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Goodwill and Intangible Assets | 12 Months Ended
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Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill The business reorganization activities described in Note 8 impacted the Company’s reporting unit structure and, as a result, in 2023 the Company had multiple reporting units. These changes required the Company to reallocate goodwill to its newly formed reporting units and test the goodwill for impairment on the reporting unit level immediately before and immediately after each reorganization. The Company engaged a third-party expert to assist in the valuation analysis. The Company concluded that its goodwill was not impaired immediately before and immediately after the reorganizations. The Company estimates the fair value of its reporting units using a weighting of fair values derived from an income and a market approach. Estimating the fair value by these methods involves the use of various assumptions that the Company believes are reasonable under then current circumstances. Under the income approach, the Company determines the fair value of a reporting unit based on the present value of estimated future cash flows using the cash flow projections prepared by management. The market approach estimates the fair value based on market multiples of revenue or adjusted EBITDA, as applicable, derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit. While these assumptions reflect management’s best estimates of future performance at the time, these estimates are inherently complex and uncertain and the Company’s actual results could differ materially from these estimates. The following table presents the goodwill allocated to the Company’s reportable segments as of December 31, 2023 and 2022, and the changes during the period:
|  | Twilio Communications |  | Twilio Segment |  | Total
|  | (In thousands)
Balance as of December 31, 2021 |  | $ | — |  |  | $ | — |  |  | $ | 5,263,166 |
Goodwill additions related to 2021 acquisitions |  | — |  |  | — |  |  | 25,748 |
Measurement period and other adjustments |  | — |  |  | — |  |  | (4,761)
Balance as of December 31, 2022 |  | $ | — |  |  | $ | — |  |  | $ | 5,284,153 |
Foreign currency adjustments |  |  |  |  |  | 26 |
Reallocation to segments in the second quarter of 2023(1) |  | $ | 4,321,130 |  |  | $ | 963,049 |  |  | $ | — |
Foreign currency adjustments |  | 251 |  | — |  |  | 251 |
Goodwill divested(2) |  | (41,164) |  | — |  |  | (41,164)
Reallocation to segments in the fourth quarter of 2023(1) |  | 656,964 |  |  | (656,964) |  |  | — |
Balance as of December 31, 2023 |  | $ | 4,937,181 |  |  | $ | 306,085 |  |  | $ | 5,243,266 |
____________________________________ |  |  |  |  |  |
(1) Represents reallocation of goodwill as a result of the reorganization activities, as described in Note 8.
(2) Represents goodwill related to the divestitures of the ValueFirst business and IoT asset group, as described in Note 5.
Intangible assets Intangible assets consist of the following:
|  | As of December 31, 2023
|  | Cost |  | Accumulated Amortization |  | Net
Amortizable intangible assets: |  | (In thousands)
Developed technology* |  | $ | 397,473 |  |  | $ | (259,635) |  |  | $ | 137,838 |
Customer relationships** |  | 349,074 |  |  | (170,511) |  |  | 178,563 |
Supplier relationships |  | 49,756 |  |  | (26,316) |  |  | 23,440 |
Trade names |  | 25,968 |  |  | (23,600) |  |  | 2,368 |
Order backlog |  | 10,000 |  |  | (10,000) |  |  | — |
Patent |  | 3,968 |  |  | (902) |  |  | 3,066 |
Total amortizable intangible assets |  | 836,239 |  |  | (490,964) |  |  | 345,275 |
Non-amortizable intangible assets: |  |  |  |  |  |
Telecommunication licenses |  | 4,920 |  |  | — |  |  | 4,920 |
Trademarks and other |  | 295 |  |  | — |  |  | 295 |
Total |  | $ | 841,454 |  |  | $ | (490,964) |  |  | $ | 350,490 |
____________________________________ |  |  |  |  |  |
* As a result of the impairment described in Note 6, the developed technology cost basis and the related accumulated amortization decreased by $381.1 million and $171.8 million, respectively.
** As a result of the impairment described in Note 6, the customer relationship cost basis and the related accumulated amortization decreased by $174.0 million and $97.6 million, respectively.
|  | As of December 31, 2022 |  |
|  | Cost |  | Accumulated Amortization |  | Net |  |
Amortizable intangible assets: |  | (In thousands) |  |
Developed technology |  | $ | 795,753 |  |  | $ | (335,893) |  |  | $ | 459,860 |  |  |
Customer relationships |  | 538,466 |  |  | (204,241) |  |  | 334,225 |  |  |
Supplier relationships |  | 56,922 |  |  | (19,846) |  |  | 37,076 |  |  |
Trade names |  | 30,342 |  |  | (20,106) |  |  | 10,236 |  |  |
Order backlog |  | 10,000 |  |  | (10,000) |  |  | — |  |  |
Patent |  | 4,028 |  |  | (705) |  |  | 3,323 |  |  |
Total amortizable intangible assets |  | 1,435,511 |  |  | (590,791) |  |  | 844,720 |  |  |
Non-amortizable intangible assets: |  |  |  |  |  |  |  |
Telecommunication licenses |  | 4,920 |  |  | — |  |  | 4,920 |  |  |
Trademarks and other |  | 295 |  |  | — |  |  | 295 |  |  |
Total |  | $ | 1,440,726 |  |  | $ | (590,791) |  |  | $ | 849,935 |  |  |
Amortization expense was $192.5 million, $206.4 million and $198.8 million for the years ended December 31, 2023, 2022 and 2021, respectively. In the year ended December 31, 2023, the Company recorded an impairment charge related to certain of its intangible assets, as described in Note 6. Total estimated future amortization expense is as follows:
|  | As of December 31, 2023
Year Ended December 31, |  | (In thousands)
2024 |  | $ | 112,042 |
2025 |  | 107,862 |
2026 |  | 42,149 |
2027 |  | 25,330 |
2028 |  | 19,055 |
Thereafter |  | 38,837 |
Total |  | $ | 345,275 |

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