TWITTER, INC.

FORM 10-K
(Annual Report)

Filed 02/29/16 for the Period Ending 12/31/15

Address 1355 MARKET STREET, SUITE 900

San Francisco, CA 94103
Telephone (415) 222-9670
CIK 0001418091
Symbol TWTR
SIC Code 7370 - Computer Programming, Data Processing, And
Fiscal Year 12/31

http://www.edgar-online.com
Copyright 2016, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
ForthefiscalyearendedDecember31,2015
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FORTHETRANSITIONPERIODFROMTO
CommissionFileNumber001-36164

Twitter, Inc.
(Exact name of registrant as specified in its charter)

Delaware 20-8913779
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1355 Market Street, Suite 900
San Francisco, California 94103
(Address of principal executive offices and Zip Code)
(415) 222-9670
(Registrants telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered

CommonStock,ParValue$0.000005PerShare NewYorkStockExchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicatebycheckmarkiftheregistrantisawell-knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.YESx
NO
IndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13or15(d)oftheAct.YES
NOx
Indicatebycheckmarkwhethertheregistrant:(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934duringthepreceding
12months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.YESx
NO
IndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyandpostedonitscorporateWebsite,ifany,everyInteractiveDataFilerequiredtobesubmittedand
postedpursuanttoRule405ofRegulationS-T(232.405ofthischapter)duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmit
andpostsuchfiles).YESx
NO
IndicatebycheckmarkifdisclosureofdelinquentfilerspursuanttoItem405ofRegulationS-K(229.405ofthischapter)isnotcontainedherein,andwillnotbecontained,to
thebestofregistrantsknowledge,indefinitiveproxyorinformationstatementsincorporatedbyreferenceinPartIIIofthisForm10-KoranyamendmenttothisForm10-K.
Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,orasmallerreportingcompany.Seethedefinitionof
largeacceleratedfiler,acceleratedfiler,andsmallerreportingcompanyinRule12b-2oftheExchangeAct.(Checkone):

Largeacceleratedfiler x Acceleratedfiler
Non-acceleratedfiler (Donotcheckifasmallerreportingcompany) Smallerreportingcompany

Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheExchangeAct).YES
NOx
Theaggregatemarketvalueofthevotingandnon-votingcommonequityheldbynon-affiliatesoftheregistrant,basedontheclosingpriceofashareoftheregistrants
commonstockonJune30,2015asreportedbytheNewYorkStockExchangeonsuchdatewasapproximately$21,559,514,818.Sharesoftheregistrantscommonstock
heldbyeachexecutiveofficer,directorandholderof5%ormoreoftheoutstandingcommonstockhavebeenexcludedinthatsuchpersonsmaybedeemedtobe
affiliates.Thiscalculationdoesnotreflectadeterminationthatcertainpersonsareaffiliatesoftheregistrantforanyotherpurpose.
ThenumberofsharesoftheregistrantscommonstockoutstandingasofFebruary17,2016was697,726,321.
PortionsoftheregistrantsDefinitiveProxyStatementrelatingtotheAnnualMeetingofStockholdersareincorporatedbyreferenceintoPartIIIofthisAnnualReportonForm
10-Kwhereindicated.SuchDefinitiveProxyStatementwillbefiledwiththeSecuritiesandExchangeCommissionwithin120daysaftertheendoftheregistrantsfiscalyear
endedDecember31,2015.

TABLE OF CONTENTS

PARTI

Page

Item1. Business 5

Item1A. RiskFactors 10

Item1B. UnresolvedStaffComments 35

Item2. Properties 36

Item3. LegalProceedings 36

Item4. MineSafetyDisclosures 36

PARTII

Item5. MarketforRegistrantsCommonEquity,RelatedStockholderMattersandIssuerPurchasesofEquitySecurities 37

Item6. SelectedFinancialData 38

Item7. ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations 42

Item7A. QuantitativeandQualitativeDisclosuresAboutMarketRisk 61

Item8. FinancialStatementsandSupplementaryData 63

Item9. ChangesinandDisagreementsWithAccountantsonAccountingandFinancialDisclosure 99

Item9A. ControlsandProcedures 99

Item9B. OtherInformation 99

PARTIII

Item10. Directors,ExecutiveOfficersandCorporateGovernance 100

Item11. ExecutiveCompensation 100

Item12. SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholderMatters 100

Item13. CertainRelationshipsandRelatedTransactions,andDirectorIndependence 100

Item14. PrincipalAccountingFeesandServices 100

PARTIV

Item15. Exhibits,FinancialStatementSchedules 101

Signatures 102

2

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

ThisAnnualReportonForm10-Kcontainsforward-lookingstatementswithinthemeaningofSection27AoftheSecuritiesActof1933,as
amended,andSection21EoftheSecuritiesExchangeActof1934,asamended,whichstatementsinvolvesubstantialrisksanduncertainties.
Forward-lookingstatementsgenerallyrelatetofutureeventsorourfuturefinancialoroperatingperformance.Insomecases,youcanidentify
forward-lookingstatementsbecausetheycontainwordssuchasmay,will,should,expects,plans,anticipates,could,intends,target,
projects,contemplates,believes,estimates,predicts,potentialorcontinueorthenegativeofthesewordsorothersimilartermsor
expressionsthatconcernourexpectations,strategy,plansorintentions.Forward-lookingstatementscontainedinthisAnnualReportonForm10-K
include,butarenotlimitedto,statementsabout:
ourabilitytoattractandretainusersandincreasethelevelofengagementofourusers;
ourabilitytodeveloporacquirenewproducts,productfeaturesandservices,improveourexistingproductsandservicesandincrease
thevalueofourproductsandservices;
ourbusinessstrategies,plansandpriorities,includingourplansforgrowthandrefinementofourcoreservice;
ourabilitytoattractadvertiserstoourplatforms,productsandservicesandincreasetheamountthatadvertisersspendwithus;
ourexpectationsregardingourusergrowthrateandthecontinuedusageofourmobileapplications;
ourabilitytoincreaseourrevenueandourrevenuegrowthrate;
ourabilitytoimproveusermonetization,includingofourloggedoutandsyndicatedaudiences;
ourfuturefinancialperformance,includingtrendsincostperadengagement,revenue,costofrevenue,operatingexpensesand
incometaxes;
ourexpectationsregardingoutstandinglitigation;
theeffectsofseasonaltrendsonourresultsofoperations;
thesufficiencyofourcashandcashequivalentsandcashgeneratedfromoperationstomeetourworkingcapitalandcapital
expenditurerequirements;
ourabilitytotimelyandeffectivelyscaleandadaptourexistingtechnologyandnetworkinfrastructure;
ourabilitytosuccessfullyacquireandintegratecompaniesandassets;and
ourabilitytosuccessfullyenternewmarketsandmanageourinternationalexpansion,includingourabilitytooperateinthosecountries.

Wecautionyouthattheforegoinglistmaynotcontainalloftheforward-lookingstatementsmadeinthisAnnualReportonForm10-K.

Youshouldnotrelyuponforward-lookingstatementsaspredictionsoffutureevents.Wehavebasedtheforward-lookingstatements
containedinthisAnnualReportonForm10-Kprimarilyonourcurrentexpectationsandprojectionsaboutfutureeventsandtrendsthatwebelieve
mayaffectourbusiness,financialcondition,operatingresults,cashflowsorprospects.Theoutcomeoftheeventsdescribedintheseforward-
lookingstatementsissubjecttorisks,uncertaintiesandotherfactorsdescribedinthesectiontitledRiskFactorsandelsewhereinthisAnnual
ReportonForm10-K.Moreover,weoperateinaverycompetitiveandrapidlychangingenvironment.Newrisksanduncertaintiesemergefromtime
totimeanditisnotpossibleforustopredictallrisksanduncertaintiesthatcouldhaveanimpactontheforward-lookingstatementscontainedinthis
AnnualReportonForm10-K.Wecannotassureyouthattheresults,eventsandcircumstancesreflectedintheforward-lookingstatementswillbe
achievedoroccur,andactualresults,eventsorcircumstancescoulddiffermateriallyfromthosedescribedintheforward-lookingstatements.

Theforward-lookingstatementsmadeinthisAnnualReportonForm10-Krelateonlytoeventsasofthedateonwhichthestatementsare
made.Weundertakenoobligationtoupdateanyforward-lookingstatementsmadeinthisAnnualReportonForm10-Ktoreflecteventsor
circumstancesafterthedateofthisAnnualReportonForm10-Kortoreflectnewinformationortheoccurrenceofunanticipatedevents,exceptas
requiredbylaw.Wemaynotactuallyachievetheplans,intentionsorexpectationsdisclosedinourforward-lookingstatementsandyoushouldnot
placeunduerelianceonourforward-lookingstatements.Ourforward-lookingstatementsdonotreflectthepotentialimpactofanyfutureacquisitions,
mergers,dispositions,jointventuresorinvestmentswemaymake.

NOTE REGARDING KEY METRICS

Wereviewanumberofmetrics,includingmonthlyactiveusers,orMAUs,changesinadengagementsandchangesincostperad
engagement,toevaluateourbusiness,measureourperformance,identifytrendsaffectingourbusiness,formulatebusinessplansandmake
strategicdecisions.SeethesectiontitledManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperationsKeyMetrics
foradiscussionofhowwecalculateMAUs,changesinadengagementsandchangesincostperadengagement.

ThenumbersofactiveuserspresentedinthisAnnualReportonForm10-Karebasedoninternalcompanydata.Whilethesenumbersare
basedonwhatwebelievetobereasonableestimatesfortheapplicableperiodofmeasurement,thereareinherentchallengesinmeasuringusage
anduserengagementacrossourlargeuserbasearoundtheworld.Forexample,thereareanumberoffalseorspamaccountsinexistenceonour
platform.Wehaveperformedaninternalreviewofasampleofaccountsandestimatethatfalseorspamaccountsrepresentedlessthan5%ofour
MAUsasofDecember31,2014.Inmakingthisdetermination,weappliedsignificantjudgment,soourestimationoffalseorspamaccountsmaynot
accuratelyrepresenttheactualnumberofsuchaccounts,andtheactualnumberoffalseorspamaccountscouldbehigherthanwehaveestimated.
Wearecontinuallyseekingtoimproveourabilitytoestimatethetotalnumberofspamaccountsandeliminatethemfromthecalculationofouractive
users,andinthepasthavemadeimprovementsinourspamdetectioncapabilitiesthathaveresultedinthesuspensionofalargenumberof
accounts.SpamaccountsthatwehaveidentifiedarenotincludedintheactiveusernumberspresentedinthisAnnualReportonForm10-K.We
treatmultipleaccountsheldbyasinglepersonororganizationasmultipleusersforpurposesofcalculatingouractiveusersbecausewepermit
peopleandorganizationstohavemorethanoneaccount.Additionally,someaccountsusedbyorganizationsareusedbymanypeoplewithinthe
organization.Assuch,thecalculationsofouractiveusersmaynotaccuratelyreflecttheactualnumberofpeopleororganizationsusingourplatform.

Ourmetricsarealsoaffectedbyapplicationsthatautomaticallycontactourserversforregularupdateswithnodiscernibleuseraction
involved,andthisactivitycancauseoursystemtocounttheusersassociatedwithsuchapplicationsasactiveusersonthedayordayssuchcontact
occurs.InthethreemonthsendedDecember31,2014,approximately8.5%ofusersusedthirdpartyapplicationsthatmayhaveautomatically
contactedourserversforregularupdateswithoutanydiscernibleadditionaluser-initiatedaction.Assuch,thecalculationsofMAUspresentedinthis
AnnualReportonForm10-Kmaybeaffectedasaresultofthisactivity.

Inaddition,ourdataregardingusergeographiclocationforpurposesofreportingthegeographiclocationofourMAUsisbasedontheIP
addressorphonenumberassociatedwiththeaccountwhenauserinitiallyregisteredtheaccountonTwitter.TheIPaddressorphonenumbermay
notalwaysaccuratelyreflectausersactuallocationatthetimesuchuserengagedwithourplatform.

Weregularlyreviewandmayadjustourprocessesforcalculatingourinternalmetricstoimprovetheiraccuracy.Ourmeasuresofusergrowth
anduserengagementmaydifferfromestimatespublishedbythirdpartiesorfromsimilarly-titledmetricsofourcompetitorsduetodifferencesin
methodology.WepresentanddiscussourtotalaudiencebasedonbothinternalmetricsandrelyingondatafromGoogleAnalytics,whichmeasures
logged-outvisitorstoourproperties.

4

PA RT I

Item 1. BUSINESS
Overview
Twittergiveseveryonethepowertocreateandshareideasandinformationinstantlywithoutbarriers.Ourserviceislivelivecommentary,
liveconnections,liveconversations.Whetheritisbreakingnews,entertainment,sports,oreverydaytopics,hearingaboutandwatchingaliveevent
unfoldisthefastestwaytounderstandthepowerofTwitter.Twitterhasalwaysbeenconsidereda"secondscreen"forwhatishappeninginthe
worldandwebelievewecanbecomethefirstscreenforeverythingthatishappeningnow.Andbydoingso,webelievewecanbuildtheplanets
largestdailyconnectedaudience.

