchestration capabilities.
We are focused on harnessing Twilio’s foundational strengths in communication channel offerings, global scale, developer loyalty, and contextual data assets to deliver a single cohesive platform for frictionless, context-driven interactions through trust at scale, simplified complexity, and smart engagement. Our investments in platform innovation include pre-built solutions and integrations, including cross-channel orchestration capabilities.
We also continue to innovate with predictive and generative AI to help customers increase the value and impact of Segment in customer engagement. We believe we can improve engagement using insights from communications data and consumer insights to offer more proactive and personalized experiences, resulting in more effective marketing, sales, and customer support. • Leveraging AI.
We aim to capitalize on communications data and contextual consumer insights to offer better engagement, with more proactive and personalized experiences, fueling more effective marketing, sales, and customer support. • Enabling and Leveraging AI.
The components of our customer data platform include: • Connections for integrating web and mobile app data with a single API, easily transforming and loading customer data into cloud data warehouses, activating data from the warehouse with Reverse ETL (Extract, Transform, Load), and customizing data pipelines.
Segment offers hundreds of out-of-the-box connections to collect web and mobile app data via a single API, transform and load it into cloud warehouses, and activate it back to business tools with Reverse ETL (Extract, Transform, Load) and customizable pipelines.
We are combining our leading communications capabilities, plus rich contextual data, plus the power of AI. This powerful combination positions us to unlock smarter and more personalized interactions for businesses. We are concentrating on the highest-impact product areas for our future, and we intend to pursue the following strategies: • One Trusted, Simple, and Smart Platform.
We are concentrating on the highest-impact product areas for our future, and we intend to pursue the following strategies: • One Platform to Enable Amazing Customer Engagement.
Businesses use our Email products for both marketing messages and transactional emails, including promotional offers, newsletters, shipping notifications, password resets, and sign-up confirmations. • Flex. Twilio Flex (“Flex”) is a digital engagement center for the entire customer journey—a sales tool for pre-purchase conversations, a cloud-based contact center, and an in-app digital concierge.
Businesses use our Email products for both marketing messages and transactional emails, including promotional offers, newsletters, shipping notifications, password resets, and sign-up confirmations. • User Authentication and Identity. Our User Authentication and Identity solutions enable businesses to verify, authenticate, and manage users.
Our aim for our platform innovation is to help customers reduce friction and streamline how customers add communication channels, enabling more personalized interactions and deeper engagement with their end customers. • Winning in Customer Data. We are focused on Segment’s interoperability across the data ecosystem to support growth in our Segment business.
These are designed to help customers reduce friction and streamline how they add communication channels, to deliver amazing customer engagement. 6 Table of Contents • Winning in Customer Data. The foundation of our platform is the real-time collection of customer interactions across channels, platforms, and systems.
Trust in our platform is a top priority as we continue to innovate, and we prioritize trust through investments in system availability and security. 5 Table of Contents We offer highly customizable APIs and products to build rich contextual communications within applications, allowing developers to build orchestrated engagements with customers worldwide.
We help enable conversations that are two-way and omnichannel by default, providing customers a tailored experience — at scale. We offer highly customizable APIs and products to build rich contextual communications within applications, allowing developers to build orchestrated engagements with customers worldwide.
We are continuing to invest in AI-enabled products and features for our customers, as well as internal applications to automate processes and help our business run more efficiently. 7 Table of Contents • Efficient Go-to-Market Execution. We are focused on improving profitability and growing our market share.
We are also focused on partnering with AI companies, capitalizing on the value of our communications capabilities for building AI solutions. • Efficient Go-to-Market Execution. We are focused on improving profitability and growing our market share.
Research and Development Our research and development efforts are focused on building one holistic trusted, simple, and smart customer engagement platform while enhancing our existing products and developing new products and features. Our research and development organization is predominantly built around small development teams.
Research and Development Our research and development efforts are focused on bringing communications, data, and AI together into a single platform that enables fast, relevant, and personalized interactions. Our research and development organization is predominantly built around small development teams.
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Item 1. Business Overview We envision a world in which every digital interaction between businesses and their customers is amazing.
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Our Platform The Twilio platform combines our communications channels and software solutions with contextual data and AI-powered orchestration, enabling businesses to deliver amazing customer engagement across the entire customer journey. Our platform provides a trusted, simple, and smart infrastructure foundation that customers can build on.
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Our platform, which combines our highly customizable communications APIs with customer data management capabilities and AI-powered predictions and recommendations, allows businesses to break down data silos and build a comprehensive single source for their customer data that is organized into unique profiles that are easily accessible by all their business teams.
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It also provides privacy and compliance tools, unifies cross-channel data into trusted customer profiles for enrichment and machine learning (“ML”), enables real-time personalization and journey orchestration, and uses generative and predictive AI to build targeted audiences and deliver 1:1 experiences at scale. We generate revenue from our platform through a combination of usage-based and subscription-based fees.
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Empowered with this information and the insights it enables, businesses using our platform can provide robust, personalized, and effective communications to their customers at every stage of their customer relationships at scale.
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With the Twilio platform serving as the foundational infrastructure layer that embeds communications, contextual data, and AI in one place, we aim to help businesses engage more effectively with fast, relevant, and personalized interactions.
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We believe that operating as one organization best positions us as we seek to deliver one trusted, smart and integrated platform that enables more personalized communications and engagements for customers. Despite realigning our organizational structure, we continue to have two reportable segments.
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Our sales and specialist teams also support our ISV partners, who leverage our APIs to build software and services that they can resell to their customers across a varying number of use cases and verticals.
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Our Communications reportable segment consists of a variety of APIs and software solutions to optimize communications between our customers and their end users. Our key offerings in our Communications reportable segment include Messaging, Voice, Email (which includes Marketing Campaigns), Flex, and User Authentication and Identity.
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Many of the laws and regulations to which we are subject are still evolving and we expect to become subject to additional laws and regulations in the future. The application and interpretation of these laws and regulations often are uncertain, particularly in the new and rapidly evolving industry in which we operate.
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Our Segment reportable segment consists of software products that enable businesses to leverage their contextual data to create unique customer profiles and achieve more effective customer engagement. Our key offering in our Segment reportable segment is our Segment product.
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Our Platform We aim to deliver the leading customer engagement platform that intelligently orchestrates customer engagement across the entire customer life cycle by combining our communications capabilities with rich contextual data and AI.
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Our trusted, simple, and smart platform provides developers with tools to build, scale, and deploy real-time communications within software applications, while simultaneously offering technology that allows businesses to harness the power of contextual data to develop more informed insights about their customers.
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The data that our platform securely collects, supported by our AI-powered predictions and recommendations, can inform interactions across the customer journey to achieve more personalized, timely, and impactful customer engagement. This in turn empowers businesses to build more productive and personalized one-to-one relationships, at scale, through both easy-to-use APIs and extensible software products.
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Flex is built for the new world of tailored customer experiences and omnichannel communications, allowing businesses to deploy a broad array of personalized, data-driven customer engagement channels while providing the tools to easily create, change or extend any part of their custom solutions.
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With Flex, businesses can rapidly deploy a tailored cloud-based engagement center that addresses their specific needs. • User Authentication and Identity. Our User Authentication and Identity solutions enable registering, onboarding, and recognizing customers.
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Segment Connections supports over 700 data sources and destinations out of the box. • Protocols to protect the integrity of data and user privacy and help businesses comply with various privacy laws, including the General Data Protection Regulation, the California Consumer Privacy Act, and the Health Insurance Portability and Accountability Act. • Unify for combining customer data from across every channel into trusted customer profiles, and syncing those profiles to the cloud data warehouse for enrichment and machine learning (“ML”) modeling. • Engage to deepen customer relationships by personalizing customer interactions on every channel, build dynamic audiences from complete, real-time, profiles and orchestrate cross-channel customer journeys. • AI capabilities to provide 1:1 interactions at scale, including the utilization of generative AI to create targeted audiences and launch personalized customer journeys using simple text prompts, and predictive AI to predict customer behavior, build targeted audiences and deliver more personalized campaigns.
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We generate revenue from our platform through a combination of usage-based and subscription-based fees. Revenue generated from Messaging, Voice, and User Authentication and Identity is primarily recognized on a usage basis. Revenue generated from Email (which includes Marketing Campaigns), Flex, and Segment is primarily recognized on a subscription basis.
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By enhancing the capabilities we already have and building new ones, we plan to offer our customers a more powerful, cohesive platform that continues to set us apart in the market. Our goal is to offer one trusted, simple, and smart platform that enables more personalized, timely, and impactful communications and engagements across the customer journey.
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Similarly, our subscription products generally feature a base level of customer support plus premium, paid support options. Our support model is global, with coverage available 24x7. We currently derive an insignificant amount of revenue from fees for customer support.
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In addition, as of December 31, 2024, we had 54 registered trademarks in the United States and 569 registered trademarks in foreign jurisdictions.
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Our values, which we call the Twilio Magic, remind us every day who we are at our core and guide how we act and how we make decisions. We are Builders . We are Owners . We are Curious . We are Positrons .
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Twilio is an equal opportunity employer, and we are committed to ensuring that Twilio is an inclusive workplace where everyone, regardless of background, is treated fairly and has access to the opportunities, systems, and resources to do their best work.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisk Factor Summary Our business operations are subject to numerous risks and uncertainties, including those outside of our control, that could cause our business, results of operations, and financial condition to be harmed, including risks regarding the following: Risks Related to Our Business and Industry • our ability to increase our customers’ usage of our platform; • our ability to attract new customers effectively and in a cost-efficient manner; • our ability to increase adoption of our products by new customers, including enterprises; • our ability to develop new products and enhancements that achieve market acceptance and adapt to changing technology, regulations, and industry standards; • our ability to integrate our products with third-party products and ensure they operate effectively; • the impact of global economic and political conditions, including macroeconomic and political uncertainties; 11 Table of Contents • fluctuations in our quarterly results and our ability to meet securities analysts’ and investors’ expectations; • our ability to effectively manage our growth and strategic changes to our business; • our ability to compete effectively in intensely competitive markets; • the evolution of the markets for our products; • our history of losses and uncertainty about our future profitability; • our ability to hire, integrate and retain highly skilled personnel; • our ability to maintain and enhance our brand and increase market awareness of our company and products; • disruptions or deterioration in quality of service and connectivity by third-party service providers; • failure to set optimal prices for our products; • our international operations; • our ability to integrate and achieve the expected benefits of acquisitions, partnerships and investments; Risks Related to Cybersecurity, Data Privacy and Intellectual Property • any breaches of or incidents impacting our networks or systems, or those of our third-party service providers; • our actual or perceived failure to comply with increasingly stringent laws, regulations and obligations relating to privacy, data protection and cybersecurity; • our ability to protect our intellectual property rights; • our use of open source software; • our reliance on third-party technology and intellectual property; • our use of AI technologies in our platform and business; Risks Related to Legal and Regulatory Matters • our ability to comply with telecommunications-related regulations, and the impact of future legislative or regulatory actions; • our ability to obtain or retain geographical, mobile, regional, local or toll-free numbers and to effectively process requests to port such numbers in a timely manner due to industry regulations; • federal and state legislation and international laws imposing obligations on the senders of commercial emails; • unwanted, fraudulent or illegal usage of or activity relating to our products; • changes in laws and regulations related to the internet or its infrastructure; • compliance with applicable laws and regulations, including export controls, economic sanctions, customs and anti-corruption regulations; • standards imposed by private entities and inbox service providers that interfere with the effectiveness of our platform; • any legal proceedings or claims against us; Risks Related to Financial and Accounting Matters • exposure to foreign currency exchange rate fluctuations; • our substantial indebtedness that may decrease our business flexibility; • our ability to obtain additional capital to support our business and its availability on acceptable terms; • the accuracy of our metrics, and assumptions and estimates used to calculate them; • the accuracy of our estimates and judgments related to our critical accounting policies; • changes in accounting standards that may cause adverse financial reporting fluctuations; • the possibility that our goodwill or intangible assets could become impaired; • our failure to maintain an effective system of disclosure controls and internal control over financial reporting; Risks Related to Tax Matters • our ability to use our net operating losses and certain other tax attributes to offset future taxable income and taxes; • additional tax liabilities or potentially adverse tax consequences of our global operations and structure; • changes in tax rules and regulations; Risks Related to Ownership of Our Common Stock • volatility of the trading price of our common stock; • potential decline in the market price of our common stock due to substantial future sales of shares; 12 Table of Contents • the possibility that we may not realize the anticipated long-term stockholder value of our share repurchase programs; • securities or industry analysts changing their recommendations regarding our common stock; • anti-takeover provisions contained in our governing documents and the exclusive forum provision in our bylaws; General Risks • the occurrence of natural catastrophic events and other events beyond our control; and • environmental, social and governance (“ESG”) matters.
Biggest changeRisk Factor Summary Our business operations are subject to numerous risks and uncertainties, including those outside of our control, that could cause our business, results of operations, and financial condition to be harmed, including risks regarding the following: Risks Related to Our Business and Industry • the impact of global economic and political conditions, including macroeconomic and political uncertainties; • fluctuations in our quarterly results and our ability to meet securities analysts’ and investors’ expectations; 10 Table of Contents • fluctuations in the levels of our customers’ usage of our platform; • our ability to attract new customers and increase usage of our products by existing customers effectively and in a cost-efficient manner; • our ability to develop new products and enhancements that achieve market acceptance and adapt to changing technology, regulations, and industry standards; • our ability to integrate our products with third-party products and ensure they operate effectively; • our ability to effectively manage our growth and strategic changes to our business; • our ability to compete effectively in intensely competitive and rapidly evolving markets; • our history of losses and uncertainty about our future profitability; • our ability to hire, integrate and retain highly skilled personnel; • our ability to maintain and enhance our brand and increase market awareness of our company and products; • our reliance on network service providers and internet service providers for network service and connectivity; • failure to set optimal prices for our products; • our international operations; • our ability to integrate and achieve the expected benefits of acquisitions, partnerships and investments; Risks Related to Cybersecurity, Data Privacy and Intellectual Property • any breaches of or incidents impacting our networks or systems, or those of our third-party service providers; • our actual or perceived failure to comply with increasingly stringent laws, regulations and obligations relating to privacy, data protection and cybersecurity; • our ability to protect our intellectual property rights; • our use of open source software; • our reliance on third-party technology and intellectual property; • our use of AI technologies in our platform and business; Risks Related to Legal and Regulatory Matters • our ability to comply with telecommunications-related regulations, and the impact of future legislative or regulatory actions; • our ability to obtain, assign or retain geographical, mobile, regional, local or toll-free numbers and to effectively process requests to port such numbers in a timely manner due to industry regulations; • federal and state legislation and international laws imposing obligations on the senders of commercial emails; • unwanted, fraudulent or illegal usage of or activity relating to our products; • changes in laws and regulations related to the internet or its infrastructure; • compliance with applicable laws and regulations, including export controls, economic sanctions, customs and anti-corruption regulations; • standards imposed by private entities and inbox service providers that interfere with the effectiveness of our platform; • any legal proceedings or claims against us; Risks Related to Financial and Accounting Matters • exposure to foreign currency exchange rate fluctuations; • our substantial indebtedness that may decrease our business flexibility; • our ability to obtain additional capital to support our business and its availability on acceptable terms; • the accuracy of our metrics, and assumptions and estimates used to calculate them; • the accuracy of our estimates and judgments related to our critical accounting policies; • changes in accounting standards that may cause adverse financial reporting fluctuations; • the possibility that our goodwill or intangible assets could become impaired; • our failure to maintain an effective system of disclosure controls and internal control over financial reporting; 11 Table of Contents Risks Related to Tax Matters • our ability to use our net operating losses and certain other tax attributes to offset future taxable income and taxes; • additional tax liabilities or potentially adverse tax consequences of our global operations and structure; • changes in tax rules and regulations; Risks Related to Ownership of Our Common Stock • volatility of the trading price of our common stock; • potential decline in the market price of our common stock due to substantial future sales of shares; • the possibility that we may not realize the anticipated long-term stockholder value of our share repurchase program; • securities or industry analysts changing their recommendations regarding our common stock; • anti-takeover provisions contained in our governing documents and the exclusive forum provision in our bylaws; General Risks • the occurrence of natural catastrophic events and other events beyond our control; and • environmental, social and governance (“ESG”) matters.
If our efforts to increase the adoption and usage of our products or sell additional products to existing customers are more expensive or time-consuming than we expect or otherwise ineffective, then our business, results of operations and financial condition would be adversely affected.
If our efforts to increase the adoption and usage of our products or sell additional products to existing customers are more expensive or time-consuming than we expect or are otherwise ineffective, then our business, results of operations and financial condition would be adversely affected.
