Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

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