Ourcurrentstrategyfor2016consistsofthefollowingobjectives:
Our Users .Wearecommittedtorefiningourcoreservicetobetterenablepeopletomoreeasilycreate,shareandconsumecontent
thatisimportanttothem.Aspartofthatstrategy,wewillbefocusingonlivestreamingvideo,whichwebelieveisastrongcomplement
tothelivenatureofTwitter.Wewillalsobeworkingtowardgivingourcreatorsandinfluencersbettertoolstobuildandconnectwith
theirfansandaudiencethroughTwitter.Finally,weintendtoinvestmoreresourcesinmakingourplatformsaferbyimplementing
technologytobetterdetecttheuseofrepeatabusiveaccounts,makingitsimplerforouruserstoreportmultipleabusiveTweetsor
accounts,andgivingpeoplesimplertoolstocurateandcontroltheirexperienceonTwitter.
Our Advertisers .Ourthreemaininitiativestoimproveouradvertisersabilitytoconnectwiththeircustomersare:(i)buildingarich
canvasformarketersbyincorporatingadditionalfeaturessuchasvideointoourPromotedProducts,(ii)increasingadvertisersreturn
oninvestment,orROI,withimprovedmeasurement,biddingandrelevancecapabilitiesand(iii)increasingadvertisersscaleandreach
byleveragingTwittersuniqueglobalaudience.
Our Developers. Wearecommittedtoprovidingaplatformfordeveloperstobuild,grow,andgeneraterevenuewiththeirsitesand
apps.Inturn,webelievethatthesesitesandappsprovideuswithstrategicvaluebyenablingustodemonstratetheimportanceof
TweetsandextendtheirreachbeyondTwitter.

Products and Services for Users

Twitter. Twitterisaglobalplatformforpublicself-expressionandconversationinrealtime.Bydevelopingawayforpeopletoconsume,
create,distributeanddiscovercontent,Twitterhasdemocratizedcontentcreationanddistribution.TheaudienceforTwitterisnotlimitedtoour
logged-inusersontheTwitterplatform,butratherextendstoalargerglobalaudience.

ThepublicnatureoftheTwitterplatformallowsusandotherstoextendthereachofTwittercontentbeyondourproperties.Mediaoutletsand
ourplatformpartnersdistributeTweetsbeyondourpropertiestocomplementtheircontentbymakingitmoretimely,relevantandcomprehensive.
Theseoutletsandpartnersalsoaddvaluetoouruserexperiencebycontributingcontenttoourplatform.Manyoftheworldsmosttrustedmedia
outlets,includingtheBBC,CNNandTimesofIndia,regularlyuseTwitterasaplatformforcontentdistribution.

Periscope and Vine. Ourmobileapplication,Periscope,letsanyonebroadcastandwatchvideolivewithothers.Werecentlyaddedthe

abilitytobroadcastfromaGoProcamera,andtowatchanybroadcastlivefromaTweet.PairingPeriscopewithTwittergivesbroadcastersgreater
distribution(anywhereaTweetcanbedisplayed,aPeriscopecantoo)andtheabilitytointegrateintoourrevenueproducts.Vineisamobile
applicationthatenablesuserstocreateanddistributeshortloopingvideosofuptosixsecondsinlength.Wedonotcurrentlymonetizevideoson
PeriscopeorVine,otherthantotheextenttheycanbeintegratedintoourrevenueproducts.

Products and Services for Advertisers

OurPromotedProductsenableouradvertiserstopromotetheirbrands,productsandservices,amplifytheirvisibilityandreach,andextend
theconversationaroundtheiradvertisingcampaigns.Weenableouradvertiserstotargetanaudiencebasedonavarietyoffactors,includinga
usersInterestGraph.TheInterestGraphmaps,amongotherthings,interestsbasedonusersfollowedandactionstakenonourplatform,suchas
TweetscreatedandengagementwithTweets.WebelieveausersInterestGraphproducesaclearandreal-timesignalofausersinterests,greatly
enhancingtherelevanceoftheadswecandisplayforusersandenhancingourtargetingcapabilitiesforadvertisers.OurPromotedProductsare
incorporatedintoourplatformasnativeadvertisingandaredesignedtobeascompellingandusefultoourusersasorganiccontentonourplatform.

Currently,ourPromotedProducts(allofwhicharelabeledpromotedwithinTwitter)consistof:
Promoted Tweets. PromotedTweetsappearwithinauserstimelineorsearchresultsjustlikeanordinaryTweetregardlessofdevice.
UsingourproprietaryalgorithmandunderstandingofeachusersInterestGraph,wecandeliverPromotedTweetsthatareintendedto
berelevanttoaparticularuser.Ourgoalistoenableadvertiserstocreateandoptimizesuccessfulmarketingcampaignsandpay
onlyfortheuseractionsthatarealignedwiththeirmarketingobjectives.Asaresult,wehaveaddedproductfeaturestoPromoted
Tweetscampaignsbasedonadvertiserobjectives,whichmayincludeTweetengagements(e.g.,retweets,repliesandlikes),app
installsorengagements,websiteclicksorconversions,orvideoviews.
Promoted Accounts .PromotedAccountsappearinthesameformatandplaceasaccountssuggestedbyourWhotoFollow
recommendationengine,orinsomecases,inTweetsinauserstimeline.PromotedAccountsprovideawayforouradvertiserstogrow
acommunityofuserswhoareinterestedintheirbusiness,productsorservices.
Promoted Trends. PromotedTrendsappearatthetopofthelistoftrendingtopicsforanentiredayinaparticularcountryorona
globalbasis.WhenauserclicksonaPromotedTrend,searchresultsforthattrendareshowninatimelineandaPromotedTweet
createdbyouradvertisersisdisplayedtotheuseratthetopofthosesearchresults.WefeatureonePromotedTrendperdayper
geography.

Ourtechnologyplatformandinformationdatabaseenableustoprovidetargetingcapabilitiesbasedonaudienceattributeslikegeography,
interests,keyword,televisionconversation,eventanddevicesthatmakeitpossibleforadvertiserstopromotetheirbrands,productsandservices,
amplifytheirvisibilityandreach,andcomplementandextendtheconversationaroundtheiradvertisingcampaigns.

Ourplatformalsoallowscustomerstoadvertiseacrossthemobileecosystem,bothonTwittersownedandoperatedpropertiesaswellasoff
Twitteronthirdpartypublisherswebsites,applicationsandotherofferings,acrossthefulluserlifecyclefromacquiringnewuserstoengaging
existingusers.WeenableadvertiserstoextendtheirreachbeyondTwitterthrough:

MoPub,ourmobile-focusedadvertisingexchange,whichcombinesadserving,adnetworkmediationandareal-timebiddingexchange
intoonecomprehensivemonetizationplatform.
TwitterAudiencePlatform,anadvertisingofferingthatenablesadvertiserstoextendtheiradvertisingcampaignswithTwitterPromoted
ProductstoaudiencesoffTwitterwhileretainingaccesstoTwittersmeasurement,targetingandcreativetools.
PerformancemarketingofferingbuiltuponTellAparttechnology,whichprovidesretailersande-commerceadvertisersunique
retargetingcapabilitiesacrossdesktopandmobileweb.

Products for Developers

Weprovideasetoftools,publicAPIsandembeddablewidgetsthatdeveloperscanusetocontributetheircontenttoourplatform,syndicate
anddistributeTwittercontentacrosstheirpropertiesandenhancetheirwebsitesandapplicationswithTwittercontent.Websitesintegratingwith
Twitteraddvaluetoouruserexperience.Indeedmanyapplicationshavebeenregisteredbydeveloperstoenablethemtointegratewithour
platform,andleverageTwittercontenttoenhanceandextendtheirapplicationsinnewandcreativeways.Thegoalofourplatformproduct
developmentistomakeiteasyfordeveloperstointegrateseamlesslywithTwitter.

OurFabricplatformofferslightweightmodularsoftwaredevelopmentkitsthathelpdevelopersbuildmorestableapplications,givesthem
mobileanalytics,theabilitytogeneraterevenuethroughTwittersmobile-focusedadvertisingexchange,MoPub,andallowsthemtotapintoTwitters
sign-insystemsforsimpleridentityverification.Fabricalsoprovidesasimplewayfordeveloperstoincorporatereal-timeTwittercontentforgreater
syndication.

Products for Data Partners

WeoffersubscriptionaccesstoourpublicdatafeedforpartnerswhowishtoaccessdatabeyondourpublicAPI,whichoffersalimited
amountofourpublicdataforfree.OurGnipbrandedproductsandservicesoffermoresophisticateddatasetsandbetterdataenrichmentstoallow
developersandbusinessestoutilizeourpubliccontenttoderivebusinessinsightsandbuildproductsusingtheuniquecontentthatissharedon
Twitter.

Competition
Ourbusinessischaracterizedbyrapidtechnologicalchange,frequentproductinnovationandcontinuouslyevolvinguser,advertiser,platform
partneranddeveloperpreferencesandexpectations.Wefacesignificantcompetitionineveryaspectofourbusiness,includingfromcompaniesthat
providetoolstofacilitatecommunicationsandthesharingofinformation,companiesthatenablemarketerstodisplayadvertising,otheronlinead
networks,exchangesandplatforms,andcompaniesthatprovidedevelopmentplatformsforapplicationdevelopers.Wecompetetoattract,engage,
andretainpeoplewhouseourproducts,toattractandretainmarketers,andtoattractandretaindeveloperstobuildcompellingmobileandweb
applicationsthatintegratewithourproducts.Wealsocompetetoattractandretainemployees,especiallysoftwareengineers,designers,and
productmanagers.

Wecompetewiththefollowingcompanies:
Companiesthatofferproductsthatenableeveryonetocreateandshareideasandotherinformation.Theseofferingsinclude,for
example,FacebookandGoogle,aswellaslargelyregionalsocialmediaandmessagingcompaniesthathavestrongpositionsin
particularcountries.
Companiesthatdevelopapplications,particularlymobileapplications,thatcreate,syndicateanddistributecontentacrossinternet
properties.
Traditional,online,andmobilebusinessesthatenablemarketerstoreachtheiraudiencesand/ordeveloptoolsandsystemsfor
managingandoptimizingadvertisingcampaigns.

Asweintroducenewproducts,asourexistingproductsevolve,orasothercompaniesintroducenewproductsandservices,wemaybecome
subjecttoadditionalcompetition.

Webelievethatwecompetefavorablyonthefactorsdescribedabove.However,ourindustryisevolvingrapidlyandisbecomingincreasingly
competitive.SeethesectionstitledRiskFactorsIfweareunabletocompeteeffectivelyforusersandadvertiserspend,ourbusinessand
operatingresultscouldbeharmedandRiskFactorsWedependonhighlyskilledpersonneltogrowandoperateourbusiness,andifweare
unabletohire,retainandmotivateourpersonnel,wemaynotbeabletogroweffectively.

Technology, Research and Development

Twitteriscomposedofasetofcore,scalableanddistributedservicesthatarebuiltfromproprietaryandopensourcetechnologies.These
systemsarecapableofdeliveringbillionsofshortmessagestohundredsofmillionsofpeopleadayinanefficientandreliableway.Wecontinueto
investinourexistingproductsandservicesaswellasdevelopnewproductsandservicesthroughresearchandproductdevelopment.

Sales and Marketing

Wehaveaglobalsalesforceandsalessupportstaffthatisfocusedonattractingandretainingadvertisers.Oursalesforceandsalessupport
staffassistsadvertisersthroughouttheadvertisingcampaigncycle,frompre-purchasedecisionmakingtoreal-timeoptimizationsastheyutilizeour
campaignmanagementtools,andtopost-campaignanalyticsreportstoassesstheeffectivenessoftheiradvertisingcampaigns.Ouradvertisers
alsouseourself-serveadvertisingplatformtolaunchandmanagetheiradvertisingcampaigns.

Sinceourinception,ouruserbasehasgrownprimarilybyword-of-mouth.Historically,wehavebuiltourbrandthroughtheseeffortsand
increasedusageofTwitterworldwidewithrelativelyminimalmarketingcosts.However,webegantospendmoreonsalesandmarketingin2015
thanwehavehadhistorically,andexpectoursalesandmarketingexpensetocontinuetoincreaseinabsolutedollarsin2016.

Intellectual Property
Weseektoprotectourintellectualpropertyrightsbyrelyingonfederal,stateandcommonlawrightsintheUnitedStatesandothercountries,
aswellascontractualrestrictions.Wegenerallyenterintoconfidentialityandinventionassignmentagreementswithouremployeesandcontractors,
andconfidentialityagreementswithotherthirdparties,inordertolimitaccessto,anddisclosureanduseof,ourconfidentialinformationand
proprietarytechnology.Inadditiontothesecontractualarrangements,wealsorelyonacombinationoftrademarks,tradedress,domainnames,
copyrights,tradesecretsandpatentstohelpprotectourbrandandourotherintellectualproperty.

