TWILIO INC

Previous wording

We operate our business in two business units: Communications and Segment. Our Communications business consists of a variety of APIs and software solutions to optimize communications between our customers and their end users. Our key Communications offerings include Messaging, Voice, Email, Flex, Marketing Campaigns, and User Identity and Authentication. Our Segment business consists of software products that enable businesses to leverage their first-party data to create unique customer profiles and achieve more effective customer engagement. Our key Segment offerings are Segment and Engage. Together, our Communications and Segment products power our customer engagement platform. We believe that our two business units are complementary and address adjacent needs and related problems for our customers. Our goal is to create a flywheel for effective customer engagement by combining Segment’s user profiles with our rich Communications data to drive more personalized and intelligent customer interactions. We believe that our business unit structure enables each business unit to execute toward its respective goals with appropriate focus and independence, best positioning us to achieve our long-term plan of creating the leading customer engagement platform.

Current wording

We operate our business in two business units: Communications and Segment. Our Communications business consists of a variety of APIs and software solutions to optimize communications between our customers and their end users. Our key Communications offerings include Messaging, Voice, Flex, Email and Marketing Campaigns, and User Identity and Authentication. Our Segment business consists of software products that enable businesses to leverage their first-party data to create unique customer profiles and achieve more effective customer engagement. Together, our Communications and Segment products power our customer engagement platform. We believe that our two business units are complementary and address adjacent needs and related problems for our customers. Our goal is to create a flywheel for effective customer engagement by combining Segment’s user profiles with our rich Communications data to drive more personalized and intelligent customer interactions. We believe that our business unit structure enables each business unit to execute toward its respective goals with appropriate focus and independence, best positioning us to achieve our long-term plan of creating the leading customer engagement platform.

Previous wording

In the three months ended March 31, 2024 and 2023, our revenue was $1.05 billion and $1.01 billion, respectively, and our net loss was $55.3 million and $342.1 million, respectively. In each of the three months ended March 31, 2024 and 2023, our 10 largest Active Customer Accounts generated an aggregate of 10% of our total revenue.

Current wording

In the three months ended June 30, 2024 and 2023, our revenue was $1.08 billion and $1.04 billion, respectively, and our net loss was $31.9 million and $166.2 million, respectively. In the three months ended June 30, 2024 and 2023, our 10 largest Active Customer Accounts generated an aggregate of 10% and 11% of our total revenue, respectively.

Previous wording

We are focused on profitable growth. To increase revenue and grow market share, we intend to drive product innovation, leverage predictive and generative AI, further enhance our ISV, reseller and other partner relationships, improve our self-service capabilities, cross-sell our products, expand internationally, and enhance Segment data warehouse interoperability. We also intend to optimize our business and take measures to reduce costs, including simplifying our business processes, modernizing our infrastructure, focusing on self-service, leveraging AI, and implementing other initiatives targeted at improving efficiencies in our business.

Current wording

We are focused on profitable growth. To increase revenue and grow market share, we intend to drive product innovation, leverage predictive and generative AI, further enhance our ISV, reseller and other partner relationships, improve our self-service capabilities, cross-sell our products, expand internationally, enhance Segment data warehouse interoperability and reduce time to value for Segment. We also intend to optimize our business and take measures to reduce costs, including simplifying and further automating our business processes, modernizing our infrastructure, focusing on self-service, leveraging AI, and implementing other initiatives targeted at improving efficiencies in our business.

Previous wording

We are winding down the software component of our Zipwhip business in 2024, which we expect will negatively impact revenue growth rates in 2024. While we previously announced the end of life of our video product, we have extended this timeline to December 2026. As a result, we no longer expect a significant impact to our revenue growth rates in 2024 resulting from the end of life of our video product.

Current wording

We are winding down the software component of our Zipwhip business in 2024, which we expect will negatively impact revenue growth rates in 2024.

