Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2018	Oct. 31, 2018
Entity Registrant Name	TWILIO INC
Entity Central Index Key	0001447669
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Common Class A
Entity Common Stock, Shares Outstanding		79,190,697
Common Class B
Entity Common Stock, Shares Outstanding		19,666,380

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 469,132	$ 115,286
Short-term marketable securities	276,221	175,587
Accounts receivable, net	80,159	43,113
Prepaid expenses and other current assets	25,237	19,279
Total current assets	850,749	353,265
Restricted cash	20,182	5,502
Property and equipment, net	59,205	50,541
Intangible assets, net	29,784	20,064
Goodwill	37,106	17,851
Other long-term assets	6,771	2,559
Total assets	1,003,797	449,782
Current liabilities:
Accounts payable	12,842	11,116
Accrued expenses and other current liabilities	93,894	53,614
Customer deposits	8,483
Deferred revenue	10,208	13,797
Total current liabilities	125,427	78,527
Convertible senior notes, net	428,778
Other long-term liabilities	15,239	11,409
Total liabilities	569,444	89,936
Commitments and contingencies (Note 11)
Stockholders' equity:
Preferred stock
Class A and Class B common stock	97	94
Additional paid-in capital	757,392	608,165
Accumulated other comprehensive income	1,380	2,025
Accumulated deficit	(324,516)	(250,438)
Total stockholders' equity	434,353	359,846
Total liabilities and stockholders' equity	$ 1,003,797	$ 449,782

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Condensed Consolidated Statements of Operations
Revenue	$ 168,895	$ 100,542	$ 445,765	$ 283,784
Cost of revenue	77,031	48,254	204,553	127,873
Gross profit	91,864	52,288	241,212	155,911
Operating expenses:
Research and development	42,340	31,674	119,727	87,910
Sales and marketing	45,949	25,778	116,520	73,047
General and administrative	28,608	18,867	76,213	40,810
Total operating expenses	116,897	76,319	312,460	201,767
Loss from operations	(25,033)	(24,031)	(71,248)	(45,856)
Other income (expenses), net	(1,939)	1,000	(3,172)	1,969
Loss before provision for income taxes	(26,972)	(23,031)	(74,420)	(43,887)
Provision for income taxes	(84)	(422)	(371)	(902)
Net loss attributable to common stockholders	$ (27,056)	$ (23,453)	$ (74,791)	$ (44,789)
Net loss per share attributable to common stockholders, basic and diluted (in dollars per share)	$ (0.28)	$ (0.25)	$ (0.78)	$ (0.49)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted (in shares)	98,019,629	92,156,768	96,359,437	90,543,087

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Condensed Consolidated Statements of Comprehensive Loss
Net loss	$ (27,056)	$ (23,453)	$ (74,791)	$ (44,789)
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities	291	(44)	126	(238)
Foreign currency translation	(873)	793	(771)	2,274
Total other comprehensive income (loss)	(582)	749	(645)	2,036
Comprehensive loss attributable to common stockholders	$ (27,638)	$ (22,704)	$ (75,436)	$ (42,753)

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (74,791)	$ (44,789)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	18,246	13,406
Net amortization of investment premium and discount	(845)	153
Amortization of debt issuance costs	657
Accretion of debt discount on convertible senior notes	7,717
Stock-based compensation	61,287	35,973
Amortization of deferred commissions	885
Provision for doubtful accounts	2,626	407
Write-off of internally developed software and intangible assets	1,687	96
Gain on lease termination		(295)
Changes in operating assets and liabilities:
Accounts receivable	(39,643)	(9,173)
Prepaid expenses and other current assets	(6,600)	(4,947)
Other long-term assets	(3,681)	(1,512)
Accounts payable	1,641	1,411
Accrued expenses and other current liabilities	39,732	(1,454)
Customer deposits	8,482
Deferred revenue	(3,390)	3,364
Long-term liabilities	(1,177)	306
Net cash provided by (used in) operating activities	12,833	(7,054)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities	(213,533)	(280,569)
Maturities of marketable securities	113,497	87,325
Capitalized software development costs	(15,276)	(12,281)
Purchases of property and equipment	(3,048)	(8,613)
Purchases of intangible assets	(380)	(206)
Acquisitions, net of cash acquired	(29,662)	(22,621)
Net cash used in investing activities	(148,402)	(236,965)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible senior notes	550,000
Payment of debt issuance costs	(12,877)
Purchase of capped call	(58,465)
Payments of costs related to public offerings		(430)
Proceeds from exercises of stock options	22,578	22,504
Proceeds from shares issued under ESPP	4,474	7,404
Value of equity awards withheld for tax liabilities	(1,720)	(476)
Net cash provided by financing activities	503,990	29,002
Effect of exchange rate changes on cash, cash equivalents and restricted cash	105	88
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	368,526	(214,929)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH-Beginning of period	120,788	314,280
CASH, CASH EQUIVALENTS AND RESTRICTED CASH -End of period	489,314	99,351
Cash paid for income taxes	544	489
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Purchases of property, equipment and intangible assets, accrued but not paid	785	124
Stock-based compensation capitalized in software development costs	4,434	$ 2,712
Acquisition holdback	2,000
Debt offering costs, accrued but not paid	$ 103

Organization and Description of Business	9 Months Ended
Organization and Description of Business	Sep. 30, 2018
Organization and Description of Business
Organization and Description of Business	1. Organization and Description of Business Twilio Inc. (the “Company”) was incorporated in the state of Delaware on March 13, 2008. The Company is the leader in the Cloud Communications Platform category and enables developers to build, scale and operate real-time communications within their software applications via simple-to-use Application Programming Interfaces (“API”). The power, flexibility, and reliability offered by the Company’s software building blocks empower entities of virtually every shape and size to build world-class engagement into their customer experience. The Company’s headquarters are located in San Francisco, California, and the Company has subsidiaries in the United States, the United Kingdom, Estonia, Ireland, Colombia, Germany, Hong Kong, Singapore, Bermuda, Spain, Sweden, Australia and Czech Republic.

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

(a)Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K filed with the SEC on March 1, 2018 (“Annual Report”).

The condensed consolidated balance sheet as of December 31, 2017, included herein, was derived from the audited financial statements as of that date, but may not include all disclosures including certain notes required by U.S. GAAP on an annual reporting basis.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year 2018 or any future period.

(b)Principles of Consolidation

The condensed consolidated financial statements include the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated.

(c)Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are used for, but not limited to, revenue allowances and returns; recoverability of long-lived and intangible assets; capitalization and useful life of the Company’s capitalized internal-use software development costs; fair value of acquired intangible assets and goodwill; accruals and contingencies. Estimates are based on historical experience and on various assumptions that the Company believes are reasonable under current circumstances. However, future events are subject to change and best estimates and judgments may require further adjustments; therefore, actual results could differ materially from those estimates. Management periodically evaluates such estimates and they are adjusted prospectively based upon such periodic evaluation.

(d)Concentration of Credit Risk

Financial instruments that potentially expose the Company to a concentration of credit risk consist primarily of cash, cash equivalents, marketable securities, restricted cash and accounts receivable. The Company maintains cash, cash equivalents, marketable securities and restricted cash with financial institutions that management believes are financially sound and have minimal credit risk exposure although the balances will exceed insured limits.

The Company sells its services to a wide variety of customers. If the financial condition or results of operations of any significant customers deteriorate substantially, operating results could be adversely affected. To reduce credit risk, management performs ongoing credit evaluations of the financial condition of significant customers. The Company does not require collateral from its credit customers and maintains reserves for estimated credit losses on customer accounts when considered necessary. Actual credit losses may differ from the Company’s estimates. During the three and nine months ended September 30, 2018 and 2017, respectively, there was no customer organization that accounted for more than 10% of the Company’s total revenue.

As of September 30, 2018 and December 31, 2017, no customer organization represented more than 10% of the Company’s gross accounts receivable.

(e)Significant Accounting Policies

Effective January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers”, which replaced the existing revenue recognition guidance, ASC 605, and outlines a single set of comprehensive principles for recognizing revenue under U.S. GAAP. Among other things, ASC 606 requires entities to assess the products or services promised in contracts with customers at contract inception to determine the appropriate unit at which to record revenue, which is referred to as a performance obligation. Revenue is recognized when control of the promised products or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those products or services.

The Company adopted ASC 606 using the modified retrospective method with cumulative catch-up adjustment to the opening retained earnings as of January 1, 2018. Results for reporting periods beginning after December 31, 2017 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historical accounting policies prior to adoption. In adopting the standard, the Company elected to apply the new guidance only to those contracts which were not completed as of the date of the adoption.

The impact of adopting the new standard on the Company’s consolidated financial statements was insignificant. The Company recorded a net cumulative catch-up adjustment to the beginning retained earnings as of January 1, 2018, of $0.7 million.

The primary impact relates to the deferral of incremental commission costs of obtaining new contracts. Under ASC 605, the Company deferred only direct and incremental commission costs to obtain a contract and amortized those costs on a straight-line basis over the term of the related subscription contract. Under the new standard, the Company defers all incremental commission costs to obtain the contract and amortizes these costs on a straight-line basis over the expected term of benefit of the underlying asset, which was determined to be five years.

The impact on the Company’s revenue recognition policies was insignificant. Prior to the adoption of ASC 606, the Company recognized the majority of its revenue according to the usage by its customers in the period in which that usage occurred. ASC 606 continues to support the recognition of revenue over time, and on a usage basis, for the majority of the Company’s contracts due to continuous transfer of control to the customer. The impact on the Company’s balance sheet presentation includes presenting customer refundable prepayments as customer deposit liabilities, whereas under ASC 605 these were included in deferred revenues.

There was not a significant tax impact to the Company’s consolidated statements of operations and consolidated balance sheet relating to the adoption of the new standard as there is a full valuation allowance due to the Company’s history of continued losses.

Revenue Recognition

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of allowances for credits and any taxes collected from customers, which are subsequently remitted to governmental authorities.

The Company determines revenue recognition through the following steps:

·

Identification of the contract, or contracts, with a customer;

·

Identification of the performance obligations in the contract;

·

Determination of the transaction price;

·

Allocation of the transaction price to the performance obligations in the contract; and

·

Recognition of revenue when, or as, the Company satisfies a performance obligation.

Nature of Products and Services

The Company’s revenue is primarily derived from usage-based fees earned from customers accessing the Company’s enterprise cloud computing services. Platform access is considered a monthly series comprising one performance obligation and usage-based fees are recognized as revenue in the period in which the usage occurs. In each of the three and nine months ended September 30, 2018, the revenue from usage-based fees represented 83% of total revenue. In the three and nine months ended September 30, 2017, the revenue from usage-based fees represented 82% and 83% of total revenue, respectively.

Subscription-based fees are derived from certain term-based contracts, such as with the sales of telephone numbers, short codes and customer support. Term-based contracts revenue is recognized on a ratable basis over the contractual term of the arrangement beginning on the date that the service is made available to the customer. In each of the three and nine months ended September 30, 2018, the revenue from term-based fees represented 17% of total revenue. In the three and nine months ended September 30, 2017, the revenue from term-based fees represented 18% and 17% of total revenue, respectively.

No significant judgments are required in determining whether products and services are considered distinct performance obligations and should be accounted for separately versus together, or to determine the stand-alone selling price (“SSP”).

Refer to Note 10, Revenue by Geographic Area, for additional disaggregation.

The Company’s arrangements do not contain general rights of return. However, credits may be issued on a case-by-case basis. The contracts do not provide customers with the right to take possession of the software supporting the applications. 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.

The reserve for sales credits is included in accounts receivable and is calculated based on historical trends and any specific risks identified in processing transactions. Changes in the reserve are recorded against revenue.

Deferred Revenue and Customer Deposits

Deferred revenue is recorded when cash payments are received in advance of future usage on non-cancellable contracts. Customer refundable prepayments are recorded as customer deposits. During the three and nine months ended September 30, 2018, the Company recognized $3.9 million and $11.1 million of revenue, respectively, that was included in the deferred revenue balance, as adjusted for ASC 606 on January 1, 2018.

Deferred Sales Commissions

The Company records an asset for the incremental costs of obtaining a contract with a customer, for example, sales commissions that are earned upon execution of contracts. The Company uses the portfolio method to recognize the amortization expense related to these capitalized costs related to initial contracts, upsells and renewals, and such expense is recognized over the estimated period of benefit of the capitalized commissions, which is determined to be five years. Total net capitalized costs as of September 30, 2018 were $7.7 million and are included in prepaid expenses and other current and long-term assets in the accompanying condensed consolidated balance sheet. Amortization of these assets was $0.4 million and $0.9 million in the three and nine months ended September 30, 2018, respectively, and is included in sales and marketing expense in the accompanying condensed consolidated statement of operations.

Other than adoption of ASC 606, there were no changes to our significant accounting policies as described in our Annual Report.

(f)Restricted Cash

In November 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-18, “Statement of Cash Flows (Topic 230) — Restricted Cash”. This standard provides guidance on the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. Restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statements of cash flows. The amendments of this ASU should be applied using a retrospective transition method and are effective for reporting periods beginning after December 15, 2017. The Company adopted ASU 2016-18 in the first quarter of 2018 and applied the guidance retrospectively to the prior period’s condensed consolidated statement of cash flows with the following impact (in thousands):

	Nine Months Ended September 30, 2017
	As Originally Reported			As Adjusted
Cash used in investing activities	$	(235,795	)	$	(236,965	)
Cash, cash equivalents and restricted cash — beginning of period	$	305,665		$	314,280
Cash, cash equivalents and restricted cash — end of period	$	91,906		$	99,351

Other than the revised statement of cash flows presentation of restricted cash, the adoption of ASU 2016-18 did not have an impact on the Company’s financial position and results of operations.

(g)Recently Issued Accounting Guidance, Not yet Adopted

In August 2018, the FASB issued ASU 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract”. This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820) Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement”. The amendments under ASU 2018-13 remove, add and modify certain disclosure requirements on fair value measurements in ASC 820. The amendments are effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently evaluating the impact the new standard will have on its consolidated financial statements.

In July 2018, the FASB issued ASU 2018-09, “Codification Improvements”, which does not prescribe any new accounting guidance, but instead makes minor improvements and clarifications of several different FASB ASC areas based on comments and suggestions made by various stakeholders. Certain updates are applicable immediately while others provide for a transition period to adopt as part of the next fiscal year beginning after December 15, 2018. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements .

In June 2018, the FASB issued ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting”, which aligns the measurement and classification for share-based payments to non-employees with the accounting guidance for share-based payments to employees. Among other requirements, the measurement of non-employee awards will now be fixed at the grant date, rather than remeasured at every reporting date. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018, with early application permitted. The Company will adopt this guidance upon its effective date. The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment”, which removes the second step of the goodwill impairment test that requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This guidance is effective prospectively for interim and annual reporting periods beginning after December 15, 2019. The Company will adopt this guidance upon its effective date. The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements .

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments”, which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted for annual and interim periods beginning after December 15, 2018. The Company is evaluating the impact of this guidance on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases”, which was further clarified by ASU 2018-10, “Codification Improvements to Topic 842, Leases”, and ASU 2018-11, “Leases - Targeted Improvements”, both issued in July 2018. ASU 2016-02 affects all entities that lease assets and will require lessees to recognize a lease liability and a right-of-use asset for all leases (except for short-term leases that have a duration of less than one year) as of the date on which the lessor makes the underlying asset available to the lessee. For lessors, accounting for leases is substantially the same as in prior periods. ASU 2018-10 clarifies or corrects unintended application of guidance related to ASU 2016-02. The amendments affects narrow aspects of ASU 2016-02 related to the implicit rate in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments. ASU 2018-11 adds a transition option for all entities and a practical expedient only for lessors. The transition option allows entities to not apply the new leases standard in the comparative periods they present in their financial statements in the year of adoption. Under the transition option, entities can opt to continue to apply the legacy guidance in ASC 840, “Leases”, including its disclosure requirements, in the comparative periods presented in the year they adopt the new leases standard. Entities that elect this transition option will still be required to adopt the new leases standard using the modified retrospective transition method required by the standard, but they will recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. The practical expedient provides lessors with an option to not separate the non-lease components from the associated lease components when certain criteria are met and requires them to account for the combined component in accordance with the revenue recognition standard in ASC 606 if the associated non-lease components are the predominant components. The new standards are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. For leases existing at, or entered into after the beginning of the earliest comparative period presented in the financial statements, lessees and lessors must apply a modified retrospective transition approach. While the Company expects the adoption of these standards to result in an increase to the reported assets and liabilities, the Company has not yet determined the full impact that the adoption of this standard will have on its consolidated financial statements.

