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`8-1 1 a22274142s-1.htm S-1
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`Use these links to rapidly review the document
`TABLE OF
`CONTENT
`EX
`LIDATED F
`
`TAL STATE
`
`TableofContents
`
`As filed with the Securities and Exchange Commission on May 26, 2016
`
`Registration No. 333-
`
`
`UNITED STATES
`SECURITIES AND EXCHANGE COMMISSION
`Washington, D.C, 20849
`
`FORM S-1
`UN
`REGISTRATIONSTATEMENT
`THE SECURITIES ACT OF 1933
`
`Twilio Inc.
`(Exact name of Registrant as specified in its charter)
`
`26-2574840
`7372
`Delaware
`
`(State or other jurisdiction of=(Primary Standard Industrial (RS. Employer
`incorporation or
`Classification Code Number)
`identification Number)
`organization)
`
`645 Harrison Street, Third Floor
`San Francisco, California 94107
`(415) 390-2337
`(Address, including zip code, and telephone number,including
`area code, of Registrant's principal executive offices)
`
`Jeff Lawson
`Chief Executive Officer
`Twillo Inc.
`(645 Harrison Street, Third Floor
`San Francisco, Callfornla 94107
`(415) 390-2337
`(Name, address, including zip code, andtelephone number,including
`area coda, of agent for servica)
`
`ATteewenDPenkBbq
`Goodwin Procter LLP
`135 Commonwealth Drive
`Menlo Park, California 94025
`(650) 752-3100
`
`Copies to:
`Karyn Smith, Esq.
`Twilio Inc.
`645 Harrison Street, Third Floor
`San Francisco, California
`(a6)390-2337
`
`Christopher L. Kaufman, Esq.
`Tad J. Freese, Esq.
`Latham & Watkins LLP
`140 Scott Drive
`Merea0)204800
`
`Approximate date of commencement of proposed sale to the public:
`As soon as practicable after this registration statement becomes effective.
`
`Hf any of the securilies being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box: O
`
`i this Form isfiled to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the
`earlier effective registration statement for the same offering. O
`
`if this Form is a post-effactive amendment filed pursuant to Rule 462(c) under the Securitias Act, chack the following box and list the Securities Act registration statement numberof the earlier effective
`registration statement for the same offering. O
`
`ifthis Form is a post-effective amendmentfled pursuant to Rule 462(d) under the Securities Act, check the following box andlist the SecuritiesAct registration statement number ofthe earliereffective
`registration statement for the same offering.
`Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelarated filer, or a smaller reporting company. See the definitions of “large accelerated filer’, "accelerated
`filer" and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
`
`Large accelerated filer O
`
`Acceleratedfiler O
`
`Non-accelerated filer &
`(Do not check if a smaller
`reporting company)
`
`Smaller reporting company 0
`
`CALCULATION OF REGISTRATION FEE
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`Proposed Maximum
`Aggregate Offering
`Pricett}t2)
`$100,000,000
`
`Title of Each Class of Securities
`to be Registered
`Class A common stock, $0,001 par value per share
`
`Amount of
`Raglstration Feel?)
`$10,070
`
`a
`@
`
`Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(0) under the Securilias Act of 1933, as amended
`Includes the additional shares that the underwriters have the option to purchase from the Registrant,if any.
`
`The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay Its effective date until the Registrant shall file a further amendment which
`spacifically states that this registration statement shail thereafter become effective In accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective
`on such date as the Securities and Exchange Commission, acting pursuant to said Section &(a), may determine.
`
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`TableofContents
`
`The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the
`Securities and Exchange Commissionis effective. This preliminary prospectusis not an offer to sell nor does it seek an offer to buy these securities in any
`jurisdiction where the offer or sale is not permitted.
`
`Subject To Completion. Dated
`
`Shares
`
`:) twilio
`
`Twilio Inc.
`
`Class A Common Stock
`
`This is an initial public offering of shares of Class A common stock of Twilio Inc.
`
`Priorto this offering, there has been no public market for the common stock,It is currently estimated that the initial public offering price per share will be between $
`. Weintendto list the Class A commen stock on the New York Stock Exchange under the symbol "TWLO",
`
`and $
`
`Wehave two classes of common stock, Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock
`are identical, except voting and conversion rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to 10 votes and is
`convertible at any time into one share of Class A common stock, The holders of our outstanding Class B commonstock will hold approximately
`% of the voting power of our
`outstanding capital stock following this offering, with ourdirectors and executive officers and their affiliates holding approximately
`%.