Our competitors are primarily (i) CPaaS companies that offer communications products and applications, (ii) other software companies that compete with portions of our communications product line, (iii) regional network service providers that offer limited developer functionality on top of their own physical infrastructure, (iv) customer relationship management and customer experience vendors and (v) standalone customer data platform vendors.
Our competitors are primarily (i) CPaaS companies that offer communications products and applications, (ii) regional network service providers that offer limited developer functionality on top of their own physical infrastructure, (iii) customer relationship management and customer experience vendors, (iv) standalone customer data platform vendors and (v) other software companies that compete with portions of our product line.
Although we believe our tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially different than that which is reflected in historical income tax provisions and accruals.
Although we believe our tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially different than that which is reflected in our historical income tax provisions and accruals.
The trading price of our common stock has, and may continue to, fluctuate significantly in response to numerous factors, many of which are beyond our control and may not be related to our operating performance, including: • price and volume fluctuations in the overall stock market from time to time; • volatility in the trading prices and trading volumes of technology stocks; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; 40 Table of Contents • sales of shares of our common stock by our stockholders; • our issuance or repurchase of shares of our common stock; • short selling of our common stock or related derivatives; • changes in financial estimates or the publication of reports or statements by securities analysts or investors who follow our company, or our failure to meet these estimates or the expectations of investors; • the financial projections or targets we may provide to the public, any changes in those projections or targets, or our failure to meet those projections or targets; • announcements by us or our competitors of new products or services or related to acquisitions of businesses, products or technologies; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; • changes in laws, industry standards, regulations or regulatory enforcement in the United States or internationally; • actual or anticipated changes in our results of operations or fluctuations in our results of operations or actual or anticipated changes in our strategy or the organization of our business; • actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • developments or disputes concerning our intellectual property or other proprietary rights; • changes in accounting standards, policies, guidelines, interpretations or principles; • any significant change in our management, including changes in the pace of hiring; and • general political, social, economic and market conditions, in both domestic and foreign markets, and slow or negative growth of our markets.
The trading price of our common stock has, and may continue to, fluctuate significantly in response to numerous factors, many of which are beyond our control and may not be related to our operating performance, including: • price and volume fluctuations in the overall stock market from time to time; • volatility in the trading prices and trading volumes of technology stocks; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; 36 Table of Contents • sales of shares of our common stock by our stockholders; • our issuance or repurchase of shares of our common stock; • short selling of our common stock or related derivatives; • changes in financial estimates or the publication of reports or statements by securities analysts or investors who follow our company, or our failure to meet these estimates or the expectations of investors; • the financial projections or targets we may provide to the public, any changes in those projections or targets, or our failure to meet those projections or targets; • announcements by us or our competitors of new products or services or related to acquisitions of businesses, products or technologies; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; • changes in laws, industry standards, regulations or regulatory enforcement in the United States or internationally; • actual or anticipated changes in our results of operations or fluctuations in our results of operations or actual or anticipated changes in our strategy or the organization of our business; • actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • developments or disputes concerning our intellectual property or other proprietary rights; • changes in accounting standards, policies, guidelines, interpretations or principles; • any significant change in our management, including changes in the pace of hiring; and • general political, social, economic and market conditions, in both domestic and foreign markets, and slow or negative growth of our markets.
For example, our business, financial condition and results of operations may be adversely affected if content or recommendations that AI solutions or features assist in producing are or are alleged to be deficient, inaccurate, or biased, or if such content, recommendations, solutions, or features or their development or deployment (including the collection, use, or other processing of data used to train or create such AI solutions or features) are found to have or alleged to have infringed upon or misappropriated third-party intellectual property rights or violated applicable laws, regulations, or other actual or asserted legal or contractual obligations to which we are or may become subject.
For example, our business, financial condition and results of operations may be adversely affected if content or recommendations that AI solutions or features assist in producing are or are alleged to be deficient, inaccurate, harmful, or biased, or if such content, recommendations, solutions, or features or their development or deployment (including the collection, use, or other processing of data used to train or create such AI solutions or features) are found to have or alleged to have infringed upon or misappropriated third-party intellectual property rights or violated applicable laws, regulations, or other actual or asserted legal or contractual obligations to which we are or may become subject.
Historically, we have not billed or collected taxes in certain jurisdictions and, in accordance with GAAP, we have recorded a provision for our tax exposure in these jurisdictions when it is both probable that a liability has been incurred and the amount of the exposure can be reasonably estimated.
Historically, we have not billed or collected indirect taxes in certain jurisdictions and, in accordance with GAAP, we have recorded a provision for our tax exposure in these jurisdictions when it is both probable that a liability has been incurred and the amount of the exposure can be reasonably estimated.
In addition, the following issues, among others, may need to be addressed in order to realize the anticipated benefits of any acquisitions, partnerships or investments: • combining the acquired businesses’ corporate functions with our corporate functions; • combining acquired businesses with our existing business in a manner that permits us to achieve the synergies anticipated to result from such acquisitions, the failure of which would result in the anticipated benefits of our acquisitions not being realized in the time frame currently anticipated or at all; 22 Table of Contents • maintaining existing agreements with customers, distributors, providers, talent and vendors and avoiding delays in entering into new agreements with prospective customers, distributors, providers, talent and vendors; • determining whether and how to address possible differences in corporate cultures and management philosophies; • integrating the companies’ product, compliance, administrative and IT infrastructure; • developing products and technology that allow value to be unlocked in the future; • incurring significant, nonrecurring costs to integrate our operations with those of acquired businesses, including the costs to maintain employee morale and retain key employees; • evaluating and forecasting the financial impact of such acquisitions, partnerships and investments, including accounting charges; and • effecting potential actions that may be required in connection with obtaining regulatory approvals.
In addition, the following issues, among others, may need to be addressed in order to realize the anticipated benefits of any acquisitions, partnerships or investments: • combining the acquired businesses’ corporate functions with our corporate functions; • combining acquired businesses with our existing business in a manner that permits us to achieve the synergies anticipated to result from such acquisitions, the failure of which would result in the anticipated benefits of our acquisitions not being realized in the time frame currently anticipated or at all; • maintaining existing agreements with customers, distributors, providers, talent and vendors and avoiding delays in entering into new agreements with prospective customers, distributors, providers, talent and vendors; • determining whether and how to address possible differences in corporate cultures and management philosophies; • integrating the companies’ product, compliance, administrative and IT infrastructure; • developing products and technology that allow value to be unlocked in the future; • incurring significant, nonrecurring costs to integrate our operations with those of acquired businesses, including the costs to maintain employee morale and retain key employees; • evaluating and forecasting the financial impact of such acquisitions, partnerships and investments, including accounting charges; and • effecting potential actions that may be required in connection with obtaining regulatory approvals.
In addition, if the third-party technology and intellectual property we use has errors, service outages, security vulnerabilities, or otherwise malfunctions, the functionality of our products and platform may be negatively impacted, our customers may experience outages or reduced service levels, and our business may be adversely affected.
In addition, if the third-party technology and intellectual property we use has errors, service outages, security vulnerabilities, or otherwise malfunctions, our business operations or the functionality of our products and platform may be negatively impacted, our customers may experience outages or reduced service levels, and our business may be adversely affected.
If we are unable to obtain or retain geographical, mobile, regional, local or toll-free numbers, or to effectively process requests to port such numbers in a timely manner due to industry regulations, our business and results of operations may be adversely affected.
If we are unable to obtain, assign or retain geographical, mobile, regional, local or toll-free numbers, or to effectively process requests to port such numbers in a timely manner due to industry regulations, our business and results of operations may be adversely affected.
Under our share repurchase program, we may make repurchases of stock through a variety of methods, including open share market purchases, privately negotiated purchases, entering into one or more confirmations or other contractual arrangements with a financial institution counterparty to 41 Table of Contents effectuate one or more accelerated stock repurchase contracts, forward purchase contracts or similar derivative instruments, Dutch auction tender offers, or through a combination of any of the foregoing, in accordance with applicable federal securities laws.
Under our share repurchase program, we may make repurchases of stock through a variety of methods, including open share market purchases, privately negotiated purchases, entering into one or more confirmations or other contractual arrangements 37 Table of Contents with a financial institution counterparty to effectuate one or more accelerated stock repurchase contracts, forward purchase contracts or similar derivative instruments, Dutch auction tender offers, or through a combination of any of the foregoing, in accordance with applicable federal securities laws.
These and other developments may require us to make significant changes to our use of AI, including by limiting or restricting our use of AI, and which may require us to make significant changes to our policies and practices, which may necessitate expenditure of significant time, expense, and other resources.
These and other developments may require us to make significant changes to our use of AI, including by limiting or restricting our use of AI, require us to make significant changes to our policies and practices, and necessitate expenditure of significant time, expense, and other resources.
There can be no assurances that such acquisitions will result in the anticipated benefits and it is possible that there could be a loss of our key employees and customers, disruption of ongoing businesses or unexpected issues, higher than expected costs, the diversion of management attention and resources from day-to-day business operations and an overall post-completion process that takes longer than originally anticipated.
There can be no assurances that such transactions will result in the anticipated benefits, and it is possible that there could be a loss of our key employees and customers, disruption of ongoing businesses or unexpected issues, higher than expected costs, the diversion of management attention and resources from day-to-day business operations and an overall post-completion process that takes longer than originally anticipated.
Operating in international markets requires significant resources and management attention and subjects us to regulatory, economic and political risks in addition to those we face in the United States. 21 Table of Contents In addition, we face risks in doing business internationally that could adversely affect our business, including: • the difficulty of managing and staffing international operations and the increased operations, travel and infrastructure and other costs associated with servicing international customers and operating numerous international locations, including collecting accounts receivable and having longer payment cycles, higher or more variable network service provider fees and other costs associated with the need to adapt and localize our products and support for foreign countries; • new and different sources of global competition affecting our ability to effectively price our products in competitive international markets; • implementing and reconciling technical controls to address different technical standards, data privacy, data protection and telecommunications regulations, and registration and certification requirements outside the United States, which could prevent customers from deploying our products or limit their usage; • our ability to comply with laws, regulations, customs and industry standards in countries and other regions in which we operate or do business, and the associated costs and management attention required to support such compliance, including with respect to data privacy, data protection, data localization, cybersecurity, intellectual property rights, environmental and sustainability matters, as well as export controls, sanctions, anti-bribery and anti-corruption matters; • international tax and trade policies, tariffs, and other non-tariff barriers; • fluctuations in currency exchange rates, which could increase the price of our products outside of the United States, increase the expenses of our international operations and expose us to foreign currency exchange rate risk; • currency control regulations, which might restrict or prohibit our conversion of other currencies into U.S. dollars; • restrictions on the transfer of funds; and • political or social unrest, economic instability, conflict or war in a specific country or region in which we, our customers, partners or service providers operate, which could have an adverse impact on our operations in the region or otherwise have a material impact on regional or global economies, any or all of which could adversely affect our business.
In addition, we face risks in doing business internationally that could adversely affect our business, including: • the difficulty of managing and staffing international operations and the increased operations, travel and infrastructure and other costs associated with servicing international customers and operating numerous international locations, including collecting accounts receivable and having longer payment cycles, higher or more variable network service provider fees and other costs associated with the need to adapt and localize our products and support for foreign countries; • new and different sources of global competition affecting our ability to effectively price our products in competitive international markets; • implementing and reconciling technical controls to address different technical standards, data privacy, data protection and telecommunications regulations, and registration and certification requirements outside the United States, which could prevent customers from deploying our products or limit their usage; • our ability to comply with laws, regulations, customs and industry standards in countries and other regions in which we operate or do business, and the associated costs and management attention required to support such compliance, including with respect to data privacy, data protection, data localization, cybersecurity, intellectual property rights, environmental and sustainability matters, as well as export controls, sanctions, anti-bribery and anti-corruption matters; • international tax and trade policies, tariffs, and other non-tariff barriers; • fluctuations in currency exchange rates, which could increase the price of our products outside of the United States, increase the expenses of our international operations and expose us to foreign currency exchange rate risk; • currency control regulations, which might restrict or prohibit our conversion of other currencies into U.S. dollars; • restrictions on the transfer of funds; and • political or social unrest, economic instability, conflict or war in a specific country or region in which we, our customers, partners or service providers operate, which could have an adverse impact on our operations in the 20 Table of Contents region or otherwise have a material impact on regional or global economies, any or all of which could adversely affect our business.
For example, certain states prohibit the sending of email messages that advertise products or services that minors are prohibited by law from purchasing or that contain content harmful to minors to email addresses listed on specified child protection registries. Some portions of these state laws may not be preempted by the CAN-SPAM Act.
For example, certain states prohibit the sending of email messages that advertise products or services that minors are prohibited by law from purchasing or that contain content harmful to minors to email addresses listed on specified registries. Some portions of these state laws may not be preempted by the CAN-SPAM Act.
We have incurred substantial indebtedness that may decrease our business flexibility, access to capital, and/or increase our borrowing costs, and we may still incur substantially more debt, which may adversely affect our operations and financial results. As of December 31, 2024, we had $1.0 billion of indebtedness outstanding (excluding intercompany indebtedness).
We have incurred substantial indebtedness that may decrease our business flexibility, access to capital, and/or increase our borrowing costs, and we may still incur substantially more debt, which may adversely affect our operations and financial results. As of December 31, 2025, we had $1.0 billion of indebtedness outstanding (excluding intercompany indebtedness).
Our indebtedness may: • limit our ability to obtain additional financing to fund future working capital, capital expenditures, business opportunities, acquisitions or other general corporate requirements; • require a portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, business opportunities, acquisitions and other general corporate purposes; • expose us to the risk of increased interest rates as certain of our borrowings, including borrowings under a future revolving credit facility, may be at variable rates of interest; and • increase our cost of borrowing.
Our indebtedness may: 32 Table of Contents • limit our ability to obtain additional financing to fund future working capital, capital expenditures, business opportunities, acquisitions or other general corporate requirements; • require a portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, business opportunities, acquisitions and other general corporate purposes; • expose us to the risk of increased interest rates as certain of our borrowings, including borrowings under a future revolving credit facility, may be at variable rates of interest; and • increase our cost of borrowing.
To grow our business, we must continue to attract new customers, increase usage of our existing products and new product adoption by existing customers, and successfully market new products, including products with higher gross margins, in a cost-effective manner. Our sales and marketing teams work closely together to drive awareness and adoption of our platform.
To grow our business, we must continue to attract new customers, increase usage of our existing products and new product adoption by existing customers, and successfully market new products, including products with higher gross margins, and do so in a cost-effective manner. Our sales and marketing teams work closely together to drive awareness and adoption of our platform.
Adverse macroeconomic conditions have resulted in, and may continue to result in, decreased or delayed business spending by our current and prospective customers and business partners, reduced demand for or usage of our products, lower renewal rates by our customers, longer or delayed sales cycles, including current and prospective customers delaying contract signing or contract renewals, reduced budgets or minimum commitments related to the products that we offer, or delays in customer payments or our ability to collect accounts receivable, all of which could negatively affect revenue and revenue growth.
Adverse macroeconomic conditions have in the past resulted in, and may in the future result in, decreased or delayed business spending by our current and prospective customers and business partners, reduced demand for or usage of our products, lower renewal rates by our customers, longer or delayed sales cycles, including current and prospective customers delaying contract signing or contract renewals, reduced budgets or minimum commitments related to the products that we offer, or delays in customer payments or our ability to collect accounts receivable, all of which could negatively affect revenue and revenue growth.
Although we maintain incident management and disaster response plans, in the event of a major disruption caused by a natural disaster or man-made problem, we may be unable to continue our operations and may endure system interruptions and outages, reputational harm, delays in our development activities, lengthy interruptions in service, security breaches and incidents and loss or unavailability of critical data, any of which could adversely affect our business, results of operations and financial condition.
Although we maintain incident management and disaster response plans, in the event of a major disruption caused by a natural disaster or man-made problem, we may be unable to continue our operations and may endure system interruptions and outages, reputational harm, delays in our development 39 Table of Contents activities, lengthy interruptions in service, security breaches and incidents and loss or unavailability of critical data, any of which could adversely affect our business, results of operations and financial condition.
This has resulted in civil claims against our company and requests for information through third-party subpoenas. The scope and interpretation of the laws that are or may be applicable to the delivery of text messages or voice calls are continuously evolving and developing.
This has resulted in civil claims against our company and requests for information through third-party subpoenas. The scope and interpretation of the laws that are or may be applicable to the delivery of text messages, voice calls, or e-mail are continuously evolving and developing.