Previous wording

We are also migrating part of Segment’s architecture to a new infrastructure provider in 2024, which we expect to allow us to recognize greater operational efficiency and scale up new AI-driven products and features. We expect this migration will take several quarters and result in overlapping expenses with our original and new vendors for much of 2024, which we expect to negatively impact Segment gross margins until we complete the migration. We expect to complete the migration by the end of 2024.

Current wording

We are also migrating part of Segment’s architecture to a new infrastructure provider in 2024, which we expect will allow us to recognize greater operational efficiency and scale up new AI-driven products and features. We expect this migration will take several quarters and result in overlapping expenses with our original and new vendors for much of 2024, which we expect to negatively impact Segment gross margins until we complete the migration. We expect to complete the migration by the end of 2024.

Previous wording

We expect our prior workforce restructurings to reduce our operating expenses in future periods. We also expect that the new cash bonus program that we introduced in 2024 to reduce or eliminate our use of equity compensation for certain employees will impact our expenses commencing in the current period.

Current wording

We expect our prior workforce restructurings to reduce our operating expenses in future periods. We also expect that the new cash bonus program that we introduced in 2024 to reduce or eliminate our use of equity compensation for certain employees will continue to increase our expenses in future periods.

Previous wording

In February 2023, one of our customers, Oi SA, a Brazilian telecom company, initiated reorganization proceedings in a Brazilian bankruptcy court and exposed us to risks on collections of pre-petition receivables and ongoing revenue. In April 2024, the creditors of Oi SA approved a Judicial Reorganization Plan (the “Oi Reorganization Plan”) that aims to ensure Oi SA’s operational feasibility and continuity of activities and further provides extended and discounted payment terms for pre-petition receivables. The Oi Reorganization Plan is subject to ratification by the Brazilian bankruptcy court and contains contingencies including but not limited to Oi SA’s completion of financing by July 16, 2024. As of March 31, 2024, we have $10.8 million in pre-petition accounts receivable (net of $4.4 million in reserves) and $16.7 million in post-petition accounts receivable due from Oi SA. The customer has been making regular payments on post-petition receivables. If the Oi Reorganization Plan is not ratified, if Oi SA fails to comply with its obligations under the Oi Reorganization Plan, if the contingencies contained in the Oi Reorganization Plan are not timely resolved, or if the customer ceases to make payment on post-petition receivables, we may incur additional bad debt expense or reductions in revenue in future periods.

Current wording

In February 2023, one of our customers, Oi SA, a Brazilian telecom company, initiated reorganization proceedings in a Brazilian bankruptcy court and exposed us to risks on collections of pre-petition receivables and ongoing revenue. In April 2024, the creditors of Oi SA approved a Judicial Reorganization Plan (the “Oi Reorganization Plan”) that aims to ensure Oi SA’s operational feasibility and continuity of activities and further provides extended and discounted payment terms for pre-petition receivables. The Oi Reorganization Plan was subsequently ratified by the Brazilian bankruptcy court and contains contingencies including but not limited to Oi SA’s completion of financing by July 16, 2024, which was subsequently extended to August 8, 2024. As of June 30, 2024, we have $6.4 million in pre-petition accounts receivable (net of $8.8 million in reserves) and $13.1 million in post-petition accounts receivable due from Oi SA. The customer has been making regular payments on post-petition receivables. If Oi SA fails to comply with its obligations under the Oi Reorganization Plan, if the contingencies contained in the Oi Reorganization Plan are not timely resolved, or if the customer ceases to make payment on post-petition receivables, we may incur additional bad debt expense or reductions in revenue in future periods.

Previous wording

Our Segment reportable segment revenue is derived from Segment and Engage products that are subscription-based. For these products we recognize revenue evenly over the contract term. When our usage-based products are embedded into our subscription-based products, we charge for each product separately on a usage or subscription basis, respectively, and record the revenue in the reportable segment in which each product resides.