Fair Value Measurements

9 Months Ended

Sep. 30, 2018

Fair Value Measurements

Fair Value Measurements

3. Fair Value Measurements

The following tables provide the financial assets measured at fair value on a recurring basis as of September 30, 2018 and December 31, 2017 (in thousands):

	Amortized Cost or Carrying		Gross Unrealized		Gross Unrealized Losses Less Than			Gross Unrealized Losses More Than			Fair Value Hierarchy as of September 30, 2018						Aggregate
	Value		Gains		12 Months			12 Months			Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and cash equivalents:
Money market funds	$	432,040	$	—	$	—		$	—		$	432,040	$	—	$	—	$	432,040
Commercial paper	9,979		—		—			—			—		9,979		—		9,979

Total included in cash and cash equivalents	442,019		—		—			—			432,040		9,979		—		442,019

Marketable securities:
U.S. Treasury securities	59,858		—		(14		)	(54		)	59,790		—		—		59,790
Corporate debt securities and commercial paper	216,835		—		(174		)	(230		)	—		216,431		—		216,431

Total marketable securities	276,693		—		(188		)	(284		)	59,790		216,431		—		276,221

Total financial assets	$	718,712	$	—	$	(188	)	$	(284	)	$	491,830	$	226,410	$	—	$	718,240

	Amortized Cost or Carrying		Gross Unrealized		Gross Unrealized Losses Less Than			Gross Unrealized Losses More Than		Fair Value Hierarchy as of December 31, 2017						Aggregate
	Value		Gains		12 Months			12 Months		Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and cash equivalents:
Money market funds	$	95,432	$	—	$	—		$	—	$	95,432	$	—	$	—	$	95,432

Total included in cash and cash equivalents	95,432		—		—			—		95,432		—		—		95,432

Marketable securities:
U.S. Treasury securities	59,962		—		(216		)	—		59,746		—		—		59,746
Corporate debt securities and commercial paper	116,223		—		(382		)	—		—		115,841		—		115,841

Total marketable securities	176,185		—		(598		)	—		59,746		115,841		—		175,587

Total financial assets	$	271,617	$	—	$	(598	)	$	—	$	155,178	$	115,841	$	—	$	271,019

As of September 30, 2018, the fair value of the 0.25% convertible senior notes due 2023 (the “Notes”), as further described in Note 8 below, was approximately $744.4 million. The fair value was determined based on the closing price for the Notes on the last trading day of the reporting period and is considered as Level 2 in the fair value hierarchy.

As the Company views its marketable securities as available to support current operations, it has classified all available for sale securities as short-term. As of September 30, 2018, for fixed income securities that were in unrealized loss positions, the Company has determined that (i) it does not have the intent to sell any of these investments, and (ii) it is not more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis. In addition, as of September 30, 2018, the Company anticipates that it will recover the entire amortized cost basis of such fixed income securities and has determined that no other-than-temporary impairments associated with credit losses were required to be recognized during the three and nine month ended September 30, 2018. Interest earned on marketable securities was $0.8 million and $2.2 million in the three and nine months ended September 30, 2018, respectively; and $0.7 million and $1.8 million in the three and nine months ended September 30, 2017, respectively. The interest is recorded as other income (expense), net, in the accompanying condensed consolidated statements of operations.

The following table summarizes the contractual maturities of marketable securities as of September 30, 2018 and December 31, 2017 (in thousands):

	As of September 30, 2018				As of December 31, 2017
	Amortized Cost		Aggregate Fair Value		Amortized Cost		Aggregate Fair Value
Financial Assets:
Less than one year	$	270,692	$	270,276	$	108,584	$	108,360
One to two years	6,001		5,945		67,601		67,227

Total	$	276,693	$	276,221	$	176,185	$	175,587

- Definition

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

+ References + Details

Property and Equipment

9 Months Ended

Sep. 30, 2018

Property and Equipment

Property and Equipment

4. Property and Equipment

Property and equipment consisted of the following (in thousands):

	As of September 30,			As of December 31,
	2018			2017
Capitalized internal-use software development costs	$	67,287		$	49,177
Leasehold improvements	14,600			14,246
Office equipment	12,117			9,652
Furniture and fixtures	2,310			1,976
Software	2,430			1,675

Total property and equipment	98,744			76,726
Less: accumulated depreciation and amortization	(39,539		)	(26,185		)

Total property and equipment, net	$	59,205		$	50,541

Depreciation and amortization expense was $5.0 million and $13.5 million for the three and nine months ended September 30, 2018, respectively, and $3.4 million and $9.3 million for the three and nine months ended September 30, 2017, respectively.

The Company capitalized $6.7 million and $19.8 million in internal-use software development costs in the three and nine months ended September 30, 2018, respectively, and $5.5 million and $15.0 million in the three and nine months ended September 30, 2017, respectively. Of this amount, stock-based compensation expense was $1.5 million and $4.4 million in the three and nine months ended September 30, 2018, respectively, and $1.2 million and $2.8 million in the three and nine months ended September 30, 2017, respectively.

Amortization of capitalized software development costs was $3.6 million and $9.3 million in the three and nine months ended September 30, 2018, respectively, and $2.2 million and $5.9 million in the three and nine months ended September 30, 2017, respectively.

Business Combinations

9 Months Ended

Sep. 30, 2018

Business Combinations

Business Combinations

5. Business Combinations

Fiscal 2018 Acquisitions

Ytica.com a.s.

In September 2018, the Company acquired all outstanding shares of Ytica.com a.s. (“Ytica”), a developer and provider of a contact center reporting and analytics based in the Czech Republic, for a total purchase price of $21.8 million, paid in cash, of which $3.2 million was held in escrow with a term of 18 months.

Additionally, the Company granted 47,574 restricted stock units of the Company’s Class A common stock to a former shareholder of Ytica that had a value of $3.6 million and is subject to vesting over a period of three years. The Company is recording stock-based compensation expense as the shares are vesting.

The acquisition was accounted for as a business combination and the total purchase price was allocated to the net tangible and intangible assets and liabilities based on their fair values on the acquisition date and the excess was recorded as goodwill. The acquired entity’s results of operations have been included in the condensed consolidated financial statements of the Company from the date of acquisition.

The following table presents the preliminary purchase price allocation recorded in the Company’s condensed consolidated balance sheet as of September 30, 2018 (in thousands):

	Total
Net tangible assets	$	(1,036	)
Intangible assets (1)	9,920
Goodwill(2)	12,873

Total purchase price	$	21,757

(1)

Identifiable finite-lived intangible assets were comprised of the following (in thousands):

(2)

The goodwill is primarily attributable to the future cash flows to be realized from the acquired technology platform as well as operational synergies. The Company intends to file elections that make the goodwill deductible for U.S. tax purposes.

The Company acquired a net deferred tax liability of $1.9 million in this business combination that is included in long-term liabilities in the accompanying condensed consolidated balance sheet.

The estimated fair value of the intangible assets acquired was determined by the Company, and the Company considered or relied in part upon a valuation report of a third-party expert. The Company used an income approach to estimate the fair values of the identifiable intangible assets.

The Company incurred cost related to this acquisition of $0.5 million that were expensed as incurred and recorded in general and administrative expenses in the accompanying condensed consolidated statement of operation.

Pro forma results of operations for this acquisition are not presented as the financial impact to the Company’s condensed consolidated financial statements is immaterial.

Core Network Dynamics GmbH

In August 2018, the Company acquired all outstanding shares of Core Network Dynamics GmbH, (“CND”) a developer and provider of a complete software mobile network infrastructure based in Germany, for a total purchase price of $11.1 million, paid in cash, of which $2.0 million was withheld by the Company for a term of 18 months.

Additionally, the Company granted 35,950 restricted stock units of the Company’s Class A common stock to a former shareholder of CND that had a value of $2.2 million and is subject to vesting over a period of three years. The Company is recording a stock-based compensation expense as the shares are vesting.

The acquisition was accounted for as a business combination and the total purchase price was allocated to the net tangible and intangible assets and liabilities based on their fair values on the acquisition date and the excess was recorded as goodwill. The acquired entity’s results of operations have been included in the condensed consolidated financial statements of the Company from the date of acquisition.

The following table presents the preliminary purchase price allocation recorded in the Company’s condensed consolidated balance sheet as of September 30, 2018 (in thousands):

	Total
Net tangible liabilities	$	(244	)
Intangible assets (1)	4,500
Goodwill(2)	6,800

Total purchase price	$	11,056

(1)

Identifiable finite-lived intangible assets were comprised of the following (in thousands):

(2)

The goodwill is primarily attributable to the future cash flows to be realized from the operating synergies between the acquired technology platform and the Company’s Programmable Wireless products. The Company intends to file elections that make the goodwill deductible for U.S. tax purposes.

The Company acquired a net deferred tax liability of $1.2 million in this business combination that is included in long-term liabilities in the accompanying condensed consolidated balance sheet.

The estimated fair value of the intangible assets acquired was determined by the Company, and the Company considered or relied in part upon a valuation report of a third-party expert. The Company used a replacement cost approach to estimate the fair values of the identifiable intangible assets.

The Company incurred cost related to this acquisition of $0.7 million that were expensed as incurred and have been recorded in general and administrative expenses in the accompanying condensed consolidated statement of operation.

Pro forma results of operations for this acquisition are not presented as the financial impact to the Company’s consolidated financial statements is immaterial.

Fiscal 2017 Acquisitions

Beepsend AB

In February 2017, the Company completed its acquisition of Beepsend AB, a messaging provider based in Sweden, specializing in messaging and SMS solutions, for a total purchase price of $23.0 million, paid in cash, of which $5.0 million was held in escrow with a term of 18 months, which was fully released at the escrow due date.

Additionally, the Company deposited $2.0 million into a separate escrow that was subject to future service conditions and was recorded ratably into the compensation expense as the services were rendered. As of September 30, 2018, the remaining balance in the escrow was insignificant.

The acquisition was accounted for as a business combination and the total purchase price was allocated to the net tangible and intangible assets and liabilities based on their fair values on the acquisition date and the excess was recorded as goodwill. The acquired entity’s results of operations have been included in the consolidated financial statements of the Company from the date of acquisition.

The following table presents the purchase price allocation, as adjusted, recorded in the Company’s condensed consolidated balance sheet as of March 31, 2017 (in thousands):

	Total
Net tangible liabilities	$	(3,575	)
Intangible assets(1)	13,700
Goodwill(2)	12,837

Total purchase price	$	22,962

(1)

Identifiable finite-lived intangible assets were comprised of the following (in thousands):

	Total		Estimated life (in years)
Developed technology	$	5,000	4
Customer relationships	6,100		7 - 8
Supplier relationships	2,600		5

Total intangible assets acquired	$	13,700

(2)

The goodwill is primarily attributable to the future cash flows to be realized from the acquired technology platform, existing customer and supplier relationships as well as operational synergies. Goodwill is deductible for tax purposes.

The Company acquired a net deferred tax liability of $2.6 million in this business combination that is included in long-term liabilities in the accompanying condensed consolidated balance sheets.

The estimated fair value of the intangible assets acquired was determined by the Company, and the Company considered or relied in part upon a valuation report of a third-party expert. The Company used the income approach to estimate the fair values of the identifiable intangible assets.

The Company incurred costs related to this acquisition of $0.7 million, of which $0.3 million and $0.4 million were incurred during fiscal years 2017 and 2016, respectively. All acquisition-related costs were expensed as incurred and have been recorded in general and administrative expenses in the accompanying condensed consolidated statements of operations.

Pro forma results of operations for this acquisition are not presented as the financial impact to the Company’s consolidated financial statements is immaterial.

Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets

Goodwill and Intangible Assets

6. Goodwill and Intangible Assets

Goodwill

Goodwill balance as of September 30, 2018 and December 31, 2017 was as follows (in thousands):

	Total
Balance as of December 31, 2017	$	17,851
Goodwill additions related to 2018 acquisitions	19,673
Effect of exchange rate	(418		)

Balance as of September 30, 2018	$	37,106

Intangible assets

Intangible assets consisted of the following (in thousands):

	As of September 30, 2018
	Gross		Accumulated Amortization			Net
Amortizable intangible assets:
Developed technology	$	27,679	$	(8,689	)	$	18,990
Customer relationships	8,245		(1,800		)	6,445
Supplier relationships	2,738		(850		)	1,888
Trade name	60		(60		)	—
Patent	2,325		(159		)	2,166

Total amortizable intangible assets	41,047		(11,558		)	29,489

Non-amortizable intangible assets:	32		—			32
Domain names
Trademarks	263		—			263

Total	$	41,342	$	(11,558	)	$	29,784

	As of December 31, 2017
	Gross		Accumulated Amortization			Net
Amortizable intangible assets:
Developed technology	$	14,941	$	(5,476	)	$	9,465
Customer relationships	7,159		(1,006		)	6,153
Supplier relationships	2,881		(500		)	2,381
Trade name	60		(60		)	—
Patent	1,878		(108		)	1,770

Total amortizable intangible assets	26,919		(7,150		)	19,769

Non-amortizable intangible assets:
Domain names	32		—			32
Trademarks	263		—			263

Total	$	27,214	$	(7,150	)	$	20,064

Amortization expense was $1.9 million and $4.7 million for the three and nine months ended September 30, 2018, respectively, and $1.5 million and $4.2 million for the three and nine months ended September 30, 2017, respectively

Total estimated future amortization expense was as follows (in thousands):

	As of September 30, 2018
2018 (remaining three months)	$	3,272
2019	8,704
2020	6,007
2021	4,592
2022	3,270
Thereafter	3,644

Total	$	29,489

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Accrued Expenses and Other Liabilities

9 Months Ended

Sep. 30, 2018

Accrued Expenses and Other Liabilities

Accrued Expenses and Other Liabilities

7. Accrued Expenses and Other Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

	As of September 30,		As of December 31,
	2018		2017
Accrued payroll and related	$	11,423	$	4,898
Accrued bonus and commission	8,170		4,777
Accrued cost of revenue	23,023		10,876
Sales and other taxes payable	22,746		20,877
ESPP contributions	4,536		1,338
Deferred rent	1,334		1,048
Accrued other expense	22,662		9,800

Total accrued expenses and other current liabilities	$	93,894	$	53,614

Other long-term liabilities consisted of the following (in thousands):

	As of September 30,		As of December 31,
	2018		2017
Deferred rent	$	7,557	$	8,480
Deferred tax liability, net	4,852		2,452
Acquisition Holdback	2,000		—
Accrued other expenses	830		477

Total other long-term liabilities	$	15,239	$	11,409

Convertible Senior Notes and Capped Call Transactions

9 Months Ended

Sep. 30, 2018

Convertible Senior Notes and Capped Call Transactions

Convertible Senior Notes and Capped Call Transactions

8. Convertible Senior Notes and Capped Call Transactions

In May 2018, the Company issued $550.0 million aggregate principal amount of 0.25% convertible senior notes due 2023 in a private placement, including $75.0 million aggregate principal amount of such Notes pursuant to the exercise in full of the over-allotment options of the initial purchasers (collectively, the “Notes”). The interest on the Notes is payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2018.

The Notes may bear special interest under specified circumstances relating to the Company’s failure to comply with its reporting obligations under the indenture relating to the issuance of Notes (the “indenture”) or if the Notes are not freely tradeable as required by the indenture. The Notes will mature on June 1, 2023, unless earlier repurchased or redeemed by the Company or converted pursuant to their terms. The total net proceeds from the debt offering, after deducting initial purchaser discounts and debt issuance costs, paid or payable by us, were approximately $537.0 million.

