This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or ~~“continue”~~“continue�� or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•

~~our ability to attract and retain users and increase the level of engagement, including ad engagement, of our users and its impact on revenue;~~

•our ability to attract and retain people on Twitter and increase their level of engagement, including ad engagement, and its impact on revenue;

~~our plans regarding health and user safety, including our expectations regarding the impact on our reported metrics, policies, enforcement and preventing manipulation of our platform;~~

•our plans regarding health and safety and our other top priorities, including our expectations regarding the impact on our reported metrics, policies, enforcement and preventing manipulation of our platform;

~~our expectations regarding monetizable DAU (mDAU), changes in cost per ad engagement and changes in ad engagements;~~

•

our ability to develop or acquire new products, product features and services, improve our existing products and services, including with respect to Promoted Tweet product features, video and performance advertising, and increase the value of our products and services;

•the impact of the COVID-19 pandemic and related responses of businesses and governments to the pandemic on our operations and personnel, and on commercial activity and advertiser demand across our platform and on our operating results;

our business strategies, plans and priorities, including our plans for growth and hiring, investment in our research and development efforts and our plans to scale capacity and enhance capability and reliability of our infrastructure, including capital expenditures relating to infrastructure;

•our expectations regarding monetizable DAUs (mDAU), changes in cost per ad engagement and changes in ad engagements;

~~our work to increase the stability, performance and scale of our ads platform and our mobile application download product;~~

•our ability to develop or acquire new products, product features and services, improve our existing products and services, including with respect to Promoted Products, video and performance advertising, and increase the value of our products and services;

~~our ability to provide new content from third parties, including our ability to secure live streaming video content on terms that are acceptable to us;~~

•our business strategies, plans and priorities, including our plans for growth and hiring, investment in our research and development efforts and our plans to scale capacity and enhance capability and reliability of our infrastructure, including capital expenditures relating to infrastructure;

~~our ability to attract advertisers to our platforms, products and services and increase the amount that advertisers spend with us;~~

•our work to increase the stability, performance, development velocity and scale of our ads platform and our Mobile Application Promotion (MAP) product;

~~our expectations regarding our user growth and growth rates and related opportunities as well as the continued usage of our mobile applications, including the impact of seasonality;~~

•our ability to provide new content from third parties, including our ability to secure live streaming video content on terms that are acceptable to us;

~~our ability to increase our revenue and our revenue growth rate, including advertising and data licensing and other revenue;~~

•our ability to attract advertisers to our platforms, products and services and increase the amount that advertisers spend with us;

~~our ability to improve user monetization;~~

•our expectations regarding our mDAU growth and growth rates and related opportunities as well as the continued usage of our mobile applications, including the impact of seasonality;

our future financial performance, including trends in cost per ad engagement, revenue (including data licensing revenue), cost of revenue, operating expenses, including stock-based compensation and income taxes;

•our ability to increase our revenue and our revenue growth rate, including advertising and data licensing and other revenue;

~~our expectations regarding certain deferred tax assets and fluctuations in our tax expense and cash taxes;~~

•our ability to improve monetization of our products and services;

~~the impact of the General Data Protection Regulation (GDPR) and other data and privacy regulation;~~

•our future financial performance, including trends in cost per ad engagement, revenue (including data licensing revenue), cost of revenue, operating expenses, including stock-based compensation and income taxes;

~~the impact of content- or copyright-related legislation or regulation;~~

•our expectations regarding certain deferred tax assets and fluctuations in our tax expense and cash taxes;

~~our expectations regarding outstanding litigation or the decisions of the courts;~~

•the impact of privacy and data protection laws and regulations;

~~the effects of seasonal trends on our results of operations;~~

•the impact of content- or copyright-related legislation or regulation;

~~the impact of our future transactions and corporate structuring on our income and other taxes;~~

•our expectations regarding outstanding litigation or the decisions of the courts;

the sufficiency of our cash and cash equivalents, short-term investment balance and credit facility together with cash generated from operations to meet our working capital and capital expenditure requirements;

•the effects of seasonal trends on our results of operations;

~~our ability to timely and effectively develop, invest in, scale and adapt our existing technology and network infrastructure;~~

•the impact of our future transactions and corporate structuring on our income and other taxes;

~~our ability to successfully acquire and integrate companies and assets; and~~

•the sufficiency of our cash and cash equivalents, short-term investment balance and credit facility together with cash generated from operations to meet our working capital and capital expenditure requirements;

~~our expectations regarding international operations and foreign exchange gains and losses.~~

•our ability to timely and effectively develop, invest in, scale and adapt our existing technology and network infrastructure;

•our ability to successfully acquire and integrate companies and assets; and

•our expectations regarding international operations and foreign exchange gains and losses.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, operating results, cash flows or prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

NOTE REGARDING KEY METRICS

We review a number of metrics, including monetizable daily active usage or users, or mDAU, changes in ad engagements and changes in cost per ad engagement, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Metrics” for a discussion of how we calculate mDAU, changes in ad engagements and changes in cost per ad engagement.

We define mDAU as ~~Twitter users~~people, organizations, or other accounts who logged in or were otherwise authenticated and accessed Twitter on any given day through ~~Twitter.com~~twitter.com or Twitter applications that are able to show ads. Our definition and calculation of mDAU is the same as that of the DAU data presented since the first quarter of 2016. The calculation of mDAU is not based on any standardized industry methodology and is not necessarily calculated in the same manner or comparable to similarly-titled measures presented by other companies. Average mDAU for a period represents the number of mDAU on each day of such period divided by the number of days for such period. Changes in mDAU are a measure of changes in the size of our daily logged in or otherwise authenticated active ~~user base.~~total accounts. To calculate the year-over-year change in mDAU, we subtract the average mDAU for the three months ended in the previous year from the average mDAU for the same three months ended in the current year and divide the result by the average mDAU for the three months ended in the previous year. ~~We believe that~~Additionally, our calculation of mDAU is not based on any standardized industry methodology and ~~its related~~is not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies. Similarly, our measures of mDAU growth ~~are the best ways to measure our success against our objectives~~ and ~~to show the size~~engagement may differ from estimates published by third parties or from similarly-titled metrics of our ~~audience and engagement.~~

competitors due to differences in methodology.

The numbers of ~~active users~~mDAU presented in this Quarterly Report on Form 10-Q are based on internal company data. While these numbers are based on what we believe to be reasonable estimates for the applicable period of measurement, there are inherent challenges in measuring usage and ~~user~~ engagement across our large ~~user base~~number of total accounts around the world. Furthermore, our metrics may be impacted by our information quality efforts, which are our overall efforts to reduce malicious activity on the service, inclusive of spam, malicious automation, and fake accounts. For example, there are a number of false or spam accounts in existence on our platform. We have performed an internal review of a sample of accounts and estimate that the average of false or spam accounts during the ~~second~~first quarter of ~~2019~~2020 represented fewer than 5% of our mDAU during the quarter. The false or spam accounts for a period represents the average of false or spam accounts in the samples during each monthly analysis period during the quarter. In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated. We are continually seeking to improve our ability to estimate the total number of spam accounts and eliminate them from the calculation of our ~~active users,~~mDAU, and have made improvements in our spam detection capabilities that have resulted in the suspension of a large number of spam, malicious automation, and fake accounts. We intend to continue to make such improvements. After we determine an account is spam, malicious automation, or fake, we stop counting it in our mDAU, or other related metrics. We also treat multiple accounts held by a single person or organization as multiple ~~users for purposes of calculating~~ mDAU because we permit people and organizations to have more than one account. Additionally, some accounts used by organizations are used by many people within the organization. As such, the calculations of our ~~active users~~mDAU may not accurately reflect the actual number of people or organizations using our platform.

In addition, ~~our~~geographic location data ~~regarding user geographic location~~collected for purposes of reporting the geographic location of our mDAU is based on the IP address or phone number associated with the account when ~~a user~~an account is initially registered ~~the account~~ on Twitter. The IP address or phone number may not always accurately reflect a ~~user’s~~person’s actual location at the time ~~such user~~they engaged with our platform. For example, someone ~~accessing Twitter on a mobile device may appear to be~~ accessing Twitter from the location of the proxy server that the ~~user~~person connects to rather than from the ~~user’s~~person’s actual location.

We regularly review and may adjust our processes for calculating our internal metrics to improve their accuracy. ~~Our measures of user growth and user engagement may differ from estimates published by third parties or from similarly-titled metrics of our competitors due to differences in methodology.~~

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

TWITTER, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(Unaudited)

	June 30,			December 31,
	2019			2018				March 31, 2020		December 31, 2019
Assets							Assets
Current assets:							Current assets:
Cash and cash equivalents	$	2,183,111		$	1,894,444		Cash and cash equivalents	$	3,463,349	$	1,799,082
Short-term investments		4,503,427			4,314,957		Short-term investments	4,207,315		4,839,970
Accounts receivable, net of allowance for doubtful accounts of $2,285 and $3,559		719,904			788,700
Accounts receivable, net of allowance for doubtful accounts of $15,852 and $2,401							Accounts receivable, net of allowance for doubtful accounts of $15,852 and $2,401	656,377		850,184
Prepaid expenses and other current assets		106,341			112,935		Prepaid expenses and other current assets	140,538		130,839
Total current assets		7,512,783			7,111,036		Total current assets	8,467,579		7,620,075
Property and equipment, net		982,513			885,078		Property and equipment, net	1,081,371		1,031,781
Operating lease right-of-use assets		694,855			—		Operating lease right-of-use assets	666,527		697,095
Intangible assets, net		50,722			45,025		Intangible assets, net	64,565		55,106
Goodwill		1,246,883			1,227,269		Goodwill	1,269,633		1,256,699
Deferred tax assets, net		1,954,808			808,459		Deferred tax assets, net	1,856,293		1,908,086
Other assets		79,043			85,705		Other assets	134,757		134,547
Total assets	$	12,521,607		$	10,162,572		Total assets	$	13,540,725	$	12,703,389
Liabilities and stockholders' equity							Liabilities and stockholders' equity
Current liabilities:							Current liabilities:
Accounts payable	$	206,282		$	145,186		Accounts payable	$	183,921	$	161,148
Accrued and other current liabilities		428,296			405,751		Accrued and other current liabilities	370,256		500,893
Convertible notes, short-term		923,648			897,328

Operating lease liabilities, short-term		129,919			—		Operating lease liabilities, short-term	141,955		146,959
Finance lease liabilities, short-term		45,593			68,046		Finance lease liabilities, short-term	13,888		23,476
Total current liabilities		1,733,738			1,516,311		Total current liabilities	710,020		832,476
Convertible notes, long-term		1,773,092			1,730,922		Convertible notes, long-term	2,706,038		1,816,833
Senior notes, long-term							Senior notes, long-term	692,240		691,967
Operating lease liabilities, long-term		614,213			—		Operating lease liabilities, long-term	582,872		609,245
Finance lease liabilities, long-term		7,576			24,394

Deferred and other long-term tax liabilities, net		23,393			17,849		Deferred and other long-term tax liabilities, net	25,366		24,170
Other long-term liabilities		24,781			67,502		Other long-term liabilities	28,562		24,312
Total liabilities		4,176,793			3,356,978		Total liabilities	4,745,098		3,999,003
Commitments and contingencies (Note 14)							Commitments and contingencies (Note 14)
Stockholders' equity:							Stockholders' equity:
Preferred stock, $0.000005 par value-- 200,000 shares authorized; none issued and outstanding		—			—
Common stock, $0.000005 par value-- 5,000,000 shares authorized; 772,393 and 764,257 shares issued and outstanding		4			4
Preferred stock, $0.000005 par value-- 200,000 shares authorized; NaN issued and outstanding							Preferred stock, $0.000005 par value-- 200,000 shares authorized; NaN issued and outstanding	—		—
Common stock, $0.000005 par value-- 5,000,000 shares authorized; 784,100 and 779,619 shares issued and outstanding							Common stock, $0.000005 par value-- 5,000,000 shares authorized; 784,100 and 779,619 shares issued and outstanding	4		4
Additional paid-in capital		8,535,463			8,324,974		Additional paid-in capital	8,952,059		8,763,330
Accumulated other comprehensive loss		(46,944	)		(65,311	)	Accumulated other comprehensive loss	(157,997)		(70,534)
Accumulated deficit		(143,709	)		(1,454,073	)
Retained earnings							Retained earnings	1,561		11,586
Total stockholders' equity		8,344,814			6,805,594		Total stockholders' equity	8,795,627		8,704,386
Total liabilities and stockholders' equity	$	12,521,607		$	10,162,572		Total liabilities and stockholders' equity	$	13,540,725	$	12,703,389

	Three Months Ended												Six Months Ended
	June 30,												June 30,													Three Months Ended March 31,
	2019						2018						2019						2018							2020				2019
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount				Shares	Amount		Shares	Amount
Common stock																									Common stock
Balance, beginning of period		767,913		$	4			752,037		$	4			764,257		$	4			746,902		$	4		Balance, beginning of period	779,619	$	4	764,257	$	4
Issuance of common stock in connection with RSU vesting		3,243			—			3,086			—			7,132			—			8,184			—		Issuance of common stock in connection with RSU vesting	4,225	—		3,889	—
Issuance of common stock in connection with acquisitions		—			—			119			—			—			—			119			—

Issuance of restricted stock in connection with acquisitions accounted for as stock-based compensation		306			—			655			—			306			—			655			—		Issuance of restricted stock in connection with acquisitions accounted for as stock-based compensation	412	—		—	—
Exercise of stock options		123			—			129			—			195			—			434			—		Exercise of stock options	181	—		72	—
Issuance of common stock upon purchases under employee stock purchase plan		901			—			990			—			901			—			990			—

Shares withheld related to net share settlement of equity awards		(91	)		—			(60	)		—			(396	)		—			(320	)		—		Shares withheld related to net share settlement of equity awards	(337)	—		(305)	—
Other activities		(2	)		—			—			—			(2	)		—			(8	)		—

Balance, end of period		772,393		$	4			756,956		$	4			772,393		$	4			756,956		$	4		Balance, end of period	784,100	$	4	767,913	$	4
Additional paid-in capital																									Additional paid-in capital
Balance, beginning of period		—		$	8,408,749			—		$	7,831,429			—		$	8,324,974			—		$	7,750,522		Balance, beginning of period	—	$	8,763,330	—	$	8,324,974
Issuance of common stock in connection with acquisitions		—			—			—			5,405			—			—			—			5,405
Issuance of stock options in connection with acquisitions		—			—			—			917			—			—			—			917

Issuance of restricted stock in connection with acquisitions		—			—			—			12,843			—			—			—			12,843		Issuance of restricted stock in connection with acquisitions	—	1,312		—	—
Exercise of stock options		—			413			—			329			—			509			—			3,097		Exercise of stock options	—	305		—	96
Issuance of common stock upon purchases under employee stock purchase plan		—			25,209			—			16,337			—			25,209			—			16,337

Shares withheld related to net share settlement of equity awards		—			(3,461	)		—			(1,803	)		—			(12,938	)		—			(9,353	)	Shares withheld related to net share settlement of equity awards	—	(11,693)		—	(9,477)
Stock-based compensation		—			104,553			—			89,368			—			197,709			—			175,053		Stock-based compensation	—	106,596		—	93,156
Equity component of the convertible note issuance, net		—			—			—			252,248			—			—			—			252,248		Equity component of the convertible note issuance, net	—	92,209		—	—
Purchase of convertible note hedge		—			—			—			(267,950	)		—			—			—			(267,950	)
Issuance of warrants		—			—			—			186,760			—			—			—			186,760
Other activities		—			—			—			6			—			—			—			10

Balance, end of period		—		$	8,535,463			—		$	8,125,889			—		$	8,535,463			—		$	8,125,889		Balance, end of period	—	$	8,952,059	—	$	8,408,749
Accumulated other comprehensive loss																									Accumulated other comprehensive loss
Balance, beginning of period		—		$	(56,665	)		—		$	(22,325	)		—		$	(65,311	)		—		$	(31,579	)	Balance, beginning of period	—	$	(70,534)	—	$	(65,311)
Other comprehensive income (loss)		—			9,721			—			(34,109	)		—			18,367			—			(24,855	)	Other comprehensive income (loss)	—	(87,463)		—	8,646
Balance, end of period		—		$	(46,944	)		—		$	(56,434	)		—		$	(46,944	)		—		$	(56,434	)	Balance, end of period	—	$	(157,997)	—	$	(56,665)
Accumulated deficit
Retained earnings (Accumulated deficit)																									Retained earnings (Accumulated deficit)
Balance, beginning of period		—		$	(1,263,269	)		—		$	(2,598,672	)		—		$	(1,454,073	)		—		$	(2,671,729	)	Balance, beginning of period	—	$	11,586	—	$	(1,454,073)
Cumulative-effect adjustment from adoption of revenue recognition rule		—			—			—			—			—			—			—			12,060
Net income		—			1,119,560			—			100,117			—			1,310,364			—			161,114

Cumulative-effect adjustment from adoption of current expected credit loss guidance																									Cumulative-effect adjustment from adoption of current expected credit loss guidance	—	(1,629)		—	—
Net income (loss)																									Net income (loss)	—	(8,396)		—	190,804
Balance, end of period		—		$	(143,709	)		—		$	(2,498,555	)		—		$	(143,709	)		—		$	(2,498,555	)	Balance, end of period	—	$	1,561	—	$	(1,263,269)
Total stockholders' equity		772,393		$	8,344,814			756,956		$	5,570,904			772,393		$	8,344,814			756,956		$	5,570,904		Total stockholders' equity	784,100	$	8,795,627	767,913	$	7,088,819

Liquidity and Capital Resources

Six Months Ended June 30,

2019

2018

(in thousands)

Consolidated Statements of Cash Flows Data:

Net income
$
1,310,364

$
161,114

Net cash provided by operating activities

690,666

563,813

Net cash used in investing activities

(384,382
)

(672,523
)
Net cash provided by (used in) financing activities

(25,153
)

1,019,872


	Three Months Ended March 31,
	2020		2019
	(in thousands)
Net income (loss)	$	(8,396)	$	190,804
Net cash provided by operating activities	$	246,767	$	351,693
Net cash provided by investing activities	$	466,144	$	29,446
Net cash provided by (used in) financing activities	$	963,984	$	(29,101)

Our principal sources of liquidity are our cash, cash equivalents, and short-term investments in marketable securities. Our cash equivalents and marketable securities are invested primarily in short-term fixed income securities, including government and investment-grade debt securities and money market funds.

In March 2020, we also received net proceeds of approximately $985.3 million from the issuance of the 2025 Notes, after deducting the debt issuance costs.

In March 2020, our Board of Directors authorized a program to repurchase up to $2.0 billion of our common stock over time. Repurchases may be made from time to time through open market purchases or through privately negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors. The repurchase program does not obligate us to acquire any particular amount of our common stock, and may be suspended at any time at our discretion. As of ~~June 30, 2019,~~March 31, 2020, no shares have been repurchased under this program.

As of March 31, 2020, we had ~~$6.69~~$7.67 billion of cash, cash equivalents and short-term investments in marketable securities, of which ~~$192.9~~$201.2 million was held by our foreign subsidiaries. ~~As a result of the changes under the Tax Cuts and Jobs Act (the “Tax Act”), we have revised our assertion~~We do not plan to ~~no longer~~ indefinitely reinvest these funds held by our foreign subsidiaries and have accrued the incremental ~~foreign withholding taxes. In addition, we have a revolving unsecured credit facility available~~taxes due as part of repatriation. While the global disruptions caused by the COVID-19 pandemic are currently expected to ~~borrow up to $500.0 million.~~be temporary, there is uncertainty around its extent and duration. Our liquidity and working capital needs could be negatively impacted. We believe that our existing cash, cash equivalents and short-term investment ~~balance,~~balances, and our credit facility, together with cash generated from operations will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months ~~and~~despite the uncertainty related to ~~repay~~ the ~~$936.2 million of principal and coupon interest associated with our 2019 Notes due in September 2019. We intend to use existing cash to repay our 2019 Notes upon maturity.~~

COVID-19 pandemic.

Credit Facility

We have a revolving credit agreement with certain lenders which provides for a $500.0 million revolving unsecured credit facility maturing on August 7, 2023. We are obligated to pay interest on loans under the credit facility and other customary fees for a credit facility of this size and type, including an upfront fee and an unused commitment fee. The interest rate for the credit facility is determined based on calculations using certain market rates as set forth in the credit agreement. In addition, the credit facility contains restrictions on payments including cash payments of dividends. As of ~~June 30, 2019,~~March 31, 2020, no amounts had been drawn under the credit facility.

Operating Activities

Cash provided by operating activities consists of net income (loss) adjusted for certain non-cash items including depreciation and amortization, stock-based compensation, amortization of discount on our Notes, deferred income taxes, ~~valuation allowance release,~~ impairment of investments in privately-held companies, non-cash restructuring charges, as well as the effect of changes in working capital and other activities. We expect that cash provided by operating activities will fluctuate in future periods as a result of a number of factors, including fluctuations in our revenue, increases in operating expenses and costs related to acquisitions. For additional discussion, see “Part II—Other Information, Item 1A. Risk Factors.”

Cash provided by operating activities in the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 was ~~$690.7~~$246.8 million, ~~an increase~~a decrease in cash inflow of ~~$126.9~~$104.9 million compared to the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. Cash provided by operating activities was driven by net ~~income~~loss of ~~$1.31 billion,~~$8.4 million, as adjusted for the exclusion of non-cash expenses and other adjustments totaling ~~$690.8~~$246.7 million, of which ~~$1.14 billion was due to a benefit from income taxes related to the establishment of deferred tax assets from intra-entity transfers of intangible assets, $229.1~~$120.6 million was related to depreciation and amortization expense, and ~~$178.1~~$97.9 million was related to stock-based compensation expense, and the effect of changes in working capital and other carrying balances that resulted in cash inflows of ~~$71.1~~$8.5 million.

Cash provided by operating activities in the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 was ~~$563.8~~$351.7 million. Cash provided by operating activities was driven by net income of ~~$161.1~~$190.8 million, as adjusted for the exclusion of non-cash expenses and other adjustments totaling ~~$357.3~~$121.9 million, of which ~~$202.8~~$113.5 million was related to depreciation and amortization expense, $110.1 million was due to a benefit for income taxes mainly related to the deferred tax asset establishment for an intra-entity transfer of an intangible asset, and ~~$152.7~~$83.5 million was related to stock-based compensation expense, and the effect of changes in working capital and other carrying balances that resulted in cash inflows of ~~$45.4 million~~$39.0 million.