AsofDecember31,2015,wehad990issuedpatentsintheUnitedStatesandforeigncountriesrelatingtomessagedistribution,graphical
userinterfaces,securityandrelatedtechnologies.OurissuedUnitedStatespatentsareexpectedtoexpirebetween2016and2033.

Wemaybeunabletoobtainpatentortrademarkprotectionforourtechnologiesandbrands,andourexistingpatentsandtrademarks,and
anypatentsortrademarksthatmaybeissuedinthefuture,maynotprovideuswithcompetitiveadvantagesordistinguishourproductsandservices
fromthoseofourcompetitors.Inaddition,anypatentsandtrademarksmaybecontested,circumventedorfoundunenforceableorinvalid,andwe
maynotbeabletopreventthirdpartiesfrominfringing,dilutingorotherwiseviolatingthem.

InMay2013,weimplementedourInnovatorsPatentAgreement,orIPA,whichweenterintowithouremployeesandconsultants,including
ourfounders.WeimplementedtheIPAbecausewewereconcernedabouttherecentproliferationofoffensivepatentlawsuits,includinglawsuitsby
non-practicingentities.WearealsoencouragingothercompaniestoimplementtheIPAinanefforttoreducethenumberofpatentswithoffensive
rightsthatmaybetransferredtothirdparties,includingnon-practicingentities.Webelievethatareductioninthenumberofpatentswith
transferrableoffensiverightsmayreducethenumberofoffensivelawsuitsthatmaybefiled,particularlybynon-practicingentities.

TheIPAlimitsourabilitytopreventinfringementofourpatents.SeethesectiontitledRiskFactorsOurintellectualpropertyrightsare
valuable,andanyinabilitytoprotectthemcouldreducethevalueofourproducts,servicesandbrandforafurtherdiscussionoftheIPA.

CompaniesintheInternet,technologyandmediaindustriesownlargenumbersofpatents,copyrights,trademarksandtradesecrets,and
frequentlyenterintolitigationbasedonallegationsofinfringement,misappropriation,orotherviolationsofintellectualpropertyorotherrights.In
addition,variousnon-practicingentitiesthatownpatentsandotherintellectualpropertyrightsoftenattempttoaggressivelyasserttheirrightsin
ordertoextractvaluefromtechnologycompanies.Wearepresentlyinvolvedinanumberofintellectualpropertylawsuits,andfromtimetotimewe
face,andweexpecttofaceinthefuture,allegationsthatwehaveinfringedorotherwiseviolatedthepatents,copyrights,trademarks,tradesecrets,
andotherintellectualpropertyrightsofthirdparties,includingourcompetitorsandnon-practicingentities.Aswefaceincreasingcompetitionandas
ourbusinessgrows,wewilllikelyfacemoreintellectualproperty-relatedclaimsandlitigationmatters.Foradditionalinformation,seethesections
titledRiskFactorsWearecurrently,andexpecttobeinthefuture,partytointellectualpropertyrightsclaimsthatareexpensiveandtime
consumingtodefend,and,ifresolvedadversely,couldhaveasignificantimpactonourbusiness,financialconditionoroperatingresultsandLegal
Proceedings.

Government Regulation
WearesubjecttoanumberofU.S.federalandstateandforeignlawsandregulationsthatinvolvematterscentraltoourbusiness.These
lawsandregulationsmayinvolveprivacy,rightsofpublicity,dataprotection,contentregulation,intellectualproperty,competition,protectionof
minors,consumerprotection,taxationorothersubjects.Manyoftheselawsandregulationsarestillevolvingandbeingtestedincourtsandcouldbe
interpretedinwaysthatcouldharmourbusiness.Inaddition,theapplicationandinterpretationoftheselawsandregulationsoftenareuncertain,
particularlyinthenewandrapidlyevolvingindustryinwhichweoperate.

Wearealsosubjecttofederal,stateandforeignlawsregardingprivacyandtheprotectionofuserdata.Foreigndataprotection,privacy,
consumerprotection,contentregulationandotherlawsandregulationsareoftenmorerestrictivethanthoseintheUnitedStates.Therearealsoa
numberoflegislativeproposalspendingbeforetheU.S.Congress,variousstatelegislativebodiesandforeigngovernmentsconcerningdata
protectionthatcouldaffectus.Forexample,regulationrelatingtothe1995EuropeanUnionDataProtectionDirectiveiscurrentlybeingconsidered
byEuropeanlegislativebodiesthatmayincludemorestringentoperationalrequirementsforentitiesprocessingpersonalinformationandsignificant
penaltiesfornon-compliance.

InMarch2011,toresolveaninvestigationintovariousincidents,weenteredintoasettlementagreementwiththeFederalTradeCommission,
orFTC,that,amongotherthings,requiresustoestablishaninformationsecurityprogramdesignedtoprotectnon-publicconsumerinformationand
alsorequiresthatweobtainbiennialindependentsecurityassessments.TheFTCinvestigationwastheresultoftwoseparateincidentsinwhich
unauthorizedintrudersobtainedadministrativepasswordsofcertainTwitteremployees.Inoneoftheincidents,theintruderaccessedthe
employeesadministrativecapabilitiestofraudulentlyresetvarioususerpasswordsandpostunauthorizedTweets.Theobligationsunderthe
settlementagreementremainineffectuntilthelaterofMarch2,2031,orthedate20yearsafterthedate,ifany,onwhichtheU.S.governmentor
theFTCfilesacomplaintinfederalcourtalleginganyviolationoftheorder.Violationofexistingorfutureregulatoryorders,settlements,orconsent
decreescouldsubjectustosubstantialmonetaryfinesandotherpenaltiesthatcouldnegativelyaffectourfinancialconditionandresultsof
operations.

TwitterusersmayberestrictedfromaccessingTwitterfromcertaincountries,andothercountrieshaveintermittentlyrestrictedaccessto
Twitter.Forexample,TwitterisnotdirectlyaccessibleinChinaandhasbeenblockedinthepastinTurkey.Itispossiblethatothergovernments
mayseektorestrictaccesstoorblockourwebsiteormobileapplications,censorcontentavailablethroughourproductsorimposeotherrestrictions
thatmayaffecttheaccessibilityorusabilityofTwitterforanextendedperiodoftimeorindefinitely.Forinstance,somecountrieshaveenactedlaws
thatallowwebsitestobeblockedforhostingcertaintypesofcontent.

Foradditionalinformation,seethesectiontitledRiskFactorsOurbusinessissubjecttocomplexandevolvingU.S.andforeignlawsand
regulations.Theselawsandregulationsaresubjecttochangeanduncertaininterpretation,andcouldresultinclaims,changestoourbusiness
practices,monetarypenalties,increasedcostofoperationsordeclinesinusergrowth,userengagementoradengagement,orotherwiseharmour
business.

Information about Segment and Geographic Revenue

InformationaboutsegmentandgeographicrevenueissetforthinNote17oftheNotestoConsolidatedFinancialStatementsunderItem8of
thisAnnualReportonForm10-K.

Employees
AsofDecember31,2015,wehad3,898full-timeemployees.

Corporate Information
WewereincorporatedinDelawareinApril2007.Ourprincipalexecutiveofficesarelocatedat1355MarketStreet,Suite900,SanFrancisco,
California94103,andourtelephonenumberis(415)222-9670.WecompletedourinitialpublicofferinginNovember2013andourcommonstockis
listedontheNewYorkStockExchangeunderthesymbolTWTR.Unlessthecontextrequiresotherwise,thewordsTwitter,we,Company,us
andourrefertoTwitter,Inc.andourwhollyownedsubsidiaries.

Available Information
Ourwebsiteislocatedatwww.twitter.com,andourinvestorrelationswebsiteislocatedathttp://investor.twitterinc.com/.CopiesofourAnnual
ReportsonForm10-K,QuarterlyReportsonForm10-Q,CurrentReportsonForm8-K,andamendmentstothesereportsfiledorfurnishedpursuant
toSection13(a)or15(d)oftheSecuritiesExchangeActof1934,asamended,ortheExchangeAct,areavailable,freeofcharge,onourinvestor
relationswebsiteassoonasreasonablypracticableafterwefilesuchmaterialelectronicallywithorfurnishittotheSecuritiesandExchange
Commission,ortheSEC.TheSECalsomaintainsawebsitethatcontainsourSECfilings.Theaddressofthesiteiswww.sec.gov.Further,acopy
ofthisAnnualReportonForm10-KislocatedattheSECsPublicReferenceRoomat100FStreet,NE,Washington,D.C.20549.Informationon
theoperationofthePublicReferenceRoomcanbeobtainedbycallingtheSECat1-800-SEC-0330.

WebroadcastviaPeriscopeand/orwebcastourearningscallsandcertaineventsweparticipateinorhostwithmembersoftheinvestment
communityonourinvestorrelationswebsite.Additionally,weprovidenotificationsofnewsorannouncementsregardingourfinancialperformance,
includingSECfilings,investorevents,pressandearningsreleases,andblogsaspartofourinvestorrelationswebsite.Wehaveused,andintends
tocontinuetouse,ourinvestorrelationswebsite,aswellascertainTwitteraccounts(@jack,@twitterand@twitterIR),asmeansofdisclosing
materialnon-publicinformationandforcomplyingwithitsdisclosureobligationsunderRegulationFD.Furthercorporategovernanceinformation,
includingourcertificateofincorporation,bylaws,corporategovernanceguidelines,boardcommitteecharters,andcodeofbusinessconductand
ethics,isalsoavailableonourinvestorrelationswebsiteundertheheadingCorporategovernance.Thecontentsofourwebsitesarenotintended
tobeincorporatedbyreferenceintothisAnnualReportonForm10-KorinanyotherreportordocumentwefilewiththeSEC,andanyreferencesto
ourwebsitesareintendedtobeinactivetextualreferencesonly.

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 Annual Report on Form 10-K, including the section titled Managements 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.

10


Risks Related to Our Business and Our Indust ry

If we fail to grow our user base, or if user engagement or ad engagement on our platform decline, our revenue, business and operating
results may be harmed.
Thesizeofouruserbaseandouruserslevelofengagementarecriticaltooursuccess.Wehad320millionaverageMAUsinthethree
monthsendedDecember31,2015,representinga9%increasefrom292millionaverageMAUsinthethreemonthsendedDecember31,2014,and
flatversusthethreemonthsendedSeptember30,2015.InthethreemonthsendedDecember31,2015,MAUs,excludingSMSFastFollowers,
grew6%year-over-yearto305million,butweredownonasequentialbasisforthethreemonthsendedSeptember30,2015.Ourfinancial
performancehasbeenandwillcontinuetobesignificantlydeterminedbyoursuccessingrowingthenumberofusersandincreasingtheiroverall
levelofengagementonourplatformaswellasthenumberofadengagements.Weanticipatethatourusergrowthratewillslowovertimeasthe
sizeofouruserbaseincreases.Forexample,ingeneral,ahigherproportionofInternetusersintheUnitedStatesusesTwitterthanInternetusersin
othercountriesand,inthefuture,weexpectourusergrowthrateincertaininternationalmarkets,suchasArgentina,Brazil,France,India,Japan
andthePhilippines,tocontinuetobehigherthanourusergrowthrateintheUnitedStates.Totheextentourlogged-inusergrowthrateslows,our
successwillbecomeincreasinglydependentonourabilitytoincreaselevelsofadengagementonTwitter,andmonetizingourtotalaudienceon
logged-outusageandsyndicatedpropertiesaswellasincreasingrevenuegrowthfromthesaletoadvertisersofouradvertisingproductswhichwe
placeonthirdpartypublisherswebsites,applicationsandotherofferings.Wegenerateasubstantialmajorityofourrevenuebasedupon
engagementbyouruserswiththeadsthatwedisplay.Ifpeopledonotperceiveourproductsandservicestobeuseful,reliableandtrustworthy,we
maynotbeabletoattractusersorincreasethefrequencyoftheirengagementwithourplatformandtheadsthatwedisplay.Anumberof
consumer-orientedwebsitesthatachievedearlypopularityhavesinceseentheiruserbasesorlevelsofengagementdecline,insomecases
precipitously.Thereisnoguaranteethatwewillnotexperienceasimilarerosionofouruserbaseorengagementlevels.Anumberoffactorscould
potentiallynegativelyaffectusergrowthandengagement,includingif:
users,includinginfluentialusers,suchasworldleaders,governmentofficials,celebrities,athletes,journalists,sportsteams,media
outletsandbrandsorcertainagedemographics,engagewithotherproducts,servicesoractivitiesasanalternativetoours;
weareunabletoconvincepotentialornewusersofthevalueandusefulnessofourproductsandservices;
thereisadecreaseintheperceivedquantity,qualityusefulnessorrelevanceofthecontentgeneratedbyourusers;
wefailtointroducenewandimprovedproductsorservicesorifweintroduceneworimprovedproductsorservicesthatarenot
favorablyreceivedorthatnegativelyaffectuserengagement;
technicalorotherproblemspreventusfromdeliveringourproductsorservicesinarapidandreliablemannerorotherwiseaffectthe
userexperience,includingissueswithconnectingtotheInternet;
usershavedifficultyinstalling,updating,orotherwiseaccessingourproductsorservicesonmobiledevicesasaresultofactionsbyus
orthirdpartiesthatwerelyontodistributeourproductsanddeliverourservices;
weareunabletomanageandprioritizeinformationtoensureusersarepresentedwithcontentthatisinteresting,usefulandrelevantto
them;
usersbelievethattheirexperienceisdiminishedasaresultofthedecisionswemakewithrespecttothefrequency,relevanceand
prominenceofadsthatwedisplay;
thereareuserconcernsrelatedtoprivacyandcommunication,safety,security,spamorotherhostileorinappropriateusageorother
factors;
thereareadversechangesinourproductsorservicesthataremandatedby,orthatweelecttomaketoaddress,legislation,regulatory
authoritiesorlitigation,includingsettlementsorconsentdecrees;
wefailtoprovideadequatecustomerservicetousers;or
wedonotmaintainourbrandimageorourreputationisdamaged.