Each $1,000 principal amount of the Notes is initially convertible into 14.1040 shares of the Company’s Class A common stock par value $0.001, which is equivalent to an initial conversion price of approximately $70.90 per share. The conversion rate is subject to adjustment upon the occurrence of certain specified events but will not be adjusted for any accrued and unpaid special interest. In addition, upon the occurrence of a make-whole fundamental change, as defined in the indenture, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its Notes in connection with such make-whole fundamental change or during the relevant redemption period.

Prior to the close of business on the business day immediately preceding March 1, 2023, the Notes may be convertible at the option of the holders only under the following circumstances:

(1) during any calendar quarter commencing after September 30, 2018, and only during such calendar quarter, if the last reported sale price of the Class A common stock for at least 20 trading days (whether or not consecutive) in a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is more than or equal to 130% of the conversion price on each applicable trading day;

(2) during the five business days period after any five consecutive trading day period in which, for each trading day of that period, the trading price per $1,000 principal amount of Notes for such trading day was less than 98% of the product of the last reported sale price of the Class A common stock and the conversion rate on each such trading day;

(3) upon the Company’s notice that it is redeeming any or all of the Notes; or

(4) upon the occurrence of specified corporate events.

On or after March 1, 2023, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the Notes may, at their option, convert all or a portion of their Notes regardless of the foregoing conditions.

Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of Class A common stock, or a combination of cash and shares of Class A Common Stock, at the Company’s election. It is the Company’s current intent to settle the principal amount of the Notes with cash.

During the three months ended September 30, 2018, the conditions allowing holders of the Notes to convert were not met. The Company may redeem the Notes, in whole or in part, at its option, on or after June 1, 2021 but before the 35th scheduled trading day before the maturity date, at a cash redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, if the last reported sale price of the Class A Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading days ending on, and including, the trading day immediately before the date the redemption notices were sent; and the trading day immediately before such notices were sent.

No sinking fund is provided for the Notes. Upon the occurrence of a fundamental change (as defined in the indenture) prior to the maturity date, holders may require the Company to repurchase all or a portion of the Notes for cash at a price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The Notes are senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment with the Company’s existing and future liabilities that are not so subordinated; effectively subordinated to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of current or future subsidiaries of the Company.

The foregoing description is qualified in its entirety by reference to the text of the indenture and the form of 0.25% convertible senior notes due 2023, which were filed as exhibits to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 and are incorporated herein by reference.

In accounting for the issuance of the Notes, the Company separated the Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was $119.4 million and was determined by deducting the fair value of the liability component from the par value of the Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount, or the debt discount, is amortized to interest expense at an effective interest rate over the contractual terms of the Notes.

In accounting for the transaction costs related to the Notes, the Company allocated the total amount incurred to the liability and equity components of the Notes based on the proportion of the proceeds allocated to the debt and equity components. Issuance costs attributable to the liability component were approximately $10.2 million, were recorded as an additional debt discount and are amortized to interest expense using the effective interest method over the contractual terms of the Notes. Issuance costs attributable to the equity component were netted with the equity component in stockholders’ equity.

The net carrying amount of the liability component of the Notes was as follows (in thousands):

	As of September 30, 2018
Principal	$	550,000
Unamortized discount	(111,717		)
Unamortized issuance costs	(9,505		)

Net carrying amount	$	428,778

The net carrying amount of the equity component of the Notes was as follows (in thousands):

	As of September 30, 2018
Proceeds allocated to the conversion options (debt discount)	$	119,435
Issuance costs	(2,819		)

Net carrying amount	$	116,616

The following table sets forth the interest expense recognized related to the Notes (in thousands):

	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018
Contractual interest expense	$	344	$	508
Amortization of debt issuance costs	446		657
Amortization of debt discount	5,233		7,717

Total interest expense related to the Notes	$	6,023	$	8,882

In connection with the offering of the Notes, the Company entered into privately-negotiated capped call transactions with certain counterparties (the “capped calls”). The capped calls each have an initial strike price of approximately $70.90 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Notes. The capped calls have initial cap prices of $105.04 per share, subject to certain adjustments. The capped calls cover, subject to anti-dilution adjustments, approximately 7,757,200 shares of Class A Common Stock. The capped calls are generally intended to reduce or offset the potential dilution to the Class A Common Stock upon any conversion of the Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. The capped calls expire on the earlier of (i) the last day on which any convertible securities remain outstanding and (ii) June 1, 2023, subject to earlier exercise. The capped calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting the Company, including a merger event, a tender offer, and a nationalization, insolvency or delisting involving the Company. In addition, the capped calls are subject to certain specified additional disruption events that may give rise to a termination of the capped calls, including changes in law, insolvency filings, and hedging disruptions. The capped call transactions are recorded in stockholders’ equity and are not accounted for as derivatives. The net cost of $58.5 million incurred to purchase the capped call transactions was recorded as a reduction to additional paid-in capital in the accompanying condensed consolidated balance sheet.

Supplemental Balance Sheet Information

9 Months Ended

Sep. 30, 2018

Supplemental Balance Sheet Information

Supplemental Balance Sheet Information

9. Supplemental Balance Sheet Information

A roll-forward of the Company’s reserves is as follows (in thousands):

(a)Allowance for doubtful accounts:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2018			2017		2018			2017
Balance, beginning of period	$	2,536		$	923	$	1,033		$	1,076
Additions	1,111			125		2,626			407
Write-offs	(5		)	—		(17		)	(435		)

Balance, end of period	$	3,642		$	1,048	$	3,642		$	1,048

b)Sales credit reserve:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Balance, beginning of period	$	2,625		$	734		$	1,761		$	544
Additions	1,651			104			4,301			1,076
Deductions against reserve	(773		)	(238		)	(2,559		)	(1,020		)

Balance, end of period	$	3,503		$	600		$	3,503		$	600

Revenue by Geographic Area

9 Months Ended

Sep. 30, 2018

Revenue by Geographic Area

Revenue by Geographic Area

10. Revenue by Geographic Area

Revenue by geographic area is based on the IP address at the time of registration. The following table sets forth revenue by geographic area (dollars in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Revenue by geographic area:
United States	$	125,697		$	76,713		$	335,575		$	221,914
International	43,198			23,829			110,190			61,870

Total	$	168,895		$	100,542		$	445,765		$	283,784

Percentage of revenue by geographic area:
United States	74		%	76		%	75		%	78		%
International	26		%	24		%	25		%	22		%

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

Commitments and Contingencies

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies

Commitments and Contingencies

11. Commitments and Contingencies

(a)Lease Commitments

The Company entered into various non-cancelable operating lease agreements for its facilities that expire over the next six years. Certain operating leases contain provisions under which monthly rent escalates over time. When lease agreements contain escalating rent clauses or free rent periods, the Company recognizes rent expense on a straight-line basis over the term of the lease.

In September 2018, the Company entered into a sub-lease agreement (“Sub-lease”) for a total of 259,416 rentable square feet of office space at 101 Spear Street in San Francisco, California. The Sub-lease covers several floors for which the terms commence on December 1, 2018 and April 1, 2020, and will be expiring at various dates between March 2025 and June 2028. The lease payments will range from $0.8 million per months to $2.2 million per month. The Company secured its lease obligation with a $14.7 million letter of credit, which it designated as restricted cash on its balance sheet as of September 30, 2018. The Company intends for this location to be its headquarters at some time in 2019.

Rent expense was $2.2 million and $6.4 million for the three and nine months ended September 30, 2018, respectively, and $2.1 million and $6.1million for the three and nine months ended September 30, 2017, respectively.

Future minimum lease payments under non-cancelable operating leases were as follows (in thousands):

Year Ending December 31:	As of September 30, 2018
2018 (remaining three months)	$	3,446
2019	21,195
2020	27,798
2021	30,209
2022	29,735
Thereafter	113,211

Total minimum lease payments	$	225,594

Additionally, in the three and nine months ended September 30, 2018, the Company entered into several non-cancellable vendor agreements with a term from one to two years for total purchase commitments of $2.2 million and $10.0 million, respectively.

(b)Legal Matters

On April 30, 2015, Telesign Corporation, or Telesign, filed a lawsuit against the Company in the United States District Court, Central District of California (“Telesign I”). Telesign alleges that the Company is infringing three U.S. patents that it holds: U.S. Patent No. 8,462,920 (“920”), U.S. Patent No. 8,687,038 (“038”) and U.S. Patent No. 7,945,034 (“034”). The patent infringement allegations in the lawsuit relate to the Company’s Account Security products, its two-factor authentication use case and an API tool to find information about a phone number.

On March 28, 2016, Telesign filed a second lawsuit against the Company in the United States District Court, Central District of California (“Telesign II”), alleging infringement of U.S. Patent No. 9,300,792 (‘792”) held by Telesign. The ‘792 patent is in the same patent family as the ‘920 and ‘038 patents asserted in Telesign I. On March 8, 2017, in response to a petition by the Company, the U.S. Patent and Trademark Office (“PTO”) issued an order instituting the inter partes review for the ‘792 patent. On March 6, 2018, the PTO found all claims challenged by Twilio in the inter partes review unpatentable. On March 15, 2017, Twilio filed a motion to consolidate and stay related cases pending the conclusion of the ‘792 patent inter partes review, which the court granted. The Central District of California court lifted the stay on April 13, 2018. The court transferred the cases to the United States District Court, Northern District of California. With respect to each of the patents asserted in the now-consolidated Telesign I and Telesign II cases (“Telesign I/II”), the consolidated complaint seeks, among other things, to enjoin the Company from allegedly infringing the patents, along with damages for lost profits. On August 14, 2018, the Company filed a motion seeking a judgment that all asserted claims are invalid under 35 U.S.C. 101. On October 19, 2018, the court granted the Company’s motion and entered judgment in the Company’s favor. On November 8, 2018, Telesign filed a notice of appeal. Based on final judgment being entered by the district court in favor of the Company, the Company does not believe a loss is reasonably possible or estimable.

On December 1, 2016, the Company filed a patent infringement lawsuit against Telesign in the United States District Court, Northern District of California (“Telesign III”), alleging indirect infringement of United States Patent No. 8,306,021 (“021”), United States Patent No. 8,837,465 (“465”), United States Patent No. 8,755,376 (“376”), United States Patent No. 8,736,051 (“051”), United States Patent No. 8,737,962 (“962”), United States Patent No. 9,270,833 (“833”), and United States Patent No. 9,226,217 (“217”). Telesign filed a motion to dismiss the complaint on January 25, 2017. In two orders, issued on March 31, 2017 and April 17, 2017, the Court granted Telesign’s motion to dismiss with respect to the ‘962, ‘833, ‘051 and ‘217 patents, but denied Telesign’s motion to dismiss as to the ‘021, ‘465 and ‘376 patents. On August 23, 2017, Telesign petitioned the U.S. Patent and Trademark Office (“U.S. PTO”) for inter partes review of the ‘021, ‘465, and ‘376 patents. On March 9, 2018, the PTO denied Telesign’s petition for inter partes review of the ‘021 patent and granted Telesign’s petitions for inter partes review of the ‘465 and ‘376 patents. Telesign III is currently stayed pending resolution of the inter partes reviews of the ‘465 and ‘376 patents. The Company is seeking a judgment of infringement, a judgment of willful infringement, monetary and injunctive relief, enhanced damages, and an award of costs and expenses against Telesign.

On February 18, 2016, a putative class action complaint was filed in the Alameda County Superior Court in California, entitled Angela Flowers v. Twilio Inc. The complaint alleges that the Company’s products permit the interception, recording and disclosure of communications at a customer’s request and are in violation of the California Invasion of Privacy Act. The complaint seeks injunctive relief as well as monetary damages. On May 27, 2016, the Company filed a demurrer to the complaint. On August 2, 2016, the court issued an order denying the demurrer in part and granting it in part, with leave to amend by August 18, 2016 to address any claims under California’s Unfair Competition Law. The plaintiff opted not to amend the complaint. Following a period of discovery, the plaintiff filed a motion for class certification on September 20, 2017. On January 2, 2018, the court issued an order granting in part and denying in part the plaintiff’s class certification motion. The court certified two classes of individuals who, during specified time periods, allegedly sent or received certain communications involving the accounts of three of the Company’s customers that were recorded. The parties held a mediation on August 29, 2018. Following further discussions in coordination with the mediator, on September 27, 2018, the parties reached an agreement in principle to settle the case. The parties are preparing a long-form settlement agreement, and a preliminary class settlement approval hearing has been scheduled for January 15, 2019. The Company currently estimates its potential liability in the Flowers matter to be $1.5 million and has reserved this amount in the accompanying condensed consolidated balance sheet as of September 30, 2018.

The Company intends to vigorously defend itself against these lawsuits and believes it has meritorious defenses to each matter in which it is a defendant.

In addition to the litigation matters discussed above, from time to time, the Company is a party to legal action and subject to claims that arise in the ordinary course of business. The claims are investigated as they arise and loss estimates are accrued, when probable and reasonably estimable. While it is not feasible to predict or determine the ultimate outcome of these matters, the Company believes that these legal proceedings will not have a material adverse effect on its financial position or results of operations.

Legal fees and other costs related to litigation and other legal proceedings are expensed as incurred and are included in general and administrative expenses in the accompanying condensed consolidated statements of operations.

(c)Indemnification Agreements

The Company has signed indemnification agreements with all of its board members and executive officers. The agreements indemnify the board members and executive officers from claims and expenses on actions brought against the individuals separately or jointly with the Company for certain indemnifiable events. Indemnifiable events generally mean any event or occurrence related to the fact that the board member or the executive officer was or is acting in his or her capacity as a board member or an executive officer for the Company or was or is acting or representing the interests of the Company.

In the ordinary course of business, the Company enters into contractual arrangements under which it agrees to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, intellectual property infringement claims made by third parties and other liabilities relating to or arising from the Company’s various products, or its acts or omissions. In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. Further, the Company’s obligations under these agreements may be limited in terms of time and/or amount, and in some instances, the Company may have recourse against third parties for certain payments. The terms of such obligations may vary.

As of September 30, 2018 and December 31, 2017, no amounts were accrued.

(d)Other Taxes

The Company conducts operations in many tax jurisdictions throughout the United States. In many of these jurisdictions, non-income-based taxes, such as sales and use and telecommunications taxes are assessed on the Company’s operations. Prior to March 2017, the Company had not billed nor collected these taxes from its customers and, in accordance with U.S. GAAP, recorded a provision for its tax exposure in these jurisdictions when it was both probable that a liability had been incurred and the amount of the exposure could be reasonably estimated. These estimates included several key assumptions including, but not limited to, the taxability of the Company’s services, the jurisdictions in which its management believed it has nexus, and the sourcing of revenues to those jurisdictions. Starting in March 2017, the Company began collecting these taxes from customers in certain jurisdictions, and since then has expanded the number of jurisdictions where these taxes are being collected. Effective January 2018, the Company began collecting taxes in one additional jurisdiction and accordingly, the Company is no longer recording a provision for its exposure in that jurisdiction. The Company expects to continue to expand the number of jurisdictions where these taxes will be collected in the future. Simultaneously, the Company was and continues to be in discussions with certain states regarding its prior state sales and other taxes, if any, that the Company may owe.

During 2017, the Company revised its estimates of its tax exposure based on settlements reached with various states indicating that certain revisions to the key assumptions including, but not limited to, the sourcing of revenue and the taxability of the Company’s services were appropriate. In the year ended December 31, 2017, the total impact of these changes on the net loss attributable to common stockholders was a reduction of $13.4 million. As of September 30, 2018 and December 31, 2017, the liability recorded for these taxes was $22.7 million and $20.9 million, respectively.

On June 21, 2018, the U.S. Supreme Court issued an opinion in South Dakota v. Wayfair permitting a state to require a seller to collect sales tax even if the seller has no physical presence in that state. This opinion reversed a prior U.S. Supreme Court opinion requiring a physical presence by the seller. The Company has evaluated the states currently requiring an out of state seller to collect sales tax and have identified the states that impose sales tax on its applicable products.