Investing Activities

Our primary investing activities consist of purchases of property and equipment, particularly purchases of servers and networking equipment, leasehold improvements for our facilities, purchases and disposal of marketable securities, strategic investments in privately-held companies, acquisitions of businesses and other activities.

Cash ~~used in~~provided by investing activities in the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 was ~~$384.4~~$466.1 million, ~~a decrease~~an increase in cash ~~outflow~~inflow of ~~$288.1~~$436.7 million compared to the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. The ~~decrease~~increase was primarily due to a ~~$1.19 billion~~$687.9 million increase in proceeds from sales of marketable securities, and a $401.6 million decrease in purchases of marketable securities, offset by a $585.7 million decrease in proceeds from maturities of marketable securities, a ~~$70.7~~$39.6 million ~~decrease~~increase in purchases of property and equipment, ~~a $13.5~~$14.8 million ~~decrease in expenditures on other investing activities, and a $12.2 million decrease in~~of cash used in business ~~combination, offset by~~combinations and $12.4 million of cash used in other investing activities in the three months ended March 31, 2020, as well as a ~~$1.0 billion increase in purchases of marketable securities, and a $1.4~~$0.3 million decrease in proceeds from sales of property and equipment.

We anticipate making capital expenditures in 2019 of approximately $550 million to $600 million, as we continue to expand our co-located data centers and continue to refresh a number of our office spaces.

Financing Activities

Our primary financing activities consist of issuance of securities, including common stock issued under our employee stock purchase plan, repayment of convertible notes, payments of finance lease obligations, and stock option exercises by employees and other service providers.

Cash provided by financing activities in the three months ended March 31, 2020 was $964.0 million, compared to $29.1 million cash used in financing activities in the ~~six~~three months ended ~~June 30, 2019 was $25.2 million, compared to $1.02 billion cash provided by financing activities in the six months ended June 30, 2018.~~March 31, 2019. The change was primarily due to ~~$1.14 billion~~$985.3 million of net proceeds from the issuance of ~~convertible notes~~the 2025 Notes net of issuance costs ~~which was reduced~~in the three months ended March 31, 2020, a $9.8 million decrease in payments of finance lease obligations, and a $0.2 million increase in proceeds from option exercises, offset by a net cash outflow of $81.2 million from the purchase of convertible note hedges and sale of warrants closed in connection with the issuance of convertible notes, in the six months ended June 30, 2018, a $3.6$2.2 million increase in tax payments related to net share settlements of equity awards, and a $2.6 million decrease in proceeds from option exercises, offset by a $9.3 million decrease in payments of finance lease obligations, and an $8.9 million increase in proceeds from the issuance of shares of stock from the ESPP.

~~Off Balance Sheet Arrangements~~

~~We do not have any off-balance sheet arrangements and did not have any such arrangements as of June 30, 2019.~~

awards.

Contractual Obligations

Our principal commitments consist of obligations under the Notes (including principal and coupon interest), finance and operating leases for equipment, office space and co-located data center facilities, as well as non-cancellable contractual commitments. Refer to Note 14 – Commitments and Contingencies for more details.

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements and did not have any such arrangements as of March 31, 2020.

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements and related notes in accordance with GAAP. In doing so, we make estimates and assumptions that affect our reported amounts of assets, liabilities, revenue and expenses, as well as related disclosure of contingent assets and liabilities. To the extent that there are material differences between these estimates and actual results, our financial condition or operating results would be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical accounting policies and estimates. Please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018~~2019 for a more complete discussion of our critical accounting policies and estimates.

~~Income Taxes~~

The establishment of deferred tax assets from intra-entity transfers of intangible assets requires management to make significant estimates and assumptions to determine the fair value of such intangible assets. Critical estimates in valuing the intangible assets include, but are not limited to, internal revenue and expense forecasts, the estimated life of the intangible assets, and discount rates. The discount rates used in the income method to discount expected future cash flows to present value are derived from a weighted-average cost of capital analysis and are adjusted to reflect the inherent risks related to the cash flow. Although we believe the assumptions and estimates we have made are reasonable and appropriate, they are based, in part, on historical experience and are inherently uncertain. Unanticipated events and circumstances may occur that could affect either the accuracy or validity of such assumptions, estimates or actual results.

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018, except as described in regards to our accounting policy related to leases in Note 6 of Part I, Item 1, and above, of this Quarterly Report on Form 10-Q.~~

2019.

Recent Accounting Pronouncements

For information with respect to recent accounting pronouncements and the impact of these pronouncements on our consolidated financial statements, see Note 1 – “Description of Business and Summary of Significant Accounting Policies” in the notes to the consolidated financial statements included in Part I of this Quarterly Report on Form 10-Q.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of our business. These risks include primarily interest rate and foreign exchange risks.

Interest Rate Fluctuation Risk

Our investment portfolio mainly consists of short-term fixed income securities, including government and investment-grade debt securities and money market funds. These securities are classified as available-for-sale and, consequently, are recorded in the consolidated balance sheets at fair value with unrealized gains or losses, net of tax reported as a separate component of accumulated other comprehensive loss. Our investment policy and strategy is focused on the preservation of capital and supporting our liquidity requirements. We do not enter into investments for trading or speculative purposes.

We continue to monitor the liquidity of our investments in light of the COVID-19 pandemic. Given the uncertainty surrounding the severity and duration of the COVID-19 pandemic, we could incur future unrealized losses on available-for-sale debt securities that are attributable to credit risk.

A rise in interest rates could have a material adverse impact on the fair value of our investment portfolio. Based on our investment portfolio balance as of ~~June 30, 2019,~~March 31, 2020, a hypothetical increase in interest rates of 100 basis points would result in a decrease of approximately ~~$29.9~~$31.3 million in the fair value of our available-for-sale securities. We currently do not hedge these interest rate exposures.

~~In 2014 and 2018,~~

As of March 31, 2020, we ~~issued convertible senior notes with an~~had $3.10 billion aggregate principal amount of ~~$1.89 billion~~Convertible Notes outstanding and ~~$1.15 billion, respectively.~~$700.0 million aggregate principal amount of 2027 Notes outstanding. We carry the Notes at face value less amortized discount on the consolidated balance sheet. Since the Notes bear interest at fixed rates, we have no financial statement risk associated with changes in interest rates. However, the fair value of the Notes changes when the market price of our stock fluctuates or interest rates change.

Foreign Currency Exchange Risk

Transaction Exposure

We transact business in various foreign currencies and have international revenue, as well as costs denominated in foreign currencies, primarily the Euro, British Pound, Singapore Dollar and Japanese Yen. This exposes us to the risk of fluctuations in foreign currency exchange rates. Accordingly, changes in exchange rates, and in particular a continuing strengthening of the U.S. dollar, would negatively affect our revenue and other operating results as expressed in U.S. dollars.

We have experienced and will continue to experience fluctuations in our net income (loss) as a result of transaction gains or losses related to revaluing and ultimately settling certain asset and liability balances that are denominated in currencies other than the functional currency of the entities in which they are recorded. Foreign currency gains were immaterial for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018.~~2019. We currently utilize foreign currency forward contracts with financial institutions to reduce the risk that our earnings may be adversely affected by the impact of exchange rate fluctuations on monetary assets or liabilities denominated in currencies other than the local currency of a subsidiary. These contracts are not designated as hedging instruments. We may in the future enter into other derivative financial instruments if it is determined that such hedging activities are appropriate to further reduce our foreign currency exchange risk. Based on our foreign currency exposures from monetary assets and liabilities net of our open hedge position, we estimated that a 10% change in exchange rates against the U.S. ~~dollars~~dollar would have resulted in a gain or loss of approximately ~~$1.7~~$9.4 million as of ~~June 30, 2019.~~

March 31, 2020.

Translation Exposure

We are also exposed to foreign exchange rate fluctuations as we translate the financial statements of our foreign subsidiaries into U.S. dollars in consolidation. If there is a change in foreign currency exchange rates, the translating adjustments resulting from the conversion of our foreign subsidiaries’ financial statements into U.S. dollars would result in a gain or loss recorded as a component of accumulated other comprehensive loss which is part of stockholders’ equity.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~June 30, 2019,~~March 31, 2020, our disclosure controls and procedures were designed at a reasonable assurance level and were effective to provide reasonable assurance.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) or 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We have not experienced any material impact to our internal controls over financial reporting despite the fact that most of our employees are working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact on their design and operating effectiveness.

PART II – OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Beginning in September 2016, multiple putative class actions and derivative actions were filed in state and federal courts in the United States against Twitter, Twitter’s directors, and/or certain former officers alleging that false and misleading statements, made in 2015, are in violation of securities laws and breached fiduciary duty. The putative class actions were consolidated in the U.S. District Court for the Northern District of California. On October 16, 2017, the court granted in part and denied in part the Company’s motion to dismiss. On July 17, 2018, the court granted plaintiffs' motion for class certification in the consolidated securities action. The Company disputes the claims and intends to continue to defend the lawsuits vigorously.

We are ~~also~~ currently involved in, and may in the future be involved in, legal proceedings, claims, investigations, and government inquiries and investigations arising in the ordinary course of business. These proceedings, which include both individual and class action litigation and administrative proceedings, have included, but are not limited to matters involving content on the platform, intellectual property, privacy, data protection, securities, employment and contractual rights. Legal risk may be enhanced in jurisdictions outside the United States where our protection from liability for content published on our platform by third parties may be unclear and where we may be less protected under local laws than we are in the United States. Future litigation may be necessary, among other things, to defend ourselves, and ~~our users~~the people on Twitter or to establish our rights.

For information regarding legal proceedings in which we are involved, see “Legal Proceedings” in Note 14 of the accompanying notes to our consolidated financial statements, which is incorporated herein by reference.

Although the results of the legal proceedings, claims, investigations, and government inquiries and investigations in which we are involved cannot be predicted with certainty, we do not believe that there is a reasonable possibility that the final outcome of these matters will have a material adverse effect on our business, financial condition, operating results, or prospects. However, the final results of any current or future proceeding cannot be predicted with certainty, and until there is final resolution on any such matter that we may be required to accrue for, we may be exposed to loss in excess of the amount accrued. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

Item 1A. RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Quarterly Report on Form 10-Q, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, before making a decision to invest in our common stock. The risks and uncertainties described below may not be the only ones we face. If any of the risks actually occurs, our business, financial condition, operating results, cash flows and prospects could be materially and adversely affected. In that event, the market price of our common stock could decline, and you could lose part or all of your investment.

Risks Related to Our Business and Our Industry

The COVID-19 pandemic has disrupted and harmed, and is expected to continue to disrupt and harm, our business, financial condition and operating results. We are unable to predict the extent to which the pandemic and related impacts will continue to adversely impact our business, financial condition and operating results and the achievement of our strategic objectives.

Our business, operations and financial performance have been negatively impacted by the COVID-19 pandemic and related public health responses, such as travel bans, restrictions, social distancing requirements and shelter-in-place orders. The pandemic and these related responses have caused, and are expected to continue to cause, decreased advertiser demand for our platform, global slowdown of economic activity (including the decrease in demand for a broad variety of goods and services) and significant volatility and disruption of financial markets.

The COVID-19 pandemic has subjected our operations, financial performance and financial condition to a number of risks, including, but not limited to, those discussed below:

•Declines in advertiser demand due to changes or uncertainty in the business operations and revenue of our advertisers because of the COVID-19 pandemic, including as a result of travel restrictions and declines in travel impacting the travel and hospitality industries, shelter-in-place orders and social distancing requirements impacting small and medium sized businesses and the sports and entertainment industries, and general economic uncertainty causing a number of businesses to cut costs or otherwise reduce advertising spend or focus advertising spend more on other platforms, have resulted in, and we believe may continue to result in, decreased demand for our advertising products.

•Postponements, suspensions or cancellations of major events, such as sporting events and music festivals, may lead to people perceiving the content on Twitter as less relevant or useful or of lower quality, which could negatively affect mDAU growth.

•Delays in payments or defaults by our customers or partners or if customers or partners terminate their relationships with us or do not renew their agreements on economic or other terms that are favorable to us.

•The responsive measures to the COVID-19 pandemic have caused us to modify our business practices by having employees work remotely, canceling all non-essential employee travel, and cancelling, postponing or holding virtually events and meetings. We may in the future be required to, or choose voluntarily to, take additional actions for the health and safety of our workforce, whether in response to government orders or based on our own determinations of what is in the best interests of our employees. While most of our operations can be performed remotely, there is no guarantee that we will be as effective while working remotely because our team is dispersed, many employees may have additional personal needs to attend to (such as looking after children as a result of school closures or family who become sick), and employees may become sick themselves and be unable to work. To the extent our current or future measures result in decreased productivity, harm our company culture or otherwise negatively affect our business, our financial condition and operating results could be adversely affected.

Many of the public health measures in response to the COVID-19 pandemic were implemented in March 2020, and thus have had a more limited impact on our operating results for the quarter ended March 31, 2020, and we expect to see more significant impacts in the second quarter of the year. The severity, magnitude and duration of the COVID-19 pandemic, the public health responses and its economic consequences are uncertain, rapidly changing and difficult to predict, the pandemic’s impact on our operations and financial performance, as well as its impact on our ability to successfully execute our business strategies and initiatives, remains uncertain and difficult to predict. Further, the ultimate impact of the COVID-19 pandemic on people on Twitter, advertisers, employees, and on our business, operations and financial performance, depends on many factors that are not within our control, including, but not limited, to: governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic (including restrictions on travel and transport, prohibitions on, or voluntary cancellation of, large gatherings of people and social distancing requirements, and modified workplace activities); the impact of the pandemic and actions taken in response local or regional economies, travel, and economic activity; the availability of government funding programs; general economic uncertainty in key markets and financial market volatility, including the liquidity of marketable securities in which we may invest from time to time; volatility in our stock price, global economic conditions and levels of economic growth; and the pace of recovery when the COVID-19 pandemic subsides.

If we fail to increase our mDAU, ad engagement or other general engagement on our platform, our revenue, business and operating results may be harmed.

~~The size of our~~

Our mDAU and their level of engagement with advertising are critical to our ~~success. mDAU for the three months ended June 30, 2019 was 139 million, an increase of 14% year-over-year.~~ ~~Our~~success and our long-term financial performance will continue to be significantly determined by our success in increasing the growth rate of our mDAU as well as the number of ad engagements. Our mDAU growth rate has fluctuated over time, and it may slow or decline. To the extent our mDAU growth rate slows or the absolute number of mDAU declines, our revenue growth will become dependent on our ability to increase levels of ~~user~~ engagement on Twitter and increase revenue growth from third-party publishers’ websites and applications, data licensing and other offerings. We generate a substantial majority of our revenue based upon engagement ~~by our users~~ with the ads that we display. If people do not perceive our products and services to be useful, reliable and trustworthy, we may not be able to attract users or increase the frequency of their engagement with our platform and the ads that we display. A number of factors have affected and could potentially negatively affect ~~user~~mDAU growth and engagement, including if:

•

~~accounts, including influential accounts, such as those of world leaders, government officials, celebrities, athletes, journalists, sports teams, media outlets and brands or~~ ~~certain~~ ~~age demographics, engage with other products, services or activities as an alternative to ours;~~

if:

•accounts, including influential accounts, such as those of world leaders, government officials, celebrities, athletes, journalists, sports teams, media outlets and brands or certain age demographics, do not contribute unique or engaging content, including as a result of the postponement, suspension or cancellation of major events in light of the COVID-19 pandemic, such as the suspension of all major sports leagues or the postponement of the 2020 Summer Olympics, or engage with other products, services or activities as an alternative to ours;

~~we are unable to convince potential or new people of the value and usefulness of our products and services;~~

•we are unable to convince people of the value and usefulness of our products and services;

~~there is a decrease in the perceived quantity, quality, usefulness or relevance of the content generated by the people who use Twitter or content partners;~~

•there is a decrease in the perceived quality, usefulness, trustworthiness or relevance of the content generated by people on Twitter or content partners;

there could also be a perception that actions we take to better foster a healthy conversation or to improve relevancy on the platform negatively impact the content or ranking of content posted by certain accounts;

•our actions taken to better foster a healthy conversation or to improve relevancy negatively impact or are perceived to negatively impact people’s experiences on the platform;

~~our content partners terminate their relationships with us or do not renew their agreements on economic or other terms that are favorable to us;~~

•there are concerns related to communication, privacy, data protection, safety, security, spam, manipulation or other hostile or inappropriate usage or other factors, or our health efforts result in the removal of certain accounts;

•our content partners terminate their relationships with us or do not renew their agreements on economic or other terms that are favorable to us;

•we fail to introduce new and improved products or services or if we introduce new or improved products or services that are not favorably received or that negatively affect engagement;

•technical or other problems prevent us from delivering our products or services in a rapid and reliable manner or otherwise affect people’s experiences on Twitter;

•people have difficulty installing, updating, or otherwise accessing our products or services on mobile devices as a result of actions by us or third parties that we rely on to distribute our products and deliver our services;

•

there are concerns related to privacy and communication, safety, security, spam, manipulation or other hostile or inappropriate usage or other factors, or our health efforts result in the removal of certain accounts;

•changes in our products or services that are mandated by, or that we elect to make to address, laws (such as the General Data Protection Regulation (GDPR)) or legislation, inquiries from legislative bodies, regulatory authorities or litigation (including settlements or consent decrees) adversely affect our products or services;

~~we fail to introduce new and improved products or services or if we introduce new or improved products or services that are not favorably received or that negatively affect user engagement;~~

•we fail to provide adequate customer service; or

technical or other problems prevent us from delivering our products or services in a rapid and reliable manner or otherwise affect the user experience, including issues with connecting to the Internet;

•we do not maintain our brand image or reputation.

users have difficulty installing, updating, or otherwise accessing our products or services on mobile devices as a result of actions by us or third parties that we rely on to distribute our products and deliver our services;

•

~~we are unable to manage and prioritize information to ensure users are presented with content that is interesting, useful and relevant to them;~~

•

~~users believe that their experience is diminished as a result of the decisions we make with respect to the frequency, format, relevance and prominence of ads or other content that we display;~~

•

changes in our products or services that are mandated by, or that we elect to make to address, laws (such as the General Data Protection Regulation, or the GDPR) or legislation, inquiries from legislative bodies, regulatory authorities or litigation (including settlements or consent decrees) adversely affect our products or users;

•

~~we fail to provide adequate customer service to users; or~~

•

~~we do not maintain our brand image or our reputation is damaged.~~

~~We believe that meaningful improvement in audience growth rate and engagement is dependent on improving our product and feature offerings to demonstrate our value proposition to a larger audience.~~ If we are unable to increase our ~~user base, user growth rate~~mDAU or ~~user~~ engagement, or if these metrics decline, our products and services could be less attractive to ~~potential or new users,~~people on Twitter, as well as to advertisers, content partners and platform partners, which would have a material and adverse impact on our business, financial condition and operating ~~results~~.results.

~~If the people who use our service or our content partners do not continue to contribute content or such content is not viewed as unique or engaging by other users,~~or if we are unable to successfully prevent or mitigate spammy, abusive or other disruptive or detracting behavior on Twitter, we may experience a decline in users accessing our products and services and their engagement, which could result in the loss of content partners, advertisers, platform partners, and revenue.

Our success depends on our ability to provide users of our products and services with unique and engaging content, which in turn depends on the content contributed by our users. We believe that one of our competitive advantages is the quality, quantity and real-time nature of the content on Twitter, and that access to unique or real-time content is one of the main reasons users visit Twitter. We seek to foster a broad and engaged user community, and we encourage world leaders, government officials, celebrities, athletes, journalists, sports teams, media outlets and brands to use our products and services to express their views to broad audiences. We also encourage media outlets to use our products and services to distribute their content. In addition, we license our premium live streaming video content from a variety of content providers. If these content providers are no longer willing or able to license us content upon economic and other terms that are acceptable to us, our ability to stream such content will be adversely affected and/or our costs could increase. If users, including influential users, do not continue to contribute content or content providers do not license content to Twitter, and we are unable to provide users with unique, engaging and timely content, our user base and engagement may decline. Additionally, if we are not able to address user concerns regarding the safety and security of our products and services or if we are unable to successfully prevent or mitigate spammy, abusive or other disruptive or detracting behavior on our platform, the size of our engaged user base may decline. We rely on the sale of advertising services for the substantial majority of our revenue. We believe advertisers come to Twitter because we have one of the most valuable audiences when they are most receptive, and we generate a high return on investment against their campaign objectives whether they are launching a new product or connecting with what's happening on Twitter. However, a decline in the number of users, user growth rate, or user engagement, including as a result of the loss of world leaders, government officials, celebrities, athletes, journalists, sports teams, media outlets and brands who generate content on Twitter, may deter advertisers from using our products or services or cause current advertisers to reduce their spending with us or cease doing business with us, which would harm our business and operating results.

We generate the substantial majority of our revenue from advertising. The loss of advertising revenue could harm our business.

The substantial majority of our revenue is currently generated from third parties advertising on Twitter. ~~We generated approximately 86% of our revenue from advertising in the fiscal year ended December 31, 2018 and the six months ended June 30, 2019.~~ We generate substantially all of our advertising revenue through the sale of our Promoted Products: Promoted Tweets, Promoted Accounts and Promoted Trends. As is common in our industry, our advertisers do not have long-term advertising commitments with us. As a result, we have experienced an immediate reduction in advertiser demand due to the COVID-19 pandemic as some advertisers have shifted their expenditures away from advertising spend and we expect to continue to experience reduced advertiser demand and decreased advertising revenue in future quarters. In addition, many of our advertisers purchase our advertising services through one of several large advertising ~~agency~~agencies' holding companies. To sustain or increase our revenue, we must add new advertisers and encourage existing advertisers to maintain or increase the amount of advertising inventory purchased through our platform and adopt new features and functionalities that we add to our platform. However, advertising agencies and potential new advertisers may view our Promoted Products or any new products or services we offer as experimental and unproven, and we may need to devote additional time and resources to educate them about our products and services. Further, our advertisers’ ability to effectively target their advertising to our audience’s interests may be impacted by the degree to which people on Twitter agree in our settings to certain types of personalization or ad targeting, which could have an impact on our revenue. People that already have accounts may change their choices as a result of changes to our privacy control settings that we have implemented or may implement in the future, and people new to Twitter may choose varied levels of personalization, whether in connection with future changes we make to product privacy settings, regulations, regulatory actions, the customer experience, or otherwise. Over time, personalization rates will impact our ability to grow our performance advertising business. Advertisers also may choose to ~~reach users through~~use our free products and services instead of our Promoted ~~Products~~.Products. Advertisers will not continue to do business with us, or they will reduce the prices they are willing to pay to advertise with us, if we do not deliver ads in an effective manner, or if they do not believe that their investment in advertising with us will generate a competitive return on investment relative to alternatives, including online, mobile and traditional advertising platforms. In addition, competition for advertising is becoming increasingly more intense and our advertising revenue could be further impacted by escalating competition for digital ad ~~spending as well as the re-evaluation of our revenue product feature portfolio, which could result in the de-emphasis of certain product features.~~ spending.