WebelievethatreturningtomeaningfulMAUgrowthisdependentonimprovingourproductandfeatureofferingstodemonstrateourvalue
propositiontoalargeraudience.Ifweareunabletoincreaseouruserbase,usergrowthrateoruserengagement,orifthesemetricsdecline,our
productsandservicescouldbelessattractivetopotentialnewusers,aswellastoadvertisersandplatformpartners,whichwouldhaveamaterial
andadverseimpactonourbusiness,financialconditionandoperatingresults.

11


If our users do not continue to contribute content or their contributions are not valuable to other users, we may experience a decline in
the number of users accessing ou r products and services and user engagement, which could result in the loss of advertisers, platform
partners and revenue.
Oursuccessdependsonourabilitytoprovideusersofourproductsandserviceswithvaluablecontent,whichinturndependsonthecontent
contributedbyourusers.Webelievethatoneofourcompetitiveadvantagesisthequality,quantityandreal-timenatureofthecontentonTwitter,
andthataccesstouniqueorreal-timecontentisoneofthemainreasonsusersvisitTwitter.Ourabilitytoexpandintonewinternationalmarkets
dependsontheavailabilityofrelevantlocalcontentinthosemarkets.Weseektofosterabroadandengagedusercommunity,andweencourage
worldleaders,governmentofficials,celebrities,athletes,journalists,sportsteams,mediaoutletsandbrandstouseourproductsandservicesto
expresstheirviewstobroadaudiences.Wealsoencouragemediaoutletstouseourproductsandservicestodistributetheircontent.Ifusers,
includinginfluentialusers,donotcontinuetocontributecontenttoTwitter,andweareunabletoprovideuserswithvaluableandtimelycontent,our
userbaseanduserengagementmaydecline.Additionally,ifwearenotabletoaddressuserconcernsregardingthesafetyandsecurityofour
productsandservicesorifweareunabletosuccessfullypreventabusiveorotherhostilebehavioronourplatform,thesizeofouruserbaseand
userengagementmaydecline.Werelyonthesaleofadvertisingservicesforthesubstantialmajorityofourrevenue.Ifweexperienceadeclinein
thenumberofusers,usergrowthrate,oruserengagement,includingasaresultofthelossofworldleaders,governmentofficials,celebrities,
athletes,journalists,sportsteams,mediaoutletsandbrandswhogeneratecontentonTwitter,advertisersmaynotviewourproductsandservices
asattractivefortheirmarketingexpenditures,andmayreducetheirspendingwithuswhichwouldharmourbusinessandoperatingresults.

We generate the substantial majority of our revenue from advertising. The loss of advertising revenue could harm our business.
ThesubstantialmajorityofourrevenueiscurrentlygeneratedfromthirdpartiesadvertisingonTwitter.Wegeneratedapproximately90%of
ourrevenuefromadvertisingineachofthefiscalyearsendedDecember31,2014and2015.Wegeneratesubstantiallyallofouradvertising
revenuethroughthesaleofourthreePromotedProducts:PromotedTweets,PromotedAccountsandPromotedTrends.Asiscommoninour
industry,ouradvertisersdonothavelong-termadvertisingcommitmentswithus.Inaddition,manyofouradvertiserspurchaseouradvertising
servicesthroughoneofseverallargeadvertisingagencyholdingcompanies.Advertisingagenciesandpotentialnewadvertisersmayviewour
PromotedProductsasexperimentalandunproven,andwemayneedtodevoteadditionaltimeandresourcestoeducatethemaboutourproducts
andservices.Advertisersalsomaychoosetoreachusersthroughourfreeproductsandservices,insteadofourPromotedProducts.Advertiserswill
notcontinuetodobusinesswithus,ortheywillreducethepricestheyarewillingtopaytoadvertisewithus,ifwedonotdeliveradsinaneffective
manner,oriftheydonotbelievethattheirinvestmentinadvertisingwithuswillgenerateacompetitivereturnrelativetoalternatives,including
online,mobileandtraditionaladvertisingplatforms.Additionally,sinceourinitialpublicoffering,ourrevenuegrowthhasbeenprimarilydrivenby
increasesinthenumberofourusersandincreasesinouradloaddrivenbystrongadvertiserdemandaswellasotherfactors.Todate,ouravailable
advertisinginventoryhasbeengreaterthandemand.Ourfuturerevenuegrowth,however,maybelimitedoncertaindaysbyavailableadvertising
inventoryforspecificadtypesifwedonotincreasethenumberofourusers,theirengagementormonetizeourlargerglobalaudience.Our
advertisingrevenuecouldbeadverselyaffectedbyanumberofotherfactors,including:
decreasesinuserengagementwiththeadsonourplatformandthosethatweserveofforourplatform;
decreasesinthesizeofouruserbaseorusergrowthrate;
ifweareunabletodemonstratethevalueofourPromotedProductstoadvertisersandadvertisingagenciesorifweareunableto
measurethevalueofourPromotedProductsinamannerwhichadvertisersandadvertisingagenciesfinduseful;
ifourPromotedProductsarenotcosteffectiveorvaluableforcertaintypesofadvertisersorifweareunabletodevelopcosteffective
orvaluableadvertisingservicesfordifferenttypesofadvertisers;
ifweareunabletoconvinceadvertisersandbrandstoinvestresourcesinlearningtouseourproductsandservicesandmaintaininga
brandpresenceonTwitter;
ouradvertisersabilitytooptimizetheircampaignsormeasuretheresultsoftheircampaigns;
productorservicechangeswemaymakethatchangethefrequencyorrelativeprominenceofadsdisplayedonTwitterorthat
detrimentallyimpactrevenueintheneartermwiththegoalofachievinglongtermbenefits;
ourinabilitytoincreaseadvertiserdemandandinventory;

12

ourinabilitytoincreasetherelevanceofadsshowntousers;
ourinabilitytohelpadvertiserseffectivelytargetads,includingasaresultofthefactthatwedonotcollectextensivepersonal
informationfromourusersandthatwedonothavereal-timegeographicinformationforallofourusersparticularlyforadsserved
throughourappmobile-focusedadvertisingexchange;
decreasesinthecostperadengagement;
failuretoeffectivelymonetizeourgrowinginternationaluserbase,ourlogged-outaudienceoroursyndicatedaudience;
lossofadvertisingmarketsharetoourcompetitors;
thedegreetowhichusersaccessTwittercontentthroughapplicationsthatdonotcontainourads;
anyarrangementsorotherpartnershipswiththirdpartiestoshareourrevenue;
ournewadvertisingstrategiesdonotgaintraction;
theimpactofnewtechnologiesthatcouldblockorobscurethedisplayofourads;
adverselegaldevelopmentsrelatingtoadvertisingormeasurementtoolsrelatedtotheeffectivenessofadvertising,includinglegislative
andregulatorydevelopments,anddevelopmentsinlitigation;
ourinabilitytocreatenewproducts,productfeaturesandservicesthatsustainorincreasethevalueofouradvertisingservicestoboth
ouradvertisersandourusers;
changestoourproductsordevelopmentofnewproductsorproductfeaturesthatdecreaseusersadengagementsorlimitthetypesof
userinteractionsthatwecountasadengagements;
theimpactoffraudulentclicksorspamonourPromotedProductsandourusers;
changesinthewayouradvertisingispriced;and
theimpactofmacroeconomicconditionsandconditionsintheadvertisingindustryingeneral.

Theoccurrenceofanyoftheseorotherfactorscouldresultinareductionindemandforourads,whichmayreducethepriceswereceivefor
ourads,eitherofwhichwouldnegativelyaffectourrevenueandoperatingresults.

If we are unable to compete effectively for users and advertiser spend, our business and operating results could be harmed.
Competitionforusersofourproductsandservicesisintense.Althoughwehavedevelopedaglobalplatformforpublicself-expressionand
conversationinrealtime,wefacestrongcompetitioninourbusiness.Wecompeteagainstmanycompaniestoattractandengageusers,including
companieswhichhavegreaterfinancialresourcesandsubstantiallylargeruserbases,suchasFacebook(includingInstagramandWhatsApp),
Google,LinkedIn,MicrosoftandYahoo,whichofferavarietyofInternetandmobiledevice-basedproducts,servicesandcontent.Forexample,
FacebookoperatesasocialnetworkingsitewithsignificantlymoreusersthanTwitterandhasbeenintroducingfeaturessimilartothoseofTwitter.In
addition,Googlemayuseitsstrongpositioninoneormoremarketstogainacompetitiveadvantageoverusinareasinwhichweoperate,including
byintegratingcompetingfeaturesintoproductsorservicestheycontrol.Asaresult,ourcompetitorsmaydrawuserstowardstheirproductsor
servicesandawayfromours.Thiscoulddecreasethegrowthorengagementofouruserbase,which,inturn,wouldnegativelyaffectourbusiness.
Wealsocompeteagainstlargelyregionalsocialmediaandmessagingcompaniesthathavestrongpositionsinparticularcountries.

Webelievethatourabilitytocompeteeffectivelyforusersdependsuponmanyfactorsbothwithinandbeyondourcontrol,including:
thepopularity,usefulness,easeofuse,performanceandreliabilityofourproductsandservicescomparedtothoseofourcompetitors;
theamount,qualityandtimelinessofcontentgeneratedbyourusers;
thetimingandmarketacceptanceofourproductsandservices;
thecontinuedadoptionofourproductsandservicesinternationally;

13

ourability,inandofitselfandincomparisontotheabilityofourcompetitors,todevelopnewproductsandservicesandenhancements
toexistingproductsandservices;
thefrequencyandrelativeprominenceoftheadsdisplayedbyusorourcompetitors;
ourabilitytoestablishandmaintainrelationshipswithplatformpartnersthatintegratewithourplatform;
ourabilitytodevelopareliable,scalable,secure,high-performancetechnologyinfrastructurethatcanefficientlyhandleincreased
usageglobally;
changesmandatedby,orthatweelecttomaketoaddress,legislation,regulatoryauthoritiesorlitigation,includingsettlementsand
consentdecrees,someofwhichmayhaveadisproportionateeffectonus;
theapplicationofantitrustlawsbothintheUnitedStatesandinternationally;
governmentactionregulatingcompetition;
ourabilitytoattract,retainandmotivatetalentedemployees,particularlyengineers,designersandproductmanagers;
acquisitionsorconsolidationwithinourindustry,whichmayresultinmoreformidablecompetitors;and
ourreputationandthebrandstrengthrelativetoourcompetitors.

Wealsofacesignificantcompetitionforadvertiserspend.Thesubstantialmajorityofourrevenueiscurrentlygeneratedthroughthirdparties
advertisingonTwitter,andwecompeteagainstonlineandmobilebusinesses,includingthosereferencedabove,andtraditionalmediaoutlets,such
astelevision,radioandprint,foradvertisingbudgets.Wealsocompetewithadvertisingnetworks,exchanges,demandsideplatformsandother
platforms,suchasGoogleAdSense,DoubleClickAdExchange,YahooAdExchange,AOLsAd.comandMicrosoftMediaNetwork,formarketing
budgetsandinthedevelopmentofthetoolsandsystemsformanagingandoptimizingadvertisingcampaigns.Inordertogrowourrevenueand
improveouroperatingresults,wemustincreaseourshareofspendingonadvertisingrelativetoourcompetitors,manyofwhicharelarger
companiesthatoffermoretraditionalandwidelyacceptedadvertisingproducts.Inaddition,someofourlargercompetitorshavesubstantially
broaderproductorserviceofferingsandleveragetheirrelationshipsbasedonotherproductsorservicestogainadditionalshareofadvertising
budgets.

Webelievethatourabilitytocompeteeffectivelyforadvertiserspenddependsuponmanyfactorsbothwithinandbeyondourcontrol,
including:
thesizeandcompositionofouruserbaserelativetothoseofourcompetitors;
ouradtargetingandmeasurementcapabilities,andthoseofourcompetitors;
thetimingandmarketacceptanceofouradvertisingservices,andthoseofourcompetitors;
ourmarketingandsellingefforts,andthoseofourcompetitors;
thepricingofourPromotedProductsrelativetotheadvertisingproductsandservicesofourcompetitors;
thereturnouradvertisersreceivefromouradvertisingservices,andthoseofourcompetitors;and
ourreputationandthestrengthofourbrandrelativetoourcompetitors.