Current wording

Our Segment reportable segment revenue is derived from Segment products that are subscription-based. For these products we recognize revenue evenly over the contract term. When our usage-based products are embedded into our subscription-based products, we charge for each product separately on a usage or subscription basis, respectively, and record the revenue in the reportable segment in which each product resides.

Previous wording

Cost of Revenue. Cost of revenue consists primarily of fees paid to network service providers. Cost of revenue also includes cloud infrastructure fees, direct costs of personnel, such as salaries and stock‑based compensation for our customer support employees, and other non‑personnel costs, such as depreciation and amortization expense related to data centers and hosting equipment, and amortization of capitalized internal-use software development costs and acquired intangible assets. Costs of revenue are generally directly attributable to each segment. Certain costs of revenue are allocated to segments based on methodologies that best reflect the patterns of consumptions of these costs.

Current wording

Cost of Revenue. Cost of revenue consists primarily of fees paid to network service providers. Cost of revenue also includes cloud infrastructure fees, direct costs of personnel, such as salaries and stock‑based compensation for our customer support employees, and other non‑personnel costs, such as depreciation and amortization expense related to data centers and hosting equipment, and amortization of capitalized internal-use software development costs and acquired intangible assets. Costs of revenue are generally directly attributable to each segment. Certain costs of revenue are allocated to segments based on methodologies that best reflect the patterns of consumption of these costs.

Previous wording

Sales and Marketing. Sales and marketing expenses consist primarily of personnel costs, including commissions and bonuses to our sales employees. Sales and marketing expenses also include expenditures related to advertising, marketing, brand awareness activities, costs related to our SIGNAL customer and developer conferences, credit card processing fees, professional services fees, depreciation, amortization of acquired intangible assets and an allocation of our general overhead expenses. Sales and marketing expenses are generally directly attributable to each segment. Certain sales and marketing expenses are allocated to segments based on methodologies that best reflect the patterns of consumptions of these costs. A small percentage of sales and marketing costs, such as costs related to corporate communications and global brand awareness, are not allocated to segments because they support company-wide processes and are managed on a company-wide level.

Current wording

Sales and Marketing. Sales and marketing expenses consist primarily of personnel costs, including commissions and bonuses to our sales employees. Sales and marketing expenses also include expenditures related to advertising, marketing, brand awareness activities, costs related to our SIGNAL customer and developer conferences, credit card processing fees, professional services fees, depreciation, amortization of acquired intangible assets and an allocation of our general overhead expenses. Sales and marketing expenses are generally directly attributable to each segment. Certain sales and marketing expenses are allocated to segments based on methodologies that best reflect the patterns of consumption of these costs. A small percentage of sales and marketing costs, such as costs related to corporate communications and global brand awareness, are not allocated to segments because they support company-wide processes and are managed on a company-wide level.

Previous wording

General and Administrative. General and administrative expenses consist primarily of personnel costs for our accounting, finance, legal, human resources and administrative support personnel. General and administrative expenses also include costs related to business acquisitions and dispositions, legal and other professional services fees, certain taxes, depreciation and amortization, charitable contributions and an allocation of our general overhead expenses. General and administrative expenses are allocated to each segment when they are directly attributable to each segment or are allocated to segments based on methodologies that best reflect the patterns of consumptions of these costs. A significant portion of general and administrative costs, such as costs related to corporate governance, and certain legal, human resources, finance and accounting functions, support company-wide processes and are managed on a company-wide level and, therefore, are considered corporate costs and are not allocated to segments.

Current wording

General and Administrative. General and administrative expenses consist primarily of personnel costs for our accounting, finance, legal, human resources and administrative support personnel. General and administrative expenses also include costs related to business acquisitions and dispositions, legal and other professional services fees, certain taxes, depreciation and amortization, charitable contributions and an allocation of our general overhead expenses. General and administrative expenses are allocated to each segment when they are directly attributable to each segment or are allocated to segments based on methodologies that best reflect the patterns of consumption of these costs. A significant portion of general and administrative costs, such as costs related to corporate governance, and certain legal, human resources, finance and accounting functions, support company-wide processes and are managed on a company-wide level and, therefore, are considered corporate costs and are not allocated to segments.