Our advertising revenue growth is primarily driven by increases in ~~the number of our~~ mDAU, increases in ad pricing or number of ads shown ~~driven by strong advertiser demand,~~and increases in our clickthrough ~~rate, as well as other factors.~~rate. Although we experienced increased mDAU and ad engagement growth in the three months ended March 31, 2020, we did not experience corresponding growth in related revenue due to a reduction in advertiser demand on our platform related to the COVID-19 pandemic. To date, our available advertising inventory has been greater than demand. Our future revenue growth, however, may be limited by available advertising inventory for specific ad types on certain days if we do not increase our mDAU or monetize our larger global audience. Our advertising revenue also could be ~~adversely~~ affected by a number of other factors, ~~including:~~

•

~~decreases in user engagement with the ads on our platform and those that we serve off of our platform;~~

•

~~decreases in the size of our mDAU or the growth rate of mDAU;~~

•

if we are unable to demonstrate the value of our Promoted Products to advertisers and advertising agencies or if we are unable to measure the value of our Promoted Products in a manner which advertisers and advertising agencies find useful or reliable;

•

~~if we are perceived as not safe for brand advertisers;~~

•

~~if we are unable to demonstrate the value of, or attract video and video advertisements to, our platform;~~

•

~~decreases in the perceived quantity, quality, usefulness or relevance of our users or the content generated by our users or content partners;~~

•

if our Promoted Products are not cost effective or not valued by certain types of advertisers or if we are unable to develop cost effective or valuable advertising services for different types of advertisers;

•

~~if we are unable to convince advertisers and brands to invest resources in learning to use our products and services and maintaining a brand presence on Twitter;~~

•

~~our advertisers’ ability to optimize their campaigns or effectively and reliably measure the results of their campaigns;~~

•

product or service changes we may make that change the frequency or relative prominence of ads displayed on Twitter or that detrimentally impact revenue in the near term with the goal of achieving long-term benefits;

•

~~our inability to increase advertiser demand and spend from new and existing advertisers as well as advertising inventory;~~

•

~~our inability to increase the relevance of ads;~~

•

our inability to help advertisers effectively target ads, including as a result of the fact that we do not collect extensive personal information from our users and that we do not have real-time geographic information for all of our users particularly for ads served through our mobile-focused advertising exchange;

•

~~decreases in the cost per ad engagement;~~

•

~~failure to effectively monetize our growing international user base, our logged-out audience or our syndicated audience;~~

•

~~loss of advertising market share to our competitors;~~

•

~~the degree to which people access Twitter content through applications that do not contain our ads;~~

•

~~any arrangements or other partnerships with third parties to share our revenue;~~

•

~~if our new advertising strategies do not gain traction;~~

•

~~the impact of new technologies that could block or obscure the display of our ads;~~

•

adverse legal developments relating to advertising or measurement tools related to our metrics or the effectiveness of advertising, including legislative and regulatory developments, such as GDPR and other privacy regulations, and developments in litigation;

•

~~our inability to create new products, product features and services that sustain or increase the value of our advertising services to both our advertisers and our users;~~

•

~~changes to our products or development of new products or product features that decrease users’ ad engagements or limit the types of user interactions that we count as ad engagements;~~

•

~~the impact of fraudulent clicks or spam on our Promoted Products and our users;~~

•

~~changes in the way our advertising is priced; and~~

•

~~the impact of macroeconomic conditions and conditions in the advertising industry in general.~~

including bugs or other product issues that may impact our ability to effectively help advertisers target ads or share data with our measurement and ad partners. The occurrence of any of these ~~or other~~ factors could result in a reduction in demand for our ads, which may reduce the prices we receive for our ads, either of which would ~~negatively affect~~adversely impact our revenue, business, financial condition and operating results.

We cannot be certain of the extent of the global slowdown of economic activity, including the decrease in demand for a broad variety of goods and services (including advertiser demand for our platform), or the pace of recovery when the COVID-19 pandemic subsides.

If we are unable to compete effectively, ~~for users and advertiser spend,~~ our business and operating results could be harmed.

~~Competition~~

We face intense competition for ~~users of~~people to use our ~~products~~platform, content and ~~services is intense. Although we have developed a global platform that we believe is the best~~data partners and ~~fastest place to see what’s happening and what people are talking about all around the world, we face strong competition in our business.~~advertising spend. We compete for our audience against ~~many~~a variety of social networking platforms, messaging companies ~~to attract~~ and ~~engage users every day, including~~media companies, some of which have greater financial resources, ~~and substantially~~ larger ~~user bases,~~audiences or more established relationships with advertisers, such as Facebook (including Instagram and WhatsApp), Alphabet (including Google and YouTube), Microsoft (including LinkedIn), Snap, TikTok, and Verizon Media Group, ~~which offer a variety of Internet~~or in certain regions WeChat, Kakao and mobile device-based products, services and content. For example, Facebook operates a social networking site with significantly more users than Twitter and has been introducing features similar to those of Twitter. In addition, Alphabet may use its strong position in oneLine. New or ~~more markets to gain a competitive advantage over us in areas in which we operate, including by integrating competing features into products or services they control. As a result, our~~existing competitors may draw ~~users~~people towards their products or services and away from ~~ours. This~~ours by introducing new product features, including features similar to those we offer, investing their greater resources in audience acquisition efforts, or otherwise developing products or services that audiences choose to engage with rather than Twitter, any of which could decrease ~~the~~mDAU growth or engagement ~~of our user base, which, in turn, would~~and negatively affect our business.

We also compete ~~against largely regional social media~~with respect to content generated by our content partners and ~~messaging companies~~the availability of applications developed by platform partners. We may not establish and maintain relationships with content partners who publish on our platform or platform partners who develop applications that ~~have strong positions in particular countries such as WeChat, Kakao~~integrate with our platform. Our content and ~~Line.~~

platform partners may choose to publish content on, or develop applications for, other platforms, and if they cease to utilize our platform or decrease their use of our platform, then mDAU, engagement, and advertising revenue may decline.

We believe that our ability to compete effectively for ~~users~~audiences and content partners depends upon many factors both within and beyond our control, including:

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~~the popularity, usefulness, ease of use, performance and reliability of our products and services compared to those of our competitors;~~

•the popularity, usefulness, ease of use, performance and reliability of our products and services compared to those of our competitors, as well as our reputation and brand, and our ability to adapt to continuously evolving preferences and expectations of people on Twitter, advertisers, content partners, platform partners and developers;

~~the amount, quality and timeliness~~ ~~of content generated by our users and content partners~~;

•the amount, quality and timeliness of content generated on our platform, including the relative mix of ads;

~~the timing and market acceptance of our products and services;~~

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~~our ability, in and of itself, and in comparison to the ability~~•the timing and market acceptance of our ~~competitors, to develop new products and services and enhancements to existing~~ products and services;

•

the ~~frequency and relative~~ prominence of our applications in application marketplaces and of our content in search engine results, as well as those of ~~the ads displayed by us or~~ our competitors;

•our ability, in and of itself, and in comparison to the ability of our competitors, to develop new products and services and enhancements to existing products and services, and to maintain the reliability and security of our products and services as usage increases globally;

~~our ability to establish and maintain relationships with content partners;~~

•our ability, and our ability in comparison to the ability of our competitors, to manage our business and operations during the COVID-19 pandemic and related governmental, business and individual actions that have been and continue to be taken in response to the pandemic (including restrictions on travel and modified workplace activities);

~~our ability to develop a reliable, scalable, secure, high-performance technology infrastructure that can efficiently handle increased usage globally;~~

•changes mandated by, or that we elect to make to address legislation, regulatory authorities or litigation, including settlements, antitrust matters, consent decrees and privacy regulations, some of which may have a disproportionate effect on us compared to our competitors; and

changes mandated by, or that we elect to make to address, legislation, regulatory authorities or litigation, including settlements, consent decrees and the GDPR, some of which may have a disproportionate effect on us;

•the continued adoption and monetization of our products and services internationally.

~~the application of antitrust laws both in the United States and internationally;~~

•

~~the continued adoption of our products and services internationally;~~

•

~~our ability to establish and maintain relationships with platform partners that integrate with our platform;~~

•

~~acquisitions or consolidation within our industry, which may result in more formidable competitors; and~~

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~~our reputation and brand strength relative to our competitors.~~

We also face significant competition for advertiser spend. ~~The substantial majority of our revenue is currently generated through third parties advertising on Twitter, and we~~We compete against online and mobile businesses ~~including those referenced above,~~ and traditional media outlets, such as television, radio and print, for advertising budgets. In addition, many advertisers, particularly branded advertisers, use marketing mix analyses to determine how to allocate their advertising budgets on an annual or bi-annual basis. Accordingly, if we fail to demonstrate to such advertisers during the appropriate time period that we provide a better return on investment than our competitors do, we may lose the opportunity to secure, increase or sustain our share of the advertising budget allocated for a significant portion of the year until the next budget cycle.

We also compete with advertising networks, exchanges, demand side platforms and other platforms, such as Google AdSense, DoubleClick Ad Exchange, Nexage and Brightroll Ad Exchanges, Verizon Media Group, and Microsoft Media Network, for marketing budgets and in the development of the tools and systems for managing and optimizing advertising campaigns. In order to grow our revenue and improve our operating results, we must increase our share of spending on advertising relative to our competitors, many of which are larger companies that offer more traditional and widely accepted advertising products. In addition, some of our larger competitors have substantially broader product or service offerings and leverage their relationships based on other products or services to gain additional share of advertising budgets.

We believe that our ability to compete effectively for advertiser spend depends upon many factors both within and beyond our control, including:

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~~the size~~ ~~and composition of our user base~~ ~~relative to those of our competitors;~~

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~~our ad targeting and measurement capabilities,~~•the size and composition of our audience relative to those of our competitors;

•

~~the timing and market acceptance of our advertising services,~~•our ad targeting and measurement capabilities, and those of our competitors;

•the timing and market acceptance of our advertising services, and those of our competitors, including our ability to demonstrate to advertisers the value of our advertising services, particularly during the periods in which they are determining their budgets, which may be annually or biannually;

~~our marketing and selling efforts, and those of our competitors;~~

•

~~the pricing of our advertising products~~•our marketing and selling efforts, and ~~services relative to~~ those of our competitors;

•our ability, and our ability in comparison to the ability of our competitors, to manage our business and operations during the COVID-19 pandemic;

~~the actual or perceived return our advertisers receive from our advertising services, and those of our competitors; and~~

•the pricing of our advertising services, including the actual or perceived return our advertisers receive from our advertising services, and those of our competitors; and

~~our reputation and the strength of our brand relative to our competitors.~~

•our reputation and the strength of our brand relative to our competitors.

Additionally, in recent years, there have been significant acquisitions and consolidation by and among our actual and potential competitors. We anticipate this trend of consolidation will continue, which will present heightened competitive challenges for our business. Acquisitions by our competitors may result in reduced functionality of our products and services. For example, following Facebook’s acquisition of Instagram, Facebook disabled Instagram’s photo integration with Twitter such that Instagram photos were no longer viewable within Tweets and ~~users~~people are instead re-directed to Instagram to view Instagram photos through a link within a Tweet. As a result, ~~our users~~people who use Twitter may be less likely to click on links to Instagram photos in Tweets, and people who use Instagram ~~users~~ may be less likely to Tweet or remain active ~~users of~~on Twitter. Any similar elimination of integration with Twitter in the future, whether by Facebook or others, may adversely impact our business and operating results.

Consolidation may also enable our larger competitors to offer bundled or integrated products that feature alternatives to our ~~platform. Reduced functionality of our products~~platform and services, or our competitors’ ability to offer bundled or integrated products that compete directly with us, may cause our users, user growth rate, and ad engagement to decline and advertisers to reduce their spend with us.

provide alternative opportunities for advertisers.

If we are not able to compete effectively for ~~users~~audience, content and platform partners, and advertiser spend, our mDAU and engagement would decline and our business and operating results would be materially and adversely ~~affected~~.

impacted.

Our ~~priority as a company is to improve~~prioritization on the long-term health of ~~the public conversation~~our service, and on ~~Twitter. Focusing our efforts on this priority~~product innovation may ~~negatively~~adversely impact our ~~business operations in the short term.~~

short-term operating results.

We believe that our long-term success depends on our ability to improve the health of the public conversation on Twitter. We have made this one of our ~~priority~~top priorities and have focused our efforts on improving the quality of that conversation, including by devoting substantial internal resources to our strategy. These efforts include the reduction of abuse, harassment, spam, manipulation and malicious automation on the platform, as well as a focus on improving information quality and the health of conversation on Twitter. For example, in the past, we announced that we were removing certain locked accounts from follower counts across profiles globally. While that specific change did not affect our previously-disclosed mDAU metrics, someSome of the health initiatives that we have implemented as part of our ongoing commitment to a healthy public conversation have negatively impacted, and may in the future negatively impact, our publicly reported metrics in a few ways.

First, our health efforts include the removal of accounts pursuant to our terms and services that are abusive, spammy, fake or malicious, and these accounts may have been included in our mDAU, as well as actions taken to detect and challenge potentially automated, spammy, or malicious accounts during the sign-up process. For example, in the third and fourth quarters of 2018, year-over-year average mDAU growth was impacted by ongoing health efforts, both due to how we resourced and prioritized our work and the impact from ongoing success removing spammy and suspicious accounts.

Second, we are also making active decisions to prioritize health related initiatives over other near-term product improvements that may drive more usage of Twitter as a daily utility. These decisions may not be consistent with the short-term expectations of our advertising customers or investors and may not produce the long-term benefits that we expect, in which case our ~~user~~mDAU growth and ~~user~~ engagement, our relationships with advertisers and our business and operating results could be harmed.

We ~~focus on the long-term health of our service, product innovation, and providing something valuable to people on Twitter every day, rather than short-term operating results.~~

We also encourage employees to quickly develop and help us launch new and innovative features. We focus on improving the ~~user~~ experience for people using our products and services, which includes protecting ~~user~~the privacy of people on Twitter, and on developing new and improved products and services for the advertisers on our platform. ~~For example, we are making investments in improving the health of the public conversation on Twitter, focusing on the long-term health of the platform over near-term metrics.~~ We prioritize innovation and the experience for ~~users~~people on Twitter and advertisers on our platform over short-term operating results. We frequently make product, product feature and service decisions that may reduce our short-term operating results if we believe that the decisions are consistent with our goals to improve the ~~user~~ experience for people on Twitter and performance for advertisers, which we believe will improve our operating results over the long term. ~~For example, we are investing~~Our decisions to invest in the long-term health of our ~~live-streaming video experiences,~~service and ~~we may not successfully monetize such experiences. These decisions may not be consistent with the~~on product innovation rather than short-term ~~expectations of investors and~~results may not produce the long-term benefits that we expect, in which case our ~~user~~mDAU growth and ~~user~~ engagement, our relationships with advertisers and our business and operating results ~~could~~would be harmed. In addition, our focus on the user experience may negatively impact our relationships with our existing or prospective advertisers. This could result in a loss of advertisers, which could harm our revenueadversely impacted, and ~~operating results~~.

~~Our operating results may fluctuate from quarter to quarter, which makes them difficult to predict.~~

Our quarterly operating results have fluctuated in the past and will fluctuate in the future. As a result, our past quarterly operating results are not necessarily indicators of future performance. Our operating results in any given quarter can be influenced by numerous factors, many of which we are unable to predict or are outside of our control, including:

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~~our ability to provide something valuable to people on Twitter every day and grow our mDAU;~~

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~~our ability to attract and retain advertisers, content partners and platform partners;~~

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the occurrence of planned significant events, such as the World Cup, Super Bowl, Champions League Final, World Series, the Olympics and the Oscars, or unplanned significant events, such as natural disasters and political revolutions;

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~~the pricing of our products and services;~~

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~~the development and introduction of new products or services, changes in features of existing products or services or de-emphasis or termination of existing products, product features or services;~~

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~~the impact of competitors or competitive products and services;~~

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~~our ability to maintain or increase revenue;~~

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~~our ability to maintain or improve gross margins and operating margins;~~

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~~increases in research and development, marketing and sales and other operating expenses that we may incur to grow and expand our operations and to remain competitive;~~

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~~stock-based compensation expense;~~

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~~costs related to the acquisition of businesses, talent, technologies or intellectual property, including potentially significant amortization costs;~~

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~~system failures resulting in the inaccessibility of our products and services;~~

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~~breaches of security or privacy, and the costs associated with remediating any such breaches;~~

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~~adverse litigation judgments, settlements or other litigation-related costs, and the fees associated with investigating and defending claims;~~

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changes in the legislative or regulatory environment, including with respect to security, tax, privacy, data protection, or content, or enforcement by government regulators, including fines, orders or consent decrees;

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~~changes in reserves or other non-cash credits or charges, such as releases of deferred tax asset valuation allowances, impairment charges or purchase accounting adjustments;~~

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~~changes in our expected estimated useful life of property and equipment and intangible assets;~~

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~~fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in foreign currencies;~~

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~~changes in U.S. generally accepted accounting principles; and~~

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~~changes in global business or macroeconomic conditions.~~

~~Given our limited operating history and the rapidly evolving markets in which we compete, our historical operating results~~ may not be ~~useful to you in predicting~~consistent with the expectations of investors, which could have a negative effect on the trading price of our future operating results. If our revenue growth rate slows, we expect that the seasonality in our business may become more pronounced and may in the future cause our operating results to fluctuate. For example, advertising spending is traditionally seasonally strong in the fourth quarter of each year and we believe that this seasonality affects our quarterly results, which generally reflect higher sequential advertising revenue growth from the third to fourth quarter compared to sequential advertising revenue growth from the fourth quarter to the subsequent first quarter. In addition, global economic concerns continue to create uncertainty and unpredictability and add risk to our future outlook. An economic downturn in any particular region in which we do business or globally could result in reductions in advertising revenue, as our advertisers reduce their advertising budgets, and other adverse effects that could harm our operating results.

common stock.

We depend on highly skilled personnel to grow and operate our ~~business, and have seen high levels of attrition.~~business. If we are unable to hire, retain and motivate our personnel, we may not be able to grow effectively.

Our future success and strategy will depend upon our continued ability to identify, hire, develop, motivate and retain highly skilled personnel, including senior management, engineers, designers and product managers. We depend on contributions from our employees, and, in particular, our senior management team, to execute efficiently and effectively. We do not have employment agreements other than offer letters with any member of our senior management or other key ~~employee,~~employees, and we do not maintain key person life insurance for any employee. We also face significant competition for employees, particularly in the San Francisco Bay Area (where our headquarters is located) and other key markets, for engineers, designers and product managers from other Internet and high-growth companies, which include both publicly-traded and privately-held companies. As a result, we may not be able to retain our existing employees or hire new employees quickly enough to meet our needs.

From time to time, we have also experienced high voluntary attrition, and in those times, the resulting influx of new leaders and other employees has required us to expend time, attention and resources to recruit and retain talent, restructure parts of our organization, and train and integrate new employees. In addition, to attract ~~highly~~ and retain skilled personnel, we have had to offer, and believe we will need to continue to offer, highly competitive compensation packages. We may need to invest significant amounts of cash and equity to attract and retain new employees and we may not realize sufficient return on these investments. In addition, changes to U.S. immigration and work authorization laws and regulations can be significantly affected by political forces and levels of economic activity. Our business may be materially adversely affected if legislative or administrative changes to immigration or visa laws and regulations impair our hiring processes or projects involving personnel who are not citizens of the country where the work is to be performed. If we are not able to effectively attract and retain employees, we may not be able to innovate or execute quickly on our strategy and our ability to achieve our strategic objectives will be adversely impacted, and our business will be harmed.

As a result of the COVID-19 pandemic we have slowed headcount growth and focused on critical roles while we continue to assess economic conditions.

We also believe that our culture and core values have been, and will continue to be, a key contributor to our success and our ability to foster the innovation, creativity and teamwork we believe we need to support our operations. If we fail to effectively manage our hiring needs and successfully integrate our new hires, our efficiency and ability to meet our forecasts and our culture, employee morale, productivity and retention could suffer, and our business and operating results ~~could~~would be adversely ~~affected.~~

~~If we fail to monetize effectively in international markets, our revenue and our business will be harmed.~~

We may not be able to monetize our products and services internationally as effectively as in the United States as a result of competition, advertiser demand, differences in the digital advertising market and digital advertising conventions, as well as differences in the way that users in different countries access or utilize our products and services. For example, a significant portion of users in emerging markets like India and Pakistan use feature phones and communicate via SMS messaging, both of which have limited functionality and neither of which may be able to take full advantage of our products and services offered on smartphone or our website or desktop applications. Users who access Twitter through SMS messaging may monetize at lower rates than other users. Differences in the competitive landscape in international markets may impact our ability to monetize our products and services. For example, in South Korea we face intense competition from a messaging service offered by Kakao, which offers some of the same communication features as Twitter. The existence of a well-established competitor in an international market may adversely affect our ability to increase our user base, attract content partners, advertisers and platform partners and monetize our products in such market. We may also experience differences in advertiser demand in international markets. For example, during times of political upheaval, advertisers may choose not to advertise on Twitter. Certain international markets are also not as familiar with digital advertising in general, or in new forms of digital advertising such as our Promoted Products. Further, we face challenges in providing certain advertising products, features or analytics in certain international markets, such as the European Union, due to government regulation. impacted.

Our products, and services may also be used differently abroad than in the United States. In particular, in certain international markets where Internet access is not as rapid or reliable as in the United States, users tend not to take advantage of certain features of our products and services, such as rich media included in Tweets, video or live streaming video. The limitation of mobile devices of users in emerging and other markets limits our ability to deliver certain features to those users and may limit the ability of advertisers to deliver compelling advertisements to users in these markets, which may result in reduced ad engagements, which would adversely affect our business and operating results.

If our revenue from our international operations, and particularly from our operations in the countries and regions where we have focused our spending, does not exceed the expense of establishing and maintaining these operations, our business and operating results will suffer. In addition, our user base may expand more rapidly in international regions where we are less successful in monetizing our products and services. As our user base continues to expand internationally, we will need to increase revenue from the activity generated by our international users in order to grow our business~~. For example, average~~ mDAU outside the United States constituted 79% of our average mDAU in the three months ended June 30, 2019, but our international revenue, as determined based on the billing location of our customers, was only 46% of our consolidated revenue in the three months ended June 30, 2019. Our inability to successfully expand our business internationally could adversely affect our business, financial condition and operating results.