In addition to the other risks described in this “Risk Factors” section, some of the factors that may result in fluctuations to our results of operations include: • fluctuations in demand for, pricing of, or usage of, our products; • our ability to introduce new products, features and enhancements; • our ability to attract and retain new customers, obtain renewals from existing customers and cross-sell or otherwise increase revenue from existing customers; • our ability to improve, automate, and leverage more of our self-service capabilities for customers; • our ability to maintain and expand relationships with resellers, distributors, and strategic partners, including independent software vendors, technology partners, and systems integrators; 16 Table of Contents • our ability to expand our customer base and the markets that our products address; • our ability to combine our communications products with contextual data and AI and introduce compelling new products and enhancements that address the changing nature of our markets and customer needs and preferences; • competition and the actions of our competitors, including pricing changes and the introduction of new technologies, products, services and geographies; • significant security breaches or incidents impacting our platform, or interruptions to the delivery and use of our products; • changes in cloud infrastructure, network services and other third-party technology, including the fees charged by their providers; • the effectiveness of our sales and marketing efforts and the productivity of our sales force; • the length and complexity of the sales cycle for certain of our products or customers; • changes in the mix of products that our customers use during a particular period; • seasonal trends in consumer activity; • changes in the mix or amount of products sold in the United States versus internationally; • the amount and timing of operating costs and capital expenditures related to the operations and expansion of our business; • our ability to control costs, including our operating expenses; • the timing of customer payments and our ability to collect accounts receivable from customers; • the amount and timing of costs associated with recruiting, training and integrating new employees, and retaining existing employees; • expenses in connection with mergers, acquisitions, dispositions, or other strategic transactions; • changes in foreign currency exchange rates and our ability to effectively hedge our foreign currency exposure; • extraordinary expenses such as litigation or other dispute-related settlement payments; • changes in laws, industry standards and regulations that affect our business; • sales tax and other tax determinations by authorities in the jurisdictions in which we conduct business; • the impact of new accounting pronouncements; • fluctuations in stock-based compensation expenses; and • general economic conditions, including heightened inflation or interest rates, and geopolitical uncertainty or instability.
In addition to the 12 Table of Contents other risks described in this “Risk Factors” section, some of the factors that may result in fluctuations to our results of operations include: • fluctuations in demand for, pricing of, or usage of, our products; • our ability to introduce new products, features and enhancements; • our ability to expand our customer base and the markets that our products address, attract and retain new customers, obtain renewals from existing customers and cross-sell or otherwise increase revenue from existing customers; • our ability to improve, automate, and leverage more of our self-service capabilities for customers; • our ability to maintain and expand relationships with resellers, distributors, and strategic partners, including ISVs, technology partners, and systems integrators; • our ability to combine our communications products with contextual data and AI and introduce compelling new products and enhancements that address the changing nature of our markets and customer needs and preferences; • competition and the actions of our competitors, including pricing changes and the introduction of new technologies, products, services and geographies; • significant security breaches or incidents impacting our platform, or interruptions to the delivery and use of our products; • changes in cloud infrastructure, network services and other third-party technology, including the fees charged by their providers; • the effectiveness of our sales and marketing efforts, the productivity of our sales force, and the length and complexity of the sales cycle for certain of our products or customers; • changes in the mix or amount of products that our customers use, and that are sold in the United States versus internationally, during a particular period; • seasonal trends, including due to increased consumer activity in the fourth quarter; • the amount and timing of operating costs and capital expenditures related to the operations and expansion of our business; • our ability to control costs, including our operating expenses; • the timing of customer payments and our ability to collect accounts receivable from customers; • the amount and timing of costs associated with recruiting, training and integrating new employees, and retaining existing employees; • expenses in connection with mergers, acquisitions, dispositions, or other strategic transactions; • changes in foreign currency exchange rates and our ability to effectively hedge our foreign currency exposure; • extraordinary expenses such as litigation or other dispute-related settlement payments; • changes in laws, industry standards and regulations that affect our business; • sales tax and other tax determinations by authorities in the jurisdictions in which we conduct business; • the impact of new accounting pronouncements; • fluctuations in stock-based compensation expenses; and 13 Table of Contents • general economic conditions, including heightened inflation or interest rates, and geopolitical uncertainty or instability.
Any of the above circumstances or events may harm our reputation, erode customer trust, cause customers to stop using or 28 Table of Contents reduce their usage of our products, discourage customers from renewing their contracts, impair our ability to increase revenue from existing customers, impair our ability to grow our customer base, subject us to financial penalties and liabilities under our service level agreements and otherwise harm our business, results of operations and financial condition.
Any of the above circumstances or events may harm our reputation, erode customer trust, cause customers to stop using or reduce their usage of our products, discourage customers from renewing their contracts, impair our ability to increase revenue from existing customers, impair our ability to grow our customer base, subject us to financial penalties and liabilities under our service level agreements and otherwise harm our business, results of operations and financial condition.
Issues with our products have had, and in the future may have, an adverse impact on customer satisfaction and our ability to retain or attract customers and have caused, and may in the future cause, us to incur certain costs associated with offering credits to our affected customers.
Such issues have had, and in the future may have, an adverse impact on customer satisfaction and our ability to retain or attract customers and have caused, and may in the future cause, us to incur certain costs associated with offering credits to our affected customers.
In addition, if our security, or that of AWS, is compromised, if our products, platform or customer data become unavailable, or if our users are unable to use our products within a reasonable amount of time or at all, any one of which may be due to circumstances beyond our control, then our business, results of operations and financial condition could be adversely affected.
In addition, if our security, 25 Table of Contents or that of AWS, is compromised, if our products, platform or customer data become unavailable, or if our users are unable to use our products within a reasonable amount of time or at all, any one of which may be due to circumstances beyond our control, then our business, results of operations and financial condition could be adversely affected.
Without federal net neutrality rules, we cannot predict whether internet access service providers may be able to limit our users’ ability to access our platform or make our platform a less attractive alternative to our competitors’ applications. Moreover, several states such as California have enacted or are considering state-level legislation or executive action that would implement certain net neutrality protections.
Without federal net neutrality rules, we cannot predict whether internet access service providers may be able to limit our users’ ability to access our platform or make our platform a less attractive alternative to our competitors’ applications. Moreover, several states have enacted or are considering state-level legislation or executive action that would implement certain net neutrality protections.
State broadband regulations have been upheld by courts in certain jurisdictions, creating the potential for a patchwork of disparate regulatory regimes. In a related regulatory context, while the EU requires equal access to internet content, under its Digital Single Market initiative the EU may impose additional requirements that could increase our costs.
State broadband regulations have been upheld by courts in certain jurisdictions, creating the potential for a patchwork of disparate regulatory regimes and operational challenges. In a related regulatory context, while the EU requires equal access to internet content, under its Digital Single Market initiative the EU may impose additional requirements that could increase our costs.
In addition, some customers may question the incremental tax charges and seek to negotiate lower pricing from us, which could adversely affect our business, results of operations and financial condition. We are in discussions with certain jurisdictions regarding potential sales and other indirect taxes for prior periods that we may owe.
In addition, some customers may question the incremental tax charges and seek to negotiate lower pricing from us, which could adversely affect our business, results of operations and financial condition. 35 Table of Contents We are in discussions with certain jurisdictions regarding potential sales and other indirect taxes for prior periods that we may owe.
Additionally, our products may be subject to fraudulent usage, including but not limited to revenue share fraud, domestic traffic pumping, subscription fraud, premium text message scams and other fraudulent schemes, such as phishing.
Similarly, our products may be subject to fraudulent usage, including but not limited to revenue share fraud, domestic traffic pumping, subscription fraud, premium text message scams and other fraudulent schemes, such as phishing.
We may not realize the anticipated long-term stockholder value of our share repurchase programs, and any failure to repurchase our common stock after we have announced our intention to do so may negatively impact our stock price.
We may not realize the anticipated long-term stockholder value of our share repurchase program, and any failure to repurchase our common stock after we have announced our intention to do so may negatively impact our stock price.
The implementation of new or more restrictive policies by inbox service providers may make it more difficult to deliver our customers’ emails, particularly if we are not given adequate notice of a change in policy or struggle to update our platform or services to comply with the changed policy in a reasonable amount of time.
The 31 Table of Contents implementation of new or more restrictive policies by inbox service providers may make it more difficult to deliver our customers’ emails, particularly if we are not given adequate notice of a change in policy or struggle to update our platform or services to comply with the changed policy in a reasonable amount of time.
We rely on a combination of patents, copyrights, trademarks, service 26 Table of Contents marks, trade secret laws and other intellectual property laws, contractual provisions, and internal processes, procedures, and controls in an effort to establish, maintain, enforce, and protect our intellectual property and proprietary rights. However, the steps we take to protect our intellectual property may be inadequate.
We rely on a combination of patents, copyrights, trademarks, service marks, trade secret laws and other intellectual property laws, contractual provisions, and internal processes, procedures, and controls in an effort to establish, maintain, enforce, and protect our intellectual property and proprietary rights. However, the steps we take to protect our intellectual property may be inadequate.
If we fail to comply with these laws, we and certain of our employees could be subject to substantial civil or criminal penalties, including: the possible loss of export privileges; fines, which may be imposed on us and responsible employees or managers; criminal liability, which may be imposed on us and responsible employees or managers; and, in extreme cases, the incarceration of responsible employees or managers.
If we fail to comply with these laws, we and certain of our employees could be subject to substantial civil or criminal penalties, including: the possible loss of export privileges; fines, 30 Table of Contents which may be imposed on us and responsible employees or managers; criminal liability, which may be imposed on us and responsible employees or managers; and, in extreme cases, the incarceration of responsible employees or managers.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources.
The 19 Table of Contents replacement of any of our senior management or other key employees will involve significant time and costs, and any loss of services of any such key employee for any reason could significantly delay or prevent the achievement of our business objectives and our financial and operational targets, and could adversely affect our business, results of operations and financial condition.
The replacement of any of our senior management or other key employees will involve significant time and costs, and any loss of services of any such key employee for any reason could significantly delay or prevent the achievement of our business objectives and our financial and operational targets, and could adversely affect our business, results of operations and financial condition.
In the years ended December 31, 2024, 2023 and 2022, we derived 35%, 34% and 34% of our revenue from customer accounts located outside the United States, respectively. The future success of our business will depend, in part, on our ability to strategically maintain and expand our customer base worldwide.
In the years ended December 31, 2025, 2024 and 2023, we derived 36%, 35% and 34% of our revenue from customer accounts located outside the United States, respectively. The future success of our business will depend, in part, on our ability to strategically maintain and expand our customer base worldwide.
This development effort may require significant resources, which would adversely affect our business, results of operations and financial condition. Any failure of our products and platform to operate effectively with 15 Table of Contents evolving or new platforms and technologies could reduce the demand for our products.
This development effort may require significant resources, which would adversely affect our business, results of operations and financial condition. Any failure of our products and platform to operate effectively with evolving or new platforms and technologies could reduce the demand for our products.
These obligations may not effectively prevent unauthorized disclosure or use of our confidential information, and it may be possible for unauthorized parties to copy or access our software or other proprietary technology or information, or to develop similar products independently without us having an adequate remedy for unauthorized use or disclosure of our confidential information.
These 24 Table of Contents obligations may not effectively prevent unauthorized disclosure or use of our confidential information, and it may be possible for unauthorized parties to copy or access our software or other proprietary technology or information, or to develop similar products independently without us having an adequate remedy for unauthorized use or disclosure of our confidential information.
Few of the licenses applicable to open source software have been interpreted by courts, and there is a risk that these licenses could be construed in a manner that could impose unanticipated 27 Table of Contents conditions or restrictions on our ability to commercialize our products and platform.
Few of the licenses applicable to open source software have been interpreted by courts, and there is a risk that these licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our products and platform.
The Federal Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (the “CAN-SPAM Act”) establishes certain requirements for commercial email messages and transactional email messages and specifies penalties for the transmission of email messages that are intended to deceive the recipient as to source or content.
The Federal Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (the “CAN-SPAM Act”) establishes certain requirements for commercial email messages and transactional email messages and specifies penalties for the 28 Table of Contents transmission of email messages that are intended to deceive the recipient as to source or content.
Our customers’ and other users’ promotion of their products and services through our platform might not comply with federal, state, and foreign laws or of contractual requirements imposed by carriers, such as the CTIA Shortcode Agreement, The Campaign Registry, and similar policies.
Our customers’ and other users’ promotion of their products and services through our platform might not comply with federal, state, and foreign laws or of contractual requirements imposed by carriers, such as the CTIA Shortcode Agreement, The Campaign Registry, carrier codes of conduct and similar policies.
Natural disasters, public health epidemics or pandemics, such as the COVID-19 pandemic, and geopolitical events could cause disruptions in our or our customers’ businesses, national economies or the world economy as a whole. 43 Table of Contents We also rely on our network and third-party infrastructure and enterprise applications and internal technology systems for our engineering, sales and marketing, and operations activities.
Natural disasters, public health epidemics or pandemics, such as the COVID-19 pandemic, and geopolitical events could cause disruptions in our or our customers’ businesses, national economies or the world economy as a whole. We also rely on our network and third-party infrastructure and enterprise applications and internal technology systems for our engineering, sales and marketing, and operations activities.
Risks Related to Our Business and Our Industry If our customers terminate or reduce their usage of our products, our business, results of operations and financial condition would be adversely affected. Our revenue grows as customers increase their usage of a product, extend their usage of a product to new applications or adopt a new product that we offer.
If our customers terminate or reduce their usage of our products, our business, results of operations and financial condition would be adversely affected. Our revenue grows as customers increase their usage of a product, extend their usage of a product to new applications or adopt a new product that we offer.
If we raise additional funds through future issuances of 36 Table of Contents equity or convertible debt securities, our stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.
If we raise additional funds through future issuances of equity or convertible debt securities, our stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.
We cannot be certain that our efforts to defeat spamming attacks will be successful in eliminating all spam messages from being sent using our platform.
We cannot be certain that our efforts to defeat spamming attacks will be successful in eliminating all spam communications from being sent using our platform.
We take precautions to prevent our products from being imported or exported and our services from being provided in violation of these laws; however, we are aware of certain of our products and services being provided to a small number of individuals and entities that are the subject of, or are located in countries or regions subject to, sanctions regulations administered by U.S. and foreign governmental authorities.
We take precautions to prevent our products from being imported or exported and our services from being provided in violation of these laws; however, we are aware of certain of our products and services being provided to, procured from, or that involve dealings with, a small number of individuals and entities that are the subject of, or are located in countries or regions subject to, sanctions regulations administered by U.S. and foreign governmental authorities.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.
A material weakness is a deficiency, or combination of deficiencies, in internal control 34 Table of Contents over financial reporting, such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.
If we are unable to generate and sustain increased revenue levels and manage our operating expenses, we may not become profitable and achieve our stated profitability goals and, even if we do, we may not be able to maintain or increase our level of profitability.
If we are unable to generate and sustain increased revenue levels and manage our operating expenses, we may not achieve and sustain profitability and, even if we do, we may not be able to increase our level of profitability or achieve our stated profitability goals.
We have also been forced to reclaim Numbering Resources from our customers as a result of certain events of non-compliance.
We have also been required to reclaim Numbering Resources from our customers as a result of certain events of non-compliance.
The actual or perceived improper sending of text messages or voice calls may subject us to potential risks, including liabilities or claims relating to consumer protection laws and regulatory enforcement, including fines. For example, the TCPA restricts telemarketing and the use of automatic SMS text messages without prior express consent.
The actual or perceived improper sending of text messages, voice calls, or e-mail may subject us to potential risks, including liabilities or claims relating to consumer protection laws and regulatory enforcement, including fines. For example, the TCPA restricts telemarketing and the use of text messages without prior express consent.
We rely on contractual representations made to us by our customers that their use of our platform will comply with our policies and applicable law, including, without limitation, our email and messaging policies.
We rely on contractual representations made to us by our customers that their use of our platform will comply with our policies and applicable law, including, without limitation, our 29 Table of Contents email and messaging policies.
These fluctuations and the related impacts to any earnings guidance we may issue from time to time could cause the price of our common stock to change significantly or experience declines.
These fluctuations and the related impacts to any earnings guidance we may issue from time to time could cause the price of our common stock to change significantly or decline.
We have deployed, and continue to develop and incorporate, AI solutions and features into our platform and our business, and these solutions and features may become more important to our operations or to our future growth over time.
We have deployed, and continue to develop and incorporate, AI solutions and features in our platform and our business, and these solutions and features may become more important to our operations, future growth or competitiveness over time.
As a result of such foreign currency exchange rate fluctuations, it could be more difficult to detect underlying trends in our business and results of 35 Table of Contents operations.
As a result of such foreign currency exchange rate fluctuations, it could be more difficult to detect underlying trends in our business and results of operations.
Global economic and political conditions, including macroeconomic and political uncertainties, have had, and may continue to have, an adverse impact on our business, results of operations and financial condition.
Risks Related to Our Business and Our Industry Global economic and political conditions, including macroeconomic and political uncertainties, have had, and may continue to have, an adverse impact on our business, results of operations and financial condition.