Inrecentyears,therehavebeensignificantacquisitionsandconsolidationbyandamongouractualandpotentialcompetitors.Weanticipate
thistrendofconsolidationwillcontinue,whichwillpresentheightenedcompetitivechallengesforourbusiness.Acquisitionsbyourcompetitorsmay
resultinreducedfunctionalityofourproductsandservices.Forexample,followingFacebooksacquisitionofInstagram,Facebookdisabled
InstagramsphotointegrationwithTwittersuchthatInstagramphotosarenolongerviewablewithinTweetsandusersarenowre-directedto
InstagramtoviewInstagramphotosthroughalinkwithinaTweet.Asaresult,ourusersmaybelesslikelytoclickonlinkstoInstagramphotosin
Tweets,andInstagramusersmaybelesslikelytotweetorremainactiveusersofTwitter.AnysimilareliminationofintegrationwithTwitterinthe
future,whetherbyFacebookorothers,mayadverselyimpactourbusinessandoperatingresults.

14


Consolidationmayalsoenableourlargercompetitorstoofferbundledorintegratedproductsthatfeaturealternativestoourplatform.
Reducedfunctionalityofourproductsandservices,orourcompetitorsabilitytoofferbundledorintegratedproductsthatcompetedirectlywithus,
maycauseourusergrowth,userengagementandadengagementtodeclineandadvertiserstoreducetheirspendwithus.

Ifwearenotabletocompeteeffectivelyforusersandadvertiserspendourbusinessandoperatingresultswouldbemateriallyandadversely
affected.

Our operating results may fluctuate from quarter to quarter, which makes them difficult to predict.
Ourquarterlyoperatingresultshavefluctuatedinthepastandwillfluctuateinthefuture.Asaresult,ourpastquarterlyoperatingresultsare
notnecessarilyindicatorsoffutureperformance.Ouroperatingresultsinanygivenquartercanbeinfluencedbynumerousfactors,manyofwhich
weareunabletopredictorareoutsideofourcontrol,including:
ourabilitytogrowouruserbaseanduserengagement;
ourabilitytoattractandretainadvertisersandplatformpartners;
theoccurrenceofplannedsignificantevents,suchastheWorldCup,SuperBowl,ChampionsLeagueFinal,WorldSeries,Olympics
andtheOscars,orunplannedsignificantevents,suchasnaturaldisastersandpoliticalrevolutions;
thepricingofourproductsandservices;
thedevelopmentandintroductionofnewproductsorservicesorchangesinfeaturesofexistingproductsorservices;
theimpactofcompetitorsorcompetitiveproductsandservices;
ourabilitytomaintainorincreaserevenue;
ourabilitytomaintainorimprovegrossmarginsandoperatingmargins;
increasesinresearchanddevelopment,marketingandsalesandotheroperatingexpensesthatwemayincurtogrowandexpandour
operationsandtoremaincompetitive;
stock-basedcompensationexpense;
costsrelatedtotheacquisitionofbusinesses,talent,technologiesorintellectualproperty,includingpotentiallysignificantamortization
costs;
systemfailuresresultingintheinaccessibilityofourproductsandservices;
breachesofsecurityorprivacy,andthecostsassociatedwithremediatinganysuchbreaches;
adverselitigationjudgments,settlementsorotherlitigation-relatedcosts,andthefeesassociatedwithinvestigatinganddefending
claims;
changesinthelegislativeorregulatoryenvironment,includingwithrespecttosecurity,privacyorenforcementbygovernment
regulators,includingfines,ordersorconsentdecrees;
fluctuationsincurrencyexchangeratesandchangesintheproportionofourrevenueandexpensesdenominatedinforeigncurrencies;
changesinU.S.generallyacceptedaccountingprinciples;and
changesinglobalbusinessormacroeconomicconditions.

15


Givenourlimitedoperatinghistoryandtherapidlyevolvingmarketsinwhichwecompete,ourhistoricaloperatingresultsmaynotbeusefulto
youinpredictingourfutureoperatingresults.Asourrevenuegrowthrateslows,weexpectthattheseasonalityinourbusinessmaybecomemore
pronouncedandmayinthefuturecauseouroperatingresultstofluctuate.Forexample,advertisingspendingistraditionallyseasonallystronginthe
fourthquarterofeachyearandwebelievethatthisseasonalityaffectsourquarterlyresults,whichgenerallyreflecthighersequentialadvertising
revenuegrowthfromthethirdtofourthquartercomparedtosequentialadvertisingrevenuegrowthfromthefourthquartertothesubsequentfirst
quarter.Inaddition,globaleconomicconcernscontinuetocreateuncertaintyandunpredictabilityandaddrisktoourfutureoutlook.Aneconomic
downturninanyparticularregioninwhichwedobusinessorgloballycouldresultinreductionsinadvertisingrevenue,asouradvertisersreduce
theiradvertisingbudgets,andotheradverseeffectsthatcouldharmouroperatingresults.

We depend on highly skilled personnel to grow and operate our business, and if we are unable to hire, retain and motivate our personnel,
we may not be able to grow effectively.
Ourfuturesuccesswilldependuponourcontinuedabilitytoidentify,hire,develop,motivateandretainhighlyskilledpersonnel,including
seniormanagement,engineers,designersandproductmanagers.Ourabilitytoexecuteefficientlyisdependentuponcontributionsfromour
employees,inparticularourseniormanagementteam.Wedonothaveemploymentagreementsotherthanofferletterswithanymemberofour
seniormanagementorotherkeyemployee,andwedonotmaintainkeypersonlifeinsuranceforanyemployee.Inaddition,fromtimetotime,there
maybechangesinourseniormanagementteamthatmaybedisruptivetoourbusiness.Ifourseniormanagementteam,includinganynewhires
thatwemaymake,failstoworktogethereffectivelyandtoexecuteourplansandstrategiesonatimelybasis,ourbusinesscouldbeharmed.

Ourgrowthstrategyalsodependsonourabilitytoattractandretainhighlyskilledpersonnel.Identifying,recruiting,trainingandintegrating
qualifiedindividualswillrequiresignificanttime,expenseandattention.Inadditiontohiringnewemployees,wemustcontinuetofocusonretaining
ourbestemployees.Becauseofourinitialpublicoffering,manyofouremployeesareabletoreceivesignificantproceedsfromsalesofourequityin
thepublicmarkets,whichmayreducetheirmotivationtocontinuetoworkforus.Competitionforhighlyskilledpersonnelisintense,particularlyin
theSanFranciscoBayArea,whereourheadquartersislocated.Wemayneedtoinvestsignificantamountsofcashandequitytoattractandretain
newemployeesandwemayneverrealizereturnsontheseinvestments.Ifwearenotabletoeffectivelyattractandretainemployees,ourabilityto
achieveourstrategicobjectiveswillbeadverselyimpacted,andourbusinesswillbeharmed.

If we fail to expand effectively in international markets, our revenue and our business will be harmed.
WemaynotbeabletomonetizeourproductsandservicesinternationallyaseffectivelyasintheUnitedStatesasaresultofcompetition,
advertiserdemand,differencesinthedigitaladvertisingmarketanddigitaladvertisingconventions,aswellasdifferencesinthewaythatusersin
differentcountriesaccessorutilizeourproductsandservices.Forexample,mostusersinemergingmarketslikeIndiaandPakistanusefeature
phonesandcommunicateviaSMSmessaging,bothofwhichhavelimitedfunctionalityandneitherofwhichmaybeabletotakefulladvantageofour
productsandservicesofferedonsmartphoneorourwebsiteordesktopapplications.UserswhoaccessTwitterthroughSMSmessagingmay
monetizeatlowerratesthanotherusers.Differencesinthecompetitivelandscapeininternationalmarketsmayimpactourabilitytomonetizeour
productsandservices.Forexample,inSouthKoreawefaceintensecompetitionfromamessagingserviceofferedbyKakao,whichofferssomeof
thesamecommunicationfeaturesasTwitter.Theexistenceofawell-establishedcompetitorinaninternationalmarketmayadverselyaffectour
abilitytoincreaseouruserbase,attractplatformpartnersandadvertisersandmonetizeourproductsinsuchmarket.Wemayalsoexperience
differencesinadvertiserdemandininternationalmarkets.Forexample,duringtimesofpoliticalupheaval,advertisersmaychoosenottoadvertise
onTwitter.Certaininternationalmarketsarealsonotasfamiliarwithdigitaladvertisingingeneral,orinnewformsofdigitaladvertisingsuchasour
PromotedProducts.Further,wefacechallengesinprovidingcertainadvertisingproducts,featuresoranalyticsincertaininternationalmarkets,such
astheEuropeanUnion,duetogovernmentregulation.OurproductsandservicesmayalsobeuseddifferentlyabroadthanintheUnitedStates.In
particular,incertaininternationalmarketswhereInternetaccessisnotasrapidorreliableasintheUnitedStates,userstendnottotakeadvantage
ofcertainfeaturesofourproductsandservices,suchasrichmediaincludedinTweets.Thelimitationofmobiledevicesofusersinemergingand
othermarketslimitsourabilitytodelivercertainfeaturestothoseusersandmaylimittheabilityofadvertiserstodelivercompellingadvertisements
tousersinthesemarketswhichmayresultinreducedadengagementswhichwouldadverselyaffectourbusinessandoperatingresults.

16


Ifourrevenuefromourinternationaloperations,andparticularlyfromouroperationsinthecountriesandregionswherewehavefocusedour
spending,doesnotexceedtheexpenseofestablishingandmaintainingtheseoperations,ourbusinessandoperatingresultswillsuffer.Inaddition,
ouruserbasemayexpandmorerapidlyininternationalregionswherewearelesssuccessfulinmonetizingourproductsandservices.Asouruser
basecontinuestoexpandinternationally,wewillneedtoincreaserevenuefromtheactivitygeneratedbyourinternationalusersinordertogrowour
business.Forexample,usersoutsidetheUnitedStatesconstituted80%ofouraverageMAUsinthethreemonthsendedDecember31,2015,but
ourinternationalrevenue,asdeterminedbasedonthebillinglocationofouradvertisers,wasonly35%ofourconsolidatedrevenueinthethree
monthsendedDecember31,2015.Ourinabilitytosuccessfullyexpandinternationallycouldadverselyaffectourbusiness,financialconditionand
operatingresults.

User growth and engagement depend upon effective interoperation with operating systems, networks, devices, web browsers and
standards that we do not control.
Wemakeourproductsandservicesavailableacrossavarietyofoperatingsystemsandthroughwebsites.Wearedependentonthe
interoperabilityofourproductsandserviceswithpopulardevices,desktopandmobileoperatingsystemsandwebbrowsersthatwedonotcontrol,
suchasMacOS,Windows,Android,iOS,ChromeandFirefox.Anychangesinsuchsystems,devicesorwebbrowsersthatdegradethe
functionalityofourproductsandservices,makeitdifficultforouruserstoaccessourcontent,limitourabilitytotargetormeasuretheeffectiveness
ofads,imposefeesrelatedtoourproductsorservicesorgivepreferentialtreatmenttocompetitiveproductsorservicescouldadverselyaffectusage
ofourproductsandservices.Further,ifthenumberofplatformsforwhichwedevelopourproductexpands,itwillresultinanincreaseinour
operatingexpenses.Inordertodeliverhighqualityproductsandservices,itisimportantthatourproductsandservicesworkwellwitharangeof
operatingsystems,networks,devices,webbrowsersandstandardsthatwedonotcontrol.Inaddition,becauseamajorityofourusersaccessour
productsandservicesthroughmobiledevices,weareparticularlydependentontheinteroperabilityofourproductsandserviceswithmobiledevices
andoperatingsystems.Wemaynotbesuccessfulindevelopingrelationshipswithkeyparticipantsinthemobileindustryorindevelopingproducts
orservicesthatoperateeffectivelywiththeseoperatingsystems,networks,devices,webbrowsersandstandards.Intheeventthatitisdifficultfor
ouruserstoaccessanduseourproductsandservices,particularlyontheirmobiledevices,ourusergrowthandengagementcouldbeharmed,and
ourbusinessandoperatingresultscouldbeadverselyaffected.

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.
Wehavedevelopedaglobalplatformforpublicself-expressionandconversationinrealtime,andthemarketforourproductsandservicesis
relativelynewandmaynotdevelopasexpected,ifatall.Despiteoureffortstoreducebarrierstoconsumption,peoplewhoarenotourusersmay
notunderstandthevalueofourproductsandservicesandnewusersmayinitiallyfindourproductconfusing.Theremaybeaperceptionthatour
productsandservicesareonlyusefultouserswhotweet,ortoinfluentialuserswithlargeaudiences.Convincingpotentialandnewusersofthe
valueofourproductsandservicesiscriticaltoincreasingouruserbaseandtothesuccessofourbusiness.

Ifwefailtoeducatepotentialusersandpotentialadvertisersaboutthevalueofourproductsandservices,ifthemarketforourplatformdoes
notdevelopasweexpectorifwefailtoaddresstheneedsofthismarket,ourbusinesswillbeharmed.Wemaynotbeabletosuccessfullyaddress
theserisksandchallengesorothers.Failuretoadequatelyaddresstheserisksandchallengescouldharmourbusinessandcauseouroperating
resultstosuffer.