Previous wording

For the periods presented, we define free cash flow and free cash flow margin as net cash provided by (used in) operating activities and operating cash flow margin, respectively, less capitalized software development costs and purchases of long-lived and intangible assets, as presented in the table below:

Current wording

For the periods presented, we define free cash flow and free cash flow margin as net cash provided by operating activities and operating cash flow margin, respectively, less capitalized software development costs and purchases of long-lived and intangible assets, as presented in the table below:

Previous wording

In the three months ended March 31, 2024, gross profit increased by $53.4 million, or 11%, compared to the same period last year. This increase was attributable to the factors impacting our revenue and cost of revenue, as described above.

Current wording

In the three months ended June 30, 2024, gross profit increased by $50.1 million, or 10%, compared to the same period last year. This increase was attributable to the factors impacting our revenue and cost of revenue, as described above.

Previous wording

In the three months ended March 31, 2024, general and administrative expenses decreased by $0.6 million, or 1%, compared to the same period last year. Fluctuations in general and administrative expense categories were not significant either individually or in the aggregate.

Current wording

In the three months ended June 30, 2024, general and administrative expenses decreased by $20.9 million, or 15%, compared to the same period last year. The decrease was primarily attributable to the $28.5 million loss on net assets held for sale recorded in the 2023 period related to the sale of our ValueFirst business. This decrease was partially offset by a $14.3 million increase in charitable contributions that we made through Twilio.org during the second quarter of 2024. Fluctuations in other general and administrative expense categories were not significant either individually or in the aggregate.

Previous wording

In the three months ended March 31, 2024, restructuring costs decreased by $112.0 million, or 92%, compared to the same period last year. The decrease was primarily attributable to restructuring activities undertaken in February 2023, which had a more substantial financial impact than the restructuring activities undertaken in the first quarter of 2024.

Current wording

In the three months ended June 30, 2024, restructuring costs decreased by $15.2 million, or 102%, compared to the same period last year. The decrease was primarily attributable to the significant restructuring costs incurred in the 2023 period related to our February 2023 restructuring activities.

Previous wording

In the three months ended March 31, 2024, Communications revenue increased by $39.1 million, or 4%, compared to the same period last year. This increase was primarily attributable to the increased usage of our products by our existing customers, as reflected in our Communications Dollar‑Based Net Expansion Rate of 103%, as well as $48.9 million in revenue derived from our new Communications Active Customer Accounts and new customer accounts from Zipwhip. These increases were partially offset by a decrease of $28.0 million related to revenue from our ValueFirst and Internet of Things businesses which we divested after the first quarter of 2023.

Current wording

In the six months ended June 30, 2024, Communications revenue increased by $81.8 million, or 4%, compared to the same period last year. This increase was primarily attributable to the increased usage of our products by our existing customers, as reflected in our Communications Dollar‑Based Net Expansion Rate of 103%, as well as $97.5 million in revenue derived from our new Communications Active Customer Accounts and new customer accounts from Zipwhip. These increases were partially offset by a decrease of $52.8 million related to revenue from our Internet of Things and ValueFirst businesses which we divested during the second and third quarters of 2023, respectively.

Previous wording

In the three months ended March 31, 2024, Segment revenue increased by $1.4 million, or 2%, compared to the same period last year. This change was primarily attributable to the decreased usage of our products due to churn and contraction affecting our existing customers in 2023, as reflected in our Segment Dollar‑Based Net Expansion Rate of 92%; partially offset by $8.5 million in revenue derived from our new Segment Active Customer Accounts.