In the event other jurisdictions challenge management’s assumptions and analysis, the actual exposure could differ materially from the current estimates.

Stockholders' Equity

9 Months Ended

Sep. 30, 2018

Stockholders' Equity

Stockholders' Equity

12. Stockholders’ Equity

(a)Preferred Stock

As of September 30, 2018 and December 31, 2017, the Company had authorized 100,000,000 shares of preferred stock, par value $0.001, of which no shares were issued and outstanding.

(b)Common Stock

As of September 30, 2018 and December 31, 2017, the Company had authorized 1,000,000,000 shares of Class A common stock and 100,000,000 shares of Class B common stock, each par value $0.001 per share. As of September 30, 2018, 78,999,646 shares of Class A common stock and 19,727,396 shares of Class B common stock were issued and outstanding. As of December 31, 2017, 69,906,550 shares of Class A common stock and 24,063,246 shares of Class B common stock were issued and outstanding.

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

	As of September 30,	As of December 31,
	2018	2017
Stock options issued and outstanding	8,567,152	10,710,427
Nonvested restricted stock units issued and outstanding	7,368,918	5,665,459
Class A common stock reserved for Twilio.org	635,014	635,014
Stock-based awards available for grant under 2016 Plan	10,773,682	10,200,189
Stock-based awards available for grant under 2016 ESPP	3,216,460	2,478,343
Class A common stock reserved for the convertible senior notes	10,472,165	—

Total	41,033,391	29,689,432

Stock-Based Compensation

9 Months Ended

Sep. 30, 2018

Stock-Based Compensation

Stock-Based Compensation

13. Stock-Based Compensation

2008 Stock Option Plan

The Company granted options under its 2008 Stock Option Plan (the “2008 Plan”), as amended and restated, until June 22, 2016, when the plan was terminated in connection with the Company’s IPO. Accordingly, no shares are available for future issuance under the 2008 Plan. The 2008 Plan continues to govern outstanding equity awards granted thereunder.

2016 Stock Option Plan

The Company’s 2016 Stock Option and Incentive Plan (the “2016 Plan”) became effective on June 21, 2016. The 2016 Plan provides for the grant of ISOs, NSOs, restricted stock, RSUs, stock appreciation rights, unrestricted stock awards, performance share awards, dividend equivalent rights and cash-based awards to employees, directors and consultants of the Company. A total of 11,500,000 shares of the Company’s Class A common stock were initially reserved for issuance under the 2016 Plan. These available shares automatically increase each January 1, beginning on January 1, 2017, by 5% of the number of shares of the Company’s Class A and Class B common stock outstanding on the immediately preceding December 31, or such lesser number of shares as determined by the Company’s compensation committee. On January 1, 2018, the shares available for grant under the 2016 Plan were automatically increased by 4,698,490 shares.

Under the 2016 Plan, the stock options are granted at a price per share not less than 100% of the fair market value per share of the underlying common stock on the date of grant. Under both plans, stock options generally expire 10 years from the date of grant and vest over periods determined by the board of directors. The vesting period for new-hire options and restricted stock units is generally a four-year term from the date of grant, at a rate of 25% after one year, then monthly or quarterly, respectively, on a straight-line basis thereafter. In July 2017, the Company began granting restricted stock units to existing employees that vest in equal quarterly installments over a four year service period.

2016 Employee Stock Purchase Plan

The Company’s Employee Stock Purchase Plan (“2016 ESPP”) became effective on June 21, 2016. A total of 2,400,000 shares of the Company’s Class A common stock were initially reserved for issuance under the 2016 ESPP. These available shares will automatically increase each January 1, beginning on January 1, 2017, by the lesser of 1,800,000 shares of the common stock, 1% of the number of shares of the Company’s Class A and Class B common stock outstanding on the immediately preceding December 31 or such lesser number of shares as determined by the Company’s compensation committee. On January 1, 2018, the shares available for grant under the 2016 Plan were automatically increased by 939,698 shares.

The 2016 ESPP allows eligible employees to purchase shares of the Company’s Class A common stock at a discount of up to 15% through payroll deductions of their eligible compensation, subject to any plan limitations. Except for the initial offering period, the 2016 ESPP provides for separate six-month offering periods beginning in May and November of each fiscal year, starting in May 2017.

On each purchase date, eligible employees purchase the Company’s stock at a price per share equal to 85% of the lesser of (i) the fair market value of the Company’s Class A common stock on the offering date or (ii) the fair market value of the Company’s Class A common stock on the purchase date.

In the three months ended September 30, 2018 and 2017, no shares of Class A common stock were purchased under the 2016 ESPP, and 127,327 shares are expected to be purchased in November 2018. As of September 30, 2018, total unrecognized compensation cost related to the 2016 ESPP was $0.5 million, which will be amortized over a weighted-average period of 0.1 years.

Stock-based awards activity under the 2008 Plan and 2016 Plan was as follows:

Stock Options

	Number of options outstanding		Weighted- average exercise price (per share)		Weighted- average remaining contractual term (in years)	Aggregate intrinsic value (in thousands)
Outstanding options as of December 31, 2017	10,155,427		$	10.31	7.12	$	145,763
Granted	1,170,118		34.73
Exercised	(2,998,329	)	7.53
Forfeited and cancelled	(315,064	)	16.03

Outstanding options as of September 30, 2018	8,012,152		$	14.69	7.03	$	573,604

Options vested and exercisable as of September 30, 2018	4,616,492		$	9.07	6.21	$	356,433

Aggregate intrinsic value represents the difference between the fair value of the Company’s Class A common stock as reported on the New York Stock Exchange and the exercise price of outstanding “in-the-money” options. The aggregate intrinsic value of stock options exercised was $56.2 million and $130.7 million during the three and nine months ended September 30, 2018, respectively, and $18.6 million and $119.3 million during the three and nine months ended September 30, 2017, respectively.

The total estimated grant date fair value of options vested was $4.6 million and $17.6 million during the three and nine months ended September 30, 2018, respectively, and $3.0 million and $12.2 million during the three and nine months ended September 30, 2017, respectively.

The weighted-average grant-date fair value per share of options granted was $28.84 and $16.04 during the three and nine months ended September 30, 2018, respectively, and $13.48 during the nine months ended September 30, 2017, respectively. No options were granted in the three months ended September 30, 2017.

On February 28, 2017, the Company granted a total of 555,000 shares of performance-based stock options in three distinct awards to an employee with grant date fair values of $13.48, $10.26 and $8.41 per share for a total grant value of $5.9 million. The first half of each award vests upon satisfaction of a performance condition and the remainder vests thereafter in equal monthly installments over a 24-month period. The achievement window expires after 4.3 years from the date of grant and the stock options expire seven years after the date of grant. The performance condition for the first award was satisfied on March 31, 2018.

The stock options are amortized over a derived service period, as adjusted, of 3.1 years, 4.4 years and 4.9 years, respectively. The stock options value and the derived service period were estimated using the Monte-Carlo simulation model. The following table summarizes the details of the performance options:

	Number of options outstanding	Weighted- average exercise price (per share)		Weighted- average remaining contractual term (in years)	Aggregate intrinsic value (in thousands)
Outstanding options as of December 31, 2017	555,000	$	31.72	6.00	$	—
Granted	—	—
Exercised	—	—
Forfeited and cancelled	—	—

Outstanding options as of September 30, 2018	555,000	$	31.72	5.41	$	30,281

Options vested and exercisable as of September 30, 2018	92,500	$	31.72	5.41	$	5,047

As of September 30, 2018, total unrecognized compensation cost related to nonvested stock options was $36.2 million, which will be amortized over a weighted-average period of 2.1 years.

Restricted Stock Units

	Number of awards outstanding		Weighted- average grant date fair value (per share)		Aggregate intrinsic value (in thousands)
Nonvested RSUs as of December 31, 2017	5,665,459		$	29.29	$	133,648
Granted	3,930,656		40.52
Vested	(1,607,997	)	29.31
Forfeited and cancelled	(619,200	)	30.78

Nonvested RSUs as of September 30, 2018	7,368,918		$	35.16	$	635,766

As of September 30, 2018, total unrecognized compensation cost related to nonvested RSUs was $238.9 million, which will be amortized over a weighted-average period of 3.1 years.

Valuation Assumptions

The fair value of employee stock options was estimated on the date of grant using the following assumptions in the Black-Scholes option pricing model:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2018			2017		2018			2017
Employee Stock Options:
Fair value of common stock	$	62.66		—		$	33.01- $62.66		$	24.77 -$31.96
Expected term (in years)	6.08			—		6.08			6.08
Expected volatility	43.6		%	—		43.6%-44.2		%	46.1%-47.6		%
Risk-free interest rate	2.8		%	—		2.7%-2.9		%	1.9%-2.1		%
Dividend rate	0		%	—		0		%	0		%

Employee Stock Purchase Plan:
Expected term (in years)	—			0.5		0.5			0.5
Expected volatility	—			33.2	%	39.8		%	33.2		%
Risk-free interest rate	—			1.1	%	2.1		%	1.1		%
Dividend rate	—			0	%	0		%	0		%

The following assumptions were used in the Monte Carlo simulation model to estimate the fair value and the derived service period of the performance options:

Asset volatility	40		%
Equity volatility	45		%
Discount rate	14		%
Stock price at grant date	$	31.72

In May 2017, the FASB issued ASU 2017-09, “Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting”, ASU 2017-09 clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. ASU 2017-09 allows companies to make certain changes to awards, such as vesting conditions, without accounting for them as modifications. It does not change the accounting for modifications. ASU 2017-09 should be applied prospectively to awards modified on or after the adoption date. The Company adopted ASU 2017-09 in the first quarter of 2018. The adoption of this guidance did not have an impact on the Company’s financial position, results of operations or cash flows.

Stock-Based Compensation Expense

The Company recorded total stock-based compensation expense as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Cost of revenue	$	284	$	180	$	772	$	460
Research and development	10,879		6,493		28,500		16,687
Sales and marketing	5,246		2,603		14,154		6,961
General and administrative	6,332		4,912		17,861		11,865

Total	$	22,741	$	14,188	$	61,287	$	35,973

Net Loss Per Share Attributable to Common Stockholders

9 Months Ended

Sep. 30, 2018

Net Loss Per Share Attributable to Common Stockholders

Net Loss Per Share Attributable to Common Stockholders

14. Net Loss Per Share Attributable to Common Stockholders

Basic and diluted net loss per common share is presented in conformity with the two-class method required for participating securities.

Class A and Class B common stock are the only outstanding equity in the Company. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to ten votes per share. Shares of Class B common stock may be converted into Class A common stock at any time at the option of the stockholder, and are automatically converted into Class A common stock upon sale or transfer, subject to certain limited exceptions.

Basic net loss per share attributable to common stockholders is computed using the weighted-average number of common shares outstanding during the period. Diluted net loss per share attributable to common stockholders is computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. The dilutive effect of these potential common shares is reflected in diluted earnings per share by application of the treasury stock method.

The following table sets forth the calculation of basic and diluted net loss per share attributable to common stockholders during the periods presented (in thousands, except share and per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Net loss attributable to common stockholders	$	(27,056	)	$	(23,453	)	$	(74,791	)	$	(44,789	)

Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted	98,019,629			92,156,768			96,359,437			90,543,087

Net loss per share attributable to common stockholders, basic and diluted	$	(0.28	)	$	(0.25	)	$	(0.78	)	$	(0.49	)

The following outstanding shares of common stock equivalents were excluded from the calculation of the diluted net loss per share attributable to common stockholders because their effect would have been anti-dilutive:

	As of September 30,
	2018	2017
Stock options issued and outstanding	8,567,152	11,380,189
Nonvested restricted stock units issued and outstanding	7,368,918	4,384,898
Class A common stock reserved for Twilio.org	635,014	680,397
Class A common stock committed under 2016 ESPP	127,327	224,126
Conversion spread*	233,799	—
Unvested shares subject to repurchase	209	16,033

Total	16,932,419	16,685,643

*Since the Company expects to settle the principal amount of its outstanding convertible senior notes in cash and any excess in shares of the Company’s Class A common stock, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The conversion spread will have a dilutive impact on diluted net income per share of Class A common stock when the average market price of the Company’s Class A common stock for a given period exceeds the conversion price of $70.90 per share for the Notes.

Income Taxes	9 Months Ended
Income Taxes	Sep. 30, 2018
Income Taxes
Income Taxes	15. Income Taxes In October 2016, the FASB issued ASU 2016-16, ‘‘Intra-Entity Transfers Other Than Inventory’’, which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The Company adopted ASU 2016-16 in the first quarter 2018. Adoption of the ASU did not have any impact on the Company’s financial statements. The Company determines its income tax provision or benefit for interim periods using an estimate of its annual effective tax rate, adjusted for discrete items occurring in the quarter. The primary difference between the Company’s effective tax rate and the federal statutory rate relates to the net operating losses in jurisdictions with a valuation allowance or a zero tax rate. The Company recorded a provision for income taxes of $0.1 million and $0.4 million for the three and nine months ended September 30, 2018, respectively, and $0.4 million and $0.9 million for the three and nine months ended September 30, 2017, respectively. The provision for income taxes consists primarily of income taxes and withholding taxes in foreign jurisdictions in which the Company conducts business. The Company’s U.S. operations have been in a loss position and the Company maintains a full valuation allowance against its U.S. deferred tax assets. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35 percent to 21 percent; (2) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized; (6) creating the base erosion anti-abuse tax (“BEAT”), a new minimum tax; (7) creating a new limitation on deductible interest expense; and (8) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017. The SEC staff issued SAB 118, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. The Company has not completed its accounting assessment for the effects of the Tax Act as of September 30, 2018; however, the final accounting assessment will occur no later than one year from the date the Tax Act was enacted. The Company has also considered and estimated a number of provisions of the Tax Act effective January 1, 2018 and, based on the initial assessment, the Company has determined that the Tax Act did not have a material effect on its consolidated financial statements for the three and nine months ended September 30, 2018.

Subsequent Events	9 Months Ended
Subsequent Events	Sep. 30, 2018
Subsequent Events
Subsequent Events	16. Subsequent Events On October 15, 2018, the Company and SendGrid, Inc. (“SendGrid”) announced a definitive agreement (the “Merger Agreement”) for the Company to acquire SendGrid. Under the terms of the Merger Agreement, shareholders of SendGrid will receive 0.485 of a Company share of Class A common stock for each SendGrid share they hold. Based upon the SendGrid shares outstanding as of October 10, 2018, the Company would be required to issue approximately 26.3 million new shares, a value of approximately $2.0 billion at the time of the announcement of the transaction. The boards of directors of each of the Company and SendGrid have approved the transaction, which is also subject to approval by each of SendGrid’s and the Company’s stockholders, clearance under the Hart-Scott-Rodino Antitrust Improvements Act and other regulatory reviews, and other customary closing conditions. Under the terms of the Merger Agreement, the Company will pay SendGrid $120 million if the merger is not consummated under certain circumstances, including if the Merger Agreement is terminated relating to a Company change in board recommendation in connection with an alternative transaction. If the Merger Agreement is terminated relating to a change in board recommendation and/or alternative transaction by SendGrid, SendGrid will be required to pay the Company $69 million. The proposed transaction is expected to close in the first half of 2019. During the nine months ended September 30, 2018, the Company incurred $1.0 million in expenses related to this transaction.

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2018

Summary of Significant Accounting Policies

Basis of Presentation

(a)Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K filed with the SEC on March 1, 2018 (“Annual Report”).

The condensed consolidated balance sheet as of December 31, 2017, included herein, was derived from the audited financial statements as of that date, but may not include all disclosures including certain notes required by U.S. GAAP on an annual reporting basis.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year 2018 or any future period.

Principles of Consolidation

(b)Principles of Consolidation

The condensed consolidated financial statements include the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated.

Use of Estimates

(c)Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are used for, but not limited to, revenue allowances and returns; recoverability of long-lived and intangible assets; capitalization and useful life of the Company’s capitalized internal-use software development costs; fair value of acquired intangible assets and goodwill; accruals and contingencies. Estimates are based on historical experience and on various assumptions that the Company believes are reasonable under current circumstances. However, future events are subject to change and best estimates and judgments may require further adjustments; therefore, actual results could differ materially from those estimates. Management periodically evaluates such estimates and they are adjusted prospectively based upon such periodic evaluation.