We have incurred significant operating losses in the past, and we may not be able to achieve or subsequently maintain profitability.
Sinceourinception,wehaveincurredsignificantoperatinglosses,and,asofDecember31,2015,wehadanaccumulateddeficitof
$2.09billion.Althoughourrevenuehasgrownrapidly,increasingfrom$28.3millionin2010to$2.22billionin2015,weexpectthatourrevenue
growthratewillslowinthefutureasaresultofavarietyoffactors,includingthedeclineinthegrowthrateofouruserbase.Webelievethatour
futurerevenuegrowthwilldependon,amongotherfactors,ourabilitytoattractnewusers,increaseuserengagementandadengagement,increase
ourbrandawareness,competeeffectively,maximizeoursalesefforts,demonstrateapositivereturnoninvestmentforadvertisers,successfully
developnewproductsandservicesandexpandinternationally.Accordingly,youshouldnotrelyontherevenuegrowthofanypriorquarterlyor
annualperiodasanindicationofourfutureperformance.Wealsoexpectourcoststoincreaseinfutureperiodsaswecontinuetoexpend
substantialfinancialresourceson:

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ourtechnologyinfrastructure;
researchanddevelopmentforourproductsandservices;
salesandmarketing;
domesticandinternationalexpansionefforts,includingtherealestateandfacilitiescostsassociatedwithsuchexpansions;
attractingandretainingtalentedemployees;
strategicopportunities,includingcommercialrelationshipsandacquisitions;and
generaladministration,includingpersonnelcostsandlegalandaccountingexpensesrelatedtobeingapubliccompany.

Theseinvestmentsmaynotresultinincreasedrevenueorgrowthinourbusiness.Ifweareunabletogenerateadequaterevenuegrowthand
tomanageourexpenses,wemaycontinuetoincursignificantlossesinthefutureandmaynotbeabletoachieveormaintainprofitability.

Our business depends on continued and unimpeded access to our products and services on the Internet by our users, platform partners
and advertisers. 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.

Wedependontheabilityofourusers,platformpartnersandadvertiserstoaccesstheInternet.Currently,thisaccessisprovidedby
companiesthathavesignificantmarketpowerinthebroadbandandInternetaccessmarketplace,includingincumbenttelephonecompanies,cable
companies,mobilecommunicationscompanies,government-ownedserviceproviders,devicemanufacturersandoperatingsystemproviders,anyof
whomcouldtakeactionsthatdegrade,disruptorincreasethecostofuseraccesstoourproductsorservices,whichwould,inturn,negatively
impactourbusiness.Theadoptionofanylawsorregulationsthatadverselyaffectthegrowth,popularityoruseoftheInternet,includinglawsor
practiceslimitingInternetneutrality,coulddecreasethedemandfor,ortheusageof,ourproductsandservices,increaseourcostofdoingbusiness
andadverselyaffectouroperatingresults.Forexample,accesstoTwitterisblockedinChinaandhasbeenintermittentlyblockedinTurkeyin2014
and2015.Wealsorelyonothercompaniestomaintainreliablenetworksystemsthatprovideadequatespeed,datacapacityandsecuritytousand
ourusers.AstheInternetcontinuestoexperiencegrowthinthenumberofusers,frequencyofuseandamountofdatatransmitted,theInternet
infrastructurethatweandourusersrelyonmaybeunabletosupportthedemandsplaceduponit.ThefailureoftheInternetinfrastructurethatweor
ourusersrelyon,evenforashortperiodoftime,couldundermineouroperationsandharmouroperatingresults.

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Our new products, product features, services and initiatives and changes to existing products, services and initiativ es could fail to attract
users, platform partners and advertisers or generate revenue.
Ourabilitytoincreasethesizeandengagementofouruserbase,attractplatformpartnersandadvertisersandgeneraterevenuewilldepend
inpartonourabilitytoimproveexistingproductsandservicesandcreatesuccessfulnewproductsandservices,bothindependentlyandin
conjunctionwiththirdparties.Wemayintroducesignificantchangestoourexistingproductsandservicesordevelopandintroducenewand
unprovenproductsandservices,includingtechnologieswithwhichwehavelittleornopriordevelopmentoroperatingexperience.Forexample,in
2015,weintroducedPeriscope,amobileapplicationthatletsusersshareandexperiencelivevideofromtheirmobilephonesandin2013,we
introducedVine,amobileapplicationthatenablesuserstocreateanddistributevideosthatareuptosixsecondsinlength,and#Music,amobile
applicationthathelpedusersdiscovernewmusicandartistsbasedonTwitterdataprofileswhichwediscontinuedin2014.Also,werecently
introducednewfeaturestoTwittersuchasMoments,acuratedcollectionofTweets,photos,videos,VinesandPeriscopebroadcastsaboutcurrent
newsstoriesorevents;WhileYouWereAway,whichsurfacesTweetsalogged-inusermayhavemissedsincelastaccessingTwitter;andInstant
Timeline,whichhelpscreateatimelinefornewusersaswellasnewfeaturestoourPromotedTweetslikepromotedvideoads.Ifneworenhanced
products,productfeaturesorservicesfailtoengageusers,platformpartnersandadvertisers,wemayfailtoattractorretainusersortogenerate
sufficientrevenueoroperatingprofittojustifyourinvestments,andourbusinessandoperatingresultscouldbeadverselyaffected.Inaddition,we
havelaunchedandexpecttocontinuetolaunchstrategicinitiatives,suchastheNielsenTwitterTVRating,thatdonotdirectlygeneraterevenuebut
whichwebelievewillenhanceourattractivenesstousers,platformpartnersandadvertisers.Inthefuture,wemayinvestinnewproducts,product
features,servicesandinitiativestogeneraterevenue,butthereisnoguaranteetheseapproacheswillbesuccessful.Wemaynotbesuccessfulin
futureeffortstogeneraterevenuefromournewproductsorservices.Ifourstrategicinitiativesdonotenhanceourabilitytomonetizeourexisting
productsandservicesorenableustodevelopnewapproachestomonetization,wemaynotbeabletomaintainorgrowourrevenueorrecoverany
associateddevelopmentcostsandouroperatingresultscouldbeadverselyaffected.

Spam could diminish the user experience on our platform, which could damage our reputation and deter our current and potential users
from using our products and services.
SpamonTwitterreferstoarangeofabusiveactivitiesthatareprohibitedbyourtermsofserviceandisgenerallydefinedasunsolicited,
repeatedactionsthatnegativelyimpactotheruserswiththegeneralgoalofdrawinguserattentiontoagivenaccount,site,productoridea.This
includespostinglargenumbersofunsolicitedmentionsofauser,duplicateTweets,misleadinglinks(e.g.,tomalwareorclick-jackingpages)or
otherfalseormisleadingcontent,andaggressivelyfollowingandun-followingaccounts,addinguserstolists,sendinginvitations,retweetingand
favoritingTweetstoinappropriatelyattractattention.Ourtermsofservicealsoprohibitthecreationofserialorbulkaccounts,bothmanuallyorusing
automation,fordisruptiveorabusivepurposes,suchastotweetspamortoartificiallyinflatethepopularityofusersseekingtopromotethemselves
onTwitter.AlthoughwecontinuetoinvestresourcestoreducespamonTwitter,weexpectspammerswillcontinuetoseekwaystoact
inappropriatelyonourplatform.Inaddition,weexpectthatincreasesinthenumberofusersonourplatformwillresultinincreasedeffortsby
spammerstomisuseourplatform.Wecontinuouslycombatspam,includingbysuspendingorterminatingaccountswebelievetobespammersand
launchingalgorithmicchangesfocusedoncurbingabusiveactivities.Ouractionstocombatspamrequirethediversionofsignificanttimeandfocus
ofourengineeringteamfromimprovingourproductsandservices.IfspamincreasesonTwitter,thiscouldhurtourreputationfordeliveringrelevant
contentorreduceusergrowthanduserengagementandresultincontinuingoperationalcosttous.

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If we fail to effectively manage our growth, our business and operating results c ould be harmed.
Weexpecttoinvestinourheadcountandoperations,whichwillcontinuetoplacesignificantdemandsonourmanagement,operationaland
financialinfrastructure.AsofDecember31,2015,wehadapproximately3,900full-timeemployees,anincreaseofapproximately260full-time
employeessinceDecember31,2014.Weintendtocontinuetomakeinvestmentstoexpandouroperations,researchanddevelopment,salesand
marketingandgeneralandadministrativeorganizations,aswellasourinternationaloperations.Wefacesignificantcompetitionforemployees,
particularlyengineers,designersandproductmanagers,fromotherInternetandhigh-growthcompanies,whichincludebothpublicly-tradedand
privately-heldcompanies,andwemaynotbeabletohirenewemployeesquicklyenoughtomeetourneeds.Toattracthighlyskilledpersonnel,we
havehadtooffer,andbelievewewillneedtocontinuetooffer,highlycompetitivecompensationpackages.Inaddition,aswehavegrown,wehave
significantlyexpandedouroperatingleasecommitments.Aswecontinuetoevolve,wearesubjecttotherisksofover-hiring,over-compensatingour
employeesandover-expandingouroperatinginfrastructure,andtothechallengesofintegrating,developingandmotivatingarapidlygrowing
employeebaseinvariouscountriesaroundtheworld.Inaddition,wemaynotbeabletoinnovateorexecuteasquicklyasasmaller,moreefficient
organization.Ifwefailtoeffectivelymanageourhiringneedsandsuccessfullyintegrateournewhires,ourefficiencyandabilitytomeetour
forecastsandouremployeemorale,productivityandretentioncouldsuffer,andourbusinessandoperatingresultscouldbeadverselyaffected.

Providingourproductsandservicestoourusersiscostlyandweexpectourexpensestocontinuetoincreaseinthefutureaswebroadenour
userbaseandincreaseuserengagement,asusersincreasetheamountofcontenttheycontribute,andaswedevelopandimplementnewfeatures,
productsandservicesthatrequiremoreinfrastructure,suchasourmobilevideoproducts,VineandPeriscope.Inaddition,ouroperatingexpenses,
suchasourresearchanddevelopmentexpensesandsalesandmarketingexpenses,havegrownrapidlyaswehaveexpandedourbusiness.
Historically,ourcostshaveincreasedeachyearduetothesefactorsandweexpecttocontinuetoincurincreasingcoststosupportouranticipated
futuregrowth.Weexpecttocontinuetoinvestinourinfrastructuresothatwecanprovideourproductsandservicesrapidlyandreliablytousers
aroundtheworld,includingincountrieswherewedonotexpectsignificantnear-termmonetization.Continuedgrowthcouldalsostrainourabilityto
maintainreliableservicelevelsforourusersandadvertisers,developandimproveouroperational,financial,legalandmanagementcontrols,and
enhanceourreportingsystemsandprocedures.Asapubliccompanyweincursignificantlegal,accountingandotherexpensesthatwedidnotincur
asaprivatecompany.Ourexpensesmaygrowfasterthanourrevenue,andourexpensesmaybegreaterthanweanticipate.Managingourgrowth
willrequiresignificantexpendituresandallocationofvaluablemanagementresources.Ifwefailtoachievethenecessarylevelofefficiencyinour
organizationasitgrows,ourbusiness,operatingresultsandfinancialconditionwouldbeharmed.

We focus on product innovation and user engagement rather than short-term operating results.
Weencourageemployeestoquicklydevelopandhelpuslaunchnewandinnovativefeatures.Wefocusonimprovingtheuserexperiencefor
ourproductsandservices,whichincludesprotectinguserprivacy,andondevelopingnewandimprovedproductsandservicesfortheadvertiserson
ourplatform.Weprioritizeinnovationandtheexperienceforusersandadvertisersonourplatformovershort-termoperatingresults.Wefrequently
makeproduct,productfeatureandservicedecisionsthatmayreduceourshort-termoperatingresultsifwebelievethatthedecisionsareconsistent
withourgoalstoimprovetheuserexperienceandperformanceforadvertisers,whichwebelievewillimproveouroperatingresultsoverthelong
term.Thesedecisionsmaynotbeconsistentwiththeshort-termexpectationsofinvestorsandmaynotproducethelong-termbenefitsthatwe
expect,inwhichcaseourusergrowthanduserengagement,ourrelationshipswithadvertisersandourbusinessandoperatingresultscouldbe
harmed.Inaddition,ourfocusontheuserexperiencemaynegativelyimpactourrelationshipswithourexistingorprospectiveadvertisers.Thiscould
resultinalossofadvertisers,whichcouldharmourrevenueandoperatingresults.

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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.