Although our customers are required to set passwords or personal identification numbers to protect their accounts, third parties have in the past been, and may in the future be, able to access and use their accounts through fraudulent means. Furthermore, spammers attempt to use our products to send targeted and untargeted spam messages.
Although our customers are required to set passwords or personal identification numbers to protect their accounts, third parties have in the past been, and may in the future be, able to access customers’ accounts through fraudulent means and use the accounts for fraudulent activity. Furthermore, spammers attempt to use our products to send targeted and untargeted spam communications.
The principal competitive factors these markets include completeness of offering, credibility with customers, ability to differentiate our products against competing offerings, global reach, ease of integration and programmability, product features, platform scalability, reliability, deliverability, security and performance, brand awareness and reputation, the strength of sales and marketing efforts, customer support, and the cost of deploying and using products.
The principal competitive factors of these markets include completeness of offering, credibility with customers, ability to differentiate our products against competing offerings, global reach, ease of integration and programmability, product features, platform scalability, reliability, deliverability, security and performance, brand awareness and reputation, the strength of sales and marketing efforts, customer support, and the cost of deploying and using products, as well as our customers’ perception of the value and necessity of our products and platform.
The current legislative and regulatory landscape regarding the regulation of the internet is subject to uncertainty. For example, in January 2025, the U.S. Court of Appeals for the Sixth Circuit struck down the FCC’s net neutrality rules, and it is unlikely that similar federal rules will be adopted beyond those intended to preempt state regulation.
The current legislative and regulatory landscape regarding the regulation of the internet is subject to uncertainty. For example, in January 2025, the U.S. Court of Appeals for the Sixth Circuit struck down the FCC’s net neutrality rules, and it is unlikely that similar federal rules will be adopted.
For example, California recently enacted legislation that limits the use of state NOLs for taxable years beginning on or after January 1, 2024 and before January 1, 2027.
For example, California legislation limits the use of state NOLs for taxable years beginning on or after January 1, 2024 and before January 1, 2027.
The numbers that we use to calculate our metrics are based on internal data and may be compiled from multiple systems, including systems that are organically developed or acquired through business combinations.
The numbers that we use to 33 Table of Contents calculate our metrics are based on internal data and may be compiled from multiple systems, including systems that are organically developed or acquired through business combinations.
Due to our or our customers’ assignment and/or use of Numbering Resources in certain countries in a manner that may violate applicable rules and regulations, we have been subjected to government inquiries and audits, and may in the future be subject to significant penalties or further governmental action, and in extreme cases, may be precluded from doing business in that particular country.
In some countries where our or our customers’ assignment and/or use of Numbering Resources in certain ways may violate applicable rules and regulations, we have been subjected to government inquiries and audits, and may in the future be subject to significant penalties or further governmental action, and in extreme cases, may be precluded from doing business in that particular country.
We reserved $41.4 million on our December 31, 2024 balance sheet for these tax payments. These estimates include several key assumptions, including, but not limited to, the taxability of our products, the jurisdictions in which we believe we have nexus or a permanent establishment, and the sourcing of revenues to those jurisdictions.
We reserved $42.8 million on our December 31, 2025 balance sheet for these tax payments. These estimates include several key assumptions, including, but not limited to, the taxability of our products, the jurisdictions in which we believe we have nexus or a permanent establishment, and the sourcing of revenues to those jurisdictions.
In addition, we support customer workloads that involve the processing of protected health information and are required to sign business associate agreements with customers that subject us to requirements under the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, as well as state laws that govern health information.
In addition, we support customer workloads involving the processing of protected health information and are required to sign business associate agreements with customers that subject us to certain requirements under federal and state laws governing health information, such as the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009.
Our customers’ and other users’ violation of our policies or other misuse of our platform to transmit unwanted, offensive or illegal messages, spam, phishing scams, links to harmful applications or for other fraudulent or illegal activity could damage our reputation, and we may face a risk of regulatory penalties, litigation and liability for illegal activities on our platform and unauthorized, inaccurate, or fraudulent information distributed via our platform.
Our customers’ and others’ violation of our policies or other misuse of our platform to transmit unwanted, offensive or illegal communications, spam, social engineering scams, links to harmful applications or for other fraudulent or illegal activity could damage our reputation, and we may face a risk of regulatory penalties, litigation and liability for illegal activities on our platform and unauthorized, inaccurate, or fraudulent information distributed via our platform.
In addition, in recent years, we have reduced the size of our sales force to drive further efficiencies in our sales operations. With a more streamlined workforce, we are continuing to improve and rely more heavily on our use of self-service capabilities to drive sales of our products to customers that do not require direct account coverage.
For example, in recent years, we have reduced the size of our sales force to drive further efficiencies in our sales operations and are continuing to improve and rely more heavily on our use of self-service capabilities to drive sales of our products to customers that do not require direct account coverage.
Among other things, our certificate of incorporation and bylaws include provisions: • authorizing “blank check” preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock; • limiting the liability of, and providing indemnification to, our directors and officers; • limiting the ability of our stockholders to call and bring business before special meetings; • providing that our board of directors is classified into three classes of directors with staggered three-year terms; • prohibiting stockholder action by written consent, instead requiring all stockholder actions to be taken at a meeting of our stockholders; • requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors; • controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings; and • providing for advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a meeting of stockholders, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us. 42 Table of Contents These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.
Among other things, our certificate of incorporation and bylaws include provisions: • authorizing “blank check” preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock; • limiting the liability of, and providing indemnification to, our directors and officers; • limiting the ability of our stockholders to call and bring business before special meetings; • prohibiting stockholder action by written consent, instead requiring all stockholder actions to be taken at a meeting of our stockholders; • requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors; • controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings; and • providing for advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a meeting of stockholders, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
We leverage our brand, marketing programs, developer network and conferences, such as SIGNAL, to expand our go- 13 Table of Contents to-market motions.
We leverage our brand, marketing programs and conferences, such as SIGNAL, to expand our go-to-market 14 Table of Contents motions.
Additionally, we are introducing AI and automation in our self-service platform aimed at improving sales and customer support. Our self-service capabilities may not be as effective as we anticipate in driving adoption or increased usage of our products, or may take longer than we expect to drive growth.
We are also introducing AI and automation in our self-service platform aimed at improving sales and customer support. These efforts may not continue to be as effective as we anticipate in driving adoption or increased usage of our products, or may take longer than we expect to drive growth or increase efficiency.
Our effective tax rates may fluctuate significantly on a quarterly basis because of a variety of factors, including changes in the mix of earnings and losses in countries with differing statutory tax rates, changes in our business or structure, changes in tax laws that could adversely impact our income or non-income taxes or the expiration of or disputes about certain tax agreements in a particular country.
Our effective tax rates may fluctuate significantly on a quarterly basis because of a variety of factors, including changes in the mix of earnings and losses in countries with differing statutory tax rates, changes in our business or structure, or the expiration of or disputes about certain tax agreements in a particular country.
We may also fail to properly implement or market our AI solutions and features. Our competitors or other third parties may incorporate AI into their products, offerings, and solutions more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.
Our competitors or other third parties may incorporate AI into their products, offerings, and solutions more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.
As a result, our gross margin has been, and may continue to be, adversely impacted by our international operations. Our failure to manage any of these risks successfully could harm our international operations, and adversely affect our business, results of operations and financial condition.
As a result, our gross margin has been, and may continue to be, adversely impacted by our international operations. If we, or our international business partners, fail to manage any of these risks successfully, it could harm our international operations and adversely affect our business, results of operations and financial condition.
As of December 31, 2024, we had U.S. federal, state and foreign net operating loss carryforwards (“NOLs”), of $2.8 billion, $2.4 billion and $0.8 billion, respectively.
As of December 31, 2025, we had U.S. federal, state and foreign net operating loss carryforwards (“NOLs”), of $2.9 billion, $2.4 billion and $1.0 billion, respectively.
Utilization of these NOL carryforwards depends on our future taxable income, and there is risk that a portion of our existing NOLs could expire unused, and that even if we achieve profitability, the use of our unexpired NOLs would be subject to limitations, which could materially and adversely affect our operating results.
Utilization of these NOLs depends on our future taxable income, and there is risk that a portion of our existing NOLs could expire unused and the use of our unexpired NOLs could be subject to limitations, which could materially and adversely affect our operating results.
Our ability to obtain allocations of, assign and retain Numbering Resources depends on factors outside of our control, such as applicable regulations, the practices of authorities that administer national numbering plans or of network service providers from whom we can provision Numbering Resources, such as offering these Numbering Resources with conditional minimum volume call level requirements, the cost of these Numbering Resources and the level of overall competitive demand for new Numbering Resources.
Our ability to obtain allocations of, assign and retain Numbering Resources depends on factors outside of our control, such as applicable regulations, the practices of authorities that administer national numbering plans and the requirements of network service providers from whom we can provision Numbering Resources, such as conditional minimum volume call level requirements, as well as related costs and competitive demand.
For example, last year we launched a new channel using Rich Communication Services (“RCS”) and we are working on a channel for Apple Messages for Business. We are also focused on Segment’s interoperability across the data ecosystem.
For example, we recently launched a new channel using Rich Communication Services (“RCS”) and we are working on a channel for Apple Messages for Business. We are also focused on the interoperability of our products across the data ecosystem.
If we fail to meet or exceed the expectations of investors or securities analysts, then the trading price of our common stock could fall substantially, and we could face costly lawsuits, including securities class action suits, which, in turn, could harm our business, results of operations and financial condition. 17 Table of Contents If we fail to effectively manage our growth and strategic changes to our business, then our business, results of operations and financial condition could be adversely affected.
If we fail to meet or exceed the expectations of investors or securities analysts, then the trading price of our common stock could fall substantially, and we could face costly lawsuits, including securities class action suits, which, in turn, could harm our business, results of operations and financial condition.
Our current and potential competitors have in the past and may in the future develop and market products and services with comparable functionality to our products, and this could lead us to decrease prices in order to remain competitive. With the introduction of new products and services and new market entrants, we expect competition to intensify in the future.
Our current and potential competitors have in the past and may in the future develop and market products and services with comparable functionality to our products, and this could lead us to decrease prices in order to remain competitive.
Furthermore, these regulations and governments’ approach to their enforcement, as well as our products and services, are still evolving and we may be unable to maintain compliance with applicable regulations, or enforce compliance by our customers, on a timely basis or without significant cost.
These regulations and governments’ approach to their enforcement, as well as our products and services, are evolving and we may be unable to maintain compliance with applicable regulations, or enforce compliance by our customers, on a timely basis or without significant cost or changes in products or business practices that result in reduced revenue.
Further, if problems occur with our network service providers, such problems have in the past caused, and may in the future cause, errors, service outages, security incidents, or poor-quality communications on our products, and we could encounter difficulty identifying the source of the problem.
Reliance on such providers in the past has caused, and may in the future cause, errors, service outages, security incidents, or poor-quality communications on our products, and we could encounter difficulty identifying the source of the problem.
There is an increasing focus on ESG matters from governmental authorities, investors, customers and other stakeholders, whose expectations are evolving and may be contradictory.
There has been a focus on ESG matters from governmental authorities, investors, customers and other stakeholders, whose expectations are evolving and may be contradictory.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAs discussed in more detail under the heading “Governance” below, our board of directors’ oversight of cybersecurity risk is supported by our audit committee, which regularly interacts with our ERM function, our Chief Digital Officer (“CDO”), our Chief Information Security Officer (“CISO”), other members of management, and relevant committees and working groups, including management’s Enterprise Risk Committee (“ERC”), Cyber Incident Task Force (“CITF”), and Security Incident Response Team (“SIRT”), in its oversight of cybersecurity-related risk. • Risk Assessment.
Biggest changeAs discussed in more detail under the heading “Governance” below, our board of directors oversees cybersecurity risk through regular interactions with our Chief Information Security Officer (“CISO”) and other members of management. In addition, our board of directors, supported by our audit committee, oversees the risk management systems and processes into which cybersecurity risk is integrated. • Risk Assessment.
We require that third-party service providers have the ability to implement and maintain reasonable and appropriate security measures, consistent with applicable laws, in connection with their work with us, and to promptly report any actual or suspected breach of their security measures that may affect our company. • Security Awareness and Training.
We also require that third-party service providers have the ability to implement and maintain reasonable and appropriate security measures, consistent with applicable laws, in connection with their work with us, and to promptly report any actual or suspected breach of their security measures that may affect our company. • Security Awareness and Training.
If one of the roles described in this Item 1C is vacant, another senior member of the applicable functional team is selected to serve on our ERC, CITF, or any other applicable committees or task forces on an interim basis, as needed.
If one of the roles described in this Item 1C is vacant, another senior member of the applicable functional team is selected to serve on our CITF or any other applicable committees or task forces on an interim basis, as needed.
Risk Management and Strategy We have policies, standards, processes and practices for assessing, identifying, and managing material risk from cybersecurity threats that are integrated into our ERM systems and processes .
Risk Management and Strategy We have policies, standards, processes and practices for assessing, identifying, and managing risk from cybersecurity threats that are integrated into our risk management systems and processes .
We conduct security assessments both internally and with the assistance of third parties to identify cybersecurity threats periodically and to 44 Table of Contents identify any potentially material changes in our business practices that may affect information systems that are vulnerable to such cybersecurity threats.
We conduct security assessments both internally and with the assistance of third parties to identify cybersecurity threats periodically and to identify any potentially material changes in our business practices that may affect information systems that are vulnerable to such cybersecurity threats.
In addition, our CITF (which includes our CDO, our CISO, our CLO, and our Chief Financial Officer (“CFO”)) is primarily responsible for evaluating cybersecurity incidents, gathering and assessing facts relevant to applicable regulatory reporting and disclosure obligations, making recommendations to our Chief Executive Officer and CFO regarding such disclosure, and advising our board of directors and audit committee on the effectiveness of policies and procedures related to the disclosure of cybersecurity incidents.
In addition, our CITF (which includes our CISO and our Chief Financial Officer (“CFO”)) is primarily responsible for evaluating cybersecurity incidents, gathering and assessing facts relevant to applicable regulatory reporting and disclosure obligations, making 41 Table of Contents recommendations to our Chief Executive Officer and CFO regarding such disclosure, and advising our board of directors and audit committee on the effectiveness of policies and procedures related to the disclosure of cybersecurity incidents.
Our audit committee receives regular presentations and reports on cybersecurity risks, which address a wide range of topics including recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the threat environment, technological trends and information security considerations arising with respect to our peers and third parties, and risks relating to cybersecurity incidents.
Management’s presentations on cybersecurity risks address a wide range of topics including recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the threat environment, technological trends and information security considerations arising with respect to our peers and third parties, and risks relating to cybersecurity incidents.
We make investments in core security capabilities, including awareness and training, identity and access, incident response, product security, cloud security, enterprise security, risk management, and supply chain risk, in order to enable us to better identify, protect, detect, respond to, and recover from evolving security threats.
We make investments in core security capabilities, including awareness and training, identity and access, incident response, product security, cloud security, enterprise security, and risk management, in order to 40 Table of Contents enable us to better identify, protect, detect, respond to, and recover from evolving security threats.
To assist with such assessment and testing, we engage assessors, consultants, auditors, and other third parties to perform assessments on our cybersecurity measures, including for third-party testing and certifications (as described above under “Technical Safeguards”), information security maturity assessments, customer audits, and independent reviews of our information security control environment and operating effectiveness.
To assist with these exercises, we engage assessors, consultants, auditors, and other third parties, including for third-party testing and certifications (as described above under “Technical Safeguards”), information security maturity assessments, customer audits, and independent reviews of our information security control environment and operating effectiveness.
Our CDO holds an undergraduate degree in electronics engineering and a graduate degree in business administration and management. Our CISO has over 18 years of experience managing cybersecurity risks in the technology industry, including serving as the acting chief security officer at a public company and holding other senior cybersecurity leadership and operational roles at other companies.
In particular, our CISO has over 20 years of experience managing cybersecurity risks in the technology industry, including serving as the acting chief security officer at a public company and holding other senior cybersecurity leadership and operational roles at other companies. Our CISO holds an undergraduate degree in computer engineering and graduate degrees in electrical engineering and business administration.
We perform due diligence on vendors, service providers and other third-party users of our systems at initial onboarding and periodically thereafter.
As part of our risk-based approach, we perform due diligence on vendors, service providers and other third-party users of our systems at initial onboarding and periodically thereafter.
We engage in the periodic assessment and testing of our cybersecurity policies, standards, processes and practices, including through audits, assessments, tabletop exercises, threat modeling, vulnerability testing and other exercises focused on evaluating the effectiveness of our cybersecurity measures and planning.