Current wording

In the six months ended June 30, 2024, Segment revenue increased by $3.4 million, or 2%, compared to the same period last year. This change was primarily attributable to $16.6 million in revenue derived from our new Segment Active Customer Accounts, partially offset by the decreased usage of our products due to churn and contraction affecting our existing customers in 2023, as reflected in our Segment Dollar‑Based Net Expansion Rate of 92%.

Previous wording

In the three months ended March 31, 2024, cost of revenue decreased by $12.9 million, or 2%, compared to the same period last year. The decrease was primarily attributable to a $14.3 million decrease in amortization of intangible assets and an $8.9 million decrease in network service providers’ costs, net of the impact of hedging instruments. These decreases were partially offset by a $6.6 million increase in hosting fees and a $4.4 million increase in amortization of internal-use software development costs.

Current wording

In the six months ended June 30, 2024, cost of revenue decreased by $18.2 million, or 2%, compared to the same period last year. The decrease was primarily attributable to a $28.3 million decrease in amortization of intangible assets and a $13.7 million decrease in network service providers’ costs, net of the impact of hedging instruments. These decreases were partially offset by a $21.0 million increase in hosting fees and a $4.2 million increase in amortization of internal-use software development costs.

Previous wording

In the three months ended March 31, 2024, research and development expenses increased by $13.0 million, or 5%, compared to the same period last year. The increase was primarily attributable to a $6.4 million increase in total personnel costs, despite a 23% decrease in average research and development headcount during the period. The $6.4 million increase in total personnel costs was primarily driven by a $14.5 million increase in bonus expenses as a result of the introduction of our new cash bonus program, a $3.8 million increase in stock-based compensation expense, and a $5.3 million increase related to our employee sabbatical program due to the reversal of certain expenses that occurred upon discontinuation of the program in the first quarter of 2023. These increases were partially offset by a $14.6 million decrease in salaries expense and a $3.2 million decrease in employee benefits expense due to our lower headcount. The increase in research and development expenses was also attributable to a $4.1 million increase in software subscription expenses.

Current wording

In the six months ended June 30, 2024, research and development expenses increased by $29.8 million, or 6%, compared to the same period last year. The increase was primarily attributable to a $23.7 million increase in total personnel costs, which was primarily driven by a $28.4 million increase in bonus expenses as a result of our new cash bonus program and an $11.2 million increase in stock-based compensation expense. These increases were partially offset by a $19.6 million decrease in salaries expense due to a 21% decrease in average research and development headcount compared to the same period last year as a result of the restructuring of our workforce in February 2023 and December 2023. The increase in research and development expenses was also attributable to a $6.2 million increase in hosting fees to support development and staging of our products.

Previous wording

In the three months ended March 31, 2024, sales and marketing expenses decreased by $45.9 million, or 18%, compared to the same period last year. The decrease was primarily attributable to a $34.2 million decrease in total personnel costs, which was mostly driven by the restructuring of our workforce in February 2023 and December 2023, that contributed to a 24% decrease in average sales and marketing headcount during the period. Sales and marketing expenses also decreased due to a $8.3 million decrease in amortization of intangible assets and a $3.4 million decrease in advertising expenses.

Current wording

In the six months ended June 30, 2024, sales and marketing expenses decreased by $89.9 million, or 17%, compared to the same period last year. The decrease was primarily attributable to a $59.0 million decrease in total personnel costs, which was primarily driven by a 23% decrease in average sales and marketing headcount compared to the same period last year. The decrease in headcount was primarily driven by the restructuring of our workforce in February 2023 and December 2023. Sales and marketing expenses also decreased due to a $16.4 million decrease in amortization of intangible assets and a $5.3 million decrease in advertising expenses.

Previous wording

In the three months ended March 31, 2024, impairment of long-lived assets decreased by $21.8 million, or 100%, compared to the same period last year. The prior year charges were related to the impairment of certain of our operating leases and other long-lived assets as a result of permanent office closures in the first quarter of 2023. There were no such impairments in the current period.