~~User~~ growth, and engagement depend upon the availability of a variety of third-party services and systems and the effective interoperation with operating systems, networks, devices, web browsers and ~~standards that we do not control.~~

standards. We make our products and services available across a variety of operating systems and through websites. We are dependent on the interoperability of our products and services with popular devices, desktop and mobile operating systems and web browsers that we do not control ~~such as Mac OS, iOS, Windows, Android, Chrome~~all of these systems and ~~Firefox.~~ ~~Any changes, bugs or technical issues in such systems, devices or web browsers or changes in our relationships with mobile operating system partners or mobile carriers, or in~~cannot guarantee their ~~terms of service or policies~~availability, and we cannot guarantee that ~~diminish the functionality of our products and services, make it difficult for our users to access our content, limit our ability to target or measure the effectiveness of ads, impose fees related to~~third parties will not take action that harm our products or ~~services or give preferential treatment~~profitability.

One of the reasons people come to ~~competitive products or services could adversely affect usage of~~Twitter every day is for real-time information, and our products and services. For example, many of our relationships with our mobile carriers to deliver our SMS messages were originally negotiated as free or low-cost connections, but recently some of the mobile carriers have been proposing fee increases for these arrangements, which may not be cost-effective for us. This may, in turn, adversely affect the number of users who receive our SMS messages. Additionally, some of our mobile carriers have experienced infrastructure issues due to natural disasters, which have caused deliverability errors or poor quality communications with our products. Any such errors, regardless of whether caused by our infrastructure or that of the service provider, may result in the loss of our existing users or may make it difficult to attract new users. Further, if the number of platforms for which we develop our product expands, it will result in an increase in our operating expenses. In order to deliver high quality products and services, it is important that our products and services work well with a range of operating systems, networks, devices, web browsers and standards that we do not control. In addition, because a majority of our users access our products and services through mobile devices, we are particularly dependent on the interoperability of our products and services with mobile devices and operating systems in order to deliver our products and services. We also may not be successful in developing relationships with key participants in the mobile industry or in developing products or services that operate effectively with these operating systems, networks, devices, web browsers and standards. In the event that it is difficult for our users to access and use our products and services, particularly on their mobile devices, our mDAU could be harmed, and our business and operating results could be adversely affected.

~~Our products and services may contain undetected software errors, which could harm our business and operating results.~~

Our products and services incorporate complex software and we encourage employees to quickly develop and help us launch new and innovative features. Our software, including any open source software that is incorporated into our code, has contained, and may now or in the future contain, errors, bugs or vulnerabilities. For example, in May 2018, we announced that an internal bug had resulted in the storage of passwords unmasked in an internal log. When users set a password for their Twitter accounts, we secure those passwords in a format that prevents anyone at Twitter from seeing or knowing the actual password through a password hashing function, which replaces the actual password with a random set of numbers and letters that are stored in Twitter’s system. Due to a bug, passwords were written to a service log before completing the hashing process. We found this error ourselves, removed the passwords from the logs, and are implementing plans to prevent this bug from happening again. Our investigation shows no indication of breach or misuse by anyone. In September 2018, we announced an internal bug related to our Account Activity API, which allows registered developers to build customer support and engagement tools for businesses and others on Twitter. This bug may have caused some of the customer communications and engagements with businesses and others on Twitter to be unintentionally sent to another registered developer. Although our initial analysis indicates that a complex series of technical circumstances had to occur at the same time for this bug to have resulted in account information definitively being shared with the wrong recipient, we contacted our developer partners to ensure that they are complying with their obligations to delete information they should not have in their possession. As was the case with these errors, errors in our software code may only be discovered after the product or service has been released. Errors, vulnerabilities, or other design defects within the software on which we rely may result in a negative experience for users, partners and advertisers who use our products, delay product introductions or enhancements, result in targeting, measurement, or billing errors, compromise our ability to protect the data of our users and/or our intellectual property or lead to reductions in our ability to provide some or all of our services. Any errors, bugs or vulnerabilities discovered in our code after release could result in damage to our reputation, loss of users, loss of content or platform partners, loss of advertisers or advertising revenue or liability for damages or other relief sought in lawsuits, regulatory inquiries or other proceedings, any of which could adversely affect our business and operating results.

~~Our~~ ~~ability to convince potential and new users of the value of our products and services is critical to increasing our user base and to~~ the success of our ~~business.~~

~~We have developed a global platform that~~business is dependent upon the ability of people to access the Internet and the proper functioning of the various operating systems, platforms, and services upon which we ~~believe is the best~~rely. These systems are provided and ~~fastest place to see what’s happening and what people are talking about all around the world, but the market for~~controlled by factors outside of our control, including nation-state actors who may suppress or censor our products, and services is relatively new and may not continue to develop as expected. Despite our efforts to reduce barriers to consumption, people who are not our users may not understand the value of our products and services and new users may initially find our products confusing, which may make retention of such users more difficult. There may be a perception that our products and services are only useful to users who Tweet, or to influential users with large audiences. Convincing potential and new users of the value of our products and services is critical to increasing our user base, user engagement and to the success of our business.

If we fail to educate potential users and potential advertisers about the value of our products and services, if the market for our platform does not continue to develop as we expect or if we fail to address the needs of this market, our business will be harmed. Failure to adequately address these risks and challenges could harm our business and cause our operating results to suffer.

~~Our~~ business depends on continued and unimpeded access to our products and services on the Internet by our users, content partners, advertisers, and platform partners. If we or our users experience disruptions in Internet service or if Internet service providers are able to block, degrade or charge for access to our products and services, we could incur additional expenses and the loss of users and advertisers.

We depend on the ability of our users, content partners, advertisers and platform partners to access the Internet. Currently, this access is provided by companies that have significant market power in the broadband and Internet access marketplace, including incumbent telephone companies, cable companies, mobile communications companies, government-owned service providers, device manufacturers and operating system ~~providers, any~~providers. Any of ~~whom~~these actors could take actions that degrade, disrupt or increase the cost of ~~user~~ access to our products or services, which would, in turn, negatively impact our business. The adoption or repeal of any laws or regulations that adversely affect the growth, popularity or use of the Internet, including laws or practices limiting Internet neutrality, could decrease the demand for, or the usage of, our products and services, increase our cost of doing business and adversely affect our operating results. For example, access to Twitter is blocked in China and has been intermittently blocked in Turkey in the ~~past and certain of our SMS messages have been blocked in Saudi Arabia.~~ past.

We also rely on other companies to maintain reliable network systems that provide adequate speed, data capacity and ~~security to us~~security. We utilize third-party cloud computing services in connection with certain aspects of our business and operations, and any disruption of, or interference with, our ~~users.~~use of such cloud services could adversely impact our business and operations. As the Internet continues to experience growth in the number of ~~users,~~consumers, frequency of use and amount of data transmitted, the Internet infrastructure that we ~~and our users~~ rely on may be unable to support the demands placed upon it. The failure of the Internet infrastructure that we ~~or our users~~ rely on, even for a short period of time, could undermine our operations and harm our operating ~~results~~.

~~Our~~ ~~new products, product features,~~results.

Furthermore, these systems, devices or software or services ~~and initiatives and~~may experience changes, ~~to existing products, services and initiatives could fail to attract users, content partners, advertisers and platform partners~~bugs or ~~generate revenue~~.

~~Our~~ ~~industry is subject to rapid and frequent changes in technology, evolving customer needs and~~technical issues, that may affect the ~~frequent introduction by our competitors~~availability of ~~new and enhanced offerings. We must constantly assess the playing field and determine whether we need to improve or re-allocate resources amongst our existing products and~~ services or ~~create new ones (independently or in conjunction with third parties). Our ability to increase~~ the ~~size and engagement~~accessibility of our user base, attract content partners, advertisers and platform partners and generate revenue will depend on those decisions. We may introduce significant changes to our existing products and services or develop and introduce new and unproven products and services, including technologies with which we have little or no prior development or operating experience. In the past, we have introduced new features to Twitter such as “Moments”, a curated collection of Tweets, photos, videos, and Periscope broadcasts about current news stories or events; “In Case You Missed It,” which surfaces Tweets a logged-in user may have missed since last accessing Twitter; expanding our character limit to 280 characters for more people around the world; and “Threads,” a feature that allows people to more easily thread Tweets together. We are also continuing our work to increase the stability, performance and scale of our ads platform and our mobile application download product, and such work will take place over multiple quarters, and any positive revenue impact will be gradual in its impact. If new or enhanced products, product features or services fail to engage users, content partners and advertisers, we may fail to attract or retain users or to generate sufficient revenue or operating profit to justify our investments, and our business and operating results could be adversely affected. In addition, we have launched and expect to continue to launch strategic initiatives that do not directly generate revenue but which we believe will enhance our attractiveness to users, content partners and advertisers, such as our investments in the health of public conversation on Twitter. In the future, we may invest in new products, product features, services and initiatives to generate revenue, but there is no guarantee these approaches will be successful. We may not be successful in future efforts to generate revenue from our new products or services. If our strategic initiatives do not enhance our ability to monetize our existing products and services, enable us to develop new approaches to monetization or meet the expectations of our users or third-party business partners, we may not be able to maintain or grow our revenue or recover any associated development costs and our operating results could be adversely affected.

~~If we fail to effectively manage changes to our business and operations, our business and operating results could be harmed.~~

~~Providing~~ our products and services to our users is costly and we expect certain of our expenses to continue to increase in the future as we broaden our user base and increase user engagement, as users increase the amount of content they contribute, and as we develop and implement new features, products and services that require more infrastructure, in particular our video product features. Historically, our operating expenses, such as our research and development expenses and sales and marketing expenses, have grown each year as we have expanded our business. As a result, our costs have increased each year due to these factors and we expect to continue to incur increasing costs to support our operations. We expect to continue to invest in our infrastructure so that we can provide our products and services rapidly and reliably to users around the world, including in countries where we do not expect significant near-term monetization.

We intend to fully invest in our highest priorities, while eliminating investment in non-core areas. Finding and maintaining the appropriate balance will require significant expenditures and allocation of valuable management resources. If we fail to achieve the necessary level of efficiency in our organization, our business, operating results and financial condition would be harmed.

~~Our business and operating results may be harmed by a disruption in our service, or by our failure to timely and effectively scale and adapt our existing technology and infrastructure.~~

~~One of the reasons people come to Twitter every day is for real-time information.~~products. We have experienced, and may in the future experience, service disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, human or software errors, hardware failure, capacity constraints due to an overwhelming number of people accessing our products and services simultaneously, computer viruses and denial of service or fraud or security attacks. In the past, ~~for example in July 2019,~~ we have experienced brief service outages during which Twitter.com and Twitter mobile clients were inaccessible as a result, in part, of software misconfigurations. Additionally, although we are investing significantly to improve the capacity, capability and reliability of our infrastructure, we are not currently serving traffic equally through our co-located data centers that support our platform. Accordingly, in the event of a significant issue at the data center supporting most of our network traffic, some of our products and services may become inaccessible to the public or the public may experience difficulties accessing our products and services. Any disruption or failure in our infrastructure could hinder our ability to handle existing or increased traffic on our platform, which could significantly harm our business.

The availability of these services are also dependent upon our relationships with third parties, which may change, including if they change their terms of service or policies that diminish the functionality of our products and services, make it difficult for people to access our content, limit our ability to target or measure the effectiveness of ads, impose fees related to our products or services or give preferential treatment to competitive products or services could adversely affect usage of our products and services. Additionally, some of our mobile carriers have experienced infrastructure issues due to natural disasters, which have caused deliverability errors or poor quality communications with our products. Because a majority of people on Twitter access our products and services through mobile devices, we are particularly dependent on the interoperability of our products and services with mobile devices and operating systems in order to deliver our products and services. We ~~utilize third-party cloud computing~~also may not be successful in developing relationships with key participants in the mobile industry or in developing products or services that operate effectively with these operating systems, networks, devices, web browsers and standards. Further, if the number of platforms for which we develop our product expands, it will result in ~~connection~~an increase in our operating expenses. In order to deliver high quality products and services, it is important that our products and services work well with ~~certain aspects~~a range of operating systems, networks, devices, web browsers and standards that we do not control. Any such errors, regardless of whether caused by our infrastructure or that of the service provider, may result in the loss of our existing accounts or may make it difficult to attract new people to Twitter. In the event that it is difficult for people to access and use our products and services, particularly on their mobile devices, our mDAU growth and engagement could be harmed, and our business and ~~operations,~~operating results could be adversely impacted.

Our new products, product features, services and initiatives and changes to existing products, services and initiatives could fail to attract new people to Twitter, content partners, advertisers and platform partners or generate revenue.

Our industry is subject to rapid and frequent changes in technology, evolving customer needs and the frequent introduction by our competitors of new and enhanced offerings. We must constantly assess the playing field and determine whether we need to improve or re-allocate resources amongst our existing products and services or create new ones (independently or in conjunction with third parties). Our ability to increase mDAU and engagement, attract content partners, advertisers and platform partners and generate revenue will depend on those decisions. We may introduce significant changes to our existing products and services or develop and introduce new and unproven products and services, including technologies with which we have little or no prior development or operating experience. We are also continuing our work to increase the stability, performance and scale of our ads platform and our MAP product, and such work will take place over multiple quarters, and any ~~disruption of,~~positive revenue impact will be gradual in its impact. If new or ~~interference with,~~enhanced products, product features or services fail to engage people on Twitter, content partners and advertisers, we may fail to attract or retain mDAU or to generate sufficient revenue or operating profit to justify our ~~use of such cloud services could adversely impact~~investments, and our business, financial condition and ~~operations.~~

operating results would be adversely impacted.

Our business and operating results may be harmed by our failure to timely and effectively scale and adapt our existing technology and infrastructure.

As ~~our user base expands and our users~~accounts generate more content, including photos and videos hosted by Twitter, we may be required to expand and adapt our technology and infrastructure to continue to reliably store, serve and analyze this content. It may become increasingly difficult to maintain and improve the performance of our products and services, especially during peak usage times, as our products and services become more complex and our ~~user~~account traffic increases. In addition, because we lease our data center facilities, we cannot be assured that we will be able to expand our data center infrastructure to meet ~~user~~ demand in a timely manner, or on favorable economic terms. If ~~our users~~people are unable to access Twitter or we are not able to make information available rapidly on Twitter, ~~users~~people may seek other channels to obtain the information, and may not return to Twitter or use Twitter as often in the future, or at all. This would negatively impact our ability to attract ~~users,~~new people to Twitter, content partners and advertisers and increase the frequency of ~~users~~people returning to Twitter. We expect to continue to make significant investments to maintain and improve the capacity, capability and reliability of our infrastructure. To the extent that we do not effectively address capacity constraints, upgrade our systems as needed and continually develop our technology and infrastructure to accommodate actual and anticipated changes in technology, our business and operating results may be ~~harmed~~.

harmed.

We continue to scale the capacity of, and enhance the capability and reliability of, our infrastructure to support ~~user~~mDAU growth and increased activity on our platform. ~~As our user base and the activity on our platform grow, we~~We expect that investments and expenses associated with our infrastructure will continue to ~~grow. These investments and expenses include~~grow, including the expansion and improvement of our data center operations and related operating costs, additional servers and networking equipment to increase the capacity of our infrastructure, increased utilization of third-party cloud computing and associated costs thereof, increased bandwidth costs, and costs to secure our customers’ data. The improvement of our infrastructure requires a significant investment of our management’s time and our financial ~~resources~~.

~~We have incurred significant operating losses in the past, and we may not be able to maintain profitability.~~

Since our inception, we have incurred significant operating losses, and, as of June 30, 2019, we had an accumulated deficit of $143.7 million. Our revenue has grown from $664.9 million in 2013 to $3.04 billion in 2018. While we were profitable on a GAAP basis in the six months ended June 30, 2019 and the year ended 2018, ~~we believe that our future revenue growth and our ability to maintain profitability will depend on, among other factors, our ability to attract new users, increase user engagement and ad engagement,~~ increase our brand awareness, compete effectively, maximize our sales efforts, demonstrate a positive return on investment for advertisers, and successfully develop new products and services. Accordingly, you should not rely on the revenue growth of any prior quarterly or annual period as an indication of our future performance. Our costs may increase in future periods as we continue to expend substantial financial resources on:

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~~our technology infrastructure;~~

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~~research and development for our products and services;~~

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~~sales and marketing;~~

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~~attracting and retaining talented employees;~~

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~~strategic opportunities, including commercial relationships and acquisitions; and~~

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~~general administration, including personnel costs and legal and accounting expenses related to being a public company.~~

These investments may not result in increased revenue or growth in our business. Additionally, certain new revenue products or product features may carry higher costs relative to our other products, which may decrease our margins.resources. If we ~~are unable~~fail to ~~generate adequate revenue growth~~efficiently scale and to manage our ~~expenses, we may incur significant losses in the future~~infrastructure, our business, financial condition and ~~may not~~operating results would be ~~able to maintain profitability.~~

adversely impacted.

If we are unable to maintain and promote our brand, our business and operating results may be harmed.

We believe that maintaining and promoting our brand is critical to ~~expanding our base of users,~~increasing mDAU, content partners and ~~advertisers.~~advertiser spend. Maintaining and promoting our brand will depend largely on our ability to continue to provide timely, useful, reliable and innovative products and services with a focus on a positive ~~user~~ experience on Twitter, which we may not do successfully. We may introduce new features, products, services or terms of service that ~~users,~~people on Twitter, content partners, advertisers or platform partners do not like, which may negatively affect our brand. Additionally, the actions of content partners may affect our brand if ~~users~~people do not have a positive experience using third-party applications or websites integrated with Twitter or that make use of Twitter content. We will also continue to experience media, legislative or regulatory scrutiny of our decisions regarding ~~user~~ privacy, data protection, security, content and other issues, which may adversely affect our reputation and brand. For example, we previously announced our discovery of content (including some advertisements) displayed on our products that may be relevant to government investigations relating to Russian interference in the 2016 U.S. presidential election, which continues to draw media and regulatory scrutiny of our actions with respect to such content. Our brand may also be negatively affected by the actions of ~~users~~people that are hostile or inappropriate to other people, by ~~users~~accounts impersonating other people, by ~~users~~accounts identified as spam, by use or perceived use, directly or indirectly, of our products or services by ~~users~~people (including governments and government-sponsored actors) to disseminate information that may be viewed as misleading (or intended to manipulate ~~the opinions of our users)~~people's opinions), by ~~users~~accounts introducing excessive amounts of spam on our platform, by third parties obtaining control over ~~users’~~people's accounts or by other security or cybersecurity incidents. For example, certain actions taken by a social media marketing company in the past to sell followers and engagement, which were in violation of our policies, drew media and regulatory scrutiny on us. Maintaining and enhancing our brand may require us to make substantial investments and these investments may not achieve the desired goals. If

Additionally, we ~~fail to successfully promote~~ and ~~maintain~~ our ~~brand or if we incur excessive expenses in this effort, our business and operating results could be adversely affected~~.

~~Negative publicity could adversely affect our reputation, our business and operating results.~~

Weexecutive leadership receive a high degree of media coverage around the world. Negative publicity about our company or executives, including about the quality and reliability of our products or of content shared on our platform, changes to our products, policies and services, our privacy, data protection, policy enforcement and security practices (including actions taken or not taken with respect to certain ~~users or~~ accounts or reports regarding government surveillance), litigation, regulatory activity, the actions of ~~our users~~certain accounts (including actions taken by prominent ~~users~~accounts on our platform or the dissemination of information that may be viewed as misleading or ~~as intended to manipulate the opinions of our users)~~manipulative), ~~or user experience with our products and services,~~ even if inaccurate, could adversely affect our ~~reputation~~reputation. Such negative publicity and ~~the~~reputational harm could adversely affect mDAU and their confidence in and ~~the use of~~loyalty to our ~~products and services. Such negative publicity could also have an adverse effect on the size, engagement and loyalty of our user base~~platform and result in decreased revenue or increased costs to reestablish our brand, which ~~could~~would adversely ~~affect~~impact our business, financial condition and operating ~~results~~results.

Spam and fake accounts could diminish the ~~user~~ experience on our platform, which could damage our reputation and deter ~~our current and potential users~~people from using our products and ~~services~~.

services.

“Spam” on Twitter refers to a range of abusive activities that are prohibited by our terms of service and is generally defined as unsolicited, repeated actions that negatively impact other ~~users~~people with the general goal of drawing ~~user~~ attention to a given account, site, product or idea. This includes posting large numbers of unsolicited mentions of ~~a user,~~an account, duplicate Tweets, malicious automation, misleading links (e.g., to malware or “click-jacking” pages) or other false or misleading content, and aggressively following and un-following accounts, adding ~~users~~accounts to lists, sending invitations, Retweeting and liking Tweets to inappropriately attract attention. Our terms of service also prohibit the creation of serial or bulk accounts, both manually or using automation, for disruptive or abusive purposes, such as to Tweet spam or to artificially inflate the popularity of ~~users~~accounts seeking to promote themselves on Twitter. Although we continue to invest resources to reduce spam and fake accounts on Twitter, which includes our investments to improve the health of the public conversation on Twitter, we expect spammers will continue to seek ways to act inappropriately on our platform. In addition, we expect that increases in the number of ~~users~~accounts on our platform will result in increased efforts by spammers to misuse our platform. We continuously combat spam and fake accounts, including by suspending or terminating accounts we believe to be spammers and launching algorithmic changes focused on curbing abusive activities. Our actions to combat spam and fake accounts require significant resources and time. If spam and fake accounts increase on Twitter, this could hurt our reputation for delivering relevant content or reduce ~~user~~mDAU growth rate and ~~user~~mDAU engagement and result in continuing operational cost to us.

~~Action by governments to restrict access to~~us.

Our products may contain errors or our security measures may be breached, resulting in the exposure of private information. Our products and services ~~or censor Twitter content could harm our business and operating results.~~

~~Governments~~ have sought, and may in the future seek, to censor content available through our products and services, restrict access to our products and services from their country entirely or impose other restrictions that may affect the accessibility of our products and services for an extended period of time or indefinitely. For example, domestic Internet service providers in China have blocked access to Twitter, and other countries, including Iran, Libya, Pakistan, Turkey and Syria, have intermittently restricted access to Twitter, and we believe that access to Twitter has been blocked in these countries primarily for political reasons. In addition, governments in these or other countries may seek to restrict access to our products and services based on our decisions around user content, providing user information in response to governmental requests, or other matters. In the event that access to our products and services is restricted, in whole or in part, in one or more countries or our competitors are able to successfully penetrate geographic markets that we cannot access, our ability to retain or increase our user base and user engagement may be ~~adversely affected, and our operating results may be harmed~~.