We engage in the periodic assessment and testing of our cybersecurity policies, standards, processes and practices, including through audits, assessments, tabletop exercises, threat modeling, vulnerability testing, and other exercises focused on evaluating their effectiveness and informing adjustments as necessary.
Our CDO and our CISO (who reports to our CDO) are primarily responsible for the assessment and management of our material risks from cybersecurity threats, working collaboratively and cross-functionally to design and implement our cybersecurity policies and processes, including those described in “Risk Management and Strategy” above, and for responding to any cybersecurity incidents.
Our CISO is primarily responsible for the assessment and management of our material risks from cybersecurity threats, working collaboratively and cross-functionally to design and implement our cybersecurity policies and processes, including those described in “Risk Management and Strategy” above, and for responding to any cybersecurity incidents. Our SIRT is primarily responsible for detecting, mitigating and remediating cybersecurity threats and incidents.
Our cross-functional approach to cybersecurity risk management is focused on preserving the confidentiality, integrity, and availability of our information systems by identifying, preventing and mitigating cybersecurity threats and effectively responding to cybersecurity incidents when they occur.
Utilizing a cross-functional approach, we focus on preserving the confidentiality, integrity, and availability of our information systems by identifying, preventing and mitigating cybersecurity threats and effectively responding to cybersecurity incidents when they occur.
We maintain a comprehensive, risk-based approach to identifying and overseeing cybersecurity risks presented by third parties, including vendors, service providers and other external users of our systems, as well as the systems of third parties that could adversely impact our business in the event of a cybersecurity incident affecting those third-party systems.
We identify and oversee cybersecurity risks presented by third parties and our supply chain, including vendors, service providers and other external users of our systems, as well as the systems of third parties that could adversely impact our business in the event of a cybersecurity incident affecting those third-party systems.
Through ongoing communications with these teams, our CDO, our CISO, and the SIRT monitor the detection, mitigation and remediation of cybersecurity threats and incidents in real time, and report such threats and incidents to the CITF when appropriate.
To facilitate our cybersecurity risk management program, multidisciplinary teams throughout our company are deployed to address cybersecurity threats and to respond to cybersecurity incidents. Through ongoing communications with these teams, our CISO, and the SIRT monitor the detection, mitigation and remediation of cybersecurity threats and incidents in real time, and report such threats and incidents to the CITF when appropriate.
Governance Our board of directors, in coordination with our audit committee, oversees our ERM process, including the management of cybersecurity risks, and is responsible for monitoring and assessing strategic risk exposure.
Governance Our board of directors, in coordination with our audit committee, oversees the management of cybersecurity risks, and is responsible for monitoring and assessing strategic risk exposure through our risk management processes. Our management team is responsible for the day-to-day management and mitigation of the material cybersecurity risks we face.
Item 1C. Cybersecurity Our board of directors recognizes the critical importance of maintaining the trust and confidence of our customers, clients, business partners and employees. Our board of directors is actively involved in oversight of our risk management program, and cybersecurity represents an important component of our overall approach to enterprise risk management (“ERM”).
Item 1C. Cybersecurity Our board of directors is actively involved in oversight of cybersecurity, recognizing the critical importance of maintaining the trust and confidence of our customers, clients, business partners and employees.
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We devote significant resources and designate high-level personnel, including our ERC, which includes our CDO, our CISO, our Chief Legal Officer (“CLO”), our Vice President of Internal Audit, and our Vice President of Ethics, Compliance and Risk Management, to manage the cybersecurity risk assessment and mitigation process.
Added
This is carried out under the leadership of our CISO, and involves our Security Incident Response Team (“SIRT”) and other core information security operational teams, in partnership with our engineering teams, as well as management committees, including our Cyber Incident Task Force (“CITF”). During 2025, our board of directors received quarterly updates directly from management on cybersecurity risks.
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The material results of such assessments, audits and reviews are reported to our audit committee, and we adjust our cybersecurity policies, standards, processes and practices as necessary based on the information provided.
Added
Our management team responsible for assessing and managing cybersecurity risks includes experienced professionals, with many years of relevant experience managing cybersecurity and other risks at the Company and at similar companies, and broad technological expertise.
Removed
Our management team and its committees, including our ERC, our CITF, our SIRT , and our core information security operational teams, in partnership with our engineering teams, are responsible for the day-to-day management and mitigation of the material cybersecurity risks we face. 45 Table of Contents Our board of directors administers its cybersecurity risk oversight function as a whole, as well as through our audit committee.
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Our board of directors has previously received quarterly updates from our audit committee on ERM and cybersecurity risks after the audit committee is updated by management but, as a reflection of the importance we place on managing and overseeing cybersecurity risk, management expects to provide quarterly updates directly to the board of directors beginning in 2025.
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Our ERC, comprised of our CLO, our CDO, our CISO, our Vice President of Internal Audit, and our Vice President of Ethics, Compliance and Risk Management, among others, oversees our ERM activities, including cybersecurity-related risks.
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To facilitate our cybersecurity risk management program, multidisciplinary teams throughout our company are deployed to address cybersecurity threats and to respond to cybersecurity incidents.
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Our CDO has over 25 years of experience at technology companies and has been in the security space for over 18 years, including serving as c hief security officer at a public company and leading security engineering at another public company. Our CDO also serves on the board of directors of a publicly traded cybersecurity company.
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Our CISO holds an undergraduate degree in computer engineering and graduate degrees in electrical engineering and business administration.
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Our CFO, VP of Internal Audit, and VP of Ethics, Compliance and Risk Management each hold undergraduate and/or graduate degrees in their respective fields, and have over 10 years of experience managing risks at the Company and at similar companies, including risks arising from cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAdditional information regarding our lease commitments is available in Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. We believe that our facilities are adequate and suitable for our current needs and that, should it be needed, suitable additional or alternative space will be available to accommodate our operations.
Biggest changeAdditional information regarding our lease commitments is available in Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. We believe that our facilities are adequate and suitable for our current needs and that, should it be needed, suitable additional or alternative space will be available to accommodate our operations. Item 3.
Added
Legal Proceedings Refer to Note 18(b) to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a description of our current material legal proceedings. Item 4. Mine Safety Disclosures Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+0 added−5 removed3 unchanged
Biggest changeIssuer Purchases of Equity Securities The following table summarizes the share repurchase activity for the three months ended December 31, 2024: Total Number of Shares Purchased (1) Average Price Paid Per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) (In thousands) (In thousands) (In millions) October 1 - 31, 2024 2,527 $ 69.85 2,527 $ 236 November 1 - 30, 2024 1,405 $ 96.12 1,405 $ 101 December 1 - 31, 2024 916 $ 109.77 916 $ — 4,848 4,848 _____________________________ (1) In February 2023, our board of directors authorized the repurchase of up to $1.0 billion in aggregate value of our Class A common stock.
Biggest changeWe believe the offer, sale and issuance of the above shares were exempt from registration under the Securities Act by virtue of Section 4(a)(2) of the Securities Act because the issuance of the shares did not involve a public offering. 43 Table of Contents Issuer Purchases of Equity Securities The following table summarizes the share repurchase activity for the three months ended December 31, 2025: Total Number of Shares Purchased (1) Average Price Paid Per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) (In thousands) (In thousands) (In millions) October 1 - 31, 2025 716 $ 109.03 716 $ 1,265 November 1 - 30, 2025 362 $ 124.98 362 $ 1,220 December 1 - 31, 2025 550 $ 135.84 550 $ 1,145 1,628 1,628 _____________________________ (1) In January 2025, our board of directors authorized a new program to repurchase up to $2.0 billion in aggregate value of our Class A common stock, which expires on December 31, 2027.
The shares were “restricted securities” for purposes of Rule 144 under the Securities Act, and had an aggregate fair market value on the date of donation of $5.9 million. The foregoing transaction did not involve any underwriters, any underwriting discounts or commissions, or any public offering.
The shares were “restricted securities” for purposes of Rule 144 under the Securities Act, and had an aggregate fair market value on the date of donation of $9.9 million. The foregoing transaction did not involve any underwriters, any underwriting discounts or commissions, or any public offering.
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock and in each respective index at the market closing price on the last trading day for the fiscal year ended December 31, 2019, and its relative performance is tracked through the last trading day for the fiscal year ended December 31, 2024.
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock and in each respective index at the market closing price on the last trading day for the fiscal year ended December 31, 2020, and its relative performance is tracked through the last trading day for the fiscal year ended December 31, 2025.
The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our common stock. 47 Table of Contents Sales of Unregistered Securities During the year ended December 31, 2024, we issued 88,408 shares of our unregistered common stock to an independent donor advised fund to further our Twilio.org philanthropic goals.
The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our common stock. Sales of Unregistered Securities During the year ended December 31, 2025, we issued 88,408 shares of our unregistered common stock to an independent donor advised fund to further our Twilio.org philanthropic goals.
Refer to Note 18 — Stockholders' Equity in Part II, Item 8, of this Annual Report on Form 10-K for additional information related to share repurchases. (2) Average price paid per share includes costs associated with the repurchases.
Refer to Note 19 — Stockholders' Equity in Part II, Item 8, of this Annual Report on Form 10-K for additional information related to share repurchases. (2) Average price paid per share includes costs associated with the repurchases. Item 6. [Reserved]
Stock Performance Graph This performance graph shall not be deemed "soliciting material" or to be "filed" with the SEC for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of Twilio Inc. under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.
We intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future. 42 Table of Contents Stock Performance Graph This performance graph shall not be deemed "soliciting material" or to be "filed" with the SEC for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of Twilio Inc. under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our Class A common stock (“common stock”) is traded on the New York Stock Exchange under the symbol “TWLO.” Our Class B common stock is neither listed nor traded, and no Class B common stock is currently issued or outstanding.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our Class A common stock (“common stock”) is traded on the New York Stock Exchange under the symbol “TWLO.” Holders of Record As of January 31, 2026, we had 195 holders of record of our Class A common stock.
Removed
Holders of Record As of January 31, 2025, we had 225 holders of record of our Class A common stock. There are no holders of record of our Class B common stock.
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We intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.
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We believe the offer, sale and issuance of the above shares were exempt from registration under the Securities Act by virtue of Section 4(a)(2) of the Securities Act because the issuance of the shares did not involve a public offering.
Removed
In March 2024, our board of directors authorized the repurchase of an additional $2.0 billion in aggregate value of our Class A common stock. As of December 31, 2024, we repurchased $3.0 billion of outstanding shares of our Class A common stock under these prior authorizations, which expired on December 31, 2024.
Removed
In January 2025, our board of directors authorized a new program to repurchase up to $2.0 billion in aggregate value of our Class A common stock, which expires on December 31, 2027.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

71 edited+18 added−66 removed30 unchanged
Biggest changeYear Ended December 31, 2024 2023 2022 Consolidated Statements of Operations Data: (In thousands, except share and per share amounts) Revenue $ 4,458,036 $ 4,153,945 $ 3,826,321 Cost of revenue (1) (2) 2,179,824 2,110,015 2,012,744 Gross profit 2,278,212 2,043,930 1,813,577 Operating expenses: Research and development (1) (2) 1,008,747 942,790 1,079,081 Sales and marketing (1) (2) 860,821 1,022,985 1,248,032 General and administrative (1) (2) 449,079 468,459 517,414 Restructuring costs (1) 13,273 165,733 76,636 Impairment of long-lived assets — 320,504 97,722 Total operating expenses 2,331,920 2,920,471 3,018,885 Loss from operations (53,708) (876,541) (1,205,308) Other expenses, net: Share of losses from equity method investment (108,481) (121,897) (35,315) Impairment of strategic investments (8,220) (46,154) — Other income (expenses), net 81,796 47,863 (3,009) Total other expenses, net (34,905) (120,188) (38,324) Loss before provision for from income taxes (88,613) (996,729) (1,243,632) Provision for income taxes (20,790) (18,712) (12,513) Net loss attributable to common stockholders $ (109,403) $ (1,015,441) $ (1,256,145) Net loss per share attributable to common stockholders, basic and diluted $ (0.66) $ (5.54) $ (6.86) Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted 165,925,128 183,327,844 182,994,038 __________________________________ (1) Includes stock-based compensation expense as follows: Year Ended December 31, 2024 2023 2022 (In thousands) Cost of revenue $ 22,001 $ 26,343 $ 21,136 Research and development 330,933 331,526 374,846 Sales and marketing 135,331 183,389 240,109 General and administrative 125,164 121,584 148,194 Restructuring costs 3,178 13,015 14,275 Total $ 616,607 $ 675,857 $ 798,560 ____________________________________ (2) Includes amortization of acquired intangibles as follows: Year Ended December 31, 2024 2023 2022 (In thousands) Cost of revenue $ 62,728 $ 113,266 $ 122,653 Research and development 1,867 1,913 1,680 Sales and marketing 47,248 77,128 81,841 General and administrative 8 — 7 Total $ 111,851 $ 192,307 $ 206,181 57 Table of Contents The following table sets forth our results of operations for each of the periods presented as a percentage of our total revenue: Year Ended December 31, 2024 2023 2022 Consolidated Statements of Operations, as a percentage of revenue: ** Revenue 100 % 100 % 100 % Cost of revenue 49 51 53 Gross profit 51 49 47 Operating expenses: Research and development 23 23 28 Sales and marketing 19 25 33 General and administrative 10 11 14 Restructuring costs * 4 2 Impairment of long-lived assets — 8 3 Total operating expenses 52 70 79 Loss from operations (1) (21) (32) Other expenses, net Share of losses from equity method investment (2) (3) (1) Impairment of strategic investments * (1) — Other income (expenses), net 2 1 * Total other expenses, net (1) (3) (1) Loss before provision for income taxes (2) (24) (33) Provision for income taxes * * * Net loss attributable to common stockholders (2 %) (24 %) (33 %) ____________________________________ * Less than 0.5% of revenue. ** Columns may not add up to 100% due to rounding. 58 Table of Contents Comparison of Fiscal Years Ended December 31, 2024, 2023 and 2022 Revenue Year Ended December 31, 2024 2023 2022 2023 to 2024 Change 2022 to 2023 Change (Dollars in thousands) Twilio Communications $ 4,160,340 $ 3,858,693 $ 3,550,087 $ 301,647 8 % $ 308,606 9 % Twilio Segment 297,696 295,252 276,234 2,444 1 % 19,018 7 % Consolidated total revenue $ 4,458,036 $ 4,153,945 $ 3,826,321 $ 304,091 7 % $ 327,624 9 % 2024 compared to 2023 In 2024, Communications revenue increased by $301.6 million, or 8%, compared to the same period last year.
Biggest changeThe period-to-period comparison of our historical results are not indicative of the results that may be expected in the future. 48 Table of Contents Year Ended December 31, 2025 2024 2023 Consolidated Statements of Operations Data: (In thousands, except share and per share amounts) Revenue $ 5,067,220 $ 4,458,036 $ 4,153,945 Cost of revenue (1) (2) 2,588,486 2,179,824 2,110,015 Gross profit 2,478,734 2,278,212 2,043,930 Operating expenses: Research and development (1) (2) 1,020,159 1,008,747 942,790 Sales and marketing (1) (2) 873,216 860,821 1,022,985 General and administrative (1) (2) 410,678 449,079 468,459 Restructuring costs (1) 15,030 13,273 165,733 Impairment of long-lived assets 1,849 — 320,504 Total operating expenses 2,320,932 2,331,920 2,920,471 Income (loss) from operations 157,802 (53,708) (876,541) Other expenses, net: Share of losses from equity method investment (101,217) (108,481) (121,897) Impairment of equity method investment (80,629) — — Impairment of strategic investments — (8,220) (46,154) Other income, net 79,138 81,796 47,863 Total other expenses, net (102,708) (34,905) (120,188) Income (loss) before provision for income taxes 55,094 (88,613) (996,729) Provision for income taxes (21,260) (20,790) (18,712) Net income (loss) attributable to common stockholders $ 33,834 $ (109,403) $ (1,015,441) Net income (loss) per share: Basic $ 0.22 $ (0.66) $ (5.54) Diluted $ 0.21 $ (0.66) $ (5.54) Weighted-average shares used to compute net income (loss) per share: Basic 152,986,390 165,925,128 183,327,844 Diluted 159,788,944 165,925,128 183,327,844 __________________________________ (1) Includes stock-based compensation expense as follows: Year Ended December 31, 2025 2024 2023 (In thousands) Cost of revenue $ 16,570 $ 22,001 $ 26,343 Research and development 326,767 330,933 331,526 Sales and marketing 136,998 135,331 183,389 General and administrative 118,319 125,164 121,584 Restructuring costs 1,753 3,178 13,015 Total $ 600,407 $ 616,607 $ 675,857 ____________________________________ (2) Includes amortization of acquired intangibles as follows: Year Ended December 31, 2025 2024 2023 (In thousands) Cost of revenue $ 62,467 $ 62,728 $ 113,266 Research and development — 1,867 1,913 Sales and marketing 45,607 47,248 77,128 General and administrative — 8 — Total $ 108,074 $ 111,851 $ 192,307 49 Table of Contents The following table sets forth our results of operations for each of the periods presented as a percentage of our total revenue: Year Ended December 31, 2025 2024 2023 Consolidated Statements of Operations, as a percentage of revenue: ** Revenue 100 % 100 % 100 % Cost of revenue 51 49 51 Gross profit 49 51 49 Operating expenses: Research and development 20 23 23 Sales and marketing 17 19 25 General and administrative 8 10 11 Restructuring costs * * 4 Impairment of long-lived assets * — 8 Total operating expenses 46 52 70 Income (loss) from operations 3 (1) (21) Other expenses, net Share of losses from equity method investment (2) (2) (3) Impairment of equity method investment (2) — — Impairment of strategic investments — * (1) Other income, net 2 2 1 Total other expenses, net (2) (1) (3) Income (loss) before provision for income taxes 1 (2) (24) Provision for income taxes * * * Net income (loss) attributable to common stockholders 1 % (2 %) (24 %) ____________________________________ * Less than 0.5% of revenue. ** Columns may not add up to 100% due to rounding.