Current wording

In the six months ended June 30, 2024, impairment of long-lived assets decreased by $31.1 million, or 100%, compared to the same period last year. The prior year charges were related to the impairment of certain of our operating leases and other long-lived assets as a result of permanent office closures in the first half of 2023. There were no such impairments in the current period.

Previous wording

In the three months ended March 31, 2024, other expenses, net, decreased by $65.9 million, or 98%, compared to the same period last year. The decrease was primarily attributable to a $46.2 million impairment of a strategic investment that occurred during the first quarter of 2023 and a $18.9 million increase in income related to our investments in the first quarter of 2024 compared to the same period in 2023.

Current wording

In the six months ended June 30, 2024, other expenses, net, decreased by $82.3 million, or 90%, compared to the same period last year. The decrease was primarily attributable to a $46.2 million impairment of a strategic investment that occurred during the first half of 2023, a $27.6 million increase in other income, net, primarily related to an increase in income earned on our debt securities, and a $9.3 million decrease in our share of losses from our equity method investment.

Previous wording

In the three months ended March 31, 2024, Communications non-GAAP income from operations increased by $68.5 million, or 38%, compared to the same period last year. The increase was primarily driven by an increase in Communications revenue of $39.1 million, as described in the Revenue section above, and a decrease in Communications operating expenses and cost of revenue. The decrease in operating expenses was primarily attributable to a $23.2 million decrease in total Communications personnel costs, which was mainly due to the restructuring of our workforce in February 2023 and December 2023. These restructurings contributed to a 27% decrease in average Communications headcount compared to the same period last year. Communications non-GAAP income from operations also increased due to an $8.9 million decrease in network service providers’ costs, net of the impact of hedging instruments.

Current wording

In the six months ended June 30, 2024, Communications non-GAAP income from operations increased by $126.0 million, or 34%, compared to the same period last year. The increase was primarily driven by an increase in Communications revenue of $81.8 million, as described in the Revenue section above, and a $33.4 million decrease in total Communications personnel costs, which was mainly due to the restructuring of our workforce in February 2023 and December 2023. These restructurings contributed to a 25% decrease in average Communications headcount compared to the same period last year. The increase was also due to a $9.2 million decrease in the provision for doubtful accounts and a $13.7 million decrease in network service providers’ costs, net of the impact of hedging instruments, which was partially offset by a $17.1 million increase in hosting fees.

Previous wording

In the three months ended March 31, 2024, Segment non-GAAP loss from operations increased by $3.8 million, or 22%, compared to the same period last year. The increase was driven by an increase in Segment operating expenses of $3.5 million and an increase in Segment cost of revenue of $1.7 million, partially offset by an increase in Segment revenue of $1.4 million, as described in the Revenue section above.

Current wording

In the six months ended June 30, 2024, Segment non-GAAP loss from operations increased by $0.6 million, or 2%, compared to the same period last year. The increase was driven by an increase in hosting fees of $3.9 million, partially offset by a decrease in Segment operating expenses of $1.8 million and an increase in Segment revenue of $3.4 million, as described in the Revenue section above.

Previous wording

As of March 31, 2024, we had cash and cash equivalents of $672.6 million and short-term marketable securities of $3.2 billion. Cash equivalents consist of money market funds and commercial paper. Short-term marketable securities consist primarily of U.S. treasury securities, non-U.S. government securities, high credit quality corporate debt securities and commercial paper. The cash and cash equivalents and short-term marketable securities are held for working capital purposes.

Current wording

As of June 30, 2024, we had cash and cash equivalents of $755.1 million and short-term marketable securities of $2.4 billion. Cash equivalents consist of money market funds and commercial paper. Short-term marketable securities consist primarily of U.S. treasury securities, non-U.S. government securities, high credit quality corporate debt securities and commercial paper. The cash and cash equivalents and short-term marketable securities are held for working capital purposes.