If ~~our security measures are breached, or if our products and services are~~ subject to attacks that degrade or deny the ability of ~~users~~people to access our products and ~~services,~~services. These issues may result in the perception that our products and services ~~may be perceived as~~are not ~~being~~ secure, ~~users~~and people on Twitter and advertisers may curtail or stop using our products and services and our business and operating results could be ~~harmed~~.

harmed.

Our products and services involve the storage and transmission of ~~users’~~people's and advertisers’ information, and security ~~breaches~~incidents, including those caused by unintentional errors and those intentionally caused by third parties, may expose us to a risk of loss of this information, litigation, increased security costs and potential liability. We ~~also work with third-party vendors to process credit card payments by our customers and are subject to payment card association operating rules. We~~ and our third-party service providers experience cyber-attacks of varying degrees on a regular basis. We expect to incur significant costs in an effort to detect and prevent security breaches and other security-related incidents, and we may face increased costs in the event of an actual or perceived security breach or other security-related incident. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed, people on Twitter and our advertisers may be harmed, lose trust and confidence in us, decrease the use of our products and services or stop using our products and services in their entirety. We may also incur significant legal and financial exposure, including legal claims, higher transaction fees and regulatory fines and penalties. Any of these actions could have a material and adverse effect on our business, reputation and operating results. While our insurance policies include liability coverage for certain of these matters, if we experienced a significant security incident, we could be subject to liability or other damages that exceed our insurance coverage.

services. Any errors, bugs or vulnerabilities discovered in our code after release could result in damage to our reputation, loss of accounts, loss of content or platform partners, loss of advertisers or advertising revenue or liability for damages or other relief sought in lawsuits, regulatory inquiries or other proceedings, any of which could adversely impact our business and operating results.

Our products operate in conjunction with, and we are dependent upon, third-party products and components across a broad ecosystem. ~~Additionally, the~~If there is a security vulnerability, error, or other bug in one of these third-party products or components and if there is a security exploit targeting them, we could face increased costs, liability claims, reduced revenue, or harm to our reputation or competitive position. The natural sunsetting of third-party products and operating systems that we use requires that our infrastructure teams reallocate time and attention to migration and updates, during which period potential security vulnerabilities could be exploited. ~~If there is a security vulnerability (such as the Spectre~~We also work with third-party vendors to process credit card payments by our customers and ~~Meltdown vulnerabilities) in one of these components and if there is a security exploit targeting it, we could face increased costs, liability claims, reduced revenue, or harm~~are subject to ~~our reputation or competitive position.~~

~~Third~~payment card association operating rules.

Unauthorized parties may also gain access to Twitter ~~user names~~handles and passwords without attacking Twitter directly and, instead, access people’s accounts by ~~combining~~using credential information from other recent breaches, using malware on victim machines that are stealing passwords for all sites, or a combination of both. In addition, some of our developers or other partners, such as third-party applications to which ~~our users~~people have given permission to Tweet on their behalf, may receive or store information provided by us or by ~~our users~~people on Twitter through mobile or web applications integrated with us. If these third parties or developers fail to adopt or adhere to adequate data security practices, or in the event of a breach of their networks, our data or ~~our users'~~ data of people on Twitter may be improperly accessed, used, or disclosed.

~~As a result, unauthorized~~ Unauthorized parties have obtained, and may in the future obtain, access to our data, data of people on Twitter or our ~~users’ or~~ advertisers’ data. In addition, a breach of a third-party application that has been trusted by a user could result in the account issuing Tweets, Likes, Retweets, or Direct Messages without such user’s knowledge or consent. Any systems failure or actual or perceived compromise of our security that results in the unauthorized access to or release of data of people on Twitter or our ~~users’ or~~ advertisers’ data, such as credit card data, could significantly limit the adoption of our products and services, as well as harm our reputation and brand and, therefore, our business.

Our security measures may also be breached due to employee error, malfeasance or otherwise. Additionally, outside parties may attempt to fraudulently induce employees, ~~users~~people on Twitter, or advertisers to disclose sensitive information in order to gain access to our data, ~~or our users’~~data of people on Twitter or advertisers’ data, ~~or accounts,~~ or may otherwise obtain access to such data or accounts. Since people on Twitter and our ~~users and~~ advertisers may use ~~their~~ Twitter ~~accounts~~ to establish and maintain online identities, unauthorized communications from Twitter accounts that have been compromised may damage their personal security, reputations and brands as well as our reputation and brand. Because the techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. We expect to incur significant costs in an effort to detect and prevent security breaches and other security-related incidents, and we may face increased costs in the event of an actual or perceived security breach or other security-related incident. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed, our users and advertisers may be harmed, lose trust and confidence in us, decrease the use of our products and services or stop using our products and services in their entirety. We may also incur significant legal and financial exposure, including legal claims, higher transaction fees and regulatory fines and penalties. Any of these actions could have a material and adverse effect on our business, reputation and operating results.

While our insurance policies include liability coverage for certain of these matters, if we experienced a significant security incident, we could be subject to liability or other damages that exceed our insurance coverage.

~~Our future performance depends in part on support from our content partners and data partners.~~

~~We believe~~ user engagement with our products and services depends in part on the availability of applications and content generated by our content or platform partners. There is no assurance that our content or platform partners will continue to develop and maintain applications and content for our products and services, and if they cease to, then user engagement may decline. In addition, we generate revenue from licensing our historical and real-time data to third parties. If any of these relationships are terminated or not renewed on economic and other terms that are acceptable to us, or if we are unable to enter into similar relationships in the future, our operating results could be adversely affected.

Our international operations are subject to increased challenges and risks.

We have offices around the world and our products and services are available in multiple languages. However, our ability to manage our business, monetize our products and services and conduct our operations internationally requires considerable management attention and resources and is subject to the particular challenges of supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal and regulatory systems, alternative dispute systems and commercial markets. Our international operations have required and will continue to require us to invest significant funds and other resources. Operating internationally subjects us to new risks and may increase risks that we currently face, including risks associated with:

•recruiting and retaining talented and capable employees in foreign countries and maintaining our company culture across all of our offices;

•providing our products and services and operating across a significant distance, in different languages and among different cultures, including the potential need to modify our products, services, content and features to ensure that they are culturally relevant in different countries;

•increased competition from largely regional websites, mobile applications and services that provide real-time communications and have strong positions in particular countries, which have expanded and may continue to expand their geographic footprint;

•differing and potentially lower levels of mDAU growth, engagement and ad engagement in new and emerging geographies;

•different levels of advertiser demand, including fluctuations in advertiser demand due to regional activities, regional economic effects of the COVID-19 pandemic and political upheaval;

•greater difficulty in monetizing our products and services, including costs to adapt our products and services in light of the manner in which people access Twitter in such jurisdictions, such as the use of feature phones in certain emerging markets such as India and Pakistan, and challenges related to different levels of Internet access or mobile device adoption in different jurisdictions;

•compliance with applicable foreign laws and regulations, including laws and regulations with respect to privacy, data protection, data localization, data security, taxation, consumer protection, copyright, fake news, hate speech, spam and content, and the risk of penalties to the people who use our products and services and individual members of management if our practices are deemed to be out of compliance;

•actions by governments or others to restrict access to Twitter or censor content on Twitter, such as how domestic Internet service providers in China have blocked access to Twitter and other countries, including Iran, Libya, Pakistan, Turkey and Syria, have intermittently restricted access to Twitter, whether these actions are taken for political reasons, in response to decisions we make regarding governmental requests or content generated by people on Twitter, or otherwise;

•longer payment cycles in some countries;

•credit risk and higher levels of payment fraud;

•operating in jurisdictions that do not protect intellectual property rights to the same extent as the United States;

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~~recruiting and retaining talented and capable employees in foreign countries and maintaining our company culture across all of our offices;~~

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providing our products and services and operating across a significant distance, in different languages and among different cultures, including the potential need to modify our products, services, content and features to ensure that they are culturally relevant in different countries;

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increased competition from largely regional websites, mobile applications and services that provide real-time communications and have strong positions in particular countries, which have expanded and may continue to expand their geographic footprint;

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~~differing and potentially lower levels of user growth, user engagement and ad engagement in new and emerging geographies;~~

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~~different levels of advertiser demand;~~

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~~greater difficulty in monetizing our products and services;~~

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compliance with applicable foreign laws and regulations, including laws and regulations with respect to privacy, data security, consumer protection, copyright, fake news, hate speech, spam and content, and the risk of penalties to our users and individual members of management if our practices are deemed to be out of compliance;

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~~burdens of complying with various foreign laws, including laws related to taxation, content removal, data localization, and regulatory oversight;~~

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~~longer payment cycles in some countries;~~

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~~credit risk and higher levels of payment fraud;~~

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~~operating in jurisdictions that do not protect intellectual property rights to the same extent as the United States;~~

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compliance with anti-bribery laws including, without limitation, compliance with the Foreign Corrupt Practices Act and the U.K. Bribery Act, including by our business partners;

•currency exchange rate fluctuations, as we conduct business in currencies other than U.S. dollars but report our operating results in U.S. dollars and any foreign currency forward contracts into which we enter may not mitigate the impact of exchange rate fluctuations;

•foreign exchange controls that might require significant lead time in setting up operations in certain geographic territories and might prevent us from repatriating cash earned outside the United States;

•political and economic instability in some countries;

•double taxation of our international earnings and potentially adverse tax consequences due to changes in the tax laws of the United States or the foreign jurisdictions in which we operate; and

•higher costs of doing business internationally, including increased accounting, travel, infrastructure and legal compliance costs.

If our revenue from our international operations, and particularly from our operations in the countries and regions where we have focused our spending, does not exceed the expense of establishing and maintaining these operations, our business and operating results will suffer. In addition, mDAU may grow more rapidly than revenue in international regions where our monetization of our products and services is not as developed. For example, average mDAU outside the United States constituted 80% of our average mDAU in the three months ended March 31, 2020, but our international revenue, as determined based on the billing location of our customers, was approximately 42% of our consolidated revenue in the three months ended March 31, 2020. Our inability to successfully expand our business, ~~partners;~~

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~~currency exchange rate fluctuations;~~

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foreign exchange controls that might require significant lead time in setting up operations in certain geographic territories and might prevent us from repatriating cash earned outside the United States;

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~~political and economic instability in some countries;~~

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~~double taxation of our international earnings and potentially adverse tax consequences due to changes in the tax laws of the United States or the foreign jurisdictions in which we operate; and~~

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~~higher costs of doing business internationally, including increased accounting, travel, infrastructure and legal compliance costs.~~

~~If we are unable to~~ manage the complexity of our global operations ~~successfully,~~or monetize our products and services internationally could adversely impact our business, financial condition and operating ~~results could be adversely affected.~~

results.

Our business is subject to complex and evolving U.S. and foreign laws and regulations. These laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties, increased cost of operations or declines in ~~user~~mDAU growth, ~~user~~mDAU engagement or ad engagement, or otherwise harm our ~~business~~.

business.

We are subject to a variety of laws and regulations in the United States and abroad that involve matters central to our business, including privacy, data protection, security, rights of publicity, ~~data protection,~~ content regulation, intellectual property, competition, protection of minors, consumer protection, credit card processing and taxation. Many of these laws and regulations are still evolving and being tested in courts. As a result, it is possible that these laws and regulations may be interpreted and applied in a manner that is inconsistent from country to country and inconsistent with our current policies and practices and in ways that could harm our business, particularly in the new and rapidly evolving industry in which we operate. Additionally, the introduction of new products or services may subject us to additional laws and regulations.

From time to time, governments, regulators and others have expressed concerns about whether our products, services or practices compromise the privacy or data protection rights of ~~users~~the people on Twitter and others. While we strive to comply with applicable privacy and data protection laws and regulations, ~~as well as~~ our ~~own posted~~ privacy policies and other obligations we may have with respect to privacy and data protection, the failure or perceived failure to so comply may result, and in some cases has resulted, in inquiries and other proceedings or actions against us by governments, regulators or others. A number of proposals have recently been adopted or are currently pending before federal, state and foreign legislative and regulatory bodies that could significantly affect our business. For example, ~~in June 2018 California enacted legislation,~~ the California Consumer Privacy Act or("CCPA") went into effect on January 1, 2020. The CCPA ~~that will,~~requires, among other things, ~~require~~ covered companies to provide new disclosures to California consumers and afford such consumers new abilities to opt-out of certain sales of personal ~~information, when it goes into effect on January 1, 2020. The~~information. Similar legislation has been proposed or adopted in other states. Aspects of the CCPA ~~was amended~~and these other state laws and regulations, as well as their enforcement, remain unclear, and we may be required to modify our practices in ~~September 2018, and it remains unclear what, if any, modifications will be made~~an effort to ~~this legislation or how it will be interpreted.~~comply with them. Moreover, foreign data protection, privacy, consumer protection, content regulation and other laws and regulations are often more restrictive or burdensome than those in the United States. In particular, the European Union, or EU, and its member states traditionally have taken broader views as to types of data that are subject to privacy and data protection, and have imposed greater legal obligations on companies in this regard. For example, the GDPR ~~went into effect in May 2018. The GDPR includes more~~imposes stringent operational requirements for entities processing personal information and significant penalties for non-compliance, including fines of up to €20 million or 4% of total worldwide revenue, whichever is higher. Additionally, we rely on a variety of legal bases to transfer certain personal information outside of the European Economic Area, including the EU-U.S. Privacy Shield Framework, the Swiss-U.S. Privacy Shield Framework, and EU Standard Contractual Clauses, or SCCs. ~~The EU-U.S. Privacy Shield Framework is currently under review by regulatory authorities~~These legal bases all have been, and ~~it and the SCCs are both~~may be, the subject of legal challenges ~~in European courts. As a result of these legal challenges, the EU-U.S. Privacy Shield Framework~~ and ~~the SCCs~~they may be modified or invalidated. ~~The absence of successor legal bases for continued data transfer~~This could ~~require~~result in us being required to ~~create~~implement duplicative, and potentially expensive, information technology infrastructure and business operations in Europe or could limit our ability to collect ~~and use~~or process personal information ~~collected~~ in Europe. Any of these changes with respect to EU data protection law could disrupt our ~~business~~.

business.

Further, following a referendum in June 2016 in which ~~voters in the~~ United Kingdom (“UK”) voters approved an exit from the EU, the ~~United Kingdom government has initiated~~UK officially left the EU on January 31, 2020, with a ~~process~~transitional period set to ~~leave the EU~~end on December 31, 2020 (often referred to as ~~“Brexit”~~"Brexit")~~, which is now expected~~. The effect of Brexit will depend on agreements, if any, the UK makes to ~~occur by the end of October 2019.~~retain access to EU markets. Brexit ~~could lead to~~creates economic and legal uncertainty in the region and could adversely affect the tax, currency, operational, legal and regulatory regimes to which our business is subject. Brexit may adversely affect our revenues and subject us to new regulatory costs and challenges, in addition to other adverse effects that we are unable effectively to anticipate.

The ~~United Kingdom~~UK implemented a Data Protection ~~Bill~~Act, effective in May 2018 and statutorily amended in 2019, that substantially implements the ~~GDPR, which became law in May 2018.~~GDPR. Brexit has created uncertainty with regard to ~~whether the EU will view the UK data protection regulation as adequate under GDPR. Until that is resolved,~~ the requirements for data transfers between the ~~United Kingdom~~UK and the EU ~~are unclear.~~

and other jurisdictions.

Legislative changes in the United States, at both the federal and state level, that could impose new obligations in areas such as privacy and liability for copyright infringement or content by third parties such as various Congressional efforts to restrict the scope of the protections available to online platforms under Section 230 of the Communications Decency Act, and our current protections from liability for third-party content in the United States could decrease or change. Additionally, recent amendments to U.S. patent laws may affect the ability of companies, including us, to protect their innovations and defend against claims of patent infringement.

In April 2019, the EU passed the Directive on Copyright in the Digital Single Market (the EU Copyright Directive), which expands the liability of online platforms for user-generated content. Each EU member state has two years to implement it. The EU Copyright Directive may increase our costs of operations, our liability for user-generated content, and our litigation costs.

Additionally, we have relationships with third parties that perform a variety of functions such as payments processing, tokenization, vaulting, currency conversion, fraud prevention and data security audits. The laws and regulations related to online payments and other activities of these third parties, including those relating to the processing of data, are complex, subject to change, and vary across different jurisdictions in the United States and globally. As a result, we may be required to spend significant time, effort and expense to comply with applicable laws and regulations. Any failure or claim of our failure to comply, or any failure or claim of failure by the above-mentioned third parties to comply, could increase our costs or could result in liabilities. Additionally, because ~~Twitter accepts~~we accept payment via credit cards, ~~and is certified as a PCI Level 1 service provider,~~ we are subject to ~~payment card association~~global payments industry operating rules and certification requirements governed by PCI Security Standards Council, including the Payment Card Industry Data Security Standard.

Any failure by us to comply with these operating rules and certification requirements also may result in costs and liabilities and may result in us losing our ability to accept certain payment cards.

The U.S. and foreign laws and regulations described above, as well as any associated inquiries or investigations or any other regulatory actions, may be costly to comply with and may delay or impede the development of new products and services, result in negative publicity, increase our operating costs, require significant management time and attention, and subject us to remedies that may result in a loss of mDAU or advertisers and otherwise harm our business, including fines or demands or orders that we modify or cease existing business practices.

We currently allow use of our platform without the collection of extensive personal ~~information, such as age.~~information. We may experience additional pressure to expand our collection of personal information in order to comply with new and additional legal or regulatory demands or we may independently decide to do so. If we obtain such additional personal information, we may be subject to additional ~~regulation.~~

legal or regulatory obligations.

Regulatory investigations and settlements could cause us to incur additional expenses or change our business practices in a manner ~~materially~~material and adverse to our business.

From time to time we notify the Irish Data Protection Commission and other regulators of certain personal data breaches and privacy or data protection issues, and are subject to inquiries and investigations regarding various aspects of our regulatory compliance. We are currently the subject of inquiries by the Irish Data Protection Commission with respect to our compliance with the ~~GDPR~~GDPR. In the past, we have been subject to regulatory investigations, and we expect to continue to be subject to regulatory scrutiny as our business grows and awareness of our brand ~~increases, In the past, we have been subject to regulatory investigations, and expect to continue to be subject to regulatory scrutiny as our business grows and awareness of our brand~~ increases.

In March 2011, to resolve an investigation into various incidents, we entered into a settlement agreement with the FTC that, among other things, required us to establish an information security program designed to protect non-public consumer information and also requires that we obtain biennial independent security assessments. The obligations under the settlement agreement remain in effect until the later of March 2, 2031, or the date 20 years after the date, if any, on which the U.S. government or the FTC files a complaint in federal court alleging any violation of the order. We expect to continue to be the subject of regulatory inquiries, investigations and audits in the future by the FTC and other regulators around the world.

It is possible that a regulatory inquiry, investigation or audit ~~might result in changes to our policies or practices, and may~~could cause us to incur substantial fines and costs, ~~or could~~ result in reputational harm, prevent us from offering certain products, services, features or functionalities, ~~cause us to incur substantial costs or~~ require us to change our policies or practices, divert management and other resources from our business, ~~practices in a manner materially adverse to~~or otherwise adversely impact our business. Violation of existing or future regulatory orders, settlements or consent decrees could subject us to substantial ~~monetary~~ fines and other penalties that ~~could negatively affect~~would adversely impact our financial condition and operating results.

We may face lawsuits or incur liability as a result of content published or made available through our products and services.

We have faced and will continue to face claims relating to content that is published or made available through our products and services or third-party products or services. In particular, the nature of our business exposes us to claims related to defamation, intellectual property rights, rights of publicity and privacy, illegal content, misinformation, content regulation and personal injury torts. The laws relating to the liability of providers of online products or services for activities of ~~their users~~the people who use them remains somewhat unsettled, both within the United States and internationally. This risk may be enhanced in certain jurisdictions outside the United States where we may be less protected under local laws than we are in the United States. For example, we are subject to legislation in Germany that may impose significant fines for failure to comply with certain content removal and disclosure obligations. Other countries, including Singapore, India, Australia, and the United Kingdom, have implemented or are considering similar legislation imposing penalties for failure to remove certain types of content. In addition, the public nature of communications on our ~~network~~platform exposes us to risks arising from the creation of impersonation accounts intended to be attributed to people on Twitter or our ~~users or~~ advertisers. We could incur significant costs investigating and defending these claims. If we incur material costs or liability as a result of these occurrences, our business, financial condition and operating results ~~could~~would be adversely ~~affected~~.

impacted.

Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services and brand.

~~Our~~

Intellectual property rights are important assets of our business and we seek protection for such rights as appropriate. To establish and protect our trade secrets, trademarks, copyrights, and patents as well as restrictions in confidentiality, license and ~~other~~ intellectual property ~~rights are important assets. We rely on, and expect to continue to rely on, a combination of confidentiality and license~~assignment agreements we enter into with our employees, consultants and third ~~parties with whom we have relationships, as well as trademark, trade dress, domain name, copyright, trade secret~~parties. Various circumstances and ~~patent laws, to protect our brand and other intellectual property rights. However, various~~ events outside of our control, however, pose ~~a threat~~threats to our intellectual property ~~rights, as well as to our products, services and technologies. For example, we~~rights. We may fail to obtain effective intellectual property protection, or effective intellectual property protection may not be available in every country in which our products and services are ~~available.~~available, or such laws may provide only limited protection. Also, the efforts we have taken to protect our intellectual property rights may not be sufficient or effective, and any of our intellectual property rights may be challenged, circumvented, infringed or misappropriated which could result in them being narrowed in scope or declared invalid or unenforceable. There can be no assurance our intellectual property rights will be sufficient to protect against others offering products or services that are substantially similar to ours and compete with our business.

We rely on non-patented proprietary information and technology, such as trade secrets, confidential information, know-how and technical information. While in certain cases we have agreements in place with employees and third parties that place restrictions on the use and disclosure of ~~this intellectual property, these~~our trade secrets and other proprietary information contained in agreements we sign with our employees, contractors, and other third parties to limit and control access to and disclosure of our trade secrets and confidential information. These agreements may be breached, or this intellectual property may otherwise be disclosed or become known to our competitors, including through hacking or theft, which could cause us to lose any competitive advantage resulting from ~~this intellectual property.~~

these trade secrets and proprietary information.

We are pursuing registration of trademarks and domain names in the United States and in certain jurisdictions outside of the United States. Effective protection of trademarks and domain names is expensive and difficult to maintain, both in terms of application and registration costs as well as the costs of defending and enforcing those rights. We may be required to protect our rights in an increasing number of countries, a process that is expensive and may not be successful or which we may not pursue in every country in which our products and services are distributed or made available.