Concentration of Credit Risk

(d)Concentration of Credit Risk

Financial instruments that potentially expose the Company to a concentration of credit risk consist primarily of cash, cash equivalents, marketable securities, restricted cash and accounts receivable. The Company maintains cash, cash equivalents, marketable securities and restricted cash with financial institutions that management believes are financially sound and have minimal credit risk exposure although the balances will exceed insured limits.

The Company sells its services to a wide variety of customers. If the financial condition or results of operations of any significant customers deteriorate substantially, operating results could be adversely affected. To reduce credit risk, management performs ongoing credit evaluations of the financial condition of significant customers. The Company does not require collateral from its credit customers and maintains reserves for estimated credit losses on customer accounts when considered necessary. Actual credit losses may differ from the Company’s estimates. During the three and nine months ended September 30, 2018 and 2017, respectively, there was no customer organization that accounted for more than 10% of the Company’s total revenue.

As of September 30, 2018 and December 31, 2017, no customer organization represented more than 10% of the Company’s gross accounts receivable.

Revenue Recognition

(e)Significant Accounting Policies

Effective January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers”, which replaced the existing revenue recognition guidance, ASC 605, and outlines a single set of comprehensive principles for recognizing revenue under U.S. GAAP. Among other things, ASC 606 requires entities to assess the products or services promised in contracts with customers at contract inception to determine the appropriate unit at which to record revenue, which is referred to as a performance obligation. Revenue is recognized when control of the promised products or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those products or services.

The Company adopted ASC 606 using the modified retrospective method with cumulative catch-up adjustment to the opening retained earnings as of January 1, 2018. Results for reporting periods beginning after December 31, 2017 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historical accounting policies prior to adoption. In adopting the standard, the Company elected to apply the new guidance only to those contracts which were not completed as of the date of the adoption.

The impact of adopting the new standard on the Company’s consolidated financial statements was insignificant. The Company recorded a net cumulative catch-up adjustment to the beginning retained earnings as of January 1, 2018, of $0.7 million.

The primary impact relates to the deferral of incremental commission costs of obtaining new contracts. Under ASC 605, the Company deferred only direct and incremental commission costs to obtain a contract and amortized those costs on a straight-line basis over the term of the related subscription contract. Under the new standard, the Company defers all incremental commission costs to obtain the contract and amortizes these costs on a straight-line basis over the expected term of benefit of the underlying asset, which was determined to be five years.

The impact on the Company’s revenue recognition policies was insignificant. Prior to the adoption of ASC 606, the Company recognized the majority of its revenue according to the usage by its customers in the period in which that usage occurred. ASC 606 continues to support the recognition of revenue over time, and on a usage basis, for the majority of the Company’s contracts due to continuous transfer of control to the customer. The impact on the Company’s balance sheet presentation includes presenting customer refundable prepayments as customer deposit liabilities, whereas under ASC 605 these were included in deferred revenues.

There was not a significant tax impact to the Company’s consolidated statements of operations and consolidated balance sheet relating to the adoption of the new standard as there is a full valuation allowance due to the Company’s history of continued losses.

Revenue Recognition

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of allowances for credits and any taxes collected from customers, which are subsequently remitted to governmental authorities.

The Company determines revenue recognition through the following steps:

·

Identification of the contract, or contracts, with a customer;

·

Identification of the performance obligations in the contract;

·

Determination of the transaction price;

·

Allocation of the transaction price to the performance obligations in the contract; and

·

Recognition of revenue when, or as, the Company satisfies a performance obligation.

Nature of Products and Services

The Company’s revenue is primarily derived from usage-based fees earned from customers accessing the Company’s enterprise cloud computing services. Platform access is considered a monthly series comprising one performance obligation and usage-based fees are recognized as revenue in the period in which the usage occurs. In each of the three and nine months ended September 30, 2018, the revenue from usage-based fees represented 83% of total revenue. In the three and nine months ended September 30, 2017, the revenue from usage-based fees represented 82% and 83% of total revenue, respectively.

Subscription-based fees are derived from certain term-based contracts, such as with the sales of telephone numbers, short codes and customer support. Term-based contracts revenue is recognized on a ratable basis over the contractual term of the arrangement beginning on the date that the service is made available to the customer. In each of the three and nine months ended September 30, 2018, the revenue from term-based fees represented 17% of total revenue. In the three and nine months ended September 30, 2017, the revenue from term-based fees represented 18% and 17% of total revenue, respectively.

No significant judgments are required in determining whether products and services are considered distinct performance obligations and should be accounted for separately versus together, or to determine the stand-alone selling price (“SSP”).

Refer to Note 10, Revenue by Geographic Area, for additional disaggregation.

The Company’s arrangements do not contain general rights of return. However, credits may be issued on a case-by-case basis. The contracts do not provide customers with the right to take possession of the software supporting the applications. 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.

The reserve for sales credits is included in accounts receivable and is calculated based on historical trends and any specific risks identified in processing transactions. Changes in the reserve are recorded against revenue.

Deferred Revenue and Customer Deposits

Deferred revenue is recorded when cash payments are received in advance of future usage on non-cancellable contracts. Customer refundable prepayments are recorded as customer deposits. During the three and nine months ended September 30, 2018, the Company recognized $3.9 million and $11.1 million of revenue, respectively, that was included in the deferred revenue balance, as adjusted for ASC 606 on January 1, 2018.

Deferred Sales Commissions

The Company records an asset for the incremental costs of obtaining a contract with a customer, for example, sales commissions that are earned upon execution of contracts. The Company uses the portfolio method to recognize the amortization expense related to these capitalized costs related to initial contracts, upsells and renewals, and such expense is recognized over the estimated period of benefit of the capitalized commissions, which is determined to be five years. Total net capitalized costs as of September 30, 2018 were $7.7 million and are included in prepaid expenses and other current and long-term assets in the accompanying condensed consolidated balance sheet. Amortization of these assets was $0.4 million and $0.9 million in the three and nine months ended September 30, 2018, respectively, and is included in sales and marketing expense in the accompanying condensed consolidated statement of operations.

Other than adoption of ASC 606, there were no changes to our significant accounting policies as described in our Annual Report.

Restricted Cash

(f)Restricted Cash

In November 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-18, “Statement of Cash Flows (Topic 230) — Restricted Cash”. This standard provides guidance on the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. Restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statements of cash flows. The amendments of this ASU should be applied using a retrospective transition method and are effective for reporting periods beginning after December 15, 2017. The Company adopted ASU 2016-18 in the first quarter of 2018 and applied the guidance retrospectively to the prior period’s condensed consolidated statement of cash flows with the following impact (in thousands):

	Nine Months Ended September 30, 2017
	As Originally Reported			As Adjusted
Cash used in investing activities	$	(235,795	)	$	(236,965	)
Cash, cash equivalents and restricted cash — beginning of period	$	305,665		$	314,280
Cash, cash equivalents and restricted cash — end of period	$	91,906		$	99,351

Other than the revised statement of cash flows presentation of restricted cash, the adoption of ASU 2016-18 did not have an impact on the Company’s financial position and results of operations.

Recently Issued Accounting Guidance, Not yet Adopted

(g)Recently Issued Accounting Guidance, Not yet Adopted

In August 2018, the FASB issued ASU 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract”. This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820) Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement”. The amendments under ASU 2018-13 remove, add and modify certain disclosure requirements on fair value measurements in ASC 820. The amendments are effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently evaluating the impact the new standard will have on its consolidated financial statements.

In July 2018, the FASB issued ASU 2018-09, “Codification Improvements”, which does not prescribe any new accounting guidance, but instead makes minor improvements and clarifications of several different FASB ASC areas based on comments and suggestions made by various stakeholders. Certain updates are applicable immediately while others provide for a transition period to adopt as part of the next fiscal year beginning after December 15, 2018. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements .

In June 2018, the FASB issued ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting”, which aligns the measurement and classification for share-based payments to non-employees with the accounting guidance for share-based payments to employees. Among other requirements, the measurement of non-employee awards will now be fixed at the grant date, rather than remeasured at every reporting date. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018, with early application permitted. The Company will adopt this guidance upon its effective date. The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment”, which removes the second step of the goodwill impairment test that requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This guidance is effective prospectively for interim and annual reporting periods beginning after December 15, 2019. The Company will adopt this guidance upon its effective date. The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements .

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments”, which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted for annual and interim periods beginning after December 15, 2018. The Company is evaluating the impact of this guidance on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases”, which was further clarified by ASU 2018-10, “Codification Improvements to Topic 842, Leases”, and ASU 2018-11, “Leases - Targeted Improvements”, both issued in July 2018. ASU 2016-02 affects all entities that lease assets and will require lessees to recognize a lease liability and a right-of-use asset for all leases (except for short-term leases that have a duration of less than one year) as of the date on which the lessor makes the underlying asset available to the lessee. For lessors, accounting for leases is substantially the same as in prior periods. ASU 2018-10 clarifies or corrects unintended application of guidance related to ASU 2016-02. The amendment affects narrow aspects of ASU 2016-02 related to the implicit rate in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments. ASU 2018-11 adds a transition option for all entities and a practical expedient only for lessors. The transition option allows entities to not apply the new leases standard in the comparative periods they present in their financial statements in the year of adoption. Under the transition option, entities can opt to continue to apply the legacy guidance in ASC 840, “Leases”, including its disclosure requirements, in the comparative periods presented in the year they adopt the new leases standard. Entities that elect this transition option will still be required to adopt the new leases standard using the modified retrospective transition method required by the standard, but they will recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. The practical expedient provides lessors with an option to not separate the non-lease components from the associated lease components when certain criteria are met and requires them to account for the combined component in accordance with the revenue recognition standard in ASC 606 if the associated non-lease components are the predominant components. The new standards are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. For leases existing at, or entered into after the beginning of the earliest comparative period presented in the financial statements, lessees and lessors must apply a modified retrospective transition approach. While the Company expects the adoption of these standards to result in an increase to the reported assets and liabilities, the Company has not yet determined the full impact that the adoption of this standard will have on its consolidated financial statements.

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2018

ASU 2016-18 - Restricted Cash

Summary of Significant Accounting Policies

Schedule of impact from adoption of guidance

The Company adopted ASU 2016-18 in the first quarter of 2018 and applied the guidance retrospectively to the prior period’s condensed consolidated statement of cash flows with the following impact (in thousands):

	Nine Months Ended September 30, 2017
	As Originally Reported			As Adjusted
Cash used in investing activities	$	(235,795	)	$	(236,965	)
Cash, cash equivalents and restricted cash — beginning of period	$	305,665		$	314,280
Cash, cash equivalents and restricted cash — end of period	$	91,906		$	99,351

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2018

Fair Value Measurements

Schedule of financial assets measured at fair value on a recurring basis

The following tables provide the financial assets measured at fair value on a recurring basis as of September 30, 2018 and December 31, 2017 (in thousands):

	Amortized Cost or Carrying		Gross Unrealized		Gross Unrealized Losses Less Than			Gross Unrealized Losses More Than			Fair Value Hierarchy as of September 30, 2018						Aggregate
	Value		Gains		12 Months			12 Months			Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and cash equivalents:
Money market funds	$	432,040	$	—	$	—		$	—		$	432,040	$	—	$	—	$	432,040
Commercial paper	9,979		—		—			—			—		9,979		—		9,979

Total included in cash and cash equivalents	442,019		—		—			—			432,040		9,979		—		442,019

Marketable securities:
U.S. Treasury securities	59,858		—		(14		)	(54		)	59,790		—		—		59,790
Corporate debt securities and commercial paper	216,835		—		(174		)	(230		)	—		216,431		—		216,431

Total marketable securities	276,693		—		(188		)	(284		)	59,790		216,431		—		276,221

Total financial assets	$	718,712	$	—	$	(188	)	$	(284	)	$	491,830	$	226,410	$	—	$	718,240

	Amortized Cost or Carrying		Gross Unrealized		Gross Unrealized Losses Less Than			Gross Unrealized Losses More Than		Fair Value Hierarchy as of December 31, 2017						Aggregate
	Value		Gains		12 Months			12 Months		Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and cash equivalents:
Money market funds	$	95,432	$	—	$	—		$	—	$	95,432	$	—	$	—	$	95,432

Total included in cash and cash equivalents	95,432		—		—			—		95,432		—		—		95,432

Marketable securities:
U.S. Treasury securities	59,962		—		(216		)	—		59,746		—		—		59,746
Corporate debt securities and commercial paper	116,223		—		(382		)	—		—		115,841		—		115,841

Total marketable securities	176,185		—		(598		)	—		59,746		115,841		—		175,587

Total financial assets	$	271,617	$	—	$	(598	)	$	—	$	155,178	$	115,841	$	—	$	271,019

Schedule of contractual maturities of marketable securities

The following table summarizes the contractual maturities of marketable securities as of September 30, 2018 and December 31, 2017 (in thousands):

	As of September 30, 2018				As of December 31, 2017
	Amortized Cost		Aggregate Fair Value		Amortized Cost		Aggregate Fair Value
Financial Assets:
Less than one year	$	270,692	$	270,276	$	108,584	$	108,360
One to two years	6,001		5,945		67,601		67,227

Total	$	276,693	$	276,221	$	176,185	$	175,587

Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2018

Property and Equipment

Schedule of property and equipment

Property and equipment consisted of the following (in thousands):

	As of September 30,			As of December 31,
	2018			2017
Capitalized internal-use software development costs	$	67,287		$	49,177
Leasehold improvements	14,600			14,246
Office equipment	12,117			9,652
Furniture and fixtures	2,310			1,976
Software	2,430			1,675

Total property and equipment	98,744			76,726
Less: accumulated depreciation and amortization	(39,539		)	(26,185		)

Total property and equipment, net	$	59,205		$	50,541

Business Combinations (Tables)

9 Months Ended

Sep. 30, 2018

Ytica.com a.s.

Business Combinations

Schedule of purchase price allocation

The following table presents the preliminary purchase price allocation recorded in the Company’s condensed consolidated balance sheet as of September 30, 2018 (in thousands):

	Total
Net tangible assets	$	(1,036	)
Intangible assets (1)	9,920
Goodwill(2)	12,873

Total purchase price	$	21,757

(1)

Identifiable finite-lived intangible assets were comprised of the following (in thousands):

(2)

The goodwill is primarily attributable to the future cash flows to be realized from the acquired technology platform as well as operational synergies. The Company intends to file elections that make the goodwill deductible for U.S. tax purposes.

Schedule of identifiable finite-lived intangible assets

Identifiable finite-lived intangible assets were comprised of the following (in thousands):

Core Network Dynamics GmbH

Business Combinations

Schedule of purchase price allocation

The following table presents the preliminary purchase price allocation recorded in the Company’s condensed consolidated balance sheet as of September 30, 2018 (in thousands):

	Total
Net tangible liabilities	$	(244	)
Intangible assets (1)	4,500
Goodwill(2)	6,800

Total purchase price	$	11,056

(1)

Identifiable finite-lived intangible assets were comprised of the following (in thousands):

(2)

The goodwill is primarily attributable to the future cash flows to be realized from the operating synergies between the acquired technology platform and the Company’s Programmable Wireless products. The Company intends to file elections that make the goodwill deductible for U.S. tax purposes.

Schedule of identifiable finite-lived intangible assets

Identifiable finite-lived intangible assets were comprised of the following (in thousands):

Beepsend AB, a messaging provider based in Sweden

Business Combinations

Schedule of purchase price allocation

The following table presents the purchase price allocation, as adjusted, recorded in the Company’s condensed consolidated balance sheet as of March 31, 2017 (in thousands):

	Total
Net tangible liabilities	$	(3,575	)
Intangible assets(1)	13,700
Goodwill(2)	12,837

Total purchase price	$	22,962

(1)

Identifiable finite-lived intangible assets were comprised of the following (in thousands):

	Total		Estimated life (in years)
Developed technology	$	5,000	4
Customer relationships	6,100		7 - 8
Supplier relationships	2,600		5

Total intangible assets acquired	$	13,700

(2)

The goodwill is primarily attributable to the future cash flows to be realized from the acquired technology platform, existing customer and supplier relationships as well as operational synergies. Goodwill is deductible for tax purposes.