`
`Weare an “emerging growth company” as defined under the federal securities laws and, as such, we have elected to comply with reduced reporting requirements forthis
`prospectus and may elect to do so in future filings.
`
`See "Risk Factors” beginning on page 16 to read about factors you should consider before buying shares of the Class A common stock.
`
`Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy
`or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
`
`Initial public offering price
`Underwriting discount)
`Proceeds, before expenses,to Twilio
`
`Per Share Total
`$
`$
`$
`
`$
`$
`$
`
`(1)
`
`See the section titted "Underwriting" for additional information regarding compensation payable to the underwriters
`
`shares of Class A commonstock, the underwriters have the option to purchase up to an additional
`To the extent that the underwriters sell more than
`from Twillo at the initial public offering price less the underwriting discount.
`
`shares
`
`The underwriters expect to deliver the shares against payment in New York, New York on
`
`Goldman, Sachs & Co.
`
`Allen & Company LLC
`
`JMP Securities
`
`William Blair
`
`J.P. Morgan
`
`Pacific Crest Securities
`a division of KeyBanc Capital Markets
`
`Canaccord Genuity
`
`Prospectus dated
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`
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`
`Futune COMMUNICATIONS
`
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`
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`
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`
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`
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`
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`expansion rate"
`
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`
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`TABLE OF CONTENTS
`
`Prospectus
`
`
`
`EXPERTS
`WHERE YOU CAN FIND ADDITIONAL INFORMATION
`INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
`
`BREEREEREReeeeeeeeees.AIt—_
`
`(the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating
`Through and including
`in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with
`respect to an unsold allotment or subscription.
`
`Wehave not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses
`we have prepared. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We are
`offering to sell, and seeking offers to buy, shares of Class A commonstock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus
`is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the Class A common stock.
`
`For investors outside the United States: Neither we nor any of the underwriters have done anything that would permit this offering or possession ordistribution of this
`prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside of the United States who come into possession of this
`prospectus mustinform themselves about, and observe anyrestrictions relating to, the offering of the shares of Class A common stock and the distribution of this prospectus
`outside of the United States.
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`This summary highlights selected information that is presented in greater detail elsewhere in this prospectus. This summary does not contain ail of the information you
`should consider before investing in our Class A common stock, You should read this entire prospectus carefully, including the sections titled "Risk Factors" and
`"Management's Discussion and Analysis ofFinancial Condition and Results of Operations" and our consolidated financial statements and the related notes included
`elsewhere in this prospectus, before making an investment decision. Unless the context otherwise requires, the terms "Twila," “the company,” “we,” "us" and “our” in this
`prospectus refer to Twilio Inc. and its consolidated subsidiaries.
`
`PROSPECTUS SUMMARY
`
`TWILIO INC.
`
`Overview
`
`package has shipped. The range of applications that developers build with the Twilio platform has provento be nearly limitless.
`
`Software developers are reinventing nearly every aspect of business today. Yet as developers, we repeatedly encountered an area where we could not innovate —
`communications. Because communication is a fundamental human activity and vital to building great businesses, we wanted to incorporate communications into our
`software applications, but the barriers to innovation were too high. Twilio was started to solve this problem.
`
`Webelieve the future of communications will be written in software, by the developers of the world — our customers. By empowering them, our mission is to fuel the
`future of communications.
`
`Cloud platforms are a new category of software that enable developers to build and manage applications without the complexity of creating and maintaining the
`underlying infrastructure. These platforms have arisen to enable a fast pace of innovation across a range of categories, such as computing and storage. We are the leaderin
`the Cloud Communications Platform category. We enable developers to build, scale and operate realtime communications within software applications.
`
`Ourdeveloper-first platform approach consists of three things: our Programmable Communications Cloud, Super Network and Business Modelfor Innovators. Our
`Programmable Communications Cloud software enables developers to embed voice, messaging, video and authentication capabilities into their applications via our simple-
`to-use Application ProgrammingInterfaces, or APIs. We do not aim to provide complete business solutions, rather our Programmable Communications Cloud offers flexible
`building blocks that enable our customers to build what they need. The Super Network is our software layer that allows our customers’ software to communicate with
`connected devices globally.It interconnects with communications networks around the world and continually analyzes data to optimize the quality and cost of
`communications that flow through our platform. Our Business Modelfor Innovators empowers developers by reducing friction and upfront costs, encouraging
`experimentation and enabling developers to grow as customers as their ideas succeed.