We are party to numerous agreements that grant licenses to third parties to use our intellectual ~~property, including our trademarks.~~property. For example, many third parties distribute their content through Twitter, or embed Twitter content in their applications or on their websites, and make use of our trademarks in connection with their services. If the licensees of our trademarks are not using our trademarks properly, it may limit our ability to protect our trademarks and could ultimately result in our trademarks being declared invalid or unenforceable. We have a policy designed to assist third parties in the proper use of our ~~brand,~~ trademarks, and ~~other assets, and we have~~ an internal team dedicated to enforcing ~~our~~this policy and protecting our brand. ~~Our brand protection~~This team routinely ~~receives and~~ reviews reports of improper and unauthorized use of the Twitter ~~brand,~~ trademarks ~~or assets~~ and issues takedown notices or initiates discussions with the third parties to correct the issues. However, there can be no assurance that we will be able to protect against the unauthorized use of our brand or trademarks. If the licensees of our trademarks ~~or other assets. If~~are not using our trademarks properly and we fail to maintain and enforce our trademark rights, we may limit our ability to protect our trademarks which could result in diminishing the value of our brand ~~could be diminished.~~or in our trademarks being declared invalid or unenforceable. There is also a risk that one or more of our trademarks could become generic, which could result in ~~them~~such trademark being declared invalid or unenforceable. For example, there is a risk that the word “Tweet” could become so commonly used that it becomes synonymous with any short comment posted publicly on the Internet, and if this happens, we could lose protection of this trademark.

We also seek to obtain patent protection for some of our technology. We may be unable to obtain patent protection for our ~~technologies, and~~technologies. Even if patents are issued from our patent applications, which is not certain, our existing patents, and any patents that may be issued in the future, may not provide us with competitive advantages or distinguish our products and services from those of our competitors. In addition, any patents may be contested, circumvented, or found unenforceable or invalid, and we may not be able to prevent third parties from infringing or otherwise violating them. Effective protection of patent rights is expensive and difficult to maintain, both in terms of application and maintenance costs, as well as the costs of defending and enforcing those rights.

Our Innovator’s Patent Agreement, or IPA, also can limit our ability to prevent infringement of our patents. In May 2013, we implemented the IPA, which we enter into with our employees and consultants, including our founders. The IPA, which applies to our current and future patents, allows us to assert our patents defensively. The IPA also allows us to assert our patents offensively with the permission of the inventors of the applicable patent. Under the IPA, an assertion of claims is considered to be for a defensive purpose if the claims are asserted: (i) against an entity that has filed, maintained, threatened or voluntarily participated in a patent infringement lawsuit against us or any people on Twitter, or any of our ~~users,~~ affiliates, customers, suppliers or distributors; (ii) against an entity that has used its patents offensively against any other party in the past ten years, so long as the entity has not instituted the patent infringement lawsuit defensively in response to a patent litigation threat against the entity; or (iii) otherwise to deter a patent litigation threat against us or people on Twitter, or any of our ~~users,~~ affiliates, customers, suppliers or distributors. In addition, the IPA provides that the above limitations apply to any future owner or exclusive licensee of any of our patents, which could limit our ability to sell or license our patents to third parties. ~~While~~In this case, while we may be able to claim protection of our intellectual property under other rights ~~such~~(such as trade secrets or contractual obligations with our employees not to disclose or use confidential ~~information,~~information), we may be unable to assert our patent rights against third parties that we believe are infringing our patents, even if such third parties are developing products and services that compete with our products and services. For example, in the event that an inventor of one of our patents ~~leaves us~~goes to work for another company and that company uses ~~our~~the inventor’s patented ~~technology~~invention to compete with us, we would not be able to assert that patent against such other company unless the assertion of the patent right is for a defensive ~~purpose.~~purpose since it would be unlikely the employee would consent to offensive use of the patent against his or her current employer. In such event, we ~~may be limited in our ability to assert a patent right against another company, and instead~~ would need to rely on trade secret protection or the contractual obligation of the inventor to us not to disclose or use our confidential information. In addition, the terms of the IPA could affect our ability to monetize our intellectual property portfolio.

Significant impairments of our intellectual property rights, and limitations on our ability to assert our intellectual property rights against others, could harm our business and our ability to compete.

Also, obtaining, maintaining and enforcing our intellectual property rights is costly and time consuming. Any increase in the unauthorized use of our intellectual property ~~could make it more expensive to do~~would adversely impact our business, financial condition and ~~harm our~~ operating results.

We are currently, and expect to be in the future, party to intellectual property rights claims that are expensive and time consuming to defend, and, if resolved adversely, ~~could have a significant~~would adversely impact on our business, financial condition orand operating results.

Companies in the internet, technology and media industries are subject to litigation based on allegations of infringement, misappropriation or other violations of intellectual property ~~or other~~ rights. Many companies in these industries, including many of our competitors, have substantially larger patent and intellectual property portfolios than we do, which could make us a target for litigation as we may not be able to assert counterclaims against parties that sue us for patent, or other intellectual property infringement. In addition, various “non-practicing entities” that own patents and other intellectual property rights often attempt to assert claims in order to extract value from technology companies. From time to time we receive claims from third parties which allege that we have infringed upon their intellectual property rights. Further, from time to time we may introduce new products, product features and services, including in areas where we currently do not have an offering, which could increase our exposure to patent and other intellectual property claims from competitors and non-practicing entities. In addition, although our standard terms and conditions for our Promoted Products and public APIs do not provide advertisers and platform partners with indemnification for intellectual property claims against them, some of our agreements with advertisers, content partners, platform partners and data partners require us to indemnify them for certain intellectual property claims against them, which could require us to incur considerable costs in defending such claims, and may require us to pay significant damages in the event of an adverse ruling. Such advertisers, content partners, platform partners and data partners may also discontinue use of our products, services and technologies as a result of injunctions or otherwise, which could result in loss of revenue and adversely impact our business.

We presently are involved in a number of intellectual property lawsuits, and as we face increasing competition and develop new products, we expect the number of patent and other intellectual property claims against us may grow. There may be intellectual property or other rights held by others, including issued or pending patents, that cover significant aspects of our products and services, and we cannot be sure that we are not infringing or violating, and have not infringed or violated, any third-party intellectual property rights or that we will not be held to have done so or be accused of doing so in the future. Any claim or litigation alleging that we have infringed or otherwise violated intellectual property or other rights of third parties, with or without merit, and whether or not settled out of court or determined in our favor, could be time-consuming and costly to address and resolve, and could divert the time and attention of our management and technical personnel. Some of our competitors have substantially greater resources than we do and are able to sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of time than we could. The outcome of any litigation is inherently uncertain, and there can be no assurances that favorable final outcomes will be obtained in all cases. In addition, plaintiffs may seek, and we may become subject to, preliminary or provisional rulings in the course of any such litigation, including potential preliminary injunctions requiring us to cease some or all of our operations. We may decide to settle such lawsuits and disputes on terms that are unfavorable to us. Similarly, if any litigation to which we are a party is resolved adversely, we may be subject to an unfavorable judgment that may not be reversed upon appeal. The terms of such a settlement or judgment may require us to cease some or all of our operations or pay substantial amounts to the other party. In addition, we may have to seek a license to continue practices found to be in violation of a third-party’s rights. If we are required, or choose to enter into royalty or licensing arrangements, such arrangements may not be available on reasonable terms, or at all, and may significantly increase our operating costs and expenses. As a result, we may also be required to develop or procure alternative non-infringing technology, which could require significant effort and expense or discontinue use of the technology. An unfavorable resolution of the disputes and litigation referred to above ~~could~~would adversely ~~affect~~impact our business, financial condition and operating results.

We have incurred significant operating losses in the past, and we may not be able to maintain profitability or accurately predict fluctuations in our operating results from quarter to quarter.

In the past we have incurred significant operating losses. While we were profitable on a GAAP basis for 2018 and 2019, our quarterly operating results have fluctuated in the past and will fluctuate in the future. As a result, our past quarterly operating results are not necessarily indicators of future performance. Our operating results in any given quarter can be influenced by numerous factors, many of which we are unable to predict or are outside of our control, including:

•our ability to attract and retain mDAU, advertisers, content partners and platform partners;

•the occurrence of planned significant events, such as major sporting events, political elections, or awards shows, or unplanned significant events, such as natural disasters and political revolutions, as well as seasonality which may differ from our expectations;

•the impacts of the COVID-19 pandemic and governmental and business actions in response thereto on the global economy;

•the pricing of our advertising services or data licensing, and our ability to maintain or improve revenue and margins;

•the development and introduction of new products or services, changes in features of existing products or services or de-emphasis or termination of existing products, product features or services;

•the actions of our competitors;

•increases in research and development, marketing and sales and other operating expenses that we may incur to grow and expand our operations and to remain competitive, including stock-based compensation expense and costs related to our technology infrastructure;

•costs related to the acquisition of businesses, talent, technologies or intellectual property, including potentially significant amortization costs;

•system failures resulting in the inaccessibility of our products and services;

•actual or perceived breaches of security or privacy, and the costs associated with remediating any such breaches;

•adverse litigation judgments, settlements or other litigation-related costs, and the fees associated with investigating and defending claims;

•changes in the legislative or regulatory environment, including with respect to security, tax, privacy, data protection, or content, or enforcement by government regulators, including fines, orders or consent decrees;

•changes in reserves or other non-cash credits or charges, such as releases of deferred tax assets valuation allowance, impairment charges or purchase accounting adjustments;

•changes in our expected estimated useful life of property and equipment and intangible assets;

•fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in foreign currencies;

•changes in U.S. generally accepted accounting principles; and

•changes in global or regional business or macroeconomic conditions.

Given the rapidly evolving markets in which we compete, our historical operating results may not be useful to you in predicting our future operating results. If our revenue growth rate slows, we expect that the seasonality in our business may become more pronounced and may in the future cause our operating results to fluctuate. For example, advertising spending is traditionally seasonally strong in the fourth quarter of each year, and we believe that this seasonality affects our quarterly results, which generally reflect higher sequential advertising revenue growth from the third to fourth quarter compared to sequential advertising revenue growth from the fourth quarter to the subsequent first quarter. Additionally, certain new revenue products or product features may carry higher costs relative to our other products, which may decrease our margins, and we may incur increased costs to scale our operations if mDAU and engagement on our platform increase. If we are unable to generate adequate revenue growth and to manage our expenses, we may incur significant losses in future periods and may not be able to maintain profitability.

Many of our products and services contain open source software, and we license some of our software through open source projects, which may pose particular risks to our proprietary software, products, and services in a manner that could ~~have a negative effect on~~adversely impact our business.

We use open source software in our products and services and will use open source software in the future. In addition, we regularly contribute software source code to open source projects under open source licenses or release internal software projects under open source licenses, and anticipate doing so in the future. The terms of many open source licenses to which we are subject have not been interpreted by U.S. or foreign courts, and there is a risk that open source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide or distribute our products or services. Additionally, under some open source licenses, if we ~~may from time to time face claims from~~combine our proprietary software with open source software in a certain manner, third parties ~~claiming~~may claim ownership of, or ~~demanding~~demand release of, the open source software or derivative works that we developed using such software, which could include our proprietary source ~~code, or otherwise seeking~~code. Such third parties may also seek to enforce the terms of the applicable open source ~~license. These claims could result in~~license through litigation ~~and~~which, if successful, could require us to make our proprietary software source code freely available, purchase a costly license or cease offering the implicated products or services unless and until we can re-engineer them to avoid infringement. This re-engineering process could require significant additional research and development resources, and we may not be able to complete it successfully. In addition to risks related to open source license requirements, use of certain open source software may pose greater risks than use of third-party commercial software, assince open source licensors generally do not provide warranties or controls on the origin of software. Any of these risks could be difficult to eliminate or manage, and, if not addressed, could ~~have a negative effect on~~adversely impact our business, financial condition and operating results.

We rely on assumptions and estimates to calculate certain of our key metrics, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.

~~The number of~~

We calculate our ~~active users is calculated~~mDAU using internal company data that has not been independently verified. While these numbers are based on what we believe to be reasonable calculations for the applicable period of measurement, there are inherent challenges in measuring ~~usage~~mDAU and ~~user engagement across our large user base around the world.~~mDAU engagement. For example, there are a number of false or spam accounts in existence on our platform. We estimate that the average of false or spam accounts during the ~~second~~first quarter of ~~2019~~2020 continued to represent fewer than 5% of our mDAU during the quarter. However, this estimate is based on an internal review of a sample of accounts and we apply significant judgment in making this determination. As such, our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have currently estimated. We are continually seeking to improve our ability to estimate the total number of spam accounts and eliminate them from the calculation of our ~~active users,~~mDAU, but we otherwise treat multiple accounts held by a single person or organization as multiple ~~users~~accounts for purposes of calculating our ~~active users~~mDAU because we permit people and organizations to have more than one account. Additionally, some accounts used by organizations are used by many people within the organization. As such, the calculations of our ~~active users~~mDAU may not accurately reflect the actual number of people or organizations using our platform. We regularly review and may adjust our processes for calculating our internal metrics to improve their accuracy. Our measures of ~~user~~mDAU growth and ~~user~~ engagement may differ from estimates published by third parties or from similarly-titled metrics of our competitors due to differences in methodology. If advertisers, content or platform partners or investors do not perceive our ~~user~~ metrics to be accurate representations of our ~~user base~~total accounts or ~~user~~mDAU engagement, or if we discover material inaccuracies in our ~~user~~ metrics, our reputation may be harmed and content partners, advertisers and platform partners may be less willing to allocate their budgets or resources to our products and services, which could negatively affect our business and operating results. Further, as our business develops, we may revise or cease reporting metrics if we determine that such metrics are no longer accurate or appropriate measures of our performance. For example, we believe that mDAU, and its related growth, are the best ways to measure our success against our objectives and to show the size of our audience and engagement going forward, so we discontinued disclosing monthly active usage ~~(MAU)~~ after the first quarter of 2019. ~~In the past, we also stopped disclosing timeline views as we no longer believed that metric was helpful in measuring engagement on our platform.~~ If investors, analysts or customers do not believe our reported measures, such as mDAU, are sufficient or accurately reflect our business, we may receive negative publicity and our operating results may be ~~harmed~~.

We rely in part on application marketplaces and Internet search engines to drive traffic to our products and services, and if we fail to appear high up in the search results or rankings, traffic to our platform could decline and our business and operating results could be adversely ~~affected.~~

We rely on application marketplaces, such as Apple’s App Store and Google’s Play, to drive downloads of our mobile applications. In the future, Apple, Google or other operators of application marketplaces may make changes to their marketplaces which make access to our products and services more difficult or limit our use of data to provide targeted advertising. We also depend in part on Internet search engines, such as Google, Apple Spotlight, Bing and Yahoo, to drive traffic to our website. For example, when a user types an inquiry into a search engine, we rely on a high organic search result ranking of our webpages in these search results to refer the user to our website. However, our ability to maintain high organic search result rankings is not within our control. Our competitors’ search engine optimization, or SEO, efforts may result in their websites receiving a higher search result page ranking than ours, or Internet search engines could revise their methodologies in a way that would adversely affect our search result rankings. If internet search engines modify their search algorithms in ways that are detrimental to us, or if our competitors’ SEO efforts are more successful than ours, the growth in our user base could slow. Our website has experienced fluctuations in search result rankings in the past, and we anticipate similar fluctuations in the future. Any reduction in the number of users directed to our mobile applications or website through application marketplaces and search engines could harm our business and operating results.

Users increasingly access our products and services through mobile and alternative devices, and we need to continue to promote the adoption of our mobile applications, and our business and operating results may be harmed if we are unable to do so.

~~In the three months ended June 30, 2019, 94~~% of our advertising revenue was generated from mobile devices. Since we generate a majority of advertising revenue through users on mobile devices, we must continue to drive adoption of our mobile applications. However, in emerging markets like India and Pakistan, a significant portion of users use feature phones and communicate via SMS messaging, both of which have limited functionality and neither of which may be able to take full advantage of our products and services offered on smartphone or our website or desktop applications. In addition, mobile users frequently change or upgrade their mobile devices. Our business and operating results may be harmed if our users do not install our mobile application when they change or upgrade their mobile device. Although we generate the majority of our advertising revenue from ad engagements on mobile devices, certain of our products and services, including Promoted Trends and Promoted Accounts, receive less prominence on our mobile applications than they do on our desktop applications. This has in the past reduced, and may in the future continue to reduce, the amount of revenue we are able to generate from these products and services as users increasingly access our products and services through mobile and alternative devices. In addition, as new devices and platforms are continually being released, users may consume content in a manner that is more difficult to monetize. If we are unable to develop products and services that are compatible with new devices and platforms, or if we are unable to drive continued adoption of our mobile applications, our business and operating results may be harmed.

impacted.

Acquisitions, divestitures and investments could disrupt our business and harm our financial condition and operating results.

Our success will depend, in part, on our ability to expand our products, product features and services, and grow our business in response to changing technologies, ~~user~~demands of people on Twitter and ~~advertiser demands,~~our advertisers and competitive pressures. In some circumstances, we may determine to do so through the acquisition of complementary businesses and technologies rather than through internal development, including, for example, our acquisitions of Periscope, a live-streaming video mobile application, and MoPub, a mobile-focused advertising exchange. The identification of suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able to successfully complete identified ~~acquisitions~~.acquisitions. The risks we face in connection with acquisitions include:

•

~~diversion of management time and focus from operating our business to addressing acquisition integration challenges;~~

•diversion of management time and focus from operating our business to addressing acquisition integration challenges;

~~retention of key employees from the acquired company;~~

•retention of key employees from the acquired company;

~~cultural challenges associated with integrating employees from the acquired company into our organization;~~

•cultural challenges associated with integrating employees from the acquired company into our organization;

~~integration of the acquired company’s accounting, management information, human resources and other administrative systems and processes;~~

•integration of the acquired company’s accounting, management information, human resources and other administrative systems and processes;

~~the need to implement or improve controls, procedures, and policies at a business that prior to the acquisition may have lacked effective controls, procedures and policies;~~

•

liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities;

•the need to implement or improve controls, procedures, and policies at a business that prior to the acquisition may have lacked effective controls, procedures and policies;

~~unanticipated write-offs or charges; and~~

•liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities;

~~litigation or other claims in connection with the acquired company, including claims from terminated employees, users, former stockholders or other third parties.~~

•unanticipated write-offs or charges; and

•litigation or other claims in connection with the acquired company, including claims from terminated employees, former stockholders or other third parties.

Our failure to address these risks or other problems encountered in connection with our past or future acquisitions and investments could cause us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities, and harm our business generally. Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses, incremental operating expenses or the impairment of goodwill, any of which could ~~harm~~adversely impact our financial condition orand operating results.

We also make investments in privately-held companies in furtherance of our strategic objectives. ~~We may not realize a return and may recognize a loss on such investments.~~ Many of the instruments in which we invest are non-marketable at the time of our initial investment. ~~Companies in which we invest range from early-stage companies still defining their strategic direction to more mature companies with established revenue streams~~We may not realize a return and ~~business models. The success of our investment in any company is typically dependent~~may recognize a loss on ~~the availability to the company of additional funding on favorable terms, or a liquidity event,~~ such as a public offering or acquisition. If any of the companies in which we invest decrease in value, we could lose all or part of our investment. For example, in the year ended December 31, 2017, we recorded a $62.4 million impairment charge relating to an investment in a privately-held company.

investments.

In certain cases, we have also divested or stopped investing in certain products, including products that we acquired. ~~For instance, in January 2017, we divested certain assets related to our Fabric platform. In 2017, we also deprecated certain of our revenue products, including TellApart, which was acquired in 2015.~~ In these cases, we have needed to and we may in the future need to restructure operations, terminate employees and/or incur other expenses. We may not realize the expected benefits and cost savings of these actions and our operating results may be ~~harmed.~~

adversely impacted.

If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.

As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, and the listing standards of the New York Stock Exchange. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and significant management oversight.

Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could cause us to be subject to one or more investigations or enforcement actions by state or federal regulatory agencies, stockholder lawsuits or other adverse actions requiring us to incur defense costs, pay fines, settlements or judgments. Any such failures could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the New York Stock Exchange.

~~If currency exchange rates fluctuate substantially in the future,~~

Our debt obligations could adversely affect our ~~operating results, which are reported in U.S. dollars, could be adversely affected.~~

Our international operations expose us to the effects of fluctuations in currency exchange rates. We incur expenses for employee compensation and other operating expenses at our international locations in the local currency, and accept payment from advertisers or data partners in currencies other than the U.S. dollar. Since we conduct business in currencies other than U.S. dollars but report our operating results in U.S. dollars, we face exposure to fluctuations in currency exchange rates. While we enter into foreign currency forward contracts with financial institutions to reduce the risk that our earnings may be adversely affected by the impact of exchange rate fluctuations on monetary assets or liabilities denominated in currencies other than the functional currency of a subsidiary, exchange rate fluctuations between the U.S. dollar and other currencies could have a material impact on our operating results.

We may not have sufficient cash on hand or the ability to raise the funds necessary for cash settlement upon conversion of our convertible senior notes, to repurchase such notes for cash upon a fundamental change, or repay the Notes at their maturity, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of such notes.

condition.

In 2014, we issued ~~$935.0 million in aggregate principal amount of 0.25% convertible senior notes due 2019, or the 2019 Notes, and~~ $954.0 million in aggregate principal amount of 1.00% convertible senior notes due 2021, or the 2021 Notes, in private placements to qualified institutional buyers. In ~~June~~ 2018, we issued an additional $1.15 billion in aggregate principal amount of 0.25% convertible senior notes due 2024, ~~which we refer to as~~or the ~~Notes when taken together with the 2019 Notes and the 2021~~2024 Notes, in a private placement to qualified institutional buyers. In December 2019, we issued $700.0 million in aggregate principal amount of 3.875% senior notes due 2027, which we refer to as the 2027 Notes. In March 2020, we issued $1.0 billion in aggregate principal amount of 0.375% convertible senior notes due 2025, or the 2025 Notes. We refer to the 2021 Notes, the 2024 Notes and the 2025 Notes as the Convertible Notes, and we refer to the Convertible Notes and the 2027 Notes as the Notes. As of ~~June 30, 2019,~~March 31, 2020, we had ~~a total par value of $3.04~~$3.80 billion in aggregate principal amount of outstanding Notes. ~~We have stated that~~As of March 31, 2020, we ~~currently expect to repay~~also had an undrawn unsecured revolving credit facility providing for loans in the ~~2019 Notes, which mature in September 2019, with cash on hand.~~

~~Holders~~aggregate principal amount of ~~the Notes will have the right under the relevant indenture governing the Notes to~~ $500.0 million.