Other Expenses, Net Our other expenses, net, consist primarily of our share of losses from our equity method investment, impairment charges and gains and losses related to our strategic investments, realized gains and losses from marketable securities, interest income and expense and debt-related costs.
Other Expenses, Net Our other expenses, net, consist primarily of our share of losses from our equity method investment, impairment charges related to our equity method investment, impairment charges and gains and losses related to our strategic investments, realized gains and losses from marketable securities, interest income and expense and debt-related costs.
The usage-based fees are earned when customers access our cloud-based platform and start using our products. Examples of our primarily usage-based Communications products are Messaging and Voice. For Messaging products, we primarily charge fees related to the number of text messages sent or received. For Voice products, we primarily charge fees for minutes of call duration.
The usage-based fees are earned when customers access our cloud-based platform and start using our products. Examples of our primarily usage-based products are Messaging and Voice. For Messaging products, we primarily charge fees related to the number of text messages sent or received. For Voice products, we primarily charge fees for minutes of call duration.
Our gross profit and gross margin are impacted by a number of factors, including our product mix; our ability to manage our cloud infrastructure‑related and network service provider fees, including A2P SMS fees; changes in foreign exchange rates; the timing of amortization of capitalized software development costs and acquired intangibles; the extent to which we periodically choose to adjust prices of our products; and the timing and extent of our investments in our operations.
Our gross profit and gross margin are impacted by a number of factors, including our product mix; our ability to manage our cloud infrastructure‑related and network service provider fees, including A2P messaging fees; changes in foreign exchange rates; the timing of amortization of capitalized software development costs and acquired intangibles; the extent to which we periodically choose to adjust prices of our products; and the timing and extent of our investments in our operations.
Gross profit represents revenue less cost of revenue. Operating Expenses The most significant components of operating expenses are personnel costs, which consist of salaries, benefits, sales commissions, bonuses and stock‑based compensation. We also incur other non‑personnel costs related to our general overhead expenses. 52 Table of Contents Research and Development.
Gross Profit . Gross profit represents revenue less cost of revenue. 47 Table of Contents Operating Expenses The most significant components of operating expenses are personnel costs, which consist of salaries, benefits, sales commissions, bonuses and stock‑based compensation. We also incur other non‑personnel costs related to our general overhead expenses. Research and Development.
Cash Flows from Investing Activities In 2024, cash provided by investing activities was $1.4 billion primarily consisting of $1.4 billion of maturities and sales of marketable securities and other investments, net of purchases, partially offset by $51.8 million related to capitalized software development costs and $7.0 million related to purchases of long-lived assets.
In 2024, cash provided by investing activities was $1.4 billion primarily consisting of $1.4 billion of maturities and sales of marketable securities and other investments, net of purchases, partially offset by $51.8 million related to capitalized software development costs and $7.0 million related to purchases of long-lived assets.
In the three years ended December 31, 2024, 2023 and 2022, revenue from Active Customer Accounts represented over 99% of total revenue in each period. Dollar‑Based Net Expansion Rate Our Dollar-Based Net Expansion Rate compares the total revenue from all Active Customer Accounts and customer accounts from Zipwhip in a quarter to the same quarter in the prior year.
In the three years ended December 31, 2025, 2024 and 2023, revenue from Active Customer Accounts represented over 99% of total revenue in each period. Dollar‑Based Net Expansion Rate Our Dollar-Based Net Expansion Rate compares the total revenue from all Active Customer Accounts and customer accounts from Zipwhip in a quarter to the same quarter in the prior year.
The following table summarizes our year-over-year revenue growth and Dollar-Based Net Expansion Rate for the years ended December 31, 2024, 2023 and 2022, and the number of Active Customer Accounts as of December 31, 2024, 2023 and 2022.
The following table summarizes our year-over-year revenue growth and Dollar-Based Net Expansion Rate for the years ended December 31, 2025, 2024 and 2023, and the number of Active Customer Accounts as of December 31, 2025, 2024 and 2023.
Our arrangements with network service providers require us to pay fees based on the volume of phone calls initiated or text messages sent, as well as the number of telephone numbers acquired by us to service our customers. Our arrangements with our cloud infrastructure providers require us to pay fees based on our server capacity consumption. Gross Profit .
Our arrangements with network service providers require us to pay fees, including fees based on the volume of phone calls initiated or text messages sent, as well as the number of telephone numbers acquired by us to service our customers. Our arrangements with our cloud infrastructure providers require us to pay fees based on our server capacity consumption.
We believe that our cash, cash equivalents and marketable securities balances, as well as the cash flows generated by our operations, will be sufficient to satisfy our anticipated cash needs for working capital and capital expenditure needs, including authorized share repurchases, for the next 12 months and beyond.
We believe that our cash, cash equivalents and marketable securities balances, as well as the cash flows generated by our operations, will be sufficient to satisfy our anticipated cash needs for working capital, capital expenditures, and authorized share repurchases, for the next 12 months and beyond.
Most of our usage-based customers gain access to our platform through our self-service sign-up format, which requires an upfront prepayment via credit card that is drawn down as they use our products. Pricing is generally based on a publicly available, self-serve pricing matrix that generally allows customers to receive tiered discounts as their usage of our products increases.
Most of our usage-based customers gain access to our platform through a self-service process, which requires an upfront prepayment via credit card that is drawn down as they use our products. Pricing is generally based on a publicly available, self-serve pricing matrix that generally allows customers to receive tiered discounts as their usage of our products increases.
In the years ended December 31, 2024, 2023 and 2022, we generated 72%, 71% and 73% of our revenue, respectively, from usage-based fees. Subscription-based fees are earned in accordance with subscription pricing terms. For our subscription-based products, customers generally enter into negotiated contracts, which are typically one to three years in duration.
In the years ended December 31, 2025, 2024 and 2023, we generated 74%, 72% and 71% of our revenue, respectively, from usage-based fees. Subscription-based fees are earned in accordance with subscription pricing terms. For our subscription-based products, customers generally enter into negotiated contracts, which are typically one to three years in duration.
We offer communications APIs that enable developers to embed numerous forms of messaging, voice, email and video interactions into their customer-facing applications, as well as software products that target specific engagement needs, including our customer data platform, digital engagement centers, marketing campaigns, and user authentication and identity solutions.
We offer highly customizable communications APIs that enable developers to embed numerous forms of messaging, voice, email, and video interactions into their customer-facing applications, as well as software products that target specific engagement needs, including our digital engagement centers, marketing campaigns, and user authentication and identity solutions.
Cash Flows from Financing Activities In 2024, cash used in financing activities was $2.3 billion primarily consisting of $2.3 billion of cash paid to repurchase 36.8 million shares of our common stock in the open market, including related costs, offset by $37.4 million in proceeds from stock options exercised by our employees and shares issued under our employee stock purchase plan.
In 2024, cash used in financing activities was $2.3 billion primarily consisting of $2.3 billion of cash paid to repurchase 36.8 million shares of our common stock, including related costs, offset by $37.4 million in proceeds from stock options exercised by our employees and shares issued under our employee stock purchase plan.
Cash equivalents consist of money market funds, commercial paper and U.S. treasury bills. Short-term marketable securities consist primarily of U.S. treasury securities, non-U.S. government securities, high credit quality corporate debt securities and commercial paper. The cash and cash equivalents and short-term marketable securities are held for working capital purposes.
Cash equivalents consist of money market funds and commercial paper. Short-term marketable securities consist primarily of U.S. treasury securities, high credit quality corporate debt securities and commercial paper. The cash and cash equivalents and short-term marketable securities are held for working capital purposes.
We also intend to optimize our business and take measures to reduce costs, including simplifying and further automating our business processes, modernizing our infrastructure, focusing on self-service, leveraging AI, enacting certain workforce planning initiatives, optimizing utilization of our distributed workforce and implementing other initiatives targeted at improving efficiencies in our business.
We also intend to optimize our business and take measures to reduce costs, including simplifying and further automating our business processes, modernizing our infrastructure, leveraging AI, enacting certain workforce planning initiatives, optimizing utilization of our distributed workforce and implementing other initiatives targeted at improving efficiencies in our business.
As our customers grow their businesses and extend the use of our platform, they sometimes create multiple customer accounts with us for operational or other reasons.
As our customers grow their businesses and extend the use of our 46 Table of Contents platform, they sometimes create multiple customer accounts with us for operational or other reasons.
Subscription customers are generally invoiced in advance at the start of the contract term. In the years ended December 31, 2024, 2023 and 2022, we generated 28%, 29% and 27% of our revenue, respectively, from non-usage‑based fees.
Subscription customers are generally invoiced in advance at the start of the contract term. In the years ended December 31, 2025, 2024 and 2023, we generated 26%, 28% and 29% of our revenue, respectively, from non-usage‑based fees.
With respect to changes in operating assets and liabilities, accounts receivable and prepaid expenses increased $141.4 million primarily due to revenue growth, timing of cash receipts and pre-payments of our cloud infrastructure fees and certain operating expenses.
With respect to changes in operating assets and liabilities, accounts receivable and prepaid expenses increased $44.5 million primarily due to revenue growth, timing of cash receipts and pre-payments of our cloud infrastructure fees and certain operating expenses.
Refer to Note 10, Note 14 and Note 17(a) to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for discussions of our obligations and commitments related to leases, debt and other purchase obligations.
Refer to Note 10, Note 15 and Note 18(a) to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for discussions of our obligations and commitments related to leases, debt and other purchase obligations.
This combination of flexible APIs and software solutions helps businesses of all sizes and across numerous industries to benefit from smarter and more streamlined engagement at every step of the customer journey, including reduced customer acquisition costs, lasting loyalty and increased customer value.
This combination of flexible APIs and software solutions, together with our customer data capabilities, helps businesses of all sizes and across numerous industries to benefit from smarter and more streamlined engagement at every step of the customer journey, including reduced customer acquisition costs, lasting loyalty, and increased customer value.
Our arrangements do not contain general rights of return. However, credits may be issued on a case-by-case basis. Credits are accounted for as variable consideration, are estimated based on historical trends and are recorded against revenue. The contracts do not provide customers with the right to take possession of the software supporting the applications.
However, credits may be issued on a case-by-case basis. Credits are accounted for as variable consideration, are estimated based on historical trends and are recorded against revenue. The contracts do not provide customers with the right to take possession of the software supporting the applications.
Sales and marketing expenses also include expenditures related to advertising, marketing, brand awareness activities, costs related to our SIGNAL customer and developer conferences, credit card processing fees, professional services fees, depreciation, amortization of acquired intangible assets and an allocation of our general overhead expenses. Sales and marketing expenses are generally directly attributable to each segment.
Sales and marketing expenses also include expenditures related to advertising, marketing, brand awareness activities, costs related to our SIGNAL customer and developer conferences, credit card processing fees, professional services fees, depreciation, amortization of acquired intangible assets and an allocation of our general overhead expenses.
We define U.S. revenue as revenue from customers with IP addresses or mailing addresses at the time of registration in the United States. We define international revenue as revenue from customers with IP addresses or mailing addresses at the time of registration outside of the United States. Cost of Revenue and Gross Profit Cost of Revenue .
We define U.S. revenue as revenue from customers with IP addresses or mailing addresses at the time of registration in the United States. We define international revenue as revenue from customers with IP addresses or mailing addresses at the time of registration outside of the United States.
Key Components of Statements of Operations Revenue Revenue. We recognize revenue from our products on either a usage basis or a subscription basis, depending on the nature of the product and the type of customer contract. 51 Table of Contents The majority of our Communications reportable segment revenue is derived from usage-based fees.
Key Components of Statements of Operations Revenue Revenue. We recognize revenue from our products on either a usage basis or a subscription basis, depending on the nature of the product and the type of customer contract. The majority of our revenue is derived from usage-based fees.
Our future capital requirements, the adequacy of our available funds and our cash from operations depend on many factors and are affected by various risks and uncertainties, including those set forth in Part I, Item 1A, “Risk Factors.” Share Repurchase Programs In February 2023, our board of directors authorized the repurchase of up to $1.0 billion in aggregate value of our Class A common stock.
Our future capital requirements, the adequacy of our available funds and our cash from operations depend on many factors and are affected by various risks and uncertainties, including those set forth in Part I, Item 1A, “Risk Factors.” 54 Table of Contents Share Repurchase Program In January 2025, our board of directors authorized the repurchase of up to $2.0 billion in aggregate value of our Class A common stock.
Our subscription-based fees are derived from our software products, such as Segment, Flex, Email and Marketing Campaigns, and certain other non-usage-based contracts, such as with the sales of short codes and customer support. Non-usage-based contracts revenue is recognized on a ratable basis over the contractual term which is generally from one to three years.
Our subscription-based fees are derived from our software products, such as Segment, Email and Marketing Campaigns, and certain other non-usage-based contracts, such as with the sales of short codes. Non-usage-based contracts revenue is recognized on a ratable basis over the contractual term which is generally from one to three years. Our arrangements do not contain general rights of return.
This increase was primarily attributable to the increased usage of our products by our existing customers, as reflected in our Communications Dollar‑Based Net Expansion Rate of 105%, as well as $201.6 million in revenue derived from our new Communications Active Customer Accounts.
This increase was primarily attributable to the increased usage of our products by our existing customers, as reflected in our Dollar‑Based Net Expansion Rate of 108%, as well as an increase of $242.0 million in revenue derived from our new Active Customer Accounts.
Accrued expenses and other current liabilities increased $87.4 million primarily driven by a $109.8 million accrual related to our company-wide bonus program introduced in 2024, offset by a $28.8 million decrease in our restructuring liability. Operating lease liabilities decreased $48.8 million due to payments made against our operating lease obligations.
Accrued expenses and other current liabilities increased $87.4 million primarily driven by a $109.8 million accrual related to our company-wide bonus program introduced in 2024, offset by a $28.8 million decrease in our restructuring liability.
Year Ended December 31, 2024 2023 2022 Active Customer Accounts 325,000 305,000 290,000 Total Revenue (in thousands) $ 4,458,036 $ 4,153,945 $ 3,826,321 Total Revenue Growth Rate 7 % 9 % 35 % Dollar-Based Net Expansion Rate 104 % 103 % 121 % 50 Table of Contents Active Customer Accounts We define an Active Customer Account at the end of any period as an individual account, as identified by a unique account identifier, for which we have recognized at least $5 of revenue in the last month of the period.
Year Ended December 31, 2025 2024 2023 Active Customer Accounts 402,000 325,000 305,000 Total Revenue (in thousands) $ 5,067,220 $ 4,458,036 $ 4,153,945 Total Revenue Growth Rate 14 % 7 % 9 % Dollar-Based Net Expansion Rate 108 % 104 % 103 % Active Customer Accounts We define an Active Customer Account at the end of any period as an individual account, as identified by a unique account identifier, for which we have recognized at least $5 of revenue in the last month of the period.
For a comprehensive overview of our business, our platform and our products refer to Part I, Item 1, “Business,” included elsewhere in this Annual Report on Form 10-K.
For a comprehensive overview of our business, our platform and our products refer to Part I, Item 1, “Business,” included elsewhere in this Annual Report on Form 10-K. Factors Affecting Our Results of Operations We are focused on innovation and durable, profitable growth.
We believe that operating as one organization best positions us as we seek to deliver one trusted, smart and integrated platform that enables more personalized communications and engagements for customers. Despite realigning our organizational structure, we continue to have two reportable segments.
We believe that operating as one organization best positions us as we seek to deliver one trusted, smart and integrated platform that enables more personalized communications and engagements for customers.
Our actual results could differ from these estimates. We believe that the accounting policies, assumptions and estimates associated with revenue recognition have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.
Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates. We believe that the accounting policies, assumptions and estimates associated with revenue recognition have the greatest potential impact on our consolidated financial statements.
To increase revenue and grow market share, we intend to drive product innovation, leverage predictive and generative AI, further enhance our ISV, reseller and other partner relationships, improve our self-service capabilities, cross-sell our products, expand internationally, enhance Segment data warehouse interoperability, and reduce time to value for Segment.
To increase revenue and grow market share, we intend to drive product innovation, leverage predictive and generative AI, further enhance our independent software vendor (“ISV”), reseller and other partner relationships, improve our self-service capabilities, cross-sell our products, and expand internationally.
Other Expenses, net Year Ended December 31, 2024 2023 2022 2023 to 2024 Change 2022 to 2023 Change (Dollars in thousands) Share of losses from equity method investment $ 108,481 $ 121,897 $ 35,315 $ (13,416) (11) % $ 86,582 245 % Impairment of strategic investments 8,220 46,154 — (37,934) (82) % 46,154 100 % Other (income) expenses, net (81,796) (47,863) 3,009 (33,933) 71 % (50,872) (1691) % Total other expenses, net $ 34,905 $ 120,188 $ 38,324 $ (85,283) (71) % $ 81,864 214 % 2024 compared to 2023 In 2024, other expenses, net, decreased by $85.3 million, or 71%, compared to the same period last year.
Other Expenses, net Year Ended December 31, 2025 2024 2023 2024 to 2025 Change 2023 to 2024 Change (Dollars in thousands) Share of losses from equity method investment $ 101,217 $ 108,481 $ 121,897 $ (7,264) (7) % $ (13,416) (11) % Impairment of equity method investment 80,629 — — 80,629 100 % — — % Impairment of strategic investments — 8,220 $ 46,154 (8,220) (100) % (37,934) (82) % Other income, net (79,138) (81,796) (47,863) 2,658 (3) % (33,933) 71 % Total other expenses, net $ 102,708 $ 34,905 $ 120,188 $ 67,803 194 % $ (85,283) (71) % In 2025, other expenses, net, increased by $67.8 million, or 194%, compared to the same period last year.
Revenue from acquisitions does not impact the Dollar-Based Net Expansion Rate calculation until the quarter following the one-year anniversary of the applicable acquisition, unless the acquisition closing date is the first day of a quarter. As a result, for the year ended December 31, 2024, our Dollar-Based Net Expansion Rate excludes the contributions from acquisitions made after October 1, 2023.
Revenue from acquisitions does not impact the Dollar-Based Net Expansion Rate calculation until the quarter following the one-year anniversary of the applicable acquisition, unless the acquisition closing date is the first day of a quarter.
General and administrative expenses also include costs related to business acquisitions and dispositions, legal and other professional services fees, certain taxes, depreciation and amortization, charitable contributions and an allocation of our general overhead expenses.
General and administrative expenses also include costs related to business acquisitions and dispositions, legal and other professional services fees, certain taxes, depreciation and amortization, charitable contributions and an allocation of our general overhead expenses. Restructuring Costs. Restructuring costs consist primarily of personnel costs, such as employee severance payments, benefits and certain facilitation costs, associated with our workforce reductions.
Impairment of long-lived assets consists of impairment of intangible assets and certain operating right-of-use assets and the associated leasehold improvements and property and equipment when the carrying amounts of these assets exceed their respective fair values.
Restructuring costs also include stock-based compensation expense related to vesting of stock-based awards of the impacted employees. Impairment of Long-Lived Assets. Impairment of long-lived assets consists of impairments of intangible assets and certain operating right-of-use assets and the associated leasehold improvements and property and equipment when the carrying amounts of these assets exceed their respective fair values.
GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances.
Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis.
Repurchases under this program can be made through open market, private transactions or other means, in compliance with applicable federal securities laws, and could include repurchases pursuant to Rule 10b5-1 trading plans.
Repurchases under this program can be made through open market, private transactions or other means, in compliance with applicable federal securities laws, and can include repurchases pursuant to Rule 10b5-1 trading plans. We have discretion in determining the conditions under which shares may be repurchased from time to time. The program expires on December 31, 2027.
Non‑GAAP Gross Profit and Non‑GAAP Gross Margin For the periods presented, we define non‑GAAP gross profit and non‑GAAP gross margin as GAAP gross profit and GAAP gross margin, respectively, adjusted to exclude, as applicable, certain expenses as presented in the table below: Year Ended December 31, 2024 2023 2022 Reconciliation: (In thousands) GAAP gross profit $ 2,278,212 $ 2,043,930 $ 1,813,577 GAAP gross margin 51 % 49 % 47 % Non-GAAP adjustments: Stock-based compensation 22,001 26,343 21,136 Amortization of acquired intangibles 62,728 113,266 122,653 Payroll taxes related to stock-based compensation 1,133 699 539 Non-GAAP gross profit $ 2,364,074 $ 2,184,238 $ 1,957,905 Non-GAAP gross margin 53 % 53 % 51 % 54 Table of Contents Non‑GAAP Operating Expenses For the periods presented, we define non‑GAAP operating expenses (including categories of operating expenses) as GAAP operating expenses (and categories of operating expenses) adjusted to exclude, as applicable, certain expenses as presented in the table below: Year Ended December 31, 2024 2023 2022 Reconciliation: (In thousands) GAAP operating expenses $ 2,331,920 $ 2,920,471 $ 3,018,885 Non-GAAP adjustments: Stock-based compensation (591,428) (636,499) (763,149) Amortization of acquired intangibles (49,123) (79,041) (83,528) Acquisition and divestiture related expenses — (5,555) (2,621) Loss on net assets divested — (32,277) — Payroll taxes related to stock-based compensation (8,509) (12,286) (23,293) Charitable contributions (19,907) (17,346) (9,541) Restructuring costs (13,273) (165,733) (76,636) Impairment of long-lived assets — (320,504) (97,722) Non-GAAP operating expenses $ 1,649,680 $ 1,651,230 $ 1,962,395 Non‑GAAP Income (Loss) from Operations and Non‑GAAP Operating Margin For the periods presented, we define non‑GAAP income (loss) from operations and non‑GAAP operating margin as GAAP loss from operations and GAAP operating margin, respectively, adjusted to exclude, as applicable, certain expenses as presented in the table below: Year Ended December 31, 2024 2023 2022 Reconciliation: (In thousands) GAAP loss from operations $ (53,708) $ (876,541) $ (1,205,308) GAAP operating margin (1) % (21) % (32) % Non-GAAP adjustments: Stock-based compensation 613,429 662,842 784,285 Amortization of acquired intangibles 111,851 192,307 206,181 Acquisition and divestiture related expenses — 5,555 2,621 Loss on net assets divested — 32,277 — Payroll taxes related to stock-based compensation 9,642 12,985 23,832 Charitable contributions 19,907 17,346 9,541 Restructuring costs 13,273 165,733 76,636 Impairment of long-lived assets — 320,504 97,722 Non-GAAP income (loss) from operations $ 714,394 $ 533,008 $ (4,490) Non-GAAP operating margin 16 % 13 % — % 55 Table of Contents Free Cash Flow and Free Cash Flow Margin For the periods presented, we define free cash flow as net cash provided by (used in) operating activities less capitalized software development costs and purchases of long-lived and intangible assets, and we define free cash flow margin as free cash flow divided by revenue, as presented in the table below: Year Ended December 31, 2024 2023 2022 Reconciliation: (In thousands) Net cash provided by (used in) operating activities $ 716,241 $ 414,752 $ (254,368) Operating cash flow margin 16 % 10 % (7) % Non-GAAP adjustments: Capitalized software development costs (51,808) (39,925) (45,761) Purchases of long-lived and intangible assets (6,978) (11,310) (34,421) Free cash flow $ 657,455 $ 363,517 $ (334,550) Free cash flow margin 15 % 9 % (9) % Net cash provided by (used in) investing activities $ 1,370,837 $ 228,603 $ (616,452) Net cash (used in) provided by financing activities $ (2,311,572) $ (643,610) $ 45,007 56 Table of Contents Results of Operations The following table sets forth our results of operations for the periods presented.
Non‑GAAP Gross Profit and Non‑GAAP Gross Margin For the periods presented, we define non‑GAAP gross profit and non‑GAAP gross margin as GAAP gross profit and GAAP gross margin, respectively, adjusted to exclude, as applicable, certain expenses as presented in the table below: Year Ended December 31, 2025 2024 2023 Reconciliation: (In thousands) GAAP gross profit $ 2,478,734 $ 2,278,212 $ 2,043,930 GAAP gross margin 49 % 51 % 49 % Non-GAAP adjustments: Stock-based compensation 16,570 22,001 26,343 Amortization of acquired intangibles 62,467 62,728 113,266 Payroll taxes related to stock-based compensation 1,466 1,133 699 Non-GAAP gross profit $ 2,559,237 $ 2,364,074 $ 2,184,238 Non-GAAP gross margin 51 % 53 % 53 % 52 Table of Contents Non‑GAAP Operating Expenses For the periods presented, we define non‑GAAP operating expenses (including categories of operating expenses) as GAAP operating expenses (and categories of operating expenses) adjusted to exclude, as applicable, certain expenses as presented in the table below: Year Ended December 31, 2025 2024 2023 Reconciliation: (In thousands) GAAP operating expenses $ 2,320,932 $ 2,331,920 $ 2,920,471 Non-GAAP adjustments: Stock-based compensation (582,084) (591,428) (636,499) Amortization of acquired intangibles (45,607) (49,123) (79,041) Acquisition and divestiture related expenses (486) — (5,555) Loss on net assets divested — — (32,277) Payroll taxes related to stock-based compensation (23,288) (8,509) (12,286) Charitable contributions (18,940) (19,907) (17,346) Restructuring costs (15,030) (13,273) (165,733) Impairment of long-lived assets (1,849) — (320,504) Gain on lease termination 1,556 — — Non-GAAP operating expenses $ 1,635,204 $ 1,649,680 $ 1,651,230 Non‑GAAP Income from Operations and Non‑GAAP Operating Margin For the periods presented, we define non‑GAAP income from operations and non‑GAAP operating margin as GAAP income (loss) from operations and GAAP operating margin, respectively, adjusted to exclude, as applicable, certain expenses as presented in the table below: Year Ended December 31, 2025 2024 2023 Reconciliation: (In thousands) GAAP income (loss) from operations $ 157,802 $ (53,708) $ (876,541) GAAP operating margin 3 % (1) % (21) % Non-GAAP adjustments: Stock-based compensation 598,654 613,429 662,842 Amortization of acquired intangibles 108,074 111,851 192,307 Acquisition and divestiture related expenses 486 — 5,555 Loss on net assets divested — — 32,277 Payroll taxes related to stock-based compensation 24,754 9,642 12,985 Charitable contributions 18,940 19,907 17,346 Restructuring costs 15,030 13,273 165,733 Impairment of long-lived assets 1,849 — 320,504 Gain on lease termination (1,556) — — Non-GAAP income from operations $ 924,033 $ 714,394 $ 533,008 Non-GAAP operating margin 18 % 16 % 13 % 53 Table of Contents Free Cash Flow and Free Cash Flow Margin For the periods presented, we define free cash flow as net cash provided by operating activities less capitalized software development costs and purchases of long-lived and intangible assets, and we define free cash flow margin as free cash flow divided by revenue, as presented in the table below: Year Ended December 31, 2025 2024 2023 Reconciliation: (In thousands) Net cash provided by operating activities $ 1,003,244 $ 716,241 $ 414,752 Operating cash flow margin 20 % 16 % 10 % Non-GAAP adjustments: Capitalized software development costs (51,969) (51,808) (39,925) Purchases of long-lived and intangible assets (5,848) (6,978) (11,310) Free cash flow $ 945,427 $ 657,455 $ 363,517 Free cash flow margin 19 % 15 % 9 % Net cash provided by investing activities $ 80,948 $ 1,370,837 $ 228,603 Net cash used in financing activities $ (833,095) $ (2,311,572) $ (643,610) Liquidity and Capital Resources As of December 31, 2025, we had cash and cash equivalents of $682.3 million and short-term marketable securities of $1.8 billion.
By combining our leading communications capabilities, plus rich contextual data, plus generative and predictive AI, we enable businesses of all sizes to revolutionize how they engage with their customers by delivering seamless, trusted and personalized customer experiences at scale.
Overview We envision a world in which every digital interaction is amazing. By combining our leading communications capabilities with rich contextual data and AI, we provide the infrastructure for businesses of all sizes to revolutionize how they engage with their customers by delivering seamless, trusted, and personalized customer experiences at scale.
A single organization may constitute multiple unique Active Customer Accounts if it has multiple account identifiers, each of which is treated as a separate Active Customer Account. Active Customer Accounts excludes customer accounts from Zipwhip, Inc. (“Zipwhip”).
A single organization may constitute multiple unique Active Customer Accounts if it has multiple account identifiers, each of which is treated as a separate Active Customer Account. Active Customer Accounts excludes customer accounts from Zipwhip, Inc. (“Zipwhip”). When presented in this Annual Report on Form 10-K, the number of Active Customer Accounts is rounded down to the nearest thousand.
Key Business Metrics We review a number of operational and financial metrics, including Active Customer Accounts and Dollar-Based Net Expansion Rate, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions.
For additional details, see Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K. 45 Table of Contents Key Business Metrics We review a number of operational and financial metrics, including Active Customer Accounts and Dollar-Based Net Expansion Rate, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions.
Operating Expenses Year Ended December 31, 2024 2023 2022 2023 to 2024 Change 2022 to 2023 Change (Dollars in thousands) Research and development $ 1,008,747 $ 942,790 $ 1,079,081 $ 65,957 7 % $ (136,291) (13) % Sales and marketing 860,821 1,022,985 1,248,032 (162,164) (16) % (225,047) (18) % General and administrative 449,079 468,459 517,414 (19,380) (4) % (48,955) (9) % Restructuring costs 13,273 165,733 76,636 (152,460) (92) % 89,097 116 % Impairment of long-lived assets — 320,504 97,722 (320,504) (100) % 222,782 228 % Total operating expenses $ 2,331,920 $ 2,920,471 $ 3,018,885 $ (588,551) (20) % $ (98,414) (3) % 2024 compared to 2023 In 2024, research and development expenses increased by $66.0 million, or 7%, compared to the same period last year.
Operating Expenses Year Ended December 31, 2025 2024 2023 2024 to 2025 Change 2023 to 2024 Change (Dollars in thousands) Research and development $ 1,020,159 $ 1,008,747 $ 942,790 $ 11,412 1 % $ 65,957 7 % Sales and marketing 873,216 860,821 1,022,985 12,395 1 % (162,164) (16) % General and administrative 410,678 449,079 468,459 (38,401) (9) % (19,380) (4) % Restructuring costs 15,030 13,273 165,733 1,757 13 % (152,460) (92) % Impairment of long-lived assets 1,849 — 320,504 1,849 100 % (320,504) (100) % Total operating expenses $ 2,320,932 $ 2,331,920 $ 2,920,471 $ (10,988) — % $ (588,551) (20) % In 2025, research and development expenses increased by $11.4 million, or 1%, compared to the same period last year.
In 2023, cash provided by operating activities consisted primarily of our net loss of $1.0 billion adjusted for non-cash items, including $675.9 million of stock-based compensation expense, $284.4 million of depreciation and amortization expense, $320.5 million of impairment of intangible assets and other long-lived assets, $72.9 million amortization of deferred commissions, $27.0 million of non-cash reduction in our operating right-of-use asset, $121.9 million of share of losses from equity method investments, $51.9 million of provision for bad debt and $230.6 million of cumulative changes in operating assets and liabilities.
In 2024, cash provided by operating activities consisted primarily of our net loss of $109.4 million adjusted for non-cash items, including $616.6 million of stock-based compensation expense, $206.0 million of depreciation and amortization expense, $76.3 million amortization of deferred commissions, $19.1 million of non-cash reduction in our operating right-of-use asset, $108.5 million of share of losses from equity method investments, $35.4 million of provision for doubtful accounts and $234.1 million of cumulative changes in operating assets and liabilities.
Recent Accounting Pronouncements Not Yet Adopted See Note 2(af) to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discussion of recent accounting pronouncements not yet adopted. 65 Table of Contents
Amounts that have been invoiced are recorded in accounts receivable and in revenue or deferred revenue depending on whether the revenue recognition criteria have been met. 56 Table of Contents Recent Accounting Pronouncements Not Yet Adopted See Note 2(af) to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discussion of recent accounting pronouncements not yet adopted.
As of December 31, 2024, the accrued bonus liability was $109.8 million recorded in the accrued expenses and other current liabilities in our consolidated balance sheet included elsewhere in this Annual Report on Form 10-K. The bonus will be paid in March of 2025.