`
`Wehad over 28,000 Active Customer Accounts as of March 31, 2016, representing organizations big and small, old and young, across nearly every industry, with one
`thing in common: they are competing by using the power of software to build differentiation through communications. With our platform, our customers are disrupting existing
`industries and creating new ones, For example, our customers have reinvented hired transportation by connecting riders and drivers, with communications asacritical part
`of each transaction. Our customers’ software applications use our platform to notify a diner whena table is ready, a traveler when a flight is delayed or a shopper when a
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`Ourgoalis for Twilio to be in the toolkit of every software developer in the world. As of March 31, 2016, over 900,000 developer accounts had been registered on our
`platform. Because big ideas often start small, we encourage developers to experiment and iterate on ourplatform. We love when developers explore whatthey can do with
`Twilio, because one day they may have a business problem that they will use our products to solve.
`
`As our customers succeed, we share in their success through our usage-based revenue model. Our revenue grows as customers increase their usage of a product,
`extend their usage of a product to new applications or adopt a new product. We believe the most useful indicator of the increased activity from ourexisting customers is our
`Dollar-Based Net Expansion Rate, which was 155% for the year ended December 31, 2015. See the section titled "Management's Discussion and Analysis of Financial
`Condition and Results of Operations—Key Business Metrics—Dollar-Based Net Expansion Rate.”
`
`We have achieved significant growth in recent periods. For the years ended December 31, 2013, 2014 and 2015 and the three months ended March 31, 2016, our
`revenue was $49.9 million, $88.8 million, $166.9 million and $59.3 million, respectively. We incurred a net loss of $26.9 million, $26.8 million, $35.5 million and $6.5 million
`for the years ended December 31, 2013, 2014 and 2015 and the three months ended March 31, 2016, respectively.
`
`Trends in Our Favor
`
`Rise of Software Developers
`
`Industry Background
`
`rapidly deploy new applications that are massively scalable. Legacy
`
`Today, software is used to disrupt industries and transform products and services, thereby redefining how organizations engage with their customers. This shift has
`significantly increased the value and influence of software developers across organizations of all sizes and industries.
`
`Differentiation Must Increasingly Be Built, Not Bought
`
`In orderfor organizationsto deliver differentiated customer experiences that build or extend competitive advantage,they are increasingly adding the software
`development competencies necessary to build applications that delight their customers.In fact, Gartner predicts that by 2020, 75% of application purchases supporting
`digital business will be "build, not buy."
`
`Cloud Platforms As Building Blocks for Modem Applications
`
`Cloud platforms, a new category of software that enables developers to build and manage applications without the complexity of creating and maintaining the
`undertying infrastructure, have arisen to enable the fast pace of innovation required by modem applications. These platforms typically provide global, scalable and cost-
`effective solutions. Cloud platforms are emerging across a range of categories, including analytics, communications, computing, mapping, payments and storage. These
`cloud platforms are enabling every organization, from small startups to Fortune 500 enterprises, to experiment, prototype and deploy next-generation applications.
`
`Agility of Software Accelerates Pace of Innovation
`
`The way organizations build, deploy and scale modem applications has fundamentally changed. Organizations must continuously bring new applications and features
`to market to differentiate themselves from their competitors and to build and extend their competitive advantage. Heightened consumer expectations for real-time,
`personalizedinteraction further necessitate rapid innovation. In order to satisfy these needs, developers must be empowered to freely experiment, quickly prototype and
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`infrastructure does not support this new paradigm for developers because it typically has been slow, complex and costly to implement, and inflexible to operate and iterate.
`
`Contextual Communications Are Transforming Applications
`
`Communication is fundamental to human activity and vital to building great businesses. While software has transformed business, communications technology has
`largely failed to evolve. In fact, the phone app on today's smartphones is merely a touch screen representation of the push-button phone invented in the 1960s.
`
`Today, there is demand for communications to be embedded into applications where communications can be deeply integrated with the context of users’lives, such as
`personal and business identities, relationships, locations and daily schedules. This type of contextual communications enables developers to build the powerful applications
`that are differentiating organizations. Whether an application is designed to book a hotel, hail a ride or aid a delayed traveler, enabling users to seamlessly communicate in
`context is critical to a delightful experience. Contextual communications are transforming applications and replacing siloed communications applications, such as the phone
`app.
`
`Limitations of Legacy Products
`
`Legacy products were not designed with the software mindset and are therefore unable to address the foregoing trends. These products tend to be monolithic, costly,
`complicated, geopolitically bounded and impractical to scale, all of which hinder innovation. As a result, many innovative ideas have never even been attempted with legacy
`products, let alone realized. Over time, many attempts have been made to evolve the communications industry with software. However, we believe that no legacy product
`has truly empowered the global developer community to transform their applications with communications.