OneofthereasonspeoplecometoTwitterisforreal-timeinformation.Wehaveexperienced,andmayinthefutureexperience,service
disruptions,outagesandotherperformanceproblemsduetoavarietyoffactors,includinginfrastructurechanges,humanorsoftwareerrors,
hardwarefailure,capacityconstraintsduetoanoverwhelmingnumberofpeopleaccessingourproductsandservicessimultaneously,computer
virusesanddenialofserviceorfraudorsecurityattacks.Forinstance,inSeptember2015,weexperiencedabriefserviceoutageduringwhich
Twitter.comwasinaccessibleasaresult,inpart,ofasoftwaremisconfigurationinoneofourinfrastructurecomponents.Additionally,althoughwe
areinvestingsignificantlytoimprovethecapacity,capabilityandreliabilityofourinfrastructure,wearenotcurrentlyservingtrafficequallythrough
ourco-locateddatacentersthatsupportourplatform.Accordingly,intheeventofasignificantissueatthedatacentersupportingmostofour
networktraffic,someofourproductsandservicesmaybecomeinaccessibletothepublicorthepublicmayexperiencedifficultiesaccessingour
productsandservices.Anydisruptionorfailureinourinfrastructurecouldhinderourabilitytohandleexistingorincreasedtrafficonourplatform,
whichcouldsignificantlyharmourbusiness.

Asthenumberofourusersincreasesandourusersgeneratemorecontent,includingphotosandvideoshostedbyTwitter,wemaybe
requiredtoexpandandadaptourtechnologyandinfrastructuretocontinuetoreliablystore,serveandanalyzethiscontent.Itmaybecome
increasinglydifficulttomaintainandimprovetheperformanceofourproductsandservices,especiallyduringpeakusagetimes,asourproductsand
servicesbecomemorecomplexandourusertrafficincreases.Inaddition,becauseweleaseourdatacenterfacilities,wecannotbeassuredthatwe
willbeabletoexpandourdatacenterinfrastructuretomeetuserdemandinatimelymanner,oronfavorableeconomicterms.Ifourusersare
unabletoaccessTwitterorwearenotabletomakeinformationavailablerapidlyonTwitter,usersmayseekotherchannelstoobtainthe
information,andmaynotreturntoTwitteroruseTwitterasofteninthefuture,oratall.Thiswouldnegativelyimpactourabilitytoattractusers,
platformpartnersandadvertisersandincreaseengagementofourusers.Weexpecttocontinuetomakesignificantinvestmentstomaintainand
improvethecapacity,capabilityandreliabilityofourinfrastructure.Totheextentthatwedonoteffectivelyaddresscapacityconstraints,upgradeour
systemsasneededandcontinuallydevelopourtechnologyandinfrastructuretoaccommodateactualandanticipatedchangesintechnology,our
businessandoperatingresultsmaybeharmed.

If we are unable to maintain and promote our brand, our business and operating results may be harmed.
Webelievethatmaintainingandpromotingourbrandiscriticaltoexpandingourbaseofusers,platformpartnersandadvertisers.Maintaining
andpromotingourbrandwilldependlargelyonourabilitytocontinuetoprovideuseful,reliableandinnovativeproductsandservices,whichwemay
notdosuccessfully.Wemayintroducenewfeatures,products,servicesortermsofservicethatusers,platformpartnersoradvertisersdonotlike,
whichmaynegativelyaffectourbrand.Additionally,theactionsofplatformpartnersmayaffectourbrandifusersdonothaveapositiveexperience
usingthird-partyapplicationsorwebsitesintegratedwithTwitterorthatmakeuseofTwittercontent.Ourbrandmayalsobenegativelyaffectedby
theactionsofusersthatarehostileorinappropriatetootherpeople,byusersimpersonatingotherpeople,byusersidentifiedasspam,byusers
introducingexcessiveamountsofspamonourplatformorbythirdpartiesobtainingcontroloverusersaccounts.Forexample,inApril2013,
attackersobtainedthecredentialstotheTwitteraccountoftheAssociatedPressnewsservicethroughaphishingattacktargetingAssociated
Pressemployees.TheattackerspostedanerroneousTweetfromtheAssociatedPressaccountreportingthattherehadbeenexplosionsatthe
WhiteHouse,triggeringastockmarketdecline,andfocusingmediaattentiononourbrandandsecurityefforts.Maintainingandenhancingourbrand
mayrequireustomakesubstantialinvestmentsandtheseinvestmentsmaynotachievethedesiredgoals.Ifwefailtosuccessfullypromoteand
maintainourbrandorifweincurexcessiveexpensesinthiseffort,ourbusinessandoperatingresultscouldbeadverselyaffected.

Negative publicity could adversely affect our business and operating results.
Wereceiveahighdegreeofmediacoveragearoundtheworld.Negativepublicityaboutourcompany,includingaboutourproductqualityand
reliability,changestoourproductsandservices,privacyandsecuritypractices,litigation,regulatoryactivity,theactionsofourusersoruser
experiencewithourproductsandservices,evenifinaccurate,couldadverselyaffectourreputationandtheconfidenceinandtheuseofour
productsandservices.Suchnegativepublicitycouldalsohaveanadverseeffectonthesize,engagementandloyaltyofouruserbaseandresultin
decreasedrevenue,whichcouldadverselyaffectourbusinessandoperatingresults.

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Action by governments to restrict access to our products and services or censor Twitter content could harm o ur business and operating
results.

Governmentshavesought,andmayinthefutureseek,tocensorcontentavailablethroughourproductsandservices,restrictaccesstoour
productsandservicesfromtheircountryentirelyorimposeotherrestrictionsthatmayaffecttheaccessibilityofourproductsandservicesforan
extendedperiodoftimeorindefinitely.Forexample,domesticInternetserviceprovidersinChinahaveblockedaccesstoTwitter,andother
countries,includingIran,Libya,Pakistan,TurkeyandSyria,haveintermittentlyrestrictedaccesstoTwitter,andwebelievethataccesstoTwitterhas
beenblockedinthesecountriesprimarilyforpoliticalreasons.Inaddition,governmentsintheseorothercountriesmayseektorestrictaccesstoour
productsandservicesbasedonourdecisionsaroundusercontent,providinguserinformationinresponsetogovernmentalrequests,orother
matters.Intheeventthataccesstoourproductsandservicesisrestricted,inwholeorinpart,inoneormorecountriesorourcompetitorsareable
tosuccessfullypenetrategeographicmarketsthatwecannotaccess,ourabilitytoretainorincreaseouruserbaseanduserengagementmaybe
adverselyaffected,andouroperatingresultsmaybeharmed.

Our future performance depends in part on support from platform partners and data partners.
Webelieveuserengagementwithourproductsandservicesdependsinpartontheavailabilityofapplicationsandcontentgeneratedby
platformpartners.Forinstance,inOctober2014,welaunchedFabric,aplatformthatofferslightweightmodularsoftwaredevelopmentkitsthathelp
developersbuildmorestableapplications,generaterevenuethroughTwittersmobileadvertisingexchange,MoPub,andtapintoTwitterssign-in
systemsforsimpleridentityverification.Ifplatformpartnersfocustheireffortsonotherplatformsdespitetheseandotherefforts,theavailabilityand
qualityofapplicationsandcontentforourproductsandservicesmaysuffer.Thereisnoassurancethatplatformpartnerswillcontinuetodevelop
andmaintainapplicationsandcontentforourproductsandservices.Ifplatformpartnersceasetodevelopandmaintainapplicationsandcontentfor
ourproductsandservices,userengagementmaydecline.Inaddition,wegeneraterevenuefromlicensingourhistoricalandreal-timedatatothird
parties.Ifanyoftheserelationshipsareterminatedornotrenewed,orifweareunabletoenterintosimilarrelationshipsinthefuture,ouroperating
resultscouldbeadverselyaffected.

Our international operations are subject to increased challenges and risks.

Wehaveofficesaroundtheworldandourproductsandservicesareavailableinmultiplelanguages.Weexpecttocontinuetoexpandour
internationaloperationsinthefuturebyopeningofficesinnewjurisdictionsandexpandingourofferingsinnewlanguages.However,wehavelimited
operatinghistoryoutsidetheUnitedStates,andourabilitytomanageourbusinessandconductouroperationsinternationallyrequiresconsiderable
managementattentionandresourcesandissubjecttotheparticularchallengesofsupportingarapidlygrowingbusinessinanenvironmentof
multiplelanguages,cultures,customs,legalandregulatorysystems,alternativedisputesystemsandcommercialmarkets.Internationalexpansion
hasrequiredandwillcontinuetorequireustoinvestsignificantfundsandotherresources.Operatinginternationallysubjectsustonewrisksand
mayincreaserisksthatwecurrentlyface,includingrisksassociatedwith:
recruitingandretainingtalentedandcapableemployeesinforeigncountriesandmaintainingourcompanycultureacrossallofour
offices;
providingourproductsandservicesandoperatingacrossasignificantdistance,indifferentlanguagesandamongdifferentcultures,
includingthepotentialneedtomodifyourproducts,services,contentandfeaturestoensurethattheyareculturallyrelevantindifferent
countries;
increasedcompetitionfromlargelyregionalwebsites,mobileapplicationsandservicesthatprovidereal-timecommunicationsandhave
strongpositionsinparticularcountries,whichhaveexpandedandmaycontinuetoexpandtheirgeographicfootprint;
differingandpotentiallylowerlevelsofusergrowth,userengagementandadengagementinnewandemerginggeographies;
differentlevelsofadvertiserdemand;
greaterdifficultyinmonetizingourproductsandservices;
compliancewithapplicableforeignlawsandregulations,includinglawsandregulationswithrespecttoprivacy,datasecurity,consumer
protection,spamandcontent,andtheriskofpenaltiestoourusersandindividualmembersofmanagementifourpracticesare
deemedtobeoutofcompliance;

22

longerpaymentcyclesinsomecountries;
creditriskandhigherlevelsofpaymentfraud;
operatinginjurisdictionsthatdonotprotectintellectualpropertyrightstothesameextentastheUnitedStates;
compliancewithanti-briberylawsincluding,withoutlimitation,compliancewiththeForeignCorruptPracticesActandtheU.K.Bribery
Act,includingbyourbusinesspartners;
currencyexchangeratefluctuations;
foreignexchangecontrolsthatmightrequiresignificantleadtimeinsettingupoperationsincertaingeographicterritoriesandmight
preventusfromrepatriatingcashearnedoutsidetheUnitedStates;
politicalandeconomicinstabilityinsomecountries;
doubletaxationofourinternationalearningsandpotentiallyadversetaxconsequencesduetochangesinthetaxlawsoftheUnited
Statesortheforeignjurisdictionsinwhichweoperate;and
highercostsofdoingbusinessinternationally,includingincreasedaccounting,travel,infrastructureandlegalcompliancecosts.

Ifweareunabletomanagethecomplexityofourglobaloperationssuccessfully,ourbusiness,financialconditionandoperatingresultscould
beadverselyaffected.

Our products and services may contain undetected software errors, which could harm our business and operating results.
Ourproductsandservicesincorporatecomplexsoftwareandweencourageemployeestoquicklydevelopandhelpuslaunchnewand
innovativefeatures.Oursoftware,includinganyopensourcesoftwarethatisincorporatedintoourcode,hascontained,andmaynoworinthefuture
contain,errors,bugsorvulnerabilities.Forexample,inSeptember2015,weexperiencedabriefserviceoutageduringwhichTwitter.comwas
inaccessibleasaresult,inpart,ofasoftwaremisconfigurationinoneofourinfrastructurecomponents.Additionally,inFebruary2016,we
discovered,andcorrected,abugthataffectedourpasswordrecoverysystemsforabout24hours.Althoughthisissuedidnotexposepasswordsor
informationthatcouldbeuseddirectlytoaccessanaccount,ithadthepotentialtoexposetheemailaddressandphonenumberassociatedwitha
smallnumberofaccounts(lessthan10,000activeaccounts).Someerrorsinoursoftwarecodemayonlybediscoveredaftertheproductorservice
hasbeenreleased.Anyerrors,bugsorvulnerabilitiesdiscoveredinourcodeafterreleasecouldresultindamagetoourreputation,lossofusers,
lossofplatformpartners,lossofadvertisersoradvertisingrevenueorliabilityfordamagesorregulatoryinquiriesorlawsuits,anyofwhichcould
adverselyaffectourbusinessandoperatingresults.

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 growth, user engagement or ad engagement, or otherwise harm our business.
WearesubjecttoavarietyoflawsandregulationsintheUnitedStatesandabroadthatinvolvematterscentraltoourbusiness,including
privacy,rightsofpublicity,dataprotection,contentregulation,intellectualproperty,competition,protectionofminors,consumerprotection,credit
cardprocessingandtaxation.Manyoftheselawsandregulationsarestillevolvingandbeingtestedincourts.Asaresult,itispossiblethatthese
lawsandregulationsmaybeinterpretedandappliedinamannerthatisinconsistentfromcountrytocountryandinconsistentwithourcurrent
policiesandpracticesandinwaysthatcouldharmourbusiness,particularlyinthenewandrapidlyevolvingindustryinwhichweoperate.
Additionally,theintroductionofnewproductsorservicesmaysubjectustoadditionallawsandregulations.