As of December 31, 2025, we had an accrued bonus liability of $136.2 million related to our company-wide bonus program recorded in accrued expenses and other current liabilities in our consolidated balance sheet included elsewhere in this Annual Report on Form 10-K.
Cost of Revenue and Gross Profit Year Ended December 31, 2024 2023 2022 2023 to 2024 Change 2022 to 2023 Change (Dollars in thousands) Cost of revenue $ 2,179,824 $ 2,110,015 $ 2,012,744 $ 69,809 3 % $ 97,271 5 % Gross profit $ 2,278,212 $ 2,043,930 $ 1,813,577 $ 234,282 11 % $ 230,353 13 % 2024 compared to 2023 In 2024, cost of revenue increased by $69.8 million, or 3%, compared to the same period last year.
Cost of Revenue and Gross Profit Year Ended December 31, 2025 2024 2023 2024 to 2025 Change 2023 to 2024 Change (Dollars in thousands) Cost of revenue $ 2,588,486 $ 2,179,824 $ 2,110,015 $ 408,662 19 % $ 69,809 3 % Gross profit $ 2,478,734 $ 2,278,212 $ 2,043,930 $ 200,522 9 % $ 234,282 11 % 50 Table of Contents In 2025, cost of revenue increased by $408.7 million, or 19%, compared to the same period last year.
See Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discussion of our accounting policies. Revenue Recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services.
Revenue Recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services.
We have discretion in determining the conditions under which shares may be repurchased from time to time. 2029 Notes and 2031 Notes In March 2021, we issued and sold $1.0 billion aggregate principal amount of senior notes, consisting of $500.0 million principal amount of 3.625% notes due 2029 (the “2029 Notes”) and $500.0 million principal amount of 3.875% notes due 2031 (the “2031 Notes,” and together with the 2029 Notes, the “Notes”).
In the year ended December 31, 2025, we repurchased $854.6 million in aggregate value, or 8.0 million shares, of our Class A common stock. 2029 Notes and 2031 Notes In March 2021, we issued and sold $1.0 billion aggregate principal amount of senior notes, consisting of $500.0 million principal amount of 3.625% notes due 2029 (the “2029 Notes”) and $500.0 million principal amount of 3.875% notes due 2031 (the “2031 Notes,” and together with the 2029 Notes, the “Notes”).
Provision for Income Taxes Our provision for income taxes consists primarily of federal, state and foreign income taxes and withholding taxes in foreign jurisdictions in which the Company conducts business.
Provision for Income Taxes Our provision for income taxes consists primarily of federal, state and foreign income taxes and withholding taxes in foreign jurisdictions in which the Company conducts business. From time to time, we may recognize tax benefits arising from various matters, including newly enacted legislations.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K. Overview We envision a world in which every digital interaction between businesses and their customers is amazing.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K. This Item generally discusses our results of operations for the year ended December 31, 2025, compared to the year ended December 31, 2024.
These Notes are described in detail in Note 14 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 63 Table of Contents Cash Flows The following table summarizes our cash flows: Year Ended December 31, 2024 2023 2022 (In thousands) Cash provided by (used in) operating activities $ 716,241 $ 414,752 $ (254,368) Cash provided by (used in) investing activities 1,370,837 228,603 (616,452) Cash (used in) provided by financing activities (2,311,572) (643,610) 45,007 Effect of exchange rate changes on cash, cash equivalents and restricted cash — 108 60 Net decrease in cash, cash equivalents and restricted cash $ (224,494) $ (147) $ (825,753) Cash Flows from Operating Activities In 2024, cash provided by operating activities consisted primarily of our net loss of $109.4 million adjusted for non-cash items, including $616.6 million of stock-based compensation expense, $206.0 million of depreciation and amortization expense, $76.3 million amortization of deferred commissions, $19.1 million of non-cash reduction in our operating right-of-use asset, $108.5 million of share of losses from equity method investments, $35.4 million of provision for doubtful accounts and $234.1 million of cumulative changes in operating assets and liabilities.
Cash Flows The following table summarizes our cash flows: Year Ended December 31, 2025 2024 2023 (In thousands) Cash provided by operating activities $ 1,003,244 $ 716,241 $ 414,752 Cash provided by investing activities 80,948 1,370,837 228,603 Cash used in financing activities (833,095) (2,311,572) (643,610) Effect of exchange rate changes on cash, cash equivalents and restricted cash — — 108 Net increase (decrease) in cash, cash equivalents and restricted cash $ 251,097 $ (224,494) $ (147) Cash Flows from Operating Activities In 2025, cash provided by operating activities consisted primarily of our net income of $33.8 million adjusted for non-cash items, including $600.4 million of stock-based compensation expense, $195.4 million of depreciation and amortization expense, $101.2 million of our share of losses from equity method investment, $80.6 million of impairment related to our equity method investment, $74.5 million in amortization of deferred commissions, $22.0 million of non-cash reductions in our operating right-of-use asset and $113.9 million of cumulative changes in operating assets and liabilities.
Our principal sources of liquidity have been (i) the payments received from customers using our products; (ii) public equity offerings, most recently in February 2021; and (iii) debt financings, most recently the issuance of our 2029 Notes and 2031 Notes (each, as defined below) in March 2021. 62 Table of Contents Our primary uses of cash include operating costs, such as personnel-related costs, network service provider costs, cloud infrastructure costs, facility-related spending, acquisitions and investments we may make from time to time, and repurchases of common stock under our share repurchase program.
Our principal sources of liquidity have been (i) the payments received from customers using our products; (ii) public equity offerings, most recently in February 2021; and (iii) debt financings, most recently the issuance of our 2029 Notes and 2031 Notes (each, as defined below) in March 2021.
We also experience 49 Table of Contents seasonal trends due to increased consumer activity in the fourth quarter, which may result in lower sequential revenue in the first quarter.
Our usage-based revenue is also more immediately impacted by changes in consumer spending and macroeconomic conditions than our subscription-based revenue. We also experience seasonal trends due to increased consumer activity in the fourth quarter, which may result in lower sequential revenue in the first quarter.
Revenue from divestitures does not impact the Dollar-Based Net Expansion Rate calculation beginning in the quarter the divestiture closed, unless the divestiture closing date is the last day of a quarter. As a result, for the year ended December 31, 2024, our Dollar-Based Net Expansion Rate excludes the contributions from divestitures made after December 31, 2023.
Revenue from divestitures does not impact the Dollar-Based Net Expansion Rate calculation beginning in the quarter the divestiture closed, unless the divestiture closing date is the last day of a quarter. We believe that measuring Dollar-Based Net Expansion Rate provides an important indication of the performance of our efforts to increase revenue from existing customers.
In 2023, cash used in financing activities was $643.6 million primarily consisting of $668.8 million of cash paid to repurchase 11.3 million shares of our common stock in the open market, including related costs, offset by $43.8 million in proceeds from stock options exercised by our employees and shares issued under our employee stock purchase plan. 64 Table of Contents Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with U.S.
Cash Flows from Financing Activities In 2025, cash used in financing activities was $833.1 million primarily consisting of $868.9 million of cash paid to repurchase 8.0 million shares of our common stock, including related costs, offset by $41.4 million in proceeds from stock options exercised by our employees and shares issued under our employee stock purchase plan.
In the years ended December 31, 2024, 2023, and 2022, our 10 largest Active Customer Accounts generated an aggregate of 10%, 10% and 12% of our total revenue, respectively. Factors Affecting Our Results of Operations We are focused on innovation, profit, and growth.
In the years ended December 31, 2025, 2024, and 2023, our 10 largest Active Customer Accounts generated an aggregate of 9%, 10% and 10% of our total revenue, respectively. Cost of Revenue and Gross Profit Cost of Revenue . Cost of revenue consists primarily of fees paid to network service providers.
When our usage-based products are embedded into our subscription-based products, we charge for each product separately on a usage or subscription basis, respectively, and record the revenue in the reportable segment in which each product resides.
Examples of our primarily subscription-based products are Email and Segment. For subscription-based revenue derived from these products, we recognize revenue evenly over the contract term. When our usage-based products are embedded into our subscription-based products, or when multiple products are purchased together as a solution, we charge for each product separately on a usage or subscription basis, as applicable.
We are investing strategically in alignment with our focus on building a trusted, leading customer engagement platform. Sales and Marketing. Sales and marketing expenses consist primarily of personnel costs, including commissions and bonuses to our sales employees.
Sales and marketing expenses consist primarily of personnel costs, including commissions and bonuses to our sales employees.
The decrease was primarily attributable to the significant restructuring costs incurred in the 2023 period related to our February 2023 and December 2023 restructuring activities. In 2024, impairment of long-lived assets decreased by $320.5 million, or 100%, compared to the same period last year.
In 2025, restructuring costs increased by $1.8 million, or 13%, compared to the same period last year. The restructuring activities in both periods were not significant. In 2025, impairment of long-lived assets increased by $1.8 million, or 100%, compared to the same period last year. The impairment amount was not significant.
Our revenue is primarily derived from usage-based fees, which can lead to variability in our results of operations and at times create differences between our forecasts and actual results. Our usage-based revenue is also more immediately impacted by changes in consumer spending and macroeconomic conditions than our subscription-based revenue.
We are focused on driving leverage through these cost savings and efficiency initiatives, as well as efforts to drive growth in higher margin products. Our revenue is primarily derived from usage-based fees, which can lead to variability in our results of operations and at times create differences between our forecasts and actual results.
The primary difference between our effective tax rate and the federal statutory rate relates to the valuation allowance the Company established on the federal, state and certain foreign net operating losses and credits. 53 Table of Contents Non-GAAP Financial Measures We use the following non‑GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes.
Benefits from income taxes may fully or partially offset the provision for income taxes within a reporting period. The primary difference between our effective tax rate and the federal statutory rate relates to the valuation allowance the Company established on the federal, state and certain foreign net operating losses and credits.
The decrease in general and administrative expenses was partially offset by an $18.3 million increase in professional services fees and an $11.9 million increase in bonus expenses as a result of the introduction of our new cash bonus program. In 2024, restructuring costs decreased by $152.5 million, or 92%, compared to the same period last year.
In 2025, general and administrative expenses decreased by $38.4 million, or 9%, compared to the same period last year. The decrease was primarily attributable to a $27.2 million decrease in the provision for doubtful accounts due to strong collections and an improved aging profile of our accounts receivable, and a $13.2 million decrease in professional services fees.
In 2023, cash provided by investing activities was $228.6 million primarily consisting of $247.4 million of maturities and sales of marketable securities and other investments, net of purchases, and $38.2 million of proceeds from divestitures, net of cash divested, partially offset by $39.9 million related to capitalized software development costs and $11.3 million related to purchases of long-lived assets.
Operating lease liabilities decreased $48.8 million due to payments made against our operating lease obligations. 55 Table of Contents Cash Flows from Investing Activities In 2025, cash provided by investing activities was $80.9 million primarily consisting of $200.3 million of maturities and sales of marketable securities and other investments, net of purchases, partially offset by $61.5 million of net cash paid to acquire other businesses as described in Note 11 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, $52.0 million related to capitalized software development costs and $5.8 million related to purchases of long-lived assets.
This increase was primarily attributable to a $51.4 million increase in network service providers’ costs, net of the impact of the hedging instruments, and a $28.7 million increase in hosting fees, which support the growth in usage of our products by our new and existing customers.
This increase was primarily attributable to a $362.4 million increase in network service providers’ costs, net of the impact of the hedging instruments, which includes $49.5 million of the incremental A2P fees introduced by a major U.S. carrier during 2025. In 2025, gross profit increased by $200.5 million, or 9%, compared to the same period last year.
Our gross margin is also impacted by the mix of U.S. messaging termination compared to international messaging termination, as international messaging has lower gross margins. We migrated part of Segment’s architecture to a new infrastructure provider in 2024, which we expect will allow us to recognize greater operational efficiency and scale up new AI-driven products and features.
Our gross margin is also impacted by the mix of U.S. messaging termination compared to international messaging termination, as international messaging has lower gross margins. In June 2025, a major U.S. mobile carrier increased network service provider fees for A2P messages delivered to its subscribers.
In 2024, general and administrative expenses decreased by $19.4 million, or 4%, compared to the same period last year.
Fluctuations in the various research and development expense categories were not significant either individually or in the aggregate. In 2025, sales and marketing expenses increased by $12.4 million, or 1%, compared to the same period last year. Fluctuations in the various sales and marketing expense categories were not significant either individually or in the aggregate.
The bonus payout amount for each eligible participant is determined based on the Company and the individual full year performance metrics. In the year ended December 31, 2024, we recorded $134.1 million of expense related to this program.
The bonus payout will be determined for each eligible recipient based on Company and individual performance metrics and paid in March 2026, which we expect to impact our cash flows in the first quarter of 2026.
These decreases were partially offset by a $32.3 million loss on divestiture related to the sale of our ValueFirst business and our IoT asset group. For further detail on the restructuring plans and divestitures, refer to Note 7 and Note 5, respectively, to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Therefore, we consider these to be our critical accounting policies and estimates. See Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discussion of our accounting policies.
Removed
Our platform, which combines our highly customizable communications APIs with customer data management capabilities and AI-powered predictions and recommendations, allows businesses to break down data silos and build a comprehensive single source for their customer data that is organized into unique profiles that are easily accessible by all their business teams.
Added
For a discussion of our results of operations for the year ended December 31, 2024, compared to the year ended December 31, 2023, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 26, 2025, and incorporated herein by reference.
Removed
Empowered with this information and the insights it enables, businesses using our platform can provide robust, personalized and effective communications to their customers at every stage of their customer relationships at scale.
Added
In the third quarter of 2025, we modified the presentation of the financial information that is regularly reviewed by our Chief Executive Officer, who is also our Chief 44 Table of Contents Operating Decision Maker (“CODM”), to reflect this realignment and the change in how management currently views and operates the business.
Removed
Our Communications reportable segment consists of a variety of APIs and software solutions to optimize communications between our customers and their end users. Our key offerings in our Communications reportable segment include Messaging, Voice, Email (which includes Marketing Campaigns), Flex, and User Authentication and Identity.
Added
These changes required us to re-evaluate our operating segment structure and resulted in the conclusion that starting with the third quarter of 2025 and as of December 31, 2025, we had one operating and reportable segment, which comprised all of the consolidated Company.
Removed
Our Segment reportable segment consists of software products that enable businesses to leverage their contextual data to create unique customer profiles and achieve more effective customer engagement. Our key offering in our Segment reportable segment is our Segment product.
Added
Other major U.S. carriers have since followed suit, with fee increases effective in January and April 2026. We pass these fees through to our customers at cost. As a result, we recognize an equal amount of revenue and cost of revenue related to these fees.
Removed
In the years ended December 31, 2024, 2023, and 2022, our revenue was $4.5 billion, $4.2 billion and $3.8 billion, respectively, and our net loss was $109.4 million, $1.0 billion and $1.3 billion, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeIn any given period, cash, cash equivalents and restricted cash may consist of bank deposits, money market funds, reverse repurchase agreements and commercial paper. Marketable securities consist primarily of U.S. treasury securities, non-U.S. government securities, high credit quality corporate debt securities and commercial paper. The cash and cash equivalents and marketable securities are held for working capital purposes.
Biggest changeIn any given period, cash, cash equivalents and restricted cash may consist of bank deposits, money market funds, reverse repurchase agreements and commercial paper. Marketable securities consist primarily of U.S. treasury securities, high credit quality corporate debt securities and commercial paper. The cash and cash equivalents and marketable securities are held for working capital purposes.
The local currencies of our foreign subsidiaries are the Australian dollar, the Brazilian real, the British pound, the Canadian dollar, the Colombian peso, the Euro, the Hong Kong dollar, the Indian rupee, the Japanese yen, the Mexican peso, the Polish zloty, the Serbian dinar, the Singapore dollar and the Swedish krona.
The local currencies of our foreign subsidiaries are the Australian dollar, the Brazilian real, the British pound, the Canadian dollar, the Colombian peso, the Euro, the Hong Kong dollar, the Indian rupee, the Japanese yen, the Mexican peso, the Polish zloty, the Singapore dollar and the Swedish krona.
A hypothetical 10% change in foreign exchange rates during any of the periods presented would not have had a material impact on our consolidated financial statements. 66 Table of Contents
A hypothetical 10% change in foreign exchange rates during any of the periods presented would not have had a material impact on our consolidated financial statements. 57 Table of Contents
Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to certain market risks in the ordinary course of our business, including sensitivities as follows: Interest Rate Risk We had cash and cash equivalents of $421.3 million and marketable securities of $2.0 billion as of December 31, 2024.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to certain market risks in the ordinary course of our business, including sensitivities as follows: Interest Rate Risk We had cash and cash equivalents of $682.3 million and marketable securities of $1.8 billion as of December 31, 2025.

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