The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. In addition to historical financial information, the following discussion contains forward-looking statements that are based upon current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q. 25 Table of Contents Overview We envision a world in which every digital interaction is amazing. The Twilio platform combines our communications channels and software solutions with contextual data and AI-powered orchestration, enabling businesses to deliver amazing customer engagement across the entire customer journey. Our platform provides a trusted, simple, and smart infrastructure foundation that customers can build on. We offer highly customizable communications APIs that enable developers to embed numerous forms of messaging, voice, email, and video interactions into their customer-facing applications, as well as software products that target specific engagement needs, including our digital engagement centers, marketing campaigns, and user authentication and identity solutions. This combination of flexible APIs and software solutions, together with our customer data capabilities, helps businesses of all sizes and across numerous industries to benefit from smarter and more streamlined engagement at every step of the customer journey, including reduced customer acquisition costs, lasting loyalty, and increased customer value. The value proposition of our offerings has become stronger and our products have become more strategic to our customers as businesses are increasingly prioritizing building more personalized and differentiated customer engagement experiences through digital channels. Factors Affecting Our Results of Operations We are focused on innovation and durable, profitable growth. To increase revenue and grow market share, we intend to drive product innovation, leverage predictive and generative AI, further enhance our independent software vendor (“ISV”), reseller and other partner relationships, improve our self-service capabilities, cross-sell our products, and expand internationally. We also intend to optimize our business and take measures to reduce costs, including simplifying and further automating our business processes, modernizing our infrastructure, leveraging AI, enacting certain workforce planning initiatives, optimizing utilization of our distributed workforce and implementing other initiatives targeted at improving efficiencies in our business. We are focused on driving leverage through these cost savings and efficiency initiatives, as well as efforts to drive growth in higher margin products. Our revenue is primarily derived from usage-based fees, which can lead to variability in our results of operations and at times create differences between our forecasts and actual results. Our usage-based revenue is also more immediately impacted by changes in consumer spending and macroeconomic conditions than our subscription-based revenue. We also experience seasonal trends due to increased consumer activity in the fourth quarter, which may result in lower sequential revenue in the first quarter. Our gross profit and gross margin are impacted by a number of factors, including our product mix; our ability to manage our cloud infrastructure‑related and network service provider fees, including A2P messaging fees; changes in foreign exchange rates; the timing of amortization of capitalized software development costs and acquired intangibles; the extent to which we periodically choose to adjust prices of our products; and the timing and extent of our investments in our operations. Our gross margin is also impacted by the mix of U.S. messaging termination compared to international messaging termination, as international messaging has lower gross margins. In recent quarters, major U.S. mobile carriers have increased network service provider fees for A2P messages delivered to their subscribers, and such fees may increase further over time. We pass these fees through to our customers at cost. As a result, we recognize an equal amount of revenue and cost of revenue related to these fees. The increased fees do not impact our gross profit, but they create a headwind to our gross margins. In the second quarter of 2026, we determined that we would be unable to consume certain network services that we prepaid in previous periods due to operational and financial challenges experienced by two network service providers. This determination resulted in a $32.8 million impairment loss on prepaid assets that impacted our operating expenses and income from operations for the three and six months ended June 30, 2026. This impairment loss has no impact on our free cash flow and will not impact our results of operations in future periods. We regularly assess the need for a valuation allowance on our deferred tax assets. As of June 30, 2026, based on our analysis of both positive and negative evidence, including the amount of pre-tax book income in the U.S. in recent periods and our expectation of future profits in the U.S., we concluded that it is more likely than not that the majority of our U.S. deferred tax assets are realizable. As a result, we released a significant portion of our valuation allowance on the net deferred tax assets in the U.S., resulting in the recognition of deferred tax assets and income tax benefit of $944.1 million during the three and six months ended June 30, 2026. For further detail refer to Note 14 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. 