Our debt obligations could adversely impact us. For example, these obligations could:

•require us to ~~repurchase all or~~use a substantial portion of ~~their~~our cash flow from operations to pay principal and interest on debt, including the Notes, or to repurchase our Notes when required upon the occurrence of ~~a fundamental~~certain change ~~before~~of control events or otherwise pursuant to the ~~relevant maturity date, in each case at a repurchase price equal to 100% of~~terms thereof, which will reduce the ~~principal~~ amount of ~~the respective services of Notes, plus accrued~~cash flow available to fund working capital, capital expenditures, acquisitions, and ~~unpaid interest, if any,~~other business activities;

•require us to ~~the fundamental change repurchase date. In addition, upon conversion of the Notes, unless we elect to deliver solely~~use cash and/or issue shares of our common stock to settle ~~such~~any conversion ~~(other than paying cash~~obligations of the Convertible Notes;

•result in ~~lieu~~certain of ~~delivering any fractional shares), we will be required to make cash payments in respect of~~our debt instruments, including the Notes, being ~~converted. Moreover, we~~accelerated or being deemed to be in default if certain terms of default are triggered, such as applicable cross payment default and/or cross-acceleration provisions;

•adversely impact our credit rating, which could increase future borrowing costs;

•limit our future ability to raise funds for capital expenditures, strategic acquisitions or business opportunities, and other general corporate requirements;

•restrict our ability to create or incur liens and enter into sale-leaseback financing transactions;

•increase our vulnerability to adverse economic and industry conditions;

•with respect to indebtedness other than the Notes, increase our exposure to interest rate risk from variable rate indebtedness;

•dilute our earnings per share as a result of the conversion provisions in the Convertible Notes; and

•place us at a competitive disadvantage compared to our less leveraged competitors.

Our ability to meet our payment obligations under our debt instruments depends on our ability to generate significant cash flows in the future. This, to some extent, is subject to market, economic, financial, competitive, legislative, and regulatory factors as well as other factors that are beyond our control. There can be no assurance that our business will generate cash flow from operations, or that additional capital will be ~~required~~available to ~~repay the Notes~~us, in ~~cash at their maturity, unless earlier converted or repurchased. However, we~~amounts sufficient to enable us to meet our debt payment obligations and to fund other liquidity needs. Additionally, events and circumstances may occur which would cause us to not ~~have sufficient available cash on hand or~~ be able to ~~obtain financing at the time~~satisfy applicable draw-down conditions and utilize our revolving credit facility. If we are ~~required~~unable to ~~make~~generate sufficient cash ~~settlement upon conversion of the Notes, repurchase the Notes upon a fundamental change, or repay the Notes at their maturity. In addition,~~flows to service our ~~ability to repurchase the Notes or pay cash due upon conversions of the Notes~~debt payment obligations, we may ~~be limited by law, regulatory authority or agreements governing our future indebtedness.~~

~~Our ability~~need to refinance ~~the Notes, make cash payments in connection with conversions~~or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. If we are unable to implement one or more of the Notes, repurchase the Notes in the event of a fundamental change, or repay the Notes at their maturity will depend on market conditions and our future performance, which is subject to economic, financial, competitive and other factors beyond our control. We also may not use the cash we have raised through the issuance of the Notes in an optimally productive and profitable manner. Since inception we have incurred significant operating losses and we historically had not been cash flow positive and may not be in the future. As a result, we may not have enough available cash or be able to obtain financingthese alternatives on commercially reasonable terms or at all, ~~at the time~~ we are required to make repurchases of notes surrendered therefor or pay cash with respect to notes being converted or at their maturity and our level of indebtedness could adversely affect our future operations by increasing our vulnerability to adverse changes in general economic and industry conditions and by limiting or prohibiting our ability to obtain additional financing for future capital expenditures, acquisitions and general corporate and other purposes. In addition, if we aremay be unable to ~~make cash payments upon conversion of the Notes we would be required to issue significant amounts of~~meet our ~~common stock,~~debt payment obligations, which would be dilutive to existing stockholders. If we do not have sufficient cash to repurchase the Notes following a fundamental change or repay the Notes at their maturity, we would be in default under the terms of the Notes, which could seriously harmmaterially and adversely impact our ~~business. In addition, the terms of the Notes do not limit the amount of future indebtedness we may incur. If we incur significantly more debt, this could intensify the risks described above.~~

business, financial condition and operating results.

Our business is subject to the risks of earthquakes, fire, power outages, floods and other catastrophic events, and to interruption by man-made problems such as terrorism.

A significant natural disaster, such as the COVID-19 pandemic or an earthquake, fire, flood or significant power outage could have a material adverse impact on our business, operating results, and financial condition. For example, the COVID-19 pandemic has led to certain business disruptions as described in our other risk factors, including travel bans and restrictions, shelter-in-place orders and the postponement or cancellation or major events, which have adversely affected demand for our advertising products and the economy as a whole, and which may continue to have an adverse effect on our business, financial condition and operating results. Our headquarters and certain of our co-located data center facilities are located in the San Francisco Bay Area, a region known for seismic activity. Despite any precautions we may take, the occurrence of a natural disaster or other unanticipated problems at our data centers could result in lengthy interruptions in our services. In addition, acts of terrorism and other geo-political unrest could cause disruptions in our business. All of the aforementioned risks may be further increased if our disaster recovery plans prove to be inadequate. We have implemented a disaster recovery program, which allows us to move production to a back-up data center in the event of a catastrophe. Although this program is functional, we do not currently serve network traffic equally from each data center, so if our primary data center shuts down, there will be a period of time that our products or services, or certain of our products or services, will remain inaccessible ~~to our users~~ or ~~our users~~people may experience severe issues accessing our products and ~~services~~.

services. We do not carry business interruption insurance sufficient to compensate us for the potentially significant losses, including the potential harm to our business that may result from interruptions in our ability to provide our products and services.

Any such natural disaster or man-made problem could adversely impact our business, financial condition and operating results.

We may have exposure to greater than anticipated tax liabilities, which could adversely impact our operating results.

Our income tax obligations are based in part on our corporate operating structure, including the manner in which we develop, value and use our intellectual property and the scope of our international operations. The tax laws applicable to our international business activities, including the laws of the United States, Ireland, and other jurisdictions, are subject to interpretation. The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for valuing developed technology (or other intangible assets) or intercompany arrangements, which could increase our worldwide effective tax rate and harm our financial condition and operating results. On October 5, 2015, the Organization for Economic Cooperation and Development (OECD), an international association of 34 countries, including the U.S., Ireland, and UK, released the final reports from its Base Erosion and Profit Shifting (BEPS) Action Plans. The BEPS recommendations covered a number of issues, including country-by-country reporting, permanent establishment rules, transfer pricing rules and tax treaties. Future tax reform resulting from this development may result in changes to long-standing tax principles, which could adversely affect our effective tax rate or result in higher cash tax liabilities. We are subject to review and audit by ~~U.S. federal~~tax authorities in the United States (federal and ~~state~~state), Ireland, and other foreign ~~tax authorities.~~jurisdictions and the laws in those jurisdictions are subject to interpretation. Tax authorities may disagree with ~~certain~~and challenge some of the positions we have taken and any adverse outcome of such ~~a review or~~an audit could have a negative effect on our financial position and operating results. In addition, our future income taxes could be adversely affected by earnings being lower than anticipated in jurisdictions that have lower statutory tax rates and higher than anticipated in jurisdictions that have higher statutory tax rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in tax laws, regulations or accounting principles, as well as certain discrete items. ~~Furthermore, changes~~For example, the legislation commonly referred to the taxation of undistributed foreign earnings could change our future intentions regarding reinvestment of such earnings. Greater than anticipated tax expenses, or disputes with tax authorities, could adversely impact our operating results. In addition, many countries in Europe, as well as a number of other countries and organizations, have recently proposed changes to tax laws regarding digital services that could significantly increase our tax obligations in many countries where we do business or require us to change the manner in which we operate our business.

On June 7, 2019, the Ninth Circuit Court of Appeals issued a new opinion in Altera Corp. v. Commissioner which upheld Department of Treasury regulations which require related parties in an intercompany cost-sharing arrangement to share expenses related to stock-based compensation and reversed the prior decision of the United States Tax Court. As a result of the opinion, we recorded an increase in the tax provision of $80.0 million in the second quarter of 2019 related to changes in uncertain tax positions and deferred tax assets related to the intra-entity transfer of an intangible asset in the first quarter of 2019. On July 22, 2019, Altera Corp. filed a petition for a rehearing before the full Ninth Circuit. We will continue to monitor future developments in this case to determine if there will be further impacts to our consolidated financial statements.

~~Uncertainties in the interpretation and application of~~ the 2017 Tax Cuts and Jobs Act ~~could materially affect our tax obligations and effective tax rate.~~

~~The 2017 Tax Cuts and Jobs Act (the “Tax Act”)~~ significantly affected U.S. tax law by changing how U.S. income tax is assessed on multinational corporations. The ~~Tax Act requires complex computations not previously provided for in U.S. tax law and the~~ U.S. Department of Treasury has issued and will continue to issue regulations and interpretive guidance that may significantly impact how we will apply the law and impact our results of operations. ~~As additional regulatory~~

In addition, the Organization for Economic Cooperation and ~~interpretive guidance is issued, we~~Development (OECD) has published proposals covering a number of issues, including country-by-country reporting, permanent establishment rules, transfer pricing rules, tax treaties and taxation of the digital economy. Future tax reform resulting from this development may ~~refine our analysis and make adjustments that differ from amounts initially recorded,~~result in changes to long-standing tax principles, which could ~~materially~~adversely affect our effective tax rate or result in higher cash tax liabilities. In 2018, the European Commission proposed a series of measures aimed at ensuring a fair and efficient taxation of digital businesses operating within the European Union. Some countries, in the European Union and beyond, have unilaterally moved to introduce their own digital services tax (“DST”) to capture tax revenue on digital services more immediately. Notably France, Italy, Austria, the United Kingdom, Turkey, India, and Indonesia have enacted or will soon enact a digital tax. Such laws would increase our tax obligations ~~and effective tax rate.~~

in those countries or change the manner in which we operate our business.

On June 7, 2019, the Ninth Circuit Court of Appeals issued a new opinion in the case of Altera Corp. v. Commissioner, which upheld Department of Treasury regulations which require related parties in an intercompany cost-sharing arrangement to share expenses related to stock-based compensation. We have prepared the consolidated financial statements consistent with this opinion. In February 2020, Altera Corp. filed a petition to appeal the decision with the Supreme Court of the United States. We will continue to monitor future developments in this case to determine if there will be further impacts to the consolidated financial statements.

If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings.

Under generally accepted accounting principles in the United States, or GAAP, we review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is required to be tested for impairment at least annually. ~~As of June 30, 2019, we had recorded a total of $1.30 billion of goodwill and intangible assets.~~ An adverse change in market conditions or financial results, particularly if such change has the effect of changing one of our critical assumptions or estimates, could result in a change to the estimation of fair value that could result in an impairment charge to our goodwill or intangible assets. Any such material charges may have a material ~~negative~~and adverse impact on our operating results.

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

As of December 31, ~~2018,~~2019, we had U.S. federal net operating loss carryforwards of approximately ~~$2.85~~$2.34 billion and state net operating loss carryforwards of approximately ~~$1.30~~$1.26 billion. As of December 31, ~~2018,~~2019, we had federal ~~R&D credits~~and state research and development credit carryforwards of ~~$300.4~~$345.2 million and ~~state credits of $236.2 million.~~$264.8 million, respectively. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes, such as research tax credits, to offset its post-change income and taxes may be limited. In general, an “ownership change” occurs if there is a cumulative change in our ownership by “5% shareholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. In the event that ~~it is determined that~~ we have ~~in the past~~ experienced an ownership change, or if we experience one or more ownership changes ~~as a result of~~in the future, ~~transactions in our stock,~~ then we may be limited in our ability to use our net operating loss carryforwards and other tax assets to reduce taxes owed on the net taxable income that we earn. Any such limitations on the ability to use our net operating loss carryforwards and other tax assets could adversely impact our business, financial condition and operating results.

~~We may require additional capital to support our operations or the growth of our business, and we cannot be certain that this capital will be available on reasonable terms when required, or at all.~~

From time to time, we may need additional financing to operate or grow our business. Our ability to obtain additional financing, if and when required, will depend on investor and lender demand, our operating performance, the condition of the capital markets and other factors, and we cannot assure you that additional financing will be available to us on favorable terms when required, or at all. If we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of our common stock, and our existing stockholders may experience dilution. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support the operation or growth of our business could be significantly impaired and our operating results may be harmed.

Risks Related to Ownership of Our Common Stock

Anti-takeover provisions contained in our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

Our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law contain provisions which could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by our board of directors. Among other things, our amended and restated certificate of incorporation and amended and restated bylaws include provisions:

•

~~creating a classified board of directors whose members serve staggered three-year terms;~~

•creating a classified board of directors whose members serve staggered three-year terms;

authorizing “blank check” preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock;

•authorizing “blank check” preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock;

~~limiting the liability of, and providing indemnification to, our directors and officers;~~

•limiting the liability of, and providing indemnification to, our directors and officers;

~~limiting the ability of our stockholders to call and bring business before special meetings;~~

•limiting the ability of our stockholders to call and bring business before special meetings;

~~requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors; and~~

•requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors; and

~~controlling the procedures for the conduct and scheduling of stockholder meetings.~~

•controlling the procedures for the conduct and scheduling of stockholder meetings.

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.

As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation law, which prevents certain stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of at least two-thirds of our outstanding common stock not held by such 15% or greater stockholder.

Any provision of our amended and restated certificate of incorporation, amended and restated bylaws or Delaware law that has the effect of delaying, preventing or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

The market price of our common stock has been and will likely continue to be volatile, and you could lose all or part of your investment.

The market price of our common stock has been and may continue to be highly volatile in response to various factors, some of which are beyond our control. ~~From January 1, 2018 to June 30, 2019, the reported high and low sales prices of our common stock has ranged from $47.79 to $22.04.~~ In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Quarterly Report on Form 10-Q, factors that could cause fluctuations in the market price of our common stock include the following:

•

~~price and volume fluctuations in the overall stock market from time to time;~~

•price and volume fluctuations in the overall stock market from time to time, including fluctuations due to general economic uncertainty or negative market sentiment, in particular related to the COVID-19 pandemic;

~~volatility in the market prices and trading volumes of technology stocks;~~

•volatility in the market prices and trading volumes of technology stocks;

~~changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;~~

•changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;

~~sales of shares of our common stock by us or our stockholders;~~

•sales of shares of our common stock by us or our stockholders;

~~rumors and market speculation involving us or other companies in our industry;~~

•rumors and market speculation involving us or other companies in our industry;

failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;

•failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;

~~the financial or non-financial metric projections we may provide to the public, any changes in those projections or our failure to meet those projections;~~

•the financial or non-financial metric projections we may provide to the public, any changes in those projections or our failure to meet those projections;

~~announcements by us or our competitors of new products or services;~~

•announcements by us or our competitors of new products or services;

~~the public’s reaction to our press releases, other public announcements and filings with the SEC;~~

•the public’s reaction to our press releases, other public announcements and filings with the SEC;

~~actual or anticipated changes in our operating results or fluctuations in our operating results;~~

•actual or anticipated changes in our operating results or fluctuations in our operating results;

~~actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally;~~

•actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally;

~~our issuance of shares of our common stock, whether in connection with an acquisition or upon conversion of some or all of our outstanding Notes;~~

•our issuance of shares of our common stock, whether in connection with an acquisition or upon conversion of some or all of our outstanding Convertible Notes;

~~litigation or regulatory action involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;~~

•

~~developments or disputes concerning our intellectual property or other proprietary rights;~~

•

~~announced or completed acquisitions~~•litigation or regulatory action involving us, our industry or both, or investigations by regulators into our operations or those of ~~businesses or technologies by us or~~ our competitors;

•developments or disputes concerning our intellectual property or other proprietary rights;

~~new laws or regulations or new interpretations of existing laws or regulations applicable to our business;~~

•announced or completed acquisitions of businesses or technologies by us or our competitors;

~~changes in accounting standards, policies, guidelines, interpretations or principles;~~

•new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

~~any significant change in our management; and~~

•changes in accounting standards, policies, guidelines, interpretations or principles;

~~general economic conditions and slow or negative growth of our markets.~~

•any significant change in our management; and

•general economic conditions and slow or negative growth of our markets.

In addition, in the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies. Any securities litigation can result in substantial costs and a diversion of our management’s attention and resources.We are currently subject to securities litigation and may experience more such litigation following any future periods of volatility.

Our failure to return capital to our stockholders could have a material adverse effect on our stock price.

In March 2020, we announced that our board of directors authorized the repurchase of up to $2.0 billion of our common stock from time to time. Any failure to meet our commitment to return capital to our stockholders could have a material adverse effect on our stock price.

The note hedge and warrant transactions may affect the value of our common stock.

Concurrent with the issuance of the 2021 Notes and 2024 Notes, we entered into note hedge transactions with certain financial institutions, which we refer to as the option counterparties. The note hedge transactions are generally expected to reduce the potential dilution upon any conversion of the 2021 Notes and 2024 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted with respect to the 2021 Notes or 2024 Notes, as the case may be. We also entered into warrant transactions with the option counterparties. However, the warrant transactions could separately have a dilutive effect to the extent that the market price of our common stock exceeds the applicable strike price of the warrants.

The option counterparties or their respective affiliates may modify their initial hedge positions by entering into or unwinding various derivatives contracts with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the 2021 Notes and 2024 Notes, as applicable (and are likely to do so during any applicable observation period related to a conversion of the 2021 Notes and 2024 Notes, as applicable, or following any repurchase of the 2021 Notes and 2024 Notes, as applicable, by us on any fundamental change repurchase date or otherwise). This activity could cause or avoid an increase or a decrease in the market price of our common stock.

In addition, if any such convertible note hedge and warrant transactions fail to become effective, the option counterparties or their respective affiliates may unwind their hedge positions with respect to our common stock, which could adversely affect the value of our common stock.

If securities or industry analysts ~~cease publishing research or reports about us, our business or our market, or if they~~ change their recommendations regarding our common stock adversely, the price of our common stock and trading volume could decline.

The trading market for our common stock is influenced, to some extent, by the research and reports that securities or industry analysts publish about us, our business, our industry, our market or our competitors. If any of the analysts who cover us change their recommendation regarding our common stock adversely, or provide more favorable relative recommendations about our competitors, the price of our common stock would likely decline. If any analysts who cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the price of our common stock or trading volume to decline.

~~We do not expect to declare any dividends in the foreseeable future.~~

We do not anticipate declaring any cash dividends to holders of our common stock in the foreseeable future. In addition, our credit facility contains restrictions on payments including payments of cash dividends. Consequently, investors may need to rely on sales of our common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Equity Securities

~~On May~~

During the three months ended March 31, ~~2019,~~2020, we issued a total of ~~306,342~~412,428 shares of our common stock in connection with the acquisition of one company to certain former shareholders of the acquired company.

The foregoing transaction did not involve any underwriters, any underwriting discounts or commissions, or any public offering. We believe the offer, sale, and issuance of the above securities was exempt from registration under the Securities Act of 1933, as amended (the “Act”) by virtue of Section 4(a)(2) of the Act and Regulation S promulgated under the Act, because the issuance of securities to the recipients did not involve a public offering. The recipients of the securities in the transaction represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in the transaction. All recipients had adequate access, through their relationships with us or otherwise, to information about us. The issuance of these securities was made without any general solicitation or advertising.

~~Issuer Purchases of Equity Securities~~

~~None.~~

Item 6. EXHIBITS

The documents listed in the Exhibit Index of this Quarterly Report on Form 10-Q are incorporated by reference or are filed with this Quarterly Report on Form 10-Q, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K).

EXHIBIT INDEX

~~Exhibit~~		~~Incorporated by Reference~~
~~Number~~	~~Exhibit Description~~	~~Form~~	~~File No.~~	~~Exhibit~~	~~Filing Date~~

~~31.1~~	~~Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~
~~31.2~~	~~Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~
~~32.1†~~	~~Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
~~101.INS~~	~~XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document~~
~~101.SCH~~	~~XBRL Taxonomy Schema Linkbase Document.~~
~~101.CAL~~	~~XBRL Taxonomy Calculation Linkbase Document.~~
~~101.DEF~~	~~XBRL Taxonomy Definition Linkbase Document.~~
~~101.LAB~~	~~XBRL Taxonomy Labels Linkbase Document.~~
~~101.PRE~~	~~XBRL Taxonomy Presentation Linkbase Document.~~

†

The certifications attached as Exhibit 32.1 that accompany this Quarterly Report on Form 10-Q, are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Twitter, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.


Exhibit Number	Exhibit Description	Form	File No.	Incorporated by Reference Exhibit	Filing Date
4.1	Indenture, dated March 12, 2020, between Twitter, Inc. and U.S. Bank National Association, as Trustee.	8-K	001-36164	4.1	March 13, 2020
4.2	Form of 0.375% Convertible Senior Notes due 2025 (included in Exhibit 4.1).	8-K	001-36164	4.2	March 13, 2020
10.1	Investment Agreement, dated as of March 9, 2020, among Twitter, Inc. and Silver Lake Partners V DE (AIV), L.P.	8-K	001-36164	10.1	March 9, 2020
10.2	Cooperation Agreement, dated as of March 9, 2020, among Twitter, Inc., Elliott Investment Management L.P., Elliott Associates, L.P. and Elliott International L.P.	8-K	001-36164	10.2	March 9, 2020
31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1†	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

† The certifications attached as Exhibit 32.1 that accompany this Quarterly Report on Form 10-Q, are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Twitter, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

~~TWITTER, INC.~~

TWITTER, INC.