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Fromtimetotime,governments,regulatorsandothershaveexpressedconcernsaboutwhetherourproducts,servicesorpractices
compromisetheprivacyofusersandothers.Whilewestrivetocomplywithapplicabledataprotectionlawsandregulations,aswellasourown
postedprivacypoliciesandotherobligationswemayhavewithrespecttoprivacyanddataprotection,thefailureorperceivedfailuretosocomply
mayresult,andinsomecaseshasresulted,ininquiriesandotherproceedingsoractionsagainstusbygovernments,regulatorsorothers.
Moreover,foreigndataprotection,privacy,consumerprotection,contentregulationandotherlawsandregulationsareoftenmorerestrictivethan
thoseintheUnitedStates.Inparticular,theEuropeanUnionanditsmemberstatestraditionallyhavetakenbroaderviewsastotypesofdatathat
aresubjecttoprivacyanddataprotection,andhaveimposedgreaterlegalobligationsoncompaniesinthisregard.Anumberofproposalsare
pendingbeforefederal,stateandforeignlegislativeandregulatorybodiesthatcouldsignificantlyaffectourbusiness.Forexample,regulation
relatingtothe1995EuropeanUnionDataProtectionDirectiveiscurrentlybeingconsideredbyEuropeanlegislativebodiesthatmayincludemore
stringentoperationalrequirementsforentitiesprocessingpersonalinformationandsignificantpenaltiesfornon-compliance.Additionally,inOctober
2015,recentlytheCourtofJusticeoftheEuropeanUnioninvalidatedtheEUU.S.SafeHarborFramework.WerelyupontheEUU.S.SafeHarbor
FrameworktotransfercertainpersonalinformationofEuropeanUnionresidentstotheUnitedStates,andrevocationoftheSafeHarborFramework
couldrequireustocreateduplicative,andpotentiallyexpensive,informationtechnologyinfrastructureandbusinessoperationsinEuropeorlimitour
abilitytocollectandusepersonalinformationcollectedinEurope.U.S.andEUauthoritiesreachedapoliticalagreementonFebruary2,2016
regardinganewpotentialmeansforlegitimizingpersonaldatatransfersfromtheEuropeanEconomicAreatotheU.S.,theEU-U.S.PrivacyShield,
butitisunclearwhethertheEU-U.S.PrivacyShieldwillbeformallyimplementedandwhethertheEU-U.S.PrivacyShield,ifformallyimplemented,
wouldincludesignificantdatatransferrestrictionsthatcouldimpactourbusinessorresultinsubstantialexpensetoimplement.Anyofthesecould
disruptourbusiness.

Similarly,therehavebeenanumberofrecentlegislativeproposalsintheUnitedStates,atboththefederalandstatelevel,thatwouldimpose
newobligationsinareassuchasprivacyandliabilityforcopyrightinfringementbythirdparties.TheU.S.government,includingtheFTCandthe
DepartmentofCommerce,hasannouncedthatitisreviewingtheneedforgreaterregulationforthecollectionofinformationconcerninguser
behaviorontheInternet,includingregulationaimedatrestrictingcertainonlinetrackingandtargetedadvertisingpractices.Additionally,recent
amendmentstoU.S.patentlawsmayaffecttheabilityofcompanies,includingus,toprotecttheirinnovationsanddefendagainstclaimsofpatent
infringement.

Wecurrentlyallowuseofourplatformwithoutthecollectionofextensivepersonalinformation,suchasage.Wemayexperienceadditional
pressuretoexpandourcollectionofpersonalinformationinordertocomplywithnewandadditionalregulatorydemandsorwemayindependently
decidetodoso.Ifweobtainsuchadditionalpersonalinformation,wemaybesubjecttoadditionalregulation.

Regulatory investigations and settlements could cause us to incur additional expenses or change our business practices in a manner
materially adverse to our business.
Wehavebeensubjecttoregulatoryinvestigationsinthepast,andexpecttocontinuetobesubjecttoregulatoryscrutinyasourbusiness
growsandawarenessofourbrandincreases.InMarch2011,toresolveaninvestigationintovariousincidents,weenteredintoasettlement
agreementwiththeFTCthat,amongotherthings,requiredustoestablishaninformationsecurityprogramdesignedtoprotectnon-publicconsumer
informationandalsorequiresthatweobtainbiennialindependentsecurityassessments.Theobligationsunderthesettlementagreementremainin
effectuntilthelaterofMarch2,2031,orthedate20yearsafterthedate,ifany,onwhichtheU.S.governmentortheFTCfilesacomplaintinfederal
courtalleginganyviolationoftheorder.Weexpecttocontinuetobethesubjectofregulatoryinquiries,investigationsandauditsinthefuturebythe
FTCandotherregulatorsaroundtheworld.

Itispossiblethataregulatoryinquiry,investigationorauditmightresultinchangestoourpoliciesorpractices,andmaycauseustoincur
substantialcostsorcouldresultinreputationalharm,preventusfromofferingcertainproducts,services,featuresorfunctionalities,causeustoincur
substantialcostsorrequireustochangeourbusinesspracticesinamannermateriallyadversetoourbusiness.Violationofexistingorfuture
regulatoryorders,settlementsorconsentdecreescouldsubjectustosubstantialmonetaryfinesandotherpenaltiesthatcouldnegativelyaffectour
financialconditionandoperatingresults.

24

If our security measures are breached, or if our products and services are subject to attacks that degrade or deny the ability of users to
access our products and services, our products and services may be perceived as not being secure, use rs and advertisers may curtail or
stop using our products and services and our business and operating results could be harmed.
Ourproductsandservicesinvolvethestorageandtransmissionofusersandadvertisersinformation,andsecuritybreachesexposeustoa
riskoflossofthisinformation,litigationandpotentialliability.Wealsoworkwiththird-partyvendorstoprocesscreditcardpaymentsbyour
customersandaresubjecttopaymentcardassociationoperatingrules.Weexperiencecyber-attacksofvaryingdegreesonaregularbasis,andas
aresult,unauthorizedpartieshaveobtained,andmayinthefutureobtain,accesstoourdataorourusersoradvertisersdata.Forexample,in
February2013,wedisclosedthatsophisticatedunknownthirdpartieshadattackedoursystemsandmayhavehadaccesstolimitedinformationfor
approximately250,000users.Anysystemsfailureorcompromiseofoursecuritythatresultsintheunauthorizedaccesstoorreleaseofourusersor
advertisersdata,suchascreditcarddata,couldsignificantlylimittheadoptionofourproductsandservices,aswellasharmourreputationand
brandand,therefore,ourbusiness.Oursecuritymeasuresmayalsobebreachedduetoemployeeerror,malfeasanceorotherwise.Additionally,
outsidepartiesmayattempttofraudulentlyinduceemployees,usersoradvertiserstodisclosesensitiveinformationinordertogainaccesstoour
dataorourusersoradvertisersdataoraccounts,ormayotherwiseobtainaccesstosuchdataoraccounts.Sinceourusersandadvertisersmay
usetheirTwitteraccountstoestablishandmaintainonlineidentities,unauthorizedcommunicationsfromTwitteraccountsthathavebeen
compromisedmaydamagetheirreputationsandbrandsaswellasours.Becausethetechniquesusedtoobtainunauthorizedaccess,disableor
degradeserviceorsabotagesystemschangefrequentlyandoftenarenotrecognizeduntillaunchedagainstatarget,wemaybeunableto
anticipatethesetechniquesortoimplementadequatepreventativemeasures.Ifanactualorperceivedbreachofoursecurityoccurs,themarket
perceptionoftheeffectivenessofoursecuritymeasurescouldbeharmed,ourusersandadvertisersmaybeharmed,losetrustandconfidencein
us,decreasetheuseofourproductsandservicesorstopusingourproductsandservicesintheirentirety.Wemayalsoincursignificantlegaland
financialexposure,includinglegalclaims,highertransactionfeesandregulatoryfinesandpenalties.Anyoftheseactionscouldhaveamaterialand
adverseeffectonourbusiness,reputationandoperatingresults.

Our commerce efforts depend on third parties and are subject to evolving laws and regulations.
Since2015,wehavebuiltcommercesolutionsthatconnectcustomersandretailpartners.Thisincludesenablinguserstomakepurchases
withinaTweet,loadoffersdirectlytoacreditordebitcard,andbrowseorshopcollectionsofproductswithoutleavingTwitter.

Wehaverelationshipswiththirdpartiesthatperformavarietyoffunctionssuchascreditcardprocessing,tokenization,vaulting,currency
conversion,fraudpreventionanddatasecurityaudits.Ifthesethirdpartiesdonotperformadequatelyorifourrelationshipswiththesethirdparties
terminate,ourretailpartnersabilitytoconductbusinessonTwittercouldbeadverselyaffectedandourbusinessandoperatingresultscouldbe
adverselyaffected.

Thelawsandregulationsrelatedtoe-commerceandpaymentsarecomplex,subjecttochange,andvaryacrossdifferentjurisdictionsinthe
UnitedStatesandglobally.Asaresult,wearerequiredtospendsignificanttime,effortandexpensetocomplywithapplicablelawsandregulations.
Anyfailureorclaimofourfailuretocomply,oranyfailureorclaimoffailurebytheabove-mentionedthirdpartiestocomply,couldincreaseourcosts
orcouldresultinliabilities.Additionally,becauseTwitteracceptspaymentviacreditcardsandiscertifiedasaPCILevel1serviceprovider,weare
subjecttopaymentcardassociationoperatingrulesandcertificationrequirements,includingthePaymentCardIndustryDataSecurityStandard.

25


We may face lawsuits or incur liability as a result of content published or made available through our products and services.
Wehavefacedandwillcontinuetofaceclaimsrelatingtocontentthatispublishedormadeavailablethroughourproductsandservicesor
thirdpartyproductsorservices.Inparticular,thenatureofourbusinessexposesustoclaimsrelatedtodefamation,intellectualpropertyrights,rights
ofpublicityandprivacy,illegalcontent,contentregulationandpersonalinjurytorts.Thelawsrelatingtotheliabilityofprovidersofonlineproductsor
servicesforactivitiesoftheirusersremainssomewhatunsettled,bothwithintheUnitedStatesandinternationally.Thisriskmaybeenhancedin
certainjurisdictionsoutsidetheUnitedStateswherewemaybelessprotectedunderlocallawsthanweareintheUnitedStates.Inaddition,the
publicnatureofcommunicationsonournetworkexposesustorisksarisingfromthecreationofimpersonationaccountsintendedtobeattributedto
ourusersoradvertisers.Wecouldincursignificantcostsinvestigatinganddefendingtheseclaims.Ifweincurmaterialcostsorliabilityasaresultof
theseoccurrences,ourbusiness,financialconditionandoperatingresultscouldbeadverselyaffected.

Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services and brand.
Ourtradesecrets,trademarks,copyrights,patentsandotherintellectualpropertyrightsareimportantassets.Werelyon,andexpectto
continuetorelyon,acombinationofconfidentialityandlicenseagreementswithouremployees,consultantsandthirdpartieswithwhomwehave
relationships,aswellastrademark,tradedress,domainname,copyright,tradesecretandpatentlaws,toprotectourbrandandotherintellectual
propertyrights.However,variouseventsoutsideofourcontrolposeathreattoourintellectualpropertyrights,aswellastoourproducts,services
andtechnologies.Forexample,wemayfailtoobtaineffectiveintellectualpropertyprotection,oreffectiveintellectualpropertyprotectionmaynotbe
availableineverycountryinwhichourproductsandservicesareavailable.Also,theeffortswehavetakentoprotectourintellectualpropertyrights
maynotbesufficientoreffective,andanyofourintellectualpropertyrightsmaybechallenged,whichcouldresultinthembeingnarrowedinscope
ordeclaredinvalidorunenforceable.Therecanbenoassuranceourintellectualpropertyrightswillbesufficienttoprotectagainstothersoffering
productsorservicesthataresubstantiallysimilartooursandcompetewithourbusiness.

Werelyonnon-patentedproprietaryinformationandtechnology,suchastradesecrets,confidentialinformation,know-howandtechnical
information.Whileincertaincaseswehaveagreementsinplacewithemployeesandthirdpartiesthatplacerestrictionsontheuseanddisclosureof
thisintellectualproperty,theseagreementsmaybebreached,orthisintellectualpropertymayotherwisebedisclosedorbecomeknowntoour
competitors,whichcouldcauseustoloseanycompetitiveadvantageresultingfromthisintellectualproperty.

WearepursuingregistrationoftrademarksanddomainnamesintheUnitedStatesandincertainjurisdictionsoutsideoftheUnitedStates.
Effectiveprotectionoftrademarksanddomainnamesisexpensiveanddifficulttomaintain,bothintermsofapplicationandregistrationcostsaswell
asthecostsofdefendingandenforcingthoserights.Wemayberequiredtoprotectourrightsinanincreasingnumberofcountries,aprocessthatis
expensiveandmaynotbesuccessfulorwhichwemaynotpursueineverycountryinwhichourproductsandservicesaredistributedormade
available.

Wearepartytonumerousagreementsthatgrantlicensestothirdpartiestouseourintellectualproperty,includingourtrademarks.For
example,manythirdpartiesdistributetheircontentthroughTwitter,orembedTwittercontentintheirapplicationsorontheirwebsites,andmakeuse