26 Table of Contents Our results of operations have in the past been, and could in the future be, impacted by adverse macroeconomic conditions. We are continuing to monitor actual and potential effects of recent macroeconomic and political conditions and uncertainty on our business. For additional details, see Part II, Item 1A, “Risk Factors.” Key Business Metrics We review a number of operational and financial metrics, including Dollar-Based Net Expansion Rate (“DBNE”), to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. The following table summarizes our year-over-year revenue growth and DBNE for the three months ended June 30, 2026 and 2025. Three Months Ended June 30, 2026 2025 Total Revenue (in thousands) $ 1,499,089 $ 1,228,425 Total Revenue Growth Rate 22 % 13 % Dollar-Based Net Expansion Rate 116 % 108 % Dollar‑Based Net Expansion Rate Our DBNE compares the total revenue in a quarter from all individual customer accounts, as identified by a unique account identifier, for which we have recognized at least $5 of revenue in the last month of the quarter, to revenue from those same accounts in the same quarter in the prior year. A single customer organization may constitute multiple unique customer accounts if it has multiple account identifiers. To calculate DBNE, we first identify the cohort of such customer accounts in the same quarter of the prior year. DBNE is the quotient obtained by dividing the revenue generated from that cohort in a quarter, by the revenue generated from that same cohort in the corresponding quarter in the prior year. When we calculate DBNE for periods longer than one quarter, we use the average of the applicable quarterly DBNEs for each of the quarters in such period. Revenue from acquisitions does not impact the DBNE calculation until the quarter following the one-year anniversary of the applicable acquisition, unless the acquisition closing date is the first day of a quarter. Revenue from divestitures does not impact the DBNE calculation beginning in the quarter the divestiture closed, unless the divestiture closing date is the last day of a quarter. We believe that measuring DBNE provides an important indication of the performance of our efforts to increase revenue from existing customers. Our ability to drive growth and generate incremental revenue depends, in part, on our ability to maintain and grow our relationships with existing customers and to increase their use of the platform. An important way in which we have historically tracked performance in this area is by measuring the DBNE for such customer accounts. Our DBNE increases when these customers increase their usage of a product, extend their usage of a product to new applications or adopt a new product. Our DBNE decreases when these customers cease or reduce their usage of a product or when we lower usage prices on a product. As our customers grow their businesses and extend the use of our platform, they sometimes create multiple customer accounts with us for operational or other reasons. As such, when we identify a significant customer organization (defined as a single customer organization generating more than 1% of revenue in a quarterly reporting period) that has created a new customer account, this new account is tied to, and revenue from this new account is included with, the original customer account for the purposes of calculating this metric. Key Components of Statements of Operations Revenue Revenue. We recognize revenue from our products on either a usage basis or a subscription basis, depending on the nature of the product and the type of customer contract. 27 Table of Contents The majority of our revenue is derived from usage-based fees. The usage-based fees are earned when customers access our cloud-based platform and start using our products. Examples of our primarily usage-based products are Messaging and Voice. For Messaging products, we primarily charge fees related to the number of text messages sent or received. For Voice products, we primarily charge fees for minutes of call duration. Examples of our primarily subscription-based products are Email and Segment. For subscription-based revenue derived from these products, we recognize revenue evenly over the contract term. When our usage-based products are embedded into our subscription-based products, or when multiple products are purchased together as a solution, we charge for each product separately on a usage or subscription basis, as applicable. Most of our usage-based customers gain access to our platform through a self-service process, which requires an upfront prepayment via credit card that is drawn down as they use our products. Pricing is generally based on a publicly available, self-serve pricing matrix that generally allows customers to receive tiered discounts as their usage of our products increases. Many of our larger usage-based customers enter into contractual arrangements with us for a period of at least 12 months. These contracts may include negotiated terms and typically include minimum revenue commitments of varying durations. Usage-based customers subject to such contracts are typically invoiced monthly in arrears for products used. In the three months ended June 30, 2026 and 2025, we generated 75% and 74% of our revenue, respectively, from usage-based fees. Subscription-based fees are earned in accordance with subscription pricing terms. For our subscription-based products, customers generally enter into negotiated contracts, which