Schedule of identifiable finite-lived intangible assets

Identifiable finite-lived intangible assets were comprised of the following (in thousands):

	Total		Estimated life (in years)
Developed technology	$	5,000	4
Customer relationships	6,100		7 - 8
Supplier relationships	2,600		5

Total intangible assets acquired	$	13,700

Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets

Schedule of goodwill balance

Goodwill balance as of September 30, 2018 and December 31, 2017 was as follows (in thousands):

	Total
Balance as of December 31, 2017	$	17,851
Goodwill additions related to 2018 acquisitions	19,673
Effect of exchange rate	(418		)

Balance as of September 30, 2018	$	37,106

Schedule of intangible assets

Intangible assets consisted of the following (in thousands):

	As of September 30, 2018
	Gross		Accumulated Amortization			Net
Amortizable intangible assets:
Developed technology	$	27,679	$	(8,689	)	$	18,990
Customer relationships	8,245		(1,800		)	6,445
Supplier relationships	2,738		(850		)	1,888
Trade name	60		(60		)	—
Patent	2,325		(159		)	2,166

Total amortizable intangible assets	41,047		(11,558		)	29,489

Non-amortizable intangible assets:	32		—			32
Domain names
Trademarks	263		—			263

Total	$	41,342	$	(11,558	)	$	29,784

	As of December 31, 2017
	Gross		Accumulated Amortization			Net
Amortizable intangible assets:
Developed technology	$	14,941	$	(5,476	)	$	9,465
Customer relationships	7,159		(1,006		)	6,153
Supplier relationships	2,881		(500		)	2,381
Trade name	60		(60		)	—
Patent	1,878		(108		)	1,770

Total amortizable intangible assets	26,919		(7,150		)	19,769

Non-amortizable intangible assets:
Domain names	32		—			32
Trademarks	263		—			263

Total	$	27,214	$	(7,150	)	$	20,064

Schedule of total estimated future amortization expense

Total estimated future amortization expense was as follows (in thousands):

	As of September 30, 2018
2018 (remaining three months)	$	3,272
2019	8,704
2020	6,007
2021	4,592
2022	3,270
Thereafter	3,644

Total	$	29,489

Accrued Expenses and Other Liabilities (Tables)

9 Months Ended

Sep. 30, 2018

Accrued Expenses and Other Liabilities

Schedule of accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

	As of September 30,		As of December 31,
	2018		2017
Accrued payroll and related	$	11,423	$	4,898
Accrued bonus and commission	8,170		4,777
Accrued cost of revenue	23,023		10,876
Sales and other taxes payable	22,746		20,877
ESPP contributions	4,536		1,338
Deferred rent	1,334		1,048
Accrued other expense	22,662		9,800

Total accrued expenses and other current liabilities	$	93,894	$	53,614

Schedule of other long-term liabilities

Other long-term liabilities consisted of the following (in thousands):

	As of September 30,		As of December 31,
	2018		2017
Deferred rent	$	7,557	$	8,480
Deferred tax liability, net	4,852		2,452
Acquisition Holdback	2,000		—
Accrued other expenses	830		477

Total other long-term liabilities	$	15,239	$	11,409

Convertible Senior Notes and Capped Call Transactions (Tables)

9 Months Ended

Sep. 30, 2018

Convertible Senior Notes and Capped Call Transactions

Schedule of net carrying amount of the liability and equity components of the Notes

The net carrying amount of the liability component of the Notes was as follows (in thousands):

	As of September 30, 2018
Principal	$	550,000
Unamortized discount	(111,717		)
Unamortized issuance costs	(9,505		)

Net carrying amount	$	428,778

The net carrying amount of the equity component of the Notes was as follows (in thousands):

	As of September 30, 2018
Proceeds allocated to the conversion options (debt discount)	$	119,435
Issuance costs	(2,819		)

Net carrying amount	$	116,616

Schedule of interest expense recognized related to the Notes

The following table sets forth the interest expense recognized related to the Notes (in thousands):

	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018
Contractual interest expense	$	344	$	508
Amortization of debt issuance costs	446		657
Amortization of debt discount	5,233		7,717

Total interest expense related to the Notes	$	6,023	$	8,882

Supplemental Balance Sheet Information (Tables)

9 Months Ended

Sep. 30, 2018

Supplemental Balance Sheet Information

Schedule of the allowance for doubtful accounts

A roll-forward of the Company’s reserves is as follows (in thousands):

(a)Allowance for doubtful accounts:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2018			2017		2018			2017
Balance, beginning of period	$	2,536		$	923	$	1,033		$	1,076
Additions	1,111			125		2,626			407
Write-offs	(5		)	—		(17		)	(435		)

Balance, end of period	$	3,642		$	1,048	$	3,642		$	1,048

Schedule of the sales credit reserve

A roll-forward of the Company’s reserves is as follows (in thousands):

b)Sales credit reserve:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Balance, beginning of period	$	2,625		$	734		$	1,761		$	544
Additions	1,651			104			4,301			1,076
Deductions against reserve	(773		)	(238		)	(2,559		)	(1,020		)

Balance, end of period	$	3,503		$	600		$	3,503		$	600

Revenue by Geographic Area (Tables)

9 Months Ended

Sep. 30, 2018

Revenue by Geographic Area

Schedule of revenue by geographic area

The following table sets forth revenue by geographic area (dollars in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Revenue by geographic area:
United States	$	125,697		$	76,713		$	335,575		$	221,914
International	43,198			23,829			110,190			61,870

Total	$	168,895		$	100,542		$	445,765		$	283,784

Percentage of revenue by geographic area:
United States	74		%	76		%	75		%	78		%
International	26		%	24		%	25		%	22		%

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies

Schedule of future minimum lease payments under non-cancelable operating leases

Future minimum lease payments under non-cancelable operating leases were as follows (in thousands):

Year Ending December 31:	As of September 30, 2018
2018 (remaining three months)	$	3,446
2019	21,195
2020	27,798
2021	30,209
2022	29,735
Thereafter	113,211

Total minimum lease payments	$	225,594

Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2018

Stockholders' Equity

Schedule of reserved shares of common stock for issuance

	As of September 30,	As of December 31,
	2018	2017
Stock options issued and outstanding	8,567,152	10,710,427
Nonvested restricted stock units issued and outstanding	7,368,918	5,665,459
Class A common stock reserved for Twilio.org	635,014	635,014
Stock-based awards available for grant under 2016 Plan	10,773,682	10,200,189
Stock-based awards available for grant under 2016 ESPP	3,216,460	2,478,343
Class A common stock reserved for the convertible senior notes	10,472,165	—

Total	41,033,391	29,689,432

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2018

Stock-Based Compensation

Schedule of restricted stock unit activity

	Number of awards outstanding		Weighted- average grant date fair value (per share)		Aggregate intrinsic value (in thousands)
Nonvested RSUs as of December 31, 2017	5,665,459		$	29.29	$	133,648
Granted	3,930,656		40.52
Vested	(1,607,997	)	29.31
Forfeited and cancelled	(619,200	)	30.78

Nonvested RSUs as of September 30, 2018	7,368,918		$	35.16	$	635,766

Schedule of valuation assumptions for ESPP

	Three Months Ended September 30,			Nine Months Ended September 30,
	2018	2017		2018		2017
Employee Stock Purchase Plan:
Expected term (in years)	—	0.5		0.5		0.5
Expected volatility	—	33.2	%	39.8	%	33.2	%
Risk-free interest rate	—	1.1	%	2.1	%	1.1	%
Dividend rate	—	0	%	0	%	0	%

Schedule of stock based compensation expense

The Company recorded total stock-based compensation expense as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Cost of revenue	$	284	$	180	$	772	$	460
Research and development	10,879		6,493		28,500		16,687
Sales and marketing	5,246		2,603		14,154		6,961
General and administrative	6,332		4,912		17,861		11,865

Total	$	22,741	$	14,188	$	61,287	$	35,973

Employee and Nonemployee Stock Options

Stock-Based Compensation

Schedule of stock options activity

	Number of options outstanding		Weighted- average exercise price (per share)		Weighted- average remaining contractual term (in years)	Aggregate intrinsic value (in thousands)
Outstanding options as of December 31, 2017	10,155,427		$	10.31	7.12	$	145,763
Granted	1,170,118		34.73
Exercised	(2,998,329	)	7.53
Forfeited and cancelled	(315,064	)	16.03

Outstanding options as of September 30, 2018	8,012,152		$	14.69	7.03	$	573,604

Options vested and exercisable as of September 30, 2018	4,616,492		$	9.07	6.21	$	356,433

Employee Stock Options

Stock-Based Compensation

Schedule of valuation assumptions

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018			2017	2018			2017
Employee Stock Options:
Fair value of common stock	$	62.66		—	$	33.01- $62.66		$	24.77 -$31.96
Expected term (in years)	6.08			—	6.08			6.08
Expected volatility	43.7		%	—	43.6%-44.2		%	46.1%-47.6		%
Risk-free interest rate	2.8		%	—	2.7%-2.9		%	1.9%-2.1		%
Dividend rate	0		%	—	0		%	0		%

Performance-based stock options

Stock-Based Compensation

Schedule of stock options activity

	Number of options outstanding	Weighted- average exercise price (per share)		Weighted- average remaining contractual term (in years)	Aggregate intrinsic value (in thousands)
Outstanding options as of December 31, 2017	555,000	$	31.72	6.00	$	—
Granted	—	—
Exercised	—	—
Forfeited and cancelled	—	—

Outstanding options as of September 30, 2018	555,000	$	31.72	5.41	$	30,281

Options vested and exercisable as of September 30, 2018	92,500	$	31.72	5.41	$	5,047

Schedule of valuation assumptions

Asset volatility	40		%
Equity volatility	45		%
Discount rate	14		%
Stock price at grant date	$	31.72

Net Loss Per Share Attributable to Common Stockholders (Tables)

9 Months Ended

Sep. 30, 2018

Net Loss Per Share Attributable to Common Stockholders

Schedule of the calculation of basic and diluted net loss per share attributable to common stockholders

The following table sets forth the calculation of basic and diluted net loss per share attributable to common stockholders during the periods presented (in thousands, except share and per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Net loss attributable to common stockholders	$	(27,056	)	$	(23,453	)	$	(74,791	)	$	(44,789	)

Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted	98,019,629			92,156,768			96,359,437			90,543,087

Net loss per share attributable to common stockholders, basic and diluted	$	(0.28	)	$	(0.25	)	$	(0.78	)	$	(0.49	)

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

	As of September 30,
	2018	2017
Stock options issued and outstanding	8,567,152	11,380,189
Nonvested restricted stock units issued and outstanding	7,368,918	4,384,898
Class A common stock reserved for Twilio.org	635,014	680,397
Class A common stock committed under 2016 ESPP	127,327	224,126
Conversion spread*	233,799	—
Unvested shares subject to repurchase	209	16,033

Total	16,932,419	16,685,643

*Since the Company expects to settle the principal amount of its outstanding convertible senior notes in cash and any excess in shares of the Company’s Class A common stock, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The conversion spread will have a dilutive impact on diluted net income per share of Class A common stock when the average market price of the Company’s Class A common stock for a given period exceeds the conversion price of $70.90 per share for the Notes.

Summary of Significant Accounting Policies - Concentration of Credit Risk (Details) - customer	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Revenue \| Customer Concentration Risk
Concentration of Credit Risk
Number of customers	0	0	0	0
Accounts Receivable \| Credit Concentration Risk
Concentration of Credit Risk
Number of customers			0		0

Summary of Significant Accounting Policies - Impact of Adopting ASC 606 (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Jan. 01, 2018	Dec. 31, 2017
Adoption of revenue recognition guidance
Retained earnings	$ (324,516)		$ (250,438)
Incremental commission costs of obtaining new contracts
Adoption of revenue recognition guidance
Amortization period for deferred incremental commission costs of obtaining new contracts	5 years
ASU 2014-09 - Revenue from Contracts with Customers \| Impact of adopting ASC 606
Adoption of revenue recognition guidance
Retained earnings		$ 700

Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenue Recognition
Revenue recognized out of adjusted deferred revenue balance	$ 3.9		$ 11.1
Usage-based fees
Revenue Recognition
Percent of revenue	83.00%	82.00%	83.00%	83.00%
Subscription-based fees
Revenue Recognition
Percent of revenue	17.00%	18.00%	17.00%	17.00%

Summary of Significant Accounting Policies - Deferred Sales Commissions (Details) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2018 USD ($)	Sep. 30, 2018 USD ($)
Deferred Sales Commissions
Total net capitalized costs	$ 7.7	$ 7.7
Amortization of capitalized costs of obtaining a contract	$ 0.4	$ 0.9
Incremental commission costs of obtaining new contracts
Deferred Sales Commissions
Amortization period for deferred incremental commission costs of obtaining new contracts		5 years

Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Dec. 31, 2016
Restricted Cash
Cash used in investing activities	$ (148,402)	$ (236,965)
Cash, cash equivalents and restricted cash	$ 489,314	99,351	$ 120,788	$ 314,280
As Originally Reported
Restricted Cash
Cash used in investing activities		(235,795)
Cash, cash equivalents and restricted cash		$ 91,906		$ 305,665

Fair Value Measurements - Assets Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Fair Value Measurements, Financial Assets
Marketable securities, Amortized Cost	$ 276,693	$ 176,185
Marketable securities, Aggregate Fair Value	276,221	175,587
Recurring
Fair Value Measurements, Financial Assets
Marketable securities, Amortized Cost	276,693	176,185
Marketable securities, Gross Unrealized Losses Less Than 12 Months	(188)	(598)
Marketable securities, Gross Unrealized Losses More Than 12 Months	(284)
Marketable securities, Aggregate Fair Value	276,221	175,587
Total financial assets, Amortized Cost or Carrying Value	718,712	271,617
Total financial assets	718,240	271,019
Recurring \| U.S. Treasury securities
Fair Value Measurements, Financial Assets
Marketable securities, Amortized Cost	59,858	59,962
Marketable securities, Gross Unrealized Losses Less Than 12 Months	(14)	(216)
Marketable securities, Gross Unrealized Losses More Than 12 Months	(54)
Marketable securities, Aggregate Fair Value	59,790	59,746
Recurring \| Corporate debt Securities and commercial paper
Fair Value Measurements, Financial Assets
Marketable securities, Amortized Cost	216,835	116,223
Marketable securities, Gross Unrealized Losses Less Than 12 Months	(174)	(382)
Marketable securities, Gross Unrealized Losses More Than 12 Months	(230)
Marketable securities, Aggregate Fair Value	216,431	115,841
Recurring \| Level 1
Fair Value Measurements, Financial Assets
Marketable securities, Aggregate Fair Value	59,790	59,746
Total financial assets	491,830	155,178
Recurring \| Level 1 \| U.S. Treasury securities
Fair Value Measurements, Financial Assets
Marketable securities, Aggregate Fair Value	59,790	59,746
Recurring \| Level 2
Fair Value Measurements, Financial Assets
Marketable securities, Aggregate Fair Value	216,431	115,841
Total financial assets	226,410	115,841
Recurring \| Level 2 \| Corporate debt Securities and commercial paper
Fair Value Measurements, Financial Assets
Marketable securities, Aggregate Fair Value	216,431	115,841
Recurring \| Carrying Value
Fair Value Measurements, Financial Assets
Cash and cash equivalents	442,019	95,432
Recurring \| Carrying Value \| Money market funds
Fair Value Measurements, Financial Assets
Cash and cash equivalents	432,040	95,432
Recurring \| Carrying Value \| Commercial paper
Fair Value Measurements, Financial Assets
Cash and cash equivalents	9,979
Recurring \| Aggregate Fair Value
Fair Value Measurements, Financial Assets
Cash and cash equivalents	442,019	95,432
Recurring \| Aggregate Fair Value \| Money market funds
Fair Value Measurements, Financial Assets
Cash and cash equivalents	432,040	95,432
Recurring \| Aggregate Fair Value \| Commercial paper
Fair Value Measurements, Financial Assets
Cash and cash equivalents	9,979
Recurring \| Aggregate Fair Value \| Level 1
Fair Value Measurements, Financial Assets
Cash and cash equivalents	432,040	95,432
Recurring \| Aggregate Fair Value \| Level 1 \| Money market funds
Fair Value Measurements, Financial Assets
Cash and cash equivalents	432,040	$ 95,432
Recurring \| Aggregate Fair Value \| Level 2
Fair Value Measurements, Financial Assets
Cash and cash equivalents	9,979
Recurring \| Aggregate Fair Value \| Level 2 \| Commercial paper
Fair Value Measurements, Financial Assets
Cash and cash equivalents	$ 9,979