Date: ~~July 31, 2019~~

May 5, 2020

~~By:~~

By:

/s/ Jack Dorsey

Jack Dorsey

Chief Executive Officer

(Principal Executive Officer)

Date: ~~July 31, 2019~~

May 5, 2020

~~By:~~

By:

/s/ Ned Segal

Ned Segal

Chief Financial Officer

(Principal Financial Officer)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.000005 per share	TWTR	New York Stock Exchange

	Three Months Ended						Six Months Ended
	June 30,						June 30,							Three Months Ended March 31,
	2019			2018			2019			2018				2020		2019
Revenue	$	841,381		$	710,541		$	1,628,271		$	1,375,412		Revenue	$	807,637	$	786,890
Costs and expenses													Costs and expenses
Cost of revenue		277,965			230,185			541,976			453,008		Cost of revenue	284,037		264,011
Research and development		159,242			138,574			305,488			261,920		Research and development	200,388		146,246
Sales and marketing		240,249			188,032			446,048			366,091		Sales and marketing	221,287		205,799
General and administrative		88,239			74,126			165,415			139,844		General and administrative	109,368		77,176
Total costs and expenses		765,695			630,917			1,458,927			1,220,863		Total costs and expenses	815,080		693,232
Income from operations		75,686			79,624			169,344			154,549
Income (loss) from operations													Income (loss) from operations	(7,443)		93,658
Interest expense		(38,317	)		(29,982	)		(75,577	)		(56,997	)	Interest expense	(33,270)		(37,260)
Interest income		42,887			21,960			83,428			38,141		Interest income	32,897		40,541
Other income (expense), net		7,523			(5,735	)		7,087			(5,944	)
Income before income taxes		87,779			65,867			184,282			129,749
Provision (benefit) for income taxes		(1,031,781	)		(34,250	)		(1,126,082	)		(31,365	)
Net income	$	1,119,560		$	100,117		$	1,310,364		$	161,114
Net income per share attributable to common stockholders:
Other expense, net													Other expense, net	(7,719)		(436)
Income (loss) before income taxes													Income (loss) before income taxes	(15,535)		96,503
Benefit from income taxes													Benefit from income taxes	(7,139)		(94,301)
Net income (loss)													Net income (loss)	$	(8,396)	$	190,804
Net income (loss) per share attributable to common stockholders:													Net income (loss) per share attributable to common stockholders:
Basic	$	1.46		$	0.13		$	1.71		$	0.21		Basic	$	(0.01)	$	0.25
Diluted	$	1.43		$	0.13		$	1.68		$	0.21		Diluted	$	(0.01)	$	0.25
Weighted-average shares used to compute net income per share attributable to common stockholders:
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:													Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:
Basic		768,755			752,351			766,658			750,037		Basic	780,688		764,550
Diluted		785,056			772,556			781,378			769,222		Diluted	780,688		777,689

	Three Months Ended					Six Months Ended
	June 30,					June 30,						Three Months Ended March 31,
	2019		2018			2019		2018				2020		2019
Net income	$	1,119,560	$	100,117		$	1,310,364	$	161,114
Other comprehensive income, net of tax:
Net income (loss)											Net income (loss)	$	(8,396)	$	190,804
Other comprehensive income (loss), net of tax:											Other comprehensive income (loss), net of tax:

Change in unrealized gain (loss) on investments in available-for-sale securities		9,106		1,384			17,954		(445	)	Change in unrealized gain (loss) on investments in available-for-sale securities	(26,360)		8,848
Change in foreign currency translation adjustment		615		(35,493	)		413		(24,410	)	Change in foreign currency translation adjustment	(61,103)		(202)
Net change in accumulated other comprehensive income (loss)		9,721		(34,109	)		18,367		(24,855	)	Net change in accumulated other comprehensive income (loss)	(87,463)		8,646
Comprehensive income	$	1,129,281	$	66,008		$	1,328,731	$	136,259
Comprehensive income (loss)											Comprehensive income (loss)	$	(95,859)	$	199,450


	Six Months Ended June 30,							Three Months Ended March 31,
	2019			2018				2020		2019
Cash flows from operating activities							Cash flows from operating activities
Net income	$	1,310,364		$	161,114
Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss)							Net income (loss)	$	(8,396)	$	190,804
Adjustments to reconcile net income (loss) to net cash provided by operating activities:							Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense		229,090			202,828		Depreciation and amortization expense	120,649		113,474
Stock-based compensation expense		178,106			152,735		Stock-based compensation expense	97,903		83,491
Amortization of discount on convertible notes		62,787			44,031		Amortization of discount on convertible notes	21,504		30,877
Bad debt expense							Bad debt expense	14,067		627
Deferred income taxes		(1,144,191	)		(42,285	)	Deferred income taxes	(7,024)		14,364
Deferred tax assets establishment related to intra-entity transfers of intangible assets							Deferred tax assets establishment related to intra-entity transfers of intangible assets	—		(124,420)
Impairment of investments in privately-held companies		1,550			3,000		Impairment of investments in privately-held companies	8,003		—
Other adjustments		(18,103	)		(3,059	)	Other adjustments	(8,425)		3,446
Changes in assets and liabilities, net of assets acquired and liabilities assumed from acquisitions:							Changes in assets and liabilities, net of assets acquired and liabilities assumed from acquisitions:
Accounts receivable		67,237			46,968		Accounts receivable	168,932		103,633
Prepaid expenses and other assets		66,627			(20,302	)	Prepaid expenses and other assets	(6,252)		(9,284)
Operating lease right-of-use assets							Operating lease right-of-use assets	38,749		35,433
Accounts payable		(4,740	)		(16,828	)	Accounts payable	(14,480)		(12,879)
Accrued and other liabilities		(58,061	)		35,611		Accrued and other liabilities	(139,168)		(47,997)
Operating lease liabilities							Operating lease liabilities	(39,295)		(29,876)
Net cash provided by operating activities		690,666			563,813		Net cash provided by operating activities	246,767		351,693
Cash flows from investing activities							Cash flows from investing activities
Purchases of property and equipment		(218,821	)		(289,541	)	Purchases of property and equipment	(122,667)		(83,026)
Proceeds from sales of property and equipment		3,057			4,456		Proceeds from sales of property and equipment	1,623		1,956
Purchases of marketable securities		(2,991,921	)		(1,990,868	)	Purchases of marketable securities	(1,233,530)		(1,635,142)
Proceeds from maturities and sales of marketable securities		2,832,237			1,638,109
Proceeds from maturities of marketable securities							Proceeds from maturities of marketable securities	1,125,634		1,711,300
Proceeds from sales of marketable securities							Proceeds from sales of marketable securities	722,253		34,358

Business combinations, net of cash acquired		(20,302	)		(32,504	)	Business combinations, net of cash acquired	(14,780)		—
Other investing activities		11,368			(2,175	)	Other investing activities	(12,389)		—
Net cash used in investing activities		(384,382	)		(672,523	)
Net cash provided by investing activities							Net cash provided by investing activities	466,144		29,446
Cash flows from financing activities							Cash flows from financing activities
Proceeds from issuance of convertible notes		—			1,150,000		Proceeds from issuance of convertible notes	1,000,000		—
Purchases of convertible note hedges		—			(267,950	)
Proceeds from issuance of warrants concurrent with note hedges		—			186,760

Debt issuance costs		—			(11,730	)	Debt issuance costs	(14,662)		—

Taxes paid related to net share settlement of equity awards		(12,938	)		(9,360	)	Taxes paid related to net share settlement of equity awards	(11,693)		(9,477)
Payments of finance lease obligations		(37,933	)		(47,282	)	Payments of finance lease obligations	(9,966)		(19,719)
Proceeds from exercise of stock options		509			3,097		Proceeds from exercise of stock options	305		95
Proceeds from issuances of common stock under employee stock purchase plan		25,209			16,337

Net cash provided by (used in) financing activities		(25,153	)		1,019,872		Net cash provided by (used in) financing activities	963,984		(29,101)
Net increase in cash, cash equivalents and restricted cash		281,131			911,162		Net increase in cash, cash equivalents and restricted cash	1,676,895		352,038
Foreign exchange effect on cash, cash equivalents and restricted cash		7,002			(12,514	)	Foreign exchange effect on cash, cash equivalents and restricted cash	(11,948)		(146)
Cash, cash equivalents and restricted cash at beginning of period		1,921,875			1,673,857		Cash, cash equivalents and restricted cash at beginning of period	1,827,666		1,921,875
Cash, cash equivalents and restricted cash at end of period	$	2,210,008		$	2,572,505		Cash, cash equivalents and restricted cash at end of period	$	3,492,613	$	2,273,767
Supplemental disclosures of non-cash investing and financing activities							Supplemental disclosures of non-cash investing and financing activities
Common stock issued in connection with acquisitions	$	—		$	19,165		Common stock issued in connection with acquisitions	$	1,312	$	—
Equipment purchases under finance leases	$	—		$	16,086

Changes in accrued property and equipment purchases	$	77,611		$	7,554		Changes in accrued property and equipment purchases	$	38,512	$	43,720
Reconciliation of cash, cash equivalents and restricted cash as shown in the consolidated statements of cash flows							Reconciliation of cash, cash equivalents and restricted cash as shown in the consolidated statements of cash flows
Cash and cash equivalents	$	2,183,111		$	2,544,641		Cash and cash equivalents	$	3,463,349	$	2,247,661
Restricted cash included in prepaid expenses and other current assets		1,379			2,261		Restricted cash included in prepaid expenses and other current assets	1,846		1,222
Restricted cash included in other assets		25,518			25,603		Restricted cash included in other assets	27,418		24,884
Total cash, cash equivalents and restricted cash	$	2,210,008		$	2,572,505		Total cash, cash equivalents and restricted cash	$	3,492,613	$	2,273,767


	Three Months Ended March 31,
	2020		2019
Revenue by services:
Advertising services	$	682,192	$	679,466
Data licensing and other	125,445		107,424
Total revenue	$	807,637	$	786,890


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	PART I – FINANCIAL INFORMATION		Page
Item 1.		Financial Statements (Unaudited)		6
		Consolidated Balance Sheets as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019		6
		Consolidated Statements of ~~Income~~Operations for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2020 and March 31, 2019 ~~and June 30, 2018~~		7
		Consolidated Statements of Comprehensive Income (Loss) for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2020 and March 31, 2019 ~~and June 30, 2018~~		8
		Consolidated Statements of Stockholders’ Equity for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2020 and March 31, 2019 ~~and June 30, 2018~~		9
		Consolidated Statements of Cash Flows for the ~~Six~~Three Months Ended ~~June 30,~~March 31, 2020 and March 31, 2019 ~~and June 30, 2018~~		10
		Notes to Consolidated Financial Statements		11
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		28 27
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		39 37
Item 4.		Controls and Procedures		40 38
		PART II – OTHER INFORMATION
Item 1.		Legal Proceedings		41 39
Item 1A.		Risk Factors		41 39
Item 2.		~~Unregistered~~Un registered Sales of Equity Securities and Use of Proceeds		65 58
Item 6.	Exhibits	~~Exhibits~~59		66
	Signatures	~~Signatures~~60		68

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Revenue by services:
Advertising services	$	727,123	$	601,060	$	1,406,589	$	1,176,216
Data licensing and other		114,258		109,481		221,682		199,196
Total revenue	$	841,381	$	710,541	$	1,628,271	$	1,375,412

	Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
	2019		2018		2019		2018			2020		2019
Revenue by geographic area:									Revenue by geographic area:
United States	$	455,201	$	366,657	$	887,557	$	713,227	United States	$	468,430	$	432,356
Japan		133,171		122,219		268,742		239,045	Japan	131,132		135,571
Rest of World		253,009		221,665		471,972		423,140	Rest of World	208,075		218,963
Total revenue	$	841,381	$	710,541	$	1,628,271	$	1,375,412	Total revenue	$	807,637	$	786,890


	March 31, 2020		December 31, 2019
Unbilled revenue	$	29,018	$	27,691
Deferred revenue	$	48,860	$	69,000

	Remaining Performance Obligations
			Remainder of				2021 and
	Total		2019		2020		Thereafter
Revenue expected to be recognized on remaining performance obligations	$	587,210	$	125,476	$	206,123	$	255,611


	Remaining Performance Obligations
	Total		Remainder of 2020		2021		2022 and Thereafter
Revenue expected to be recognized on remaining performance obligations	$	815,446	$	220,308	$	249,190	$	345,948

	June 30,
	2019
Due within one year	$	2,650,741
Due after one year through five years		1,852,686
Total	$	4,503,427


	March 31, 2020
Due within one year	$	2,401,260
Due after one year through five years	1,805,555
Total	$	4,206,815

	June 30, 2019
	Gross		Gross		Gross			Aggregated
	Amortized		Unrealized		Unrealized			Estimated			March 31, 2020
	Costs		Gains		Losses			Fair Value			Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregated Estimated Fair Value
U.S. government and agency securities including treasury bills	$	815,128	$	1,740	$	(55	)	$	816,813	U.S. government and agency securities including treasury bills	$	247,262	$	1,686	$	—	$	248,948
Corporate notes, commercial paper and certificates of deposit		3,674,393		12,555		(334	)		3,686,614	Corporate notes, commercial paper and certificates of deposit	3,972,693		7,817		(22,643)		3,957,867
Total available-for-sale securities classified as short-term investments	$	4,489,521	$	14,295	$	(389	)	$	4,503,427


	December 31, 2018
	Gross		Gross		Gross			Aggregated
	Amortized		Unrealized		Unrealized			Estimated
	Costs		Gains		Losses			Fair Value
U.S. government and agency securities including treasury bills	$	1,053,988	$	41	$	(621	)	$	1,053,408
Corporate notes, commercial paper and certificates of deposit		3,265,012		713		(4,176	)		3,261,549
Total available-for-sale securities classified as short-term investments	$	4,319,000	$	754	$	(4,797	)	$	4,314,957
Total available-for-sale debt securities classified as short-term investments										Total available-for-sale debt securities classified as short-term investments	$	4,219,955	$	9,503	$	(22,643)	$	4,206,815


	December 31, 2019
	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregated Estimated Fair Value
U.S. government and agency securities including treasury bills	$	660,361	$	1,049	$	(550)	$	660,860
Corporate notes, commercial paper and certificates of deposit	4,166,203		13,133		(226)		4,179,110
Total available-for-sale debt securities classified as short-term investments	$	4,826,564	$	14,182	$	(776)	$	4,839,970


	June 30, 2019							March 31, 2020
	Level 1		Level 2		Total					Level 1			Level 2			Total
Assets							Assets
Cash equivalents:							Cash equivalents:
Money market funds	$	752,160	$	—	$	752,160	Money market funds	$	2,617,093		$	—		$	2,617,093
Corporate notes							Corporate notes	—			6,414			6,414
Commercial paper		—		1,212,426		1,212,426	Commercial paper	—			604,413			604,413

Short-term investments:							Short-term investments:
U.S. government and agency securities		—		816,813		816,813	U.S. government and agency securities	—			248,948			248,948
Corporate notes		—		2,339,106		2,339,106	Corporate notes	—			2,517,406			2,517,406
Commercial paper		—		838,578		838,578	Commercial paper	—			1,051,720			1,051,720
Certificates of deposit		—		508,930		508,930	Certificates of deposit	—			388,741			388,741
Marketable equity securities							Marketable equity securities	500			—			500
Other current assets:							Other current assets:
Foreign currency contracts		—		4,273		4,273	Foreign currency contracts	—			1,979			1,979
Total	$	752,160	$	5,720,126	$	6,472,286	Total	$	2,617,593		$	4,819,621		$	7,437,214
Liabilities							Liabilities
Other current liabilities:							Other current liabilities:
Foreign currency contracts		—		2,024		2,024	Foreign currency contracts	—			4,646			4,646
Total	$	—	$	2,024	$	2,024	Total	$	—		$	4,646		$	4,646

		June 30,		December 31,
	Balance Sheet Location	2019		2018			Balance Sheet Location	March 31, 2020		December 31, 2019
Assets						Assets
Foreign currency contracts not designated as hedging instruments	Other current assets	$	4,273	$	1,343	Foreign currency contracts not designated as hedging instruments	Other current assets	$	1,979	$	3,756
Liabilities						Liabilities
Foreign currency contracts not designated as hedging instruments	Other current liabilities	$	2,024	$	3,826	Foreign currency contracts not designated as hedging instruments	Other current liabilities	$	4,646	$	1,573


	March 31, 2020		December 31, 2019
Property and equipment, net:
United States	$	1,053,030	$	999,552
International	28,341		32,229
Total property and equipment, net	$	1,081,371	$	1,031,781

	~~Six Months Ended~~
	~~June 30,~~
	~~2019~~
~~Supplemental Cash Flows Information~~
~~Cash paid for amounts included in the measurement of lease liabilities:~~
~~Operating cash flows from operating leases~~		~~78,191~~
~~Operating cash flows from finance leases~~		~~1,381~~
~~Financing cash flows from finance leases~~		~~37,933~~
~~Right-of-use assets obtained in exchange for lease obligations:~~
~~Operating leases~~		~~26,760~~
~~Finance leases~~		—

	~~June 30,~~
	~~2019~~
~~Lease Term and Discount Rate~~
~~Weighted-average remaining lease term (years):~~
~~Operating leases~~		~~7.0~~
~~Finance leases~~		~~1.0~~
~~Weighted-average discount rate:~~
~~Operating leases~~		~~4.5~~	%
~~Finance leases~~		~~3.7~~	%

	Operating			Finance						Sublease
	Leases			Leases			Total			Income
Years Ending December 31,
Remainder of 2019	$	73,086		$	29,876		$	102,962		$	(11,851	)
2020		170,727			23,845			194,572			(15,141	)
2021		129,629			569			130,198			(11,759	)
2022		106,720			—			106,720			(1,318	)
2023		78,004			—			78,004			—
Thereafter		324,200			—			324,200			—
Total future lease payments		882,366			54,290			936,656		$	(40,069	)
Less: leases not yet commenced		(5,773	)		—			(5,773	)
Less: imputed interest		(132,461	)		(1,121	)		(133,582	)
Total lease liabilities	$	744,132		$	53,169		$	797,301
Reconciliation of lease liabilities as shown in the consolidated balance sheets
Operating lease liabilities, short-term	$	129,919		$	—		$	129,919
Operating lease liabilities, long-term		614,213			—			614,213
Finance lease liabilities, short-term		—			45,593			45,593
Finance lease liabilities, long-term		—			7,576			7,576
Total lease liabilities	$	744,132		$	53,169		$	797,301

Goodwill
Balance as of December 31, 2018	$	1,227,269
Acquisition		19,092
Other		522
Balance as of June 30, 2019	$	1,246,883


Goodwill
Balance as of December 31, 2019	$	1,256,699
Acquisition	18,590
Other	(5,656)
Balance as of March 31, 2020	$	1,269,633

	Gross Carrying		Accumulated			Net Carrying
	Value		Amortization			Value			Gross Carrying Value		Accumulated Amortization		Net Carrying Value
June 30, 2019:
March 31, 2020:								March 31, 2020:
Patents and developed technologies	$	107,611	$	(56,889	)	$	50,722	Patents and developed technologies	$	109,703	$	(46,551)	$	63,152
Advertiser relationships		9,300		(9,300	)		—
Other								Other	1,433		(20)		1,413
Total	$	116,911	$	(66,189	)	$	50,722	Total	$	111,136	$	(46,571)	$	64,565
December 31, 2018:
December 31, 2019:								December 31, 2019:
Patents and developed technologies	$	93,211	$	(48,806	)	$	44,405	Patents and developed technologies	$	96,636	$	(41,530)	$	55,106
Publisher and advertiser relationships		9,300		(8,680	)		620

Total	$	102,511	$	(57,486	)	$	45,025	Total	$	96,636	$	(41,530)	$	55,106

Remainder of 2019	$	7,613
2020		12,664

Remainder of 2020			Remainder of 2020	$	16,948
2021		9,801	2021	15,815
2022		5,921	2022	10,589
2023		5,214	2023	6,829
2024			2024	6,026
Thereafter		9,509	Thereafter	8,358
Total	$	50,722	Total	$	64,565

	June 30, 2019									December 31, 2018
	2019 Notes			2021 Notes			2024 Notes			2019 Notes			2021 Notes			2024 Notes
Principal amounts:
Principal	$	935,000		$	954,000		$	1,150,000		$	935,000		$	954,000		$	1,150,000
Unamortized debt discount and issuance costs ⁽¹⁾		(11,352	)		(107,843	)		(223,065	)		(37,672	)		(130,232	)		(242,846	)
Net carrying amount	$	923,648		$	846,157		$	926,935		$	897,328		$	823,768		$	907,154
Carrying amount of the equity component ⁽²⁾	$	222,826		$	283,283		$	254,981		$	222,826		$	283,283		$	254,981

	PRSUs Outstanding
				Weighted-
				Average Grant-
				Date Fair Value
	Shares			Per Share
Unvested and outstanding at December 31, 2018		390		$	35.55
Granted (100% target level)		646		$	31.52
Additional earned performance shares related to 2018 grants		362		$	35.55
Vested (193% target level)		(752	)	$	35.55
Unvested and outstanding at June 30, 2019		646		$	31.52


	PRSUs Outstanding
	Shares	Weighted- Average Grant- Date Fair Value Per Share
Unvested and outstanding at December 31, 2019	646	$	31.52

Vested (100% target level)	(646)	$	31.52
Unvested and outstanding at March 31, 2020	—	$	—

	TSR RSUs Outstanding
				Weighted-
				Average Grant-
				Date Fair Value
	Shares			Per Share
Unvested and outstanding at December 31, 2018		420		$	45.78
Granted (100% target level)		431		$	30.60
Additional earned performance shares related to 2018 grants		30		$	13.02
Vested (132% target level)		(122	)	$	13.02
Unvested and outstanding at June 30, 2019		759		$	41.15

	RSUs Outstanding
				Weighted-			RSUs Outstanding
				Average Grant-			Shares	Weighted- Average Grant- Date Fair Value Per Share
				Date Fair Value
	Shares			Per Share
Unvested and outstanding at December 31, 2018		30,387		$	24.97
Unvested and outstanding at December 31, 2019						Unvested and outstanding at December 31, 2019	31,731	$	29.74
Granted		11,760		$	31.93	Granted	2,076	$	32.78
Vested		(6,258	)	$	24.51	Vested	(3,198)	$	25.97
Canceled		(1,482	)	$	24.44	Canceled	(824)	$	32.27
Unvested and outstanding at June 30, 2019		34,407		$	27.46
Unvested and outstanding at March 31, 2020						Unvested and outstanding at March 31, 2020	29,785	$	30.29

	Payments Due by Year
			Remainder of
	Total		2019		2020-2021		2022-2023		Thereafter
	(In thousands)
2019 Notes	$	936,178	$	936,178	$	—	$	—	$	—
2021 Notes		977,915		4,809		973,106		—		—
2024 Notes		1,164,352		1,438		5,742		5,734		1,151,438
Operating lease obligations ⁽¹⁾		882,366		73,086		300,356		184,724		324,200
Finance lease obligations		54,290		29,876		24,414		—		—
Other contractual commitments ⁽²⁾		435,222		57,302		215,272		151,103		11,545
Total contractual obligations	$	4,450,323	$	1,102,689	$	1,518,890	$	341,561	$	1,487,183