are typically one to three years in duration. Subscription customers are generally invoiced in advance at the start of the contract term. In the three months ended June 30, 2026 and 2025, we generated 25% and 26% of our revenue, respectively, from non-usage‑based fees. Amounts that have been charged via credit card or invoiced are recorded in revenue, deferred revenue or customer deposits, depending on whether the revenue recognition criteria have been met. Our deferred revenue and customer deposits liability balance is not a meaningful indicator of our future revenue at any point in time because the number of contracts with our invoiced customers that contain terms requiring any form of prepayment is not significant. We define U.S. revenue as revenue from customers with IP addresses or mailing addresses at the time of registration in the United States. We define international revenue as revenue from customers with IP addresses or mailing addresses at the time of registration outside of the United States. Cost of Revenue and Gross Profit Cost of Revenue. 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. Our arrangements with network service providers require us to pay fees, including fees based on the volume of phone calls initiated or text messages sent, as well as the number of telephone numbers acquired by us to service our customers. Our arrangements with our cloud infrastructure providers require us to pay fees based on our server capacity consumption. Gross Profit. Gross profit represents revenue less cost of revenue. Operating Expenses The most significant components of operating expenses are personnel costs, which consist of salaries, benefits, sales commissions, bonuses and stock‑based compensation. We also incur other non‑personnel costs related to our general overhead expenses. Research and Development. Research and development expenses consist primarily of personnel costs, outsourced engineering services, cloud infrastructure fees for staging and development of our products, depreciation, amortization of capitalized internal-use software development costs and an allocation of our general overhead expenses. We capitalize the portion of our software development costs that meets the criteria for capitalization. We are focusing our research and development investment in the highest impact product areas for our future. We are investing strategically in alignment with our focus on combining communications, memory, and AI orchestration with identity, governance and observability to enable businesses to deliver continuous, personal and secure conversations. 28 Table of Contents 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. We focus our sales and marketing efforts on generating awareness of our company, platform and products, creating sales leads, expanding relationships with existing customers and establishing and promoting our brand, both domestically and internationally. 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. Impairment Loss on Prepaid Assets. Impairment loss on prepaid assets consists of certain losses related to network services we prepaid in prior periods that we will be unable to consume due to operational and financial challenges experienced by two network service providers. Other (Expenses) Income, Net Our other (expenses) income, net, consist primarily of our share of losses from our equity method investment, impairment charges and gains and losses related to our strategic investments, realized gains and losses from marketable securities, interest income and expense and debt-related costs. Benefit from (Provision for) Income Taxes Our benefit from (provision for) income taxes consists primarily of the tax benefit from the release of a significant portion of our U.S. valuation allowance; and also, federal, state and foreign income taxes and withholding taxes in foreign jurisdictions in which the Company conducts business. From time to time, we may recognize tax benefits arising from various matters, including newly enacted legislations. Benefits from income taxes may fully or partially offset the provision for income taxes within a reporting period. In 2026, the primary difference between our effective tax rate and federal statutory rate relates to the tax benefit recognized from the U.S. valuation allowance released during the second quarter of 2026. In prior periods, the primary difference between our effective tax rate and the federal statutory rate related to the valuation allowance we established on the federal, state and certain foreign deferred tax assets. 29 Table of Contents Results of Operations The following table sets forth our results of operations for the periods presented. The period-to-period comparison of our historical results are not indicative of the results that may be expected in the future. Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 Condensed Consolidated Statements of Operations Data: (In thousands, except share and per share amounts) Revenue $ 1,499,089 $ 1,228,425 $ 2,905,996 $ 2,400,888 Cost of revenue (1) (2) 773,223 625,685 1,495,886 1,216,581 Gross profit 725,866 602,740 1,410,110 1,184,307 Operating expenses: Research and development (1) 273,317 243,495 535,483 497,790 Sales and marketing (1) (2) 216,802 220,724 428,668 432,837 General and administrative (1) 118,430 101,532 220,976 193,609 Impairment loss on prepaid assets 32,771 — 32,771 — Total operating expenses 641,320 565,751 1,217,898 1,124,236 Income from operations 84,546 36,989 192,212 60,071 Other (expenses) income, net: Share of losses from equity method investment (24,346) (25,222) (51,569) (44,693) Other income, net 15,326 21,825 37,115 44,798 Total other (expenses) income, net (9,020) (3,397) (14,454) 105 Income before benefit from (provision for) income taxes 75,526 33,592 177,758 60,176 Benefit from (provision for) income taxes 991,683 (11,169) 979,590 (17,736) Net income attributable to common stockholders $ 1,067,209 $ 22,423 $ 1,157,348 $ 42,440 Net income per share: Basic $ 6.99 $ 0.15 $ 7.59 $ 0.28 Diluted $ 6.68 $ 0.14 $ 7.29 $ 0.26 Weighted-average shares used to compute net income per share: Basic 152,785,292 153,228,766 152,582,316 153,273,594 Diluted 159,708,166 159,691,758 158,711,170 160,729,638 __________________________________ (1) Includes stock-based compensation expense as follows: Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 (In thousands) Cost of revenue $ 3,111 $ 4,087 $ 6,485 $ 8,358 Research and development 74,702 80,590 147,713 158,656 Sales and marketing 32,299 34,413 63,448 65,772 General and administrative 31,800 30,161 60,777 55,738 Total $ 141,912 $ 149,251 $ 278,423 $ 288,524 ____________________________________ (2) Includes amortization of acquired intangibles as follows: Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 (In thousands) Cost of revenue $ 6,037 $ 15,594 $ 15,393 $ 31,276 Sales and marketing 5,248 11,411 12,509 22,868 Total $ 11,285 $ 27,005 $ 27,902 $ 54,144 30 Table of Contents The following table sets forth our results of operations for each of the periods presented as a percentage of our total revenue: Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 Condensed Consolidated Statements of Operations, as a percentage of revenue: ** Revenue 100 % 100 % 100 % 100 % Cost of revenue 52 51 51 51 Gross profit 48 49 49 49 Operating expenses: Research and development 18 20 18 21 Sales and marketing 14 18 15 18 General and administrative 8 8 8 8 Impairment loss on prepaid assets 2 — 1 — Total operating expenses 43 46 42 47 Income from operations 6 3 7 3 Other (expenses) income, net Share of losses from equity method investment (2) (2) (2) (2) Other income, net 1 2 1 2 Total other (expenses) income, net (1) * * * Income before benefit from (provision for) income taxes 5 3 6 3 Benefit from (provision for) income taxes 66 (1) 34 (1) Net income attributable to common stockholders 71 % 2 % 40 % 2 % ____________________________________ * Less than 0.5% of revenue. ** Columns may not sum due to rounding. Comparison of the Three Months Ended June 30, 2026 and 2025 Revenue Three Months Ended June 30, 2026 2025 Change (Dollars in thousands) Revenue $ 1,499,089 $ 1,228,425 $ 270,664 22 % In the three months ended June 30, 2026, revenue increased by $270.7 million, or 22%, 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 DBNE of 116%, as well as an increase of $75.7 million in revenue derived from customer accounts not captured in our DBNE calculation, which are primarily new customer accounts. The increase also reflects $71.1 million in revenue related to the incremental A2P fees recently introduced by major U.S. carriers. 31 Table of Contents Cost of Revenue and Gross Profit Three Months Ended June 30, 2026 2025 Change (Dollars in thousands) Cost of revenue $ 773,223 $ 625,685 $ 147,538 24 % Gross profit $ 725,866 $ 602,740 $ 123,126 20 % In the three months ended June 30, 2026, cost of revenue increased by $147.5 million, or 24%, compared to the same period last year. The increase was primarily attributable to a $138.8 million increase in network service provider costs, net of the impact of hedging instruments, which includes a $71.1 million increase due to the incremental A2P fees recently introduced by major U.S. carriers. In the three months ended June 30, 2026, gross profit increased by $123.1 million, or 20%, compared to the same period last year. This increase was attributable to the factors impacting our revenue and cost of revenue, as described above. Operating Expenses Three Months Ended June 30, 2026 2025 Change (Dollars in thousands) Research and development $ 273,317 $ 243,495 $ 29,822 12 % Sales and marketing 216,802 220,724 (3,922) (2) % General and administrative 118,430 101,532 16,898 17 % Impairment loss on prepaid assets 32,771 — 32,771 NM Total operating expenses $ 641,320 $ 565,751 $ 75,569 13 % _____________________________ NM - Percentage not meaningful In the three months ended June 30, 2026, research and development expenses increased by $29.8 million, or 12%, compared to the same period last year. The increase was primarily attributable to a $13.8 million increase in hosting fees to support development and staging of our products and a $10.3 million increase in total personnel costs. In the three months ended June 30, 2026, sales and marketing expenses decreased by $3.9 million, or 2%, compared to the same period last year. Fluctuations in the various sales and marketing expense categories were not significant either individually or in the aggregate. In the three months ended June 30, 2026, general and administrative expenses increased by $16.9 million, or 17%, compared to the same period last year. The increase was primarily attributable to an $8.0 million increase in the provision for doubtful accounts, a $4.0 million increase in personnel costs, and a $2.1 million increase in professional services fees. In the three months ended June 30, 2026, impairment loss on prepaid assets increased by $32.8 million compared to the same period last year. The impairment relates to certain prepaid network services that we determined we would be unable to consume due to operational and financial challenges experienced by two network service providers. No such impairment occurred in the prior year period. 