`
`through software controls, to pawer Use cases such as appointment reminders,delivery notifications, order confirmations and customercare.
`
`Our Platform Approach
`
`Twilio's mission is to fuel the future of communications, We enable developers to build, scale and operate real-time communications within software applications.
`
`Our Programmable Communications Cloud, Super Network and Business Modelfor Innovators work together to create value for our customers and a competitive
`advantage for our company.
`
`Our Programmabie Communications Cloud. Our Programmable Communications Cloud consists of software products that can be used individually orin
`combination to build rich contextual communications within applications. Our Programmable Communications Cloud includes:
`
`.
`
`Programmable Voice. Our Programmable Voice software products allow developers to build solutions to make and receive phone calls globally, and
`incorporate advanced voice functionality such as text-to-speech, conferencing, recording and transcription. Programmable Voice, through our advanced call
`control software, allows developers to build customized applications that address use cases such as contact centers,call tracking and analytics solutions and
`anonymized communications.
`
`Programmable Messaging. Our Programmable Messaging software products allow developers to build solutions to send and receive text messages globally,
`and incorporate advanced messaging functionality such as emoji, picture messaging andlocalized languages. Our customers use Programmable Messaging,
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`Programmable Video, Our recently introduced Programmable Video software products enable developers to build next-generation mobile and web
`applications with embedded video,including for use cases such as customer care, collaboration and physician consultations.
`
`Use Case APIs. While developers can build a broad range of applications on ourplatform, certain use cases are more common. Our Use Case APIs build
`upon the above products to offer more fully implemented functionality for a specific purpose, such as two-factor authentication, thereby saving developers
`significant time in building their applications.
`
`Add-on Marketplace. Launched in May 2016, our Add-on Marketplace allows third parties to integrate their capabilities directly into our Cloud
`Communications Platform, which allows us to further leverage our community to provide new anddifferentiated functionality for our customers.
`
`Our Super Network. Our Programmable Communications Cloud is built on top of our global software layer, which we call our Super Network. Our Super Network
`interfaces intelligently with communications networks globally. We do not own any physical network infrastructure. We use software to build a high performance network that
`optimizes performance for our customers. Our Super Network breaks down the geopolitical boundaries and scale limitations of the physical network infrastructure.
`
`Ourplatform has global reach, consisting of 22 cloud data centers in seven regions. We interconnect those cloud data centers with network service providers around
`the world, giving us redundant meansto reach users globally. We are continually adding new network service providerrelationships as we scale.
`
`Our Super Network analyzes massive volumes of data from end users,their applications and the communications networks to optimize our customers’
`communications for quality and cost. With every new message andcall, our Super Network becomes more robust,intelligent and efficient, enabling us to provide better
`performance at lowerprices to our customers. Our Super Network's sophistication becomes increasingly difficult for others to replicate over time.
`
`Our Business Model for innovators. Big ideas often start small, and therefore developers need the freedom and tools to experimentand iterate on their ideas. In
`order to empower developers to experiment, our developer-first business modelis low friction, eliminating the upfront costs, time and complexity that hinder innovation,
`Developers can begin building with a free trial. Once developers determine that our software meets their needs, they can flexibly increase consumption and pay based on
`usage.In short, we acquire developers like consumers and enable them to spendlike enterprises.
`
`cases.
`
`Ourplatform was built by developers for developers, and our approach has thefollowing strengths:
`
`Strengths of Our Platform Approach
`
`.
`
`Developer Mind Share. We are recognized as the leading platform for cloud communications, and we believe we set the standard for developers to build,
`scale and operate real-time communications within software applications.
`
`Composable. Weare a platiorm company focused on providing software developers with the necessary building blocks to compose communications
`solutions that can be integrated into their applications. We believe this enables developers to build differentiated applications for a nearly limitless range of use
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`Comprehensive. Our Programmable Communications Cloud offers a breadth of functionality, including voice, messaging and video,all with global reach and
`across devices.
`
`Easy to Get Started. Developers can begin building with a free trial, allowing them to experiment and iterate on ourplatform. This approacheliminates the
`upfront costs and complexity that typically hinder innovation.
`
`Easy to Build. We designed our APIs so developers could quickly learn, access and build upon our Programmable Communications Cloud.