Fair Value Measurements - Convertible Senior Notes (Details) - Convertible senior notes, 0.25%, due 2023 - USD ($) $ in Millions	Sep. 30, 2018	May 31, 2018
Fair Value Measurements, Liabilities
Interest rate (as a percent)	0.25%	0.25%
Level 2
Fair Value Measurements, Liabilities
Fair value of the notes	$ 744.4

Fair Value Measurements - Marketable Securities (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Marketable Securities
Other-than-temporary impairments associated with credit losses	$ 0		$ 0
Interest earned on marketable securities	$ 800	$ 700	$ 2,200	$ 1,800

Fair Value Measurements - Contractual Maturities (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Fair Value Measurements
Less than one year, Amortized Cost	$ 270,692	$ 108,584
One to two years, Amortized Cost	6,001	67,601
Total Amortized Cost	276,693	176,185
Less than one year, Aggregate Fair Value	270,276	108,360
One to two years, Aggregate Fair Value	5,945	67,227
Total Aggregate Fair Value	$ 276,221	$ 175,587

Property and Equipment - Property and Equipment, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Property and Equipment
Total property and equipment	$ 98,744	$ 76,726
Less: accumulated depreciation and amortization	(39,539)	(26,185)
Total property and equipment, net	59,205	50,541
Capitalized internal-use software development costs
Property and Equipment
Total property and equipment	67,287	49,177
Leasehold improvements
Property and Equipment
Total property and equipment	14,600	14,246
Office equipment
Property and Equipment
Total property and equipment	12,117	9,652
Furniture and fixtures
Property and Equipment
Total property and equipment	2,310	1,976
Software
Property and Equipment
Total property and equipment	$ 2,430	$ 1,675

Property and Equipment - Depreciation and Amortization Expense (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Property and Equipment
Depreciation and amortization	$ 5.0	$ 3.4	$ 13.5	$ 9.3

Property and Equipment - Capitalized Software Development Costs (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Property and Equipment
Capitalized software development costs	$ 6,700	$ 5,500	$ 19,800	$ 15,000
Stock-based compensation capitalized in software development costs	1,500	1,200	4,434	2,712
Amortization of capitalized software development costs	$ 3,600	$ 2,200	$ 9,300	$ 5,900

Business Combinations - Consideration (Details) - USD ($) $ in Millions	1 Months Ended
	Sep. 30, 2018	Aug. 31, 2018	Feb. 28, 2017
Ytica.com a.s.
Acquisition
Total purchase price	$ 21.8
Purchase price paid in cash	21.8
Amount of purchase price placed into an escrow account	$ 3.2
Escrow effective period	18 months
Ytica.com a.s. \| Restricted Stock \| Common Class A
Acquisition
Grants (in shares)	47,574
Aggregate value	$ 3.6
Weighted average remaining contractual term (in years)	3 years
Core Network Dynamics GmbH
Acquisition
Total purchase price		$ 11.1
Purchase price paid in cash		11.1
Amount of purchase price placed into an escrow account		$ 2.0
Escrow effective period		18 months
Core Network Dynamics GmbH \| Restricted Stock \| Common Class A
Acquisition
Grants (in shares)		35,950
Aggregate value		$ 2.2
Weighted average remaining contractual term (in years)		3 years
Beepsend AB, a messaging provider based in Sweden
Acquisition
Total purchase price			$ 23.0
Purchase price paid in cash			23.0
Amount of purchase price placed into an escrow account			$ 5.0
Escrow effective period			18 months
Amount deposited into a separate escrow conditioned upon future service conditions			$ 2.0

Business Combinations - Purchase Price Allocation (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Aug. 31, 2018	Dec. 31, 2017	Feb. 28, 2017
Acquisition
Goodwill	$ 37,106		$ 17,851
Ytica.com a.s.
Acquisition
Net tangible liabilities	(1,036)
Intangible assets	9,920
Goodwill	12,873
Total purchase price	$ 21,757
Core Network Dynamics GmbH
Acquisition
Net tangible liabilities		$ (244)
Intangible assets		4,500
Goodwill		6,800
Total purchase price		$ 11,056
Beepsend AB, a messaging provider based in Sweden
Acquisition
Net tangible liabilities				$ (3,575)
Intangible assets				13,700
Goodwill				12,837
Total purchase price				$ 22,962

Business Combinations - Identifiable Finite-lived Intangible Assets (Details) - USD ($) $ in Thousands	1 Months Ended
	Sep. 30, 2018	Aug. 31, 2018	Feb. 28, 2017
Ytica.com a.s.
Acquisition
Total intangible assets acquired	$ 9,920
Net deferred tax liability	1,900
Ytica.com a.s. \| Developed technology
Acquisition
Total intangible assets acquired	$ 9,090
Estimated life (in years)	4 years
Ytica.com a.s. \| Customer relationships
Acquisition
Total intangible assets acquired	$ 830
Estimated life (in years)	2 years
Core Network Dynamics GmbH
Acquisition
Total intangible assets acquired		$ 4,500
Net deferred tax liability		1,200
Core Network Dynamics GmbH \| Developed technology
Acquisition
Total intangible assets acquired		$ 3,910
Estimated life (in years)		4 years
Core Network Dynamics GmbH \| Customer relationships
Acquisition
Total intangible assets acquired		$ 590
Estimated life (in years)		6 months
Beepsend AB, a messaging provider based in Sweden
Acquisition
Total intangible assets acquired			$ 13,700
Net deferred tax liability			2,600
Beepsend AB, a messaging provider based in Sweden \| Developed technology
Acquisition
Total intangible assets acquired			$ 5,000
Estimated life (in years)			4 years
Beepsend AB, a messaging provider based in Sweden \| Customer relationships
Acquisition
Total intangible assets acquired			$ 6,100
Beepsend AB, a messaging provider based in Sweden \| Customer relationships \| Minimum
Acquisition
Estimated life (in years)			7 years
Beepsend AB, a messaging provider based in Sweden \| Customer relationships \| Maximum
Acquisition
Estimated life (in years)			8 years
Beepsend AB, a messaging provider based in Sweden \| Supplier relationships
Acquisition
Total intangible assets acquired			$ 2,600
Estimated life (in years)			5 years

Business Combinations - Acquisition Costs (Details) - General and administrative - USD ($) $ in Millions	1 Months Ended		12 Months Ended		24 Months Ended
	Sep. 30, 2018	Aug. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017
Ytica.com a.s.
Business Combinations
Acquisition related costs	$ 0.5
Core Network Dynamics GmbH
Business Combinations
Acquisition related costs		$ 0.7
Beepsend AB, a messaging provider based in Sweden
Business Combinations
Acquisition related costs			$ 0.3	$ 0.4	$ 0.7

Goodwill and Intangible Assets - Goodwill (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2018 USD ($)
Goodwill
Balance at the beginning of the period	$ 17,851
Goodwill additions related to 2018 acquisitions	19,673
Effect of exchange rate	(418)
Balance at the end of the period	$ 37,106

Goodwill and Intangible Assets - Amortizable Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Intangible Assets
Gross	$ 41,047	$ 26,919
Accumulated Amortization	(11,558)	(7,150)
Net	29,489	19,769
Developed technology
Intangible Assets
Gross	27,679	14,941
Accumulated Amortization	(8,689)	(5,476)
Net	18,990	9,465
Customer relationships
Intangible Assets
Gross	8,245	7,159
Accumulated Amortization	(1,800)	(1,006)
Net	6,445	6,153
Supplier relationships
Intangible Assets
Gross	2,738	2,881
Accumulated Amortization	(850)	(500)
Net	1,888	2,381
Trade name
Intangible Assets
Gross	60	60
Accumulated Amortization	(60)	(60)
Patent
Intangible Assets
Gross	2,325	1,878
Accumulated Amortization	(159)	(108)
Net	$ 2,166	$ 1,770

Goodwill and Intangible Assets - Non-amortizable Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Domain names
Intangible Assets
Non-amortizable intangible assets	$ 32	$ 32
Trademarks
Intangible Assets
Non-amortizable intangible assets	$ 263	$ 263

Goodwill and Intangible Assets - Total Intangible Assets, Gross (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Intangible Assets
Amortizable intangible assets, gross	$ 41,047	$ 26,919
Total	41,342	27,214
Domain names
Intangible Assets
Non-amortizable intangible assets	32	32
Trademarks
Intangible Assets
Non-amortizable intangible assets	$ 263	$ 263

Goodwill and Intangible Assets - Total Intangible Assets, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Intangible Assets
Amortizable intangible assets, net	$ 29,489	$ 19,769
Total	29,784	20,064
Domain names
Intangible Assets
Non-amortizable intangible assets	32	32
Trademarks
Intangible Assets
Non-amortizable intangible assets	$ 263	$ 263

Goodwill and Intangible Assets - Total Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Goodwill and Intangible Assets
Gross	$ 41,342	$ 27,214
Accumulated Amortization	(11,558)	(7,150)
Net	$ 29,784	$ 20,064

Goodwill and Intangible Assets - Amortization Expense (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Goodwill and Intangible Assets
Amortization expense	$ 1.9	$ 1.5	$ 4.7	$ 4.2

Goodwill and Intangible Assets - Total Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Intangible Assets
2018 (remaining three months)	$ 3,272
2019	8,704
2020	6,007
2021	4,592
2022	3,270
Thereafter	3,644
Net	$ 29,489	$ 19,769

Accrued Expenses and Other Liabilities - Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Accrued Expenses and Other Liabilities
Accrued payroll and related	$ 11,423	$ 4,898
Accrued bonus and commission	8,170	4,777
Accrued cost of revenue	23,023	10,876
Sales and other taxes payable	22,746	20,877
ESPP contributions	4,536	1,338
Deferred rent	1,334	1,048
Accrued other expense	22,662	9,800
Total accrued expenses and other current liabilities	$ 93,894	$ 53,614

Accrued Expenses and Other Liabilities - Long-term Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Accrued Expenses and Other Liabilities
Deferred rent	$ 7,557	$ 8,480
Deferred tax liability, net	4,852	2,452
Acquisition Holdback	2,000
Accrued other expenses	830	477
Total other long-term liabilities	$ 15,239	$ 11,409

Convertible Senior Notes and Capped Call Transactions - Issuance (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2018	May 31, 2018
Convertible senior notes, 0.25%, due 2023
Convertible Senior Notes
Interest rate (as a percent)	0.25%	0.25%
Net proceeds from the debt offering	$ 537.0
Convertible senior notes, 0.25%, due 2023 - initial private placement
Convertible Senior Notes
Aggregate principal amount		$ 550.0
Convertible senior notes, 0.25%, due 2023 - over-allotment
Convertible Senior Notes
Aggregate principal amount		$ 75.0

Convertible Senior Notes and Capped Call Transactions - Terms (Details)	1 Months Ended	9 Months Ended
	May 31, 2018 $ / shares	Sep. 30, 2018 USD ($) D $ / shares	Dec. 31, 2017 $ / shares
Convertible Senior Notes
Conversion price \| $ / shares		$ 70.90
Common Class A
Convertible Senior Notes
Common stock, par value (in dollars per share) \| $ / shares		$ 0.001	$ 0.001
Convertible senior notes, 0.25%, due 2023
Convertible Senior Notes
Conversion price \| $ / shares	$ 70.90
Threshold trading days for determining conversion eligibility		20
Consecutive trading period for determining conversion eligibility		30
Minimum sale price of stock as a percentage of the conversion price, to trigger conversion eligibility		130.00%
Number of business days of conversion eligibility following period of threshold Notes trading price		5
Number of consecutive trading days of threshold Notes trading price for conversion eligibility to follow		5
Principal amount used in test of threshold Notes trading price for conversion eligibility \| $		$ 1,000
Trading price as a percentage of the product of common stock sale price and conversion rate, below which conversion eligibility is triggered		98.00%
Cash redemption price, percentage of principal amount of the Notes		100.00%
Convertible senior notes, 0.25%, due 2023 \| Common Class A
Convertible Senior Notes
Conversion ratio	14.1040

Convertible Senior Notes and Capped Call Transactions - Net Carrying Amount (Details) - Convertible senior notes, 0.25%, due 2023 - USD ($) $ in Thousands	Sep. 30, 2018	May 31, 2018
Net carrying amount of the liability component of the Notes
Principal	$ 550,000
Unamortized discount	(111,717)
Unamortized issuance costs	(9,505)	$ (10,200)
Net carrying amount, liability component	428,778
Net carrying amount of the equity component of the Notes
Proceeds allocated to the conversion options (debt discount)	119,435	$ 119,400
Issuance costs	(2,819)
Net carrying amount, equity component	$ 116,616

Convertible Senior Notes and Capped Call Transactions - Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2018
Interest expense recognized related to the Notes
Amortization of debt issuance costs		$ 657
Amortization of debt discount		7,717
Convertible senior notes, 0.25%, due 2023
Interest expense recognized related to the Notes
Contractual interest expense	$ 344	508
Amortization of debt issuance costs	446	657
Amortization of debt discount	5,233	7,717
Total interest expense related to the Notes	$ 6,023	$ 8,882

Convertible Senior Notes and Capped Call Transactions - Capped Calls (Details) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2018 USD ($) $ / shares shares
Capped calls
Net cost to purchase the transactions \| $	$ 58,465
Capped calls
Capped calls
Initial strike price (in dollars per share) \| $ / shares	$ 70.90
Initial cap price (in dollars per share) \| $ / shares	$ 105.04
Number of shares covered \| shares	7,757,200
Net cost to purchase the transactions \| $	$ 58,500

Supplemental Balance Sheet Information - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Allowance for doubtful accounts
Balance, beginning of period	$ 2,536	$ 923	$ 1,033	$ 1,076
Additions	1,111	125	2,626	407
Write-offs	(5)		(17)	(435)
Balance, end of period	$ 3,642	$ 1,048	$ 3,642	$ 1,048

Supplemental Balance Sheet Information - Sales Credit Reserve (Details) - Sales credit reserve - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Sales credit reserve
Balance, beginning of period	$ 2,625	$ 734	$ 1,761	$ 544
Additions	1,651	104	4,301	1,076
Deductions against reserve	(773)	(238)	(2,559)	(1,020)
Balance, end of period	$ 3,503	$ 600	$ 3,503	$ 600

Revenue by Geographic Area - Revenue by Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenue by geographic area
Revenue	$ 168,895	$ 100,542	$ 445,765	$ 283,784
United States
Revenue by geographic area
Revenue	125,697	76,713	335,575	221,914
International
Revenue by geographic area
Revenue	$ 43,198	$ 23,829	$ 110,190	$ 61,870

Revenue by Geographic Area - Percentage of Revenue by Geographic Area (Details) - Revenue - Geographic Concentration Risk	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
United States
Percentage of revenue by geographic area
Percentage of revenue (as a percent)	74.00%	76.00%	75.00%	78.00%
International
Percentage of revenue by geographic area
Percentage of revenue (as a percent)	26.00%	24.00%	25.00%	22.00%