Previous wording

In February 2023, our board of directors authorized a share repurchase program pursuant to which we may repurchase up to $1.0 billion in aggregate value of our common stock. In March 2024, our board of directors authorized a second share repurchase program for an additional $2.0 billion in aggregate value of our common stock. As of March 31, 2024, we have repurchased $1.1 billion of our common stock in the open market under these programs, and approximately $1.9 billion of the aggregate authorized amount remained available for future repurchases. Repurchases under these programs will be made through open market, private transactions or other means in compliance with applicable federal securities laws, and could include repurchases pursuant to Rule 10b5-1 trading plans. We have discretion in determining the conditions under which shares may be repurchased from time to time. The programs expire on December 31, 2024.

Current wording

In February 2023, our board of directors authorized a share repurchase program pursuant to which we may repurchase up to $1.0 billion in aggregate value of our common stock. In March 2024, our board of directors authorized a second share repurchase program for an additional $2.0 billion in aggregate value of our common stock. As of June 30, 2024, we have repurchased approximately $2.0 billion of our common stock in the open market under these programs, and approximately $1.0 billion of the aggregate authorized amount remained available for future repurchases. Repurchases under these programs will be made through open market, private transactions or other means in compliance with applicable federal securities laws, and could include repurchases pursuant to Rule 10b5-1 trading plans. We have discretion in determining the conditions under which shares may be repurchased from time to time. The programs expire on December 31, 2024.

Previous wording

In the three months ended March 31, 2024, we repurchased $384.3 million in aggregate value, or 6.1 million shares, of our common stock on the open market under these programs.

Current wording

In the three and six months ended June 30, 2024, we repurchased $898.6 million in aggregate value, or 15.2 million shares, and $1.3 billion in aggregate value, or 21.4 million shares, respectively, of our common stock on the open market under these programs.

Previous wording

In the three months ended March 31, 2024, cash provided by operating activities consisted primarily of our net loss of $55.3 million adjusted for non-cash items, including $158.6 million of stock-based compensation expense, $53.3 million of depreciation and amortization expense, $18.8 million amortization of deferred commissions, $29.6 million of share of losses from equity method investments and $25.1 million of cumulative changes in operating assets and liabilities. With respect to changes in operating assets and liabilities, accounts receivable and prepaid expenses decreased $32.5 million primarily due to timing of cash receipts and pre-payments of certain operating expenses. Accounts payable and other current liabilities decreased $50.2 million primarily driven by timing of payments to vendors.

Current wording

In the six months ended June 30, 2024, cash provided by operating activities consisted primarily of our net loss of $87.2 million adjusted for non-cash items, including $306.3 million of stock-based compensation expense, $105.4 million of depreciation and amortization expense, $37.8 million amortization of deferred commissions, $53.5 million of share of losses from equity method investments and $32.7 million of cumulative changes in operating assets and liabilities. With respect to changes in operating assets and liabilities, accounts receivable and prepaid expenses decreased $30.8 million primarily due to timing of cash receipts and pre-payments of certain operating expenses. Accounts payable and other current liabilities decreased $35.4 million primarily driven by timing of payments to vendors. Operating lease liabilities decreased $24.2 million due to payments made against our operating lease obligations.

Previous wording

In the three months ended March 31, 2023, cash used in operating activities consisted primarily of our net loss of $342.1 million adjusted for non-cash items, including $170.8 million of stock-based compensation expense, $71.4 million of depreciation and amortization expense, $21.8 million of impairment of operating lease assets and other long-lived assets, $8.6 million of non-cash reduction in our operating right-of-use asset, $17.9 million amortization of deferred commissions, $30.4 million of our share of losses from an equity method investment, $46.2 million of impairment of an investment that we acquired in 2021, and $143.2 million of cumulative changes in operating assets and liabilities. With respect to changes in operating assets and liabilities, accounts receivable and prepaid expenses increased $86.7 million primarily due to revenue growth, timing of cash receipts and pre-payments and certain operating expenses. Accounts payable and other current liabilities increased $19.1 million primarily driven by a $33.2 million increase in the restructuring liabilities that was offset by a $15.0 million decrease in the sabbatical benefit accrual as a result of lower headcount and sunsetting of the program. Operating lease liabilities decreased $13.7 million due to payments made against our operating lease obligations. Other long-term assets increased $21.5 million primarily due to an increase in the sales commissions balances related to the growth of our business.