32 Table of Contents Other Expenses, net Three Months Ended June 30, 2026 2025 Change (Dollars in thousands) Share of losses from equity method investment $ (24,346) $ (25,222) $ 876 3 % Other income, net 15,326 21,825 (6,499) (30) % Total other expenses, net $ (9,020) $ (3,397) $ (5,623) 166 % In the three months ended June 30, 2026, other expenses, net, increased by $5.6 million, or 166%, compared to the same period last year. Fluctuations in the various other expense, net, categories were not significant either individually or in the aggregate. Benefit from (Provision for) Income Taxes Three Months Ended June 30, 2026 2025 Change (Dollars in thousands) Benefit from (provision for) income taxes $ 991,683 $ (11,169) $ 1,002,852 NM _____________________________ NM - Percentage not meaningful In the three months ended June 30, 2026, benefit from (provision for) income taxes increased by $1.0 billion compared to the same period last year. The increase was primarily attributable to the release of our valuation allowance on certain of our U.S. federal and state deferred tax assets in the three months ended June 30, 2026, which generated a $944.1 million income tax benefit. For further detail refer to Note 14 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. 33 Table of Contents Comparison of the Six Months Ended June 30, 2026 and 2025 Revenue Six Months Ended June 30, 2026 2025 Change (Dollars in thousands) Revenue $ 2,905,996 $ 2,400,888 $ 505,108 21 % In the six months ended June 30, 2026, revenue increased by $505.1 million, or 21%, 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 DBNE of 115%, as well as an increase of $146.6 million in revenue derived from customer accounts not captured in our DBNE calculation, which are primarily new customer accounts. The increase also reflects $117.1 million in revenue related to the incremental A2P fees recently introduced by major U.S. carriers. Cost of Revenue and Gross Profit Six Months Ended June 30, 2026 2025 Change (Dollars in thousands) Cost of revenue $ 1,495,886 $ 1,216,581 $ 279,305 23 % Gross profit $ 1,410,110 $ 1,184,307 $ 225,803 19 % In the six months ended June 30, 2026, cost of revenue increased by $279.3 million, or 23%, compared to the same period last year. This increase was primarily attributable to a $257.0 million increase in network service providers’ costs, net of the impact of hedging instruments, which includes a $117.1 million increase due to the incremental A2P fees recently introduced by major U.S. carriers. In the six months ended June 30, 2026, gross profit increased by $225.8 million, or 19%, compared to the same period last year. The increase was attributable to the factors impacting our revenue and cost of revenue, as described above. Operating Expenses Six Months Ended June 30, 2026 2025 Change (Dollars in thousands) Research and development $ 535,483 $ 497,790 $ 37,693 8 % Sales and marketing 428,668 432,837 (4,169) (1) % General and administrative 220,976 193,609 27,367 14 % Impairment loss on prepaid assets 32,771 — 32,771 NM Total operating expenses $ 1,217,898 $ 1,124,236 $ 93,662 8 % _____________________________ NM - Percentage not meaningful In the six months ended June 30, 2026, research and development expenses increased by $37.7 million, or 8%, compared to the same period last year. The increase was primarily attributable to a $22.6 million increase in hosting fees to support development and staging of our products and a $12.5 million increase in total personnel costs. In the six months ended June 30, 2026, sales and marketing expenses decreased by $4.2 million, or 1%, compared to the same period last year. Fluctuations in the various sales and marketing expense categories were not significant either individually or in the aggregate. 34 Table of Contents In the six months ended June 30, 2026, general and administrative expenses increased by $27.4 million, or 14%, compared to the same period last year. The increase was primarily attributable to an $11.1 million increase in total personnel costs, a $7.1 million increase in the provision for doubtful accounts and a $4.6 million increase in professional services fees. In the six months ended June 30, 2026, impairment loss on prepaid assets increased by $32.8 million compared to the same period last year. The impairment relates to certain prepaid network services that we determined we would be unable to consume due to operational and financial challenges experienced by two network service providers. No such impairment occurred in the prior year period. Other (Expenses) Income, net Six Months Ended June 30, 2026 2025 Change (Dollars in thousands) Share of losses from equity method investment $ (51,569) $ (44,693) $ (6,876) 15 % Other income, net 37,115 44,798 (7,683) (17) % Total other (expenses) income, net $ (14,454) $ 105 $ (14,559) NM _____________________________ NM - Percentage not meaningful In the six months ended June 30, 2026, other (expenses) income, net, decreased by $14.6 million compared to the same period last year. The decrease is primarily attributable to a $7.7 million decrease in other income, net, primarily driven by unrealized losses from fluctuations in foreign currency exchange rates