Commitments and Contingencies - Lease Commitments (Details) $ in Millions	9 Months Ended
	Sep. 30, 2018 USD ($) ft²
Various Facilities Leases \| Maximum
Lease Commitments
Non-cancelable operating lease agreements, facilities, remaining term (in years)	6 years
Office Space, 101 Spear Street, San Francisco, California
Lease Commitments
Area of office space (in square feet) \| ft²	259,416
Office Space, 101 Spear Street, San Francisco, California \| Minimum
Lease Commitments
Monthly lease payments	$ 0.8
Office Space, 101 Spear Street, San Francisco, California \| Maximum
Lease Commitments
Monthly lease payments	2.2
Office Space, 101 Spear Street, San Francisco, California \| Letter of Credit
Lease Commitments
Letter of credit	$ 14.7

Commitments and Contingencies - Rent Expense (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Commitments and Contingencies
Rent expense	$ 2.2	$ 2.1	$ 6.4	$ 6.1

Commitments and Contingencies - Future Minimum Lease Payments (Details) $ in Thousands	Sep. 30, 2018 USD ($)
Future minimum lease payments
2018 (remaining three months)	$ 3,446
2019	21,195
2020	27,798
2021	30,209
2022	29,735
Thereafter	113,211
Total minimum lease payments	$ 225,594

Commitments and Contingencies - Other Commitments (Details) - Non-cancellable vendor agreements - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2018
Non-cancellable commitment
Total purchase commitments	$ 2.2	$ 10.0
Minimum
Non-cancellable commitment
Term of non-cancellable agreement	1 year	1 year
Maximum
Non-cancellable commitment
Term of non-cancellable agreement	2 years	2 years

Commitments and Contingencies - Legal Matters (Details) - Pending Litigation - Putative class action complaint, Angela Flowers v. Twilio Inc. $ in Millions	Sep. 30, 2018 USD ($)	Jan. 02, 2018 item
Legal Matters
Number of classes of individuals who allegedly sent or received certain communications		2
Number of customers' accounts involved in the complaint		3
Estimated probable loss \| $	$ 1.5

Commitments and Contingencies - Indemnification Agreements (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Indemnification Agreement
Indemnification Agreements
Amount accrued	$ 0	$ 0

Commitments and Contingencies - Other taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Other taxes
Liability for uncertain tax positions	$ 22,700		$ 22,700		$ 20,900
Net loss attributable to common stockholders	$ (27,056)	$ (23,453)	$ (74,791)	$ (44,789)
Change in estimate for non-income-based tax exposure - revisions in key assumptions
Other taxes
Net loss attributable to common stockholders					$ 13,400

Stockholders' Equity - Preferred Stock (Details) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Preferred Stock
Preferred stock, authorized (in shares)	100,000,000	100,000,000
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0

Stockholders' Equity - Common Stock (Details) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Common Class A
Common Stock
Common stock, authorized (in shares)	1,000,000,000	1,000,000,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, issued (in shares)	78,999,646	69,906,550
Common stock, outstanding (in shares)	78,999,646	69,906,550
Common Class B
Common Stock
Common stock, authorized (in shares)	100,000,000	100,000,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, issued (in shares)	19,727,396	24,063,246
Common stock, outstanding (in shares)	19,727,396	24,063,246

Stockholders' Equity - Common Stock Shares Reserved (Details) - shares	Sep. 30, 2018	Dec. 31, 2017
Stockholders' Equity
Total	41,033,391	29,689,432
2016 Stock Option and Incentive Plan
Stockholders' Equity
Stock-based awards available for grant	10,773,682	10,200,189
Common Class A
Stockholders' Equity
Common stock reserved for Twilio.org	635,014	635,014
Common stock reserved for the convertible senior notes	10,472,165
Stock Options
Stockholders' Equity
Stock options issued and outstanding	8,567,152	10,710,427
Restricted Stock Units (RSUs)
Stockholders' Equity
Nonvested restricted stock units issued and outstanding	7,368,918	5,665,459
Employee Stock
Stockholders' Equity
Stock-based awards available for grant	3,216,460	2,478,343

Stock-Based Compensation - 2008 Stock Option Plan (Details)	Sep. 30, 2018 shares
2008 Stock Option Plan
Stock Based Compensation
Shares available for future issuance (in shares)	0

Stock-Based Compensation - 2016 Stock Option Plan (Details) - shares		9 Months Ended
	Jan. 01, 2018	Sep. 30, 2018	Jun. 21, 2016
Employee and Nonemployee Stock Options
Stock Based Compensation
Expiration term		10 years
Employee and Nonemployee Stock Options \| New Hires
Stock Based Compensation
Vesting period		4 years
Employee and Nonemployee Stock Options \| First vesting \| New Hires
Stock Based Compensation
Vesting period		1 year
Percentage of vesting rights		25.00%
Restricted Stock Units (RSUs)
Stock Based Compensation
Vesting period		4 years
Restricted Stock Units (RSUs) \| First vesting \| New Hires
Stock Based Compensation
Vesting period		1 year
Percentage of vesting rights		25.00%
2016 Stock Option and Incentive Plan
Stock Based Compensation
Maximum automatic annual increase as a percentage of outstanding common shares		5.00%
Automatic increase in shares available for grant (in shares)	4,698,490
2016 Stock Option and Incentive Plan \| Common Class A
Stock Based Compensation
Shares reserved for issuance (in shares)			11,500,000
2016 Stock Option and Incentive Plan \| Employee and Nonemployee Stock Options
Stock Based Compensation
Minimum grant price as a percentage of fair market value per share of the underlying common stock on the date of grant (as a percent)		100.00%

Stock-Based Compensation - 2016 Employee Stock Purchase Plan (Details) - Employee Stock - USD ($) $ in Millions		1 Months Ended	3 Months Ended		9 Months Ended
	Jan. 01, 2018	Nov. 30, 2018	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Jun. 21, 2016
Stock Based Compensation
Maximum automatic annual increase (in shares)			1,800,000		1,800,000
Maximum automatic annual increase as a percentage of outstanding common shares			1.00%		1.00%
Automatic increase in shares available for grant (in shares)	939,698
Unrecognized compensation cost, other than options			$ 0.5		$ 0.5
Weighted-average period (in years)					1 month 6 days
Common Class A
Stock Based Compensation
Shares reserved for issuance (in shares)						2,400,000
Discount from market price, offering date (as a percent)					15.00%
Discount from market price, purchase date (as a percent)					15.00%
Purchase price, percentage of fair market value (as a percent)					85.00%
Shares purchased (in shares)			0	0
Common Class A \| Forecast
Stock Based Compensation
Shares purchased (in shares)		127,327

Stock-Based Compensation - Stock Option Activity (Details) - Employee and Nonemployee Stock Options - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Number of options outstanding
Outstanding options as of the beginning of the period (in shares)	10,155,427
Granted (in shares)	1,170,118
Exercised (in shares)	(2,998,329)
Forfeited and cancelled (in shares)	(315,064)
Outstanding options as of the end of the period (in shares)	8,012,152	10,155,427
Weighted-average exercise price (per share)
Outstanding options as of the beginning of the period (in dollars per share)	$ 10.31
Granted (in dollars per share)	34.73
Exercised (in dollars per share)	7.53
Forfeited and cancelled (in dollars per share)	16.03
Outstanding options as of the end of the period (in dollars per share)	$ 14.69	$ 10.31
Weighted-average remaining contractual term and aggregate intrinsic value
Weighted-average remaining contractual term (in years)	7 years 11 days	7 years 1 month 13 days
Aggregate intrinsic value	$ 573,604	$ 145,763
Options vested and exercisable and options vested and expected to vest
Options vested and exercisable - number of options outstanding (in shares)	4,616,492
Options vested and exercisable - weighted-average exercise price (in dollars per share)	$ 9.07
Options vested and exercisable - weighted-average remaining contractual term (in years)	6 years 2 months 16 days
Options vested and exercisable - aggregate intrinsic value	$ 356,433

Stock-Based Compensation - Stock Options - Additional Information (Details) - Employee and Nonemployee Stock Options - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Stock Based Compensation
Aggregate intrinsic value of stock options exercised	$ 56.2	$ 18.6	$ 130.7	$ 119.3
Grant date fair value of options vested	$ 4.6	$ 3.0	$ 17.6	$ 12.2
Weighted-average grant date fair value of options granted (in dollars per share)	$ 28.84		$ 16.04	$ 13.48
Stock options granted in the period		0

Stock-Based Compensation - Performance-Based Stock Options (Details) $ / shares in Units, $ in Thousands		9 Months Ended	12 Months Ended
	Feb. 28, 2017 USD ($) item $ / shares shares	Sep. 30, 2018 USD ($) $ / shares shares	Dec. 31, 2017 $ / shares shares
Performance-based stock options
Stock-Based Compensation
Number of distinct awards \| item	3
Total grant value \| $	$ 5,900
Vesting period upon satisfaction of performance condition	24 months
Performance condition achievement window	4 years 3 months 18 days
Expiration term	7 years
Number of options outstanding
Outstanding options as of the beginning of the period (in shares) \| shares		555,000
Granted (in shares) \| shares	555,000
Outstanding options as of the end of the period (in shares) \| shares		555,000	555,000
Weighted-average exercise price (per share)
Outstanding options as of the beginning of the period (in dollars per share)		$ 31.72
Outstanding options as of the end of the period (in dollars per share)		$ 31.72	$ 31.72
Weighted-average remaining contractual term
Weighted-average remaining contractual term (in years)		5 years 4 months 28 days	6 years
Aggregate intrinsic value \| $		$ 30,281
Options vested and exercisable
Options vested and exercisable - number of options outstanding (in shares) \| shares		92,500
Options vested and exercisable - weighted-average exercise price (in dollars per share)		$ 31.72
Options vested and exercisable - weighted-average remaining contractual term (in years)		5 years 4 months 28 days
Options vested and exercisable - aggregate intrinsic value \| $		$ 5,047
Performance-based stock options, $13.48 grant date fair value
Stock-Based Compensation
Grant date fair value (in dollars per share)	$ 13.48
Derived service period as adjusted	3 years 1 month 6 days
Performance-based stock options, $10.26 grant date fair value
Stock-Based Compensation
Grant date fair value (in dollars per share)	$ 10.26
Derived service period as adjusted	4 years 4 months 24 days
Performance-based stock options, $8.41 grant date fair value
Stock-Based Compensation
Grant date fair value (in dollars per share)	$ 8.41
Derived service period as adjusted	4 years 10 months 24 days

Stock-Based Compensation - Stock Options - Unrecognized Compensation Cost (Details) - Stock Options $ in Millions	9 Months Ended
	Sep. 30, 2018 USD ($)
Stock Based Compensation
Unrecognized compensation cost, options	$ 36.2
Weighted-average period (in years)	2 years 1 month 6 days

Stock-Based Compensation - Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Number of units outstanding
Nonvested RSUs at the beginning of the period (in shares)	5,665,459
Granted (in shares)	3,930,656
Vested (in shares)	(1,607,997)
Forfeited and cancelled (in shares)	(619,200)
Nonvested RSUs at the end of the period (in shares)	7,368,918
Weighted-average grant date fair value (per share)
Nonvested RSUs at the beginning of the period (in dollars per share)	$ 29.29
Granted (in dollars per share)	40.52
Vested (in dollars per share)	29.31
Forfeited and cancelled (in dollars per share)	30.78
Nonvested RSUs at the end of the period (in dollars per share)	$ 35.16
Aggregate intrinsic value
Aggregate intrinsic value	$ 635,766	$ 133,648

Stock-Based Compensation - Restricted Stock Units - Unrecognized Compensation Cost (Details) - Restricted Stock Units (RSUs) $ in Millions	9 Months Ended
	Sep. 30, 2018 USD ($)
Stock Based Compensation
Unrecognized compensation cost, other than options	$ 238.9
Weighted-average period (in years)	3 years 1 month 6 days

Stock-Based Compensation - Valuation Assumptions (Details) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Employee Stock Options
Valuation Assumptions
Fair value of common stock (in dollars per share)	$ 62.66
Expected term (in years)	6 years 29 days		6 years 29 days	6 years 29 days
Expected volatility (as a percent)	43.60%
Expected volatility, low end of range (as a percent)			43.60%	46.10%
Expected volatility, high end of range (as a percent)			44.20%	47.60%
Risk-free interest rate (as a percent)	2.80%
Risk-free interest rate, low end of range (as a percent)			2.70%	1.90%
Risk-free interest rate, high end of range (as a percent)			2.90%	2.10%
Dividend rate (as a percent)	0.00%		0.00%	0.00%
Employee Stock
Valuation Assumptions
Expected term (in years)		6 months	6 months	6 months
Expected volatility (as a percent)		33.20%	39.80%	33.20%
Risk-free interest rate (as a percent)		1.10%	2.10%	1.10%
Dividend rate (as a percent)		0.00%	0.00%	0.00%
Performance-based stock options
Valuation Assumptions
Asset volatility (as a percent)			40.00%
Equity volatility (as a percent)			45.00%
Discount rate (as a percent)			14.00%
Stock price at grant date (in dollars per share)	$ 31.72		$ 31.72
Minimum \| Employee Stock Options
Valuation Assumptions
Fair value of common stock (in dollars per share)			33.01	$ 24.77
Maximum \| Employee Stock Options
Valuation Assumptions
Fair value of common stock (in dollars per share)			$ 62.66	$ 31.96

Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Stock-Based Compensation Expense
Stock-based compensation expense	$ 22,741	$ 14,188	$ 61,287	$ 35,973
Cost of revenue
Stock-Based Compensation Expense
Stock-based compensation expense	284	180	772	460
Research and development
Stock-Based Compensation Expense
Stock-based compensation expense	10,879	6,493	28,500	16,687
Sales and marketing
Stock-Based Compensation Expense
Stock-based compensation expense	5,246	2,603	14,154	6,961
General and administrative
Stock-Based Compensation Expense
Stock-based compensation expense	$ 6,332	$ 4,912	$ 17,861	$ 11,865

Net Loss per Share Attributable to Common Stockholders - General Information (Details)	Sep. 30, 2018 Vote
Common Class A
Net Loss Per Share Attributable to Common Stockholders
Votes per share	1
Common Class B
Net Loss Per Share Attributable to Common Stockholders
Votes per share	10

Net Loss Per Share Attributable to Common Stockholders - Basic and Diluted Net Loss per Share Attributable to Common Stockholders (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Net Loss Per Share Attributable to Common Stockholders
Net loss attributable to common stockholders	$ (27,056)	$ (23,453)	$ (74,791)	$ (44,789)
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted (in shares)	98,019,629	92,156,768	96,359,437	90,543,087
Net loss per share attributable to common stockholders, basic and diluted (in dollars per share)	$ (0.28)	$ (0.25)	$ (0.78)	$ (0.49)

Net Loss Per Share Attributable to Common Stockholders - Anti-Dilutive Securities (Details) - $ / shares	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Anti-dilutive securities
Total	16,932,419	16,685,643
Conversion price of the notes	$ 70.90
Stock Options
Anti-dilutive securities
Total	8,567,152	11,380,189
Restricted Stock Units (RSUs)
Anti-dilutive securities
Total	7,368,918	4,384,898
Class A common stock reserved for Twilio.org
Anti-dilutive securities
Total	635,014	680,397
Employee Stock
Anti-dilutive securities
Total	127,327	224,126
Conversion spread
Anti-dilutive securities
Total	233,799
Unvested shares subject to repurchase
Anti-dilutive securities
Total	209	16,033

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Income Taxes
Provision for income taxes	$ (84)	$ (422)	$ (371)	$ (902)
Tax Cuts and Jobs Act
U.S. corporate income tax rate (as a percent)			21.00%		35.00%

Subsequent Events (Details) - Subsequent Events - SendGrid shares in Millions, $ in Millions	Oct. 15, 2018 USD ($) shares
Subsequent Events
Shares issuable as part of acquisition (in shares) \| shares	26.3
Value of shares issuable as part of acquisition	$ 2,000.0
Amount payable if merger is not consummated under certain circumstances	120.0
Amount receivable if merger agreement is terminated by the acquiree	69.0
Acquisition related costs	$ 1.0
Common Class A
Subsequent Events
Ratio to convert acquiree shares into rights to receive the Company's common stock	0.485

Estimated
life
(in years)

Developed technology

Customer relationships

Total intangible assets acquired