Current wording

In the six months ended June 30, 2023, cash used in operating activities consisted primarily of our net loss of $508.3 million adjusted for non-cash items, including $323.9 million of stock-based compensation expense which included the impact of our February 2023 restructuring activities, $146.4 million of depreciation and amortization expense, $62.8 million of our share of losses from an equity method investment, $46.2 million of impairment of an investment that we acquired in 2021, $36.1 million amortization of deferred commissions, $31.1 million of impairment of operating lease assets and other long-lived assets, $32.3 million loss on net assets held for sale or divested, $16.1 million of non-cash reduction in our operating right-of-use asset, and $241.2 million of cumulative changes in operating assets and liabilities. With respect to changes in operating assets and liabilities, accounts receivable and prepaid expenses increased $137.2 million primarily due to revenue growth, timing of cash receipts and prepayments and certain operating expenses. Accounts payable and other current liabilities decreased $57.9 million primarily driven by an $18.1 million decrease in the sabbatical benefit accrual as a result of lower headcount and sunsetting of the program. Operating lease liabilities decreased $27.9 million due to payments made against our operating lease obligations. Other long-term assets increased $19.2 million primarily due to an increase in the sales commissions balances related to the growth of our business.

Previous wording

In the three months ended March 31, 2024, cash provided by investing activities was $189.8 million, primarily consisting of $202.6 million of maturities and sales of marketable securities, net of purchases, partially offset by $11.2 million related to capitalized software development costs and $1.7 million related to purchases of long-lived assets.

Current wording

In the six months ended June 30, 2024, cash provided by investing activities was $974.4 million, primarily consisting of $1.0 billion of maturities and sales of marketable securities, net of purchases, partially offset by $25.8 million related to capitalized software development costs and $2.8 million related to purchases of long-lived assets.

Previous wording

In the three months ended March 31, 2023, cash provided by investing activities was $202.5 million, primarily consisting of $219.1 million of proceeds from sales and maturities of marketable securities, net of purchases of marketable securities and other investments; partially offset by $9.9 million related to capitalized software development costs and $6.8 million related to purchases of long-lived assets.

Current wording

In the six months ended June 30, 2023, cash provided by investing activities was $509.8 million primarily consisting of $538.3 million of proceeds from sales and maturities of marketable securities, net of purchases of marketable securities and other investments; $20.1 million related to capitalized software development costs and $8.3 million related to purchases of long-lived assets.

Previous wording

In the three months ended March 31, 2024, cash used in financing activities was $363.2 million, primarily consisting of $356.9 million of cash paid to repurchase 6.1 million shares of our common stock in the open market, including related costs.

Current wording

In the six months ended June 30, 2024, cash used in financing activities was $1.3 billion, primarily consisting of $1.3 billion of cash paid to repurchase 15.2 million shares of our common stock in the open market, including related costs.

Previous wording

In the three months ended March 31, 2023, cash used in financing activities was $121.5 million, primarily consisting of $115.0 million of cash paid to repurchase 1.9 million shares of our Class A common stock in the open market, including related costs, and $7.4 million in principal payments on debt and finance leases, offset by $3.3 million in proceeds from stock options exercised by our employees and shares issued under our employee stock purchase plan.

Current wording

In the six months ended June 30, 2023, cash used in financing activities was $469.4 million primarily consisting of $485.1 million of cash paid to repurchase 8.3 million shares of our Class A common stock in the open market, including related costs, and $9.8 million in principal payments on debt and finance leases, offset by $28.1 million in proceeds from stock options exercised by our employees and shares issued under our employee stock purchase plan.