`
`Easy to Scale. Ourplatform allows our customers to scale elastically without having to rearchitect their applications or manage communications
`infrastructure.
`
`Multi-Tenant Architecture. Our multi-tenant architecture enables all of our customers to operate on our platform while securely partitioning their application
`usage and data. In addition, our Solution Partner customers, which embed our products in the solutions theysell to other businesses, rely on our multi-tenant
`platform to independently manage their own customers' activity.
`
`Reliable. Ourplatform consists of fault-tolerant and globally-distributed systems that have enabled our customers to operate their applications without
`significant failures or downtime.
`
`Global. Customers can write an application once and configure it to operate in nearly every country in the world without any change to the code.
`
`Our Opportunity
`
`products address portions of this market segment.
`
`Gartnerestimated that in 2015, $3.5 trillion would be spent on information technology globally, and 42% of all IT spending would be on communications. The
`$1.5trillion spent on communications services represents almost five times the amount spent on enterprise software and nine times the amount spent on data centers. We
`believe the limitations of existing hardware- and network-centric communications products historically have anchored the communications technology market in high cost
`and low functionality. Over time, we believe that a meaningful portion of the $1.5trillion spent on communications services will migrate from existing hardware- and network-
`centric communications products to contextual communications solutions that are integrated into software applications.
`
`Our Programmable Communications Cloud includes a suite of software products, including Programmable Voice, Programmable Messaging, Programmable Video
`and Programmable Authentication. As a result, our platform currently addresses significant portions of several large markets that, in aggregate, have been estimated by IDC
`to be $45.6 billion in 2017.
`
`Specifically, IDC estimates that, in 2017:
`
`The Worldwide Application-to-Person SMS market will be $29.4 billion, Our Programmable Messaging products address portions of this market.
`
`Certain segments of the Worldwide Unified Communications and Collaboration market will be $14.1 billion. Our Programmable Voice and Programmable Video
`products address portions of these market segments.
`
`The Advanced Authentication segment of the Worldwide Identity and Access Management market will be $2.1 billion. Our Programmable Authentication
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`We are the leader in the Cloud Communications Platform category based on revenue, market share and reputation, and intend ta continue to set the pace for
`innovation. Weintend to pursuethe following growth strategies:
`
`.
`
`Continue Significant Investment in our Technology Platform. Wewill continue to invest in building new software capabilities and extending our platform to
`bring the powerof contextual communications to a broader range of applications, geographies and customers.
`
`Our Growth Strategy
`
`Grow Our Developer Community and Accelerate Adoption. As of March 31, 2016, over 900,000 developer accounts had been registered on our platform,
`and we had over 90,000 paying customer accounts, of which over 28,000 were Active Customer Accounts. We categorize a customer account as an Active
`Customer Account in a quarter in which it generates at least $5 of revenue during the last month of the quarter. Wewill continue to enhance ourrelationships
`with developers globally and seek to increase the numberof developers on ourplatform. In addition to adding new developers, we believe there is significant
`opportunity for revenue growth from existing paying customer accounts that we seek to grow into Active Customer Accounts.
`
`Increase OurInternational Presence. Our platform operates in over 180 countries today, makingit as simple to communicate from Sao Paulo as it is from
`San Francisco. We plan to grow internationally by expanding our operations outside of the United States and collaborating with intemational strategic partners.
`
`Expand Focus on Enterprises. We plan to drive greater awareness and adoption of Twilio from enterprises across industries. We intend to increase our
`investment in sales and marketing to meet evolving enterprise needs globally, in addition to extending our enterprise-focused platform capabilities and use
`cases.
`
`Further Enable Solution Partner Customers. We have relationships with a numberof Solution Pariner customers that embed our products in the solutions
`that they sell to other businesses, We intend to expand ourrelationships with existing Solution Partner customers and to add new Solution Partner customers.
`
`Expand ISV Development Platform and S| Partnerships. We intendto continueto invest and develop the ecosystem for our solutions in partnership with
`independent software vendor (ISV) development platforms and system integrators, or Sls, to accelerate awareness and adoption of ourplatform.
`
`Selectively Pursue Acquisitions and Strategic Investments, We mayselectively pursue acquisitions and strategic investments in businesses and
`technologies that strengthen ourplatform.
`
`apply to every Twilion, not just managers or executives, and provide a personal growth path for employees in their journeys to become better leaders.
`
`Our core values are at the center of everything that we do. As a company built by developers for developers, these values guide us to work in a way that exemplifies
`many attributes of the developer ethos, Our values provide a guide for the way our tea