and a $6.9 million increase in our share of losses from our equity method investment. Benefit from (Provision for) Income Taxes Six Months Ended June 30, 2026 2025 Change (Dollars in thousands) Benefit from (provision for) income taxes $ 979,590 $ (17,736) $ 997,326 NM _____________________________ NM - Percentage not meaningful In the six months ended June 30, 2026, benefit from (provision for) income taxes increased by $1.0 billion compared to the same period last year. The increase was primarily attributable to the release of our valuation allowance on certain of our U.S. federal and state deferred tax assets in the six months ended June 30, 2026, which generated a $944.1 million income tax benefit. For further detail refer to Note 14 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Non-GAAP Financial Measures We use the following non‑GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non‑GAAP financial information may be helpful to investors because it provides consistency and comparability with past financial performance, facilitates period‑to‑period comparisons of results of operations and assists in comparisons with other companies, many of which use similar non‑GAAP financial information to supplement their results of operations reported in accordance with generally accepted accounting principles (“GAAP”). We believe free cash flow and free cash flow margin provide useful supplemental information to help investors understand underlying trends in our business and our liquidity. 35 Table of Contents Non‑GAAP financial information is presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly‑titled non‑GAAP measures used by other companies. Whenever we use a non‑GAAP financial measure, a reconciliation is provided to the most closely applicable financial measure stated in accordance with GAAP. The users of our consolidated financial statements are encouraged to review the related GAAP financial measures and the reconciliation of these non‑GAAP financial measures to their most directly comparable GAAP financial measures. Non‑GAAP Gross Profit and Non‑GAAP Gross Margin For the periods presented, we define non‑GAAP gross profit and non‑GAAP gross margin as GAAP gross profit and GAAP gross margin, respectively, adjusted to exclude, as applicable, certain expenses as presented in the table below: Three Months Ended June 30, 2026 2025 Reconciliation: (In thousands) GAAP gross profit $ 725,866 $ 602,740 GAAP gross margin 48 % 49 % Non-GAAP adjustments: Stock-based compensation 3,111 4,087 Amortization of acquired intangibles 6,037 15,594 Payroll taxes related to stock-based compensation 696 481 Non-GAAP gross profit $ 735,710 $ 622,902 Non-GAAP gross margin 49 % 51 % Non‑GAAP Operating Expenses For the periods presented, we define non‑GAAP operating expenses (including categories of operating expenses) as GAAP operating expenses (and categories of operating expenses) adjusted to exclude, as applicable, certain expenses as presented in the table below: Three Months Ended June 30, 2026 2025 Reconciliation: (In thousands) GAAP operating expenses $ 641,320 $ 565,751 Non-GAAP adjustments: Stock-based compensation (138,801) (145,164) Amortization of acquired intangibles (5,248) (11,411) Acquisition and divestiture related expenses (32) — Payroll taxes related to stock-based compensation (9,143) (4,440) Charitable contributions (4,356) (2,237) Restructuring costs 108 (140) Impairment loss on prepaid assets (32,771) — Non-GAAP operating expenses $ 451,077 $ 402,359 36 Table of Contents Non‑GAAP Income from Operations and Non‑GAAP Operating Margin For the periods presented, we define non‑GAAP income from operations and non‑GAAP operating margin as GAAP income from operations and GAAP operating margin, respectively, adjusted to exclude, as applicable, certain expenses as presented in the table below: Three Months Ended June 30, 2026 2025 Reconciliation: (In thousands) GAAP income from operations $ 84,546 $ 36,989 GAAP operating margin 6 % 3 % Non-GAAP adjustments: Stock-based compensation 141,912 149,251 Amortization of acquired intangibles 11,285 27,005 Acquisition and divestiture related expenses 32 — Payroll taxes related to stock-based compensation 9,839 4,921 Charitable contributions 4,356 2,237 Restructuring costs (108) 140 Impairment loss on prepaid assets 32,771 — Non-GAAP income from operations $ 284,633 $ 220,543 Non-GAAP operating margin 19 % 18 % Free Cash Flow and Free Cash Flow Margin For the periods presented, we define free cash flow as net cash provided by operating activities less capitalized software development costs and purchases of long-lived assets, and we define free cash flow margin as free cash flow divided by revenue, as presented in the table below: Three Months Ended June 30, 2026 2025 Reconciliation: (In thousands) Net cash provided by operating activities $ 372,385 $ 277,084 Operating cash flow margin 25 % 23 % Non-GAAP adjustments: Capitalized software development costs (16,675) (12,588) Purchases of long-lived assets (3,065) (1,004) Free cash flow $ 352,645 $ 263,492 Free cash flow margin 24 % 21 % Net cash (used in) provided by investing activities $ (53,246) $ 402,019 Net cash used in financing activities $ (37,854) $ (175,914) Liquidity and Capital Resources As of June 30, 2026, we had cash and cash equivalents of $823.3 million and short-term marketable securities of $1.8 billion. Cash equivalents consist of money market funds, commercial paper and U.S. treasury bills. Short-term marketable securities consist primarily of U.S. treasury securities, 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. Our principal sources of liquidity have been (i) the payments received from customers using our products; (ii) public equity offerings, most recently in February 2021; and (iii) debt financings, most recently the issuance of our 2029 Notes and 2031 Notes (each, as defined below) in March 2021. 37 Table of Contents Our primary uses of cash include operating costs, such as personnel-related costs, network service provider costs, cloud infrastructure costs, facility-related spending, acquisitions and investments we may make from time to time, and repurchases of common stock under our share repurchase program. Our principal contractual and other commitments consist of obligations under our 2029 Notes and 2031 Notes, our operating leases for office space that we occupy, sublease or hold, and contractual commitments to our cloud infrastructure and network service providers. Refer to Note 8 and Note 10(a) to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for discussions of our obligations and commitments related to leases, debt and other purchase obligations. We may, from time to time, consider acquisitions of, or investments in, complementary businesses, products, services, capital infrastructure or technologies which might affect our liquidity requirements or cause us to secure additional financing or issue additional equity or debt securities. There can be no assurance that additional credit lines or financing instruments will be available in amounts or on terms acceptable to us, if at all. We believe that our cash, cash equivalents and marketable securities balances, as well as the cash flows generated by our operations, will be sufficient to satisfy our anticipated cash needs for working capital and capital expenditure needs, including authorized share repurchases, for the next 12 months and beyond. However, our belief may prove to be incorrect, and we could utilize our available financial resources sooner than we currently expect. We may be required to seek additional equity or debt financing in order to meet our future capital requirements. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us, or at all. If we are unable to raise additional capital when desired, our business, results of operations and financial condition would be adversely affected. Our future capital requirements, the adequacy of our available funds and our cash from operations depend on many factors and are affected by various risks and uncertainties, including those set forth in Part II, Item 1A, “Risk Factors.” Share Repurchase Program In January 2025, our board of directors authorized the repurchase of up to $2.0 billion in aggregate value of our Class A common stock. Repurchases under this program can be made through open market, private transactions or other means, in compliance with applicable federal securities laws, and can include repurchases pursuant to Rule 10b5-1 trading plans. We have discretion in determining the conditions under which shares may be repurchased from time to time. The program expires on December 31, 2027. In the three and six months ended June 30, 2026, we repurchased $66.0 million in aggregate value, or 0.5 million shares, and $319.4 million in aggregate value, or 2.6 million shares, respectively, of our Class A common stock. As of June 30, 2026, approximately $826.0 million of the amount authorized in January 2025 for share repurchases remained available for future repurchases. 2029 Notes and 2031 Notes In March 2021, we issued and sold $1.0 billion in aggregate principal amount of senior notes, consisting of $500.0 million principal amount of 3.625% notes due 2029 (the “2029 Notes”) and $500.0 million principal amount of 3.875% notes due 2031 (the “2031 Notes,” and together with the 2029 Notes, the “Notes”). The Notes are described in detail in Note 15 to our Annual Report on Form 10-K filed with the SEC on February 24, 2026. Cash Flows The following table summarizes our cash flows: Six Months Ended June 30, 2026 2025 (In thousands) Cash provided by operating activities $ 525,591 $ 468,126 Cash (used in) provided by investing activities (94,436) 382,879 Cash used in financing activities (290,428) (301,708) Net increase in cash, cash equivalents and restricted cash $ 140,727 $ 549,297 38 Table of Contents Cash Flows from Operating Activities In the six months ended June 30, 2026, cash provided by operating activities consisted primarily of our net income of $1.2 billion adjusted for non-cash items, including $944.1 million of tax benefit related to release of our U.S. valuation allowance, $278.4 million of stock-based compensation expense, $63.7 million of depreciation and amortization expense, $51.6 million of our share of losses from an equity method investment, $33.6 million of amortization of deferred commissions, $9.5 million of non-cash reduction in our operating right-of-use asset, and $175.0 million of cumulative changes in operating assets and liabilities. With respect to changes in operating assets and liabilities, accounts payable and other current liabilities decreased $67.3 million primarily driven by the payment of the 2025 company-wide bonus in the six months ended June 30, 2026. Operating lease liabilities decreased $17.8 million due to payments made against our operating lease obligations. In the six months ended June 30, 2025, cash provided by operating activities consisted primarily of our net income of $42.4 million adjusted for non-cash items, including $288.5 million of stock-based compensation expense, $99.4 million of depreciation and amortization expense, $44.7 million of our share of losses from an equity method investment, $38.4 million of amortization of deferred commissions, $10.5 million of non-cash reduction in our operating right-of-use asset, and $59.8 million of cumulative changes in operating assets and liabilities. With respect to changes in operating assets and liabilities, accounts receivable and prepaid expenses decreased $81.6 million primarily due to timing of cash receipts and prepayments of certain operating expenses. Accounts payable and other current liabilities decreased $64.4 million primarily driven by the payment of the 2024 company-wide bonus in the six months ended June 30, 2025. Other long-term assets increased $51.4 million primarily due to an increase in long-term prepayments to support our business. Operating lease liabilities decreased $18.7 million due to payments made against our operating lease obligations. Cash Flows from Investing Activities In the six months ended June 30, 2026, cash used in investing activities was $94.4 million, primarily consisting of $53.2 million of purchases of marketable securities and other investments, net of proceeds from sales and maturities of marketable securities and other investments, $33.4 million related to capitalized software development costs, and $7.2 million related to purchases of long-lived assets. In the six months ended June 30, 2025, cash provided by investing activities was $382.9 million, primarily consisting of $409.2 million of maturities and sales of marketable securities, net of purchases, partially offset by $24.2 million related to capitalized software development costs, and $2.2 million related to purchases of long-lived assets. Cash Flows from Financing Activities In the six months ended June 30, 2026, cash used in financing activities was $290.4 million primarily consisting of $323.0 million of cash paid to repurchase 0.5 million shares of our Class A common stock, including related costs, partially offset by $32.8 million in proceeds from exercises of stock options and shares of Class A common stock issued under the Company’s ESPP. In the six months ended June 30, 2025, cash used in financing activities was $301.7 million primarily consisting of $323.2 million of cash paid to repurchase 3.0 million shares of our Class A common stock, including related costs, partially offset by $25.9 million in proceeds from exercises of stock options and shares of Class A common stock issued under the Company’s ESPP. Critical Accounting Policies and Estimates Our unaudited condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates. 39 Table of Contents Income Taxes We account for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as net operating losses and tax credit carry-forwards. Deferred tax amounts are determined by using the enacted tax rates expected to be in effect when the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance reduces the deferred tax assets to the amount that is more likely than not to be realized. We recognize the effect of uncertain income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is more than 50% likely to be realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. We regularly assess the need for a valuation allowance on our deferred tax assets. In making that assessment, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of all available evidence, whether it is more-likely-than-not that some or all of our deferred tax assets will be realized. The determination of the realizability of deferred tax assets requires significant judgment and relies on management's estimates of future taxable income. As of June 30, 2026, we demonstrated sustained profitability in the U.S. over a cumulative period of three years based on the U.S. pre-tax book income adjusted for permanent book-tax differences, and we expect to continue to sustain this profitability position in the U.S. for the annual period ended December 31, 2026. This evidence is objective and verifiable and represents strong positive evidence that carries significant weight. Based on our analysis of all available positive and negative evidence, including the objective and verifiable positive evidence as described above, and anticipated future earnings, we concluded that it is more likely than not that the majority of our U.S. deferred tax assets are realizable. As a result of this change in estimate, we released a significant portion of the valuation allowance on our U.S. deferred tax assets in the current quarter. For further detail refer to Note 14 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Our judgment regarding the need for a valuation allowance may reasonably change in future reporting periods due to many factors, including changes in expectations of future profitability in the U.S. and changes in tax laws or regulations. We will continue to maintain a valuation allowance against deferred tax assets where we believe that it is more likely than not that they will not be realized. There have been no other changes to our critical accounting policies and estimates as described in our Annual Report on Form 10-K filed with the SEC on February 24, 2026. Recent Accounting Pronouncements Not Yet Adopted Refer to Note 2 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements not yet adopted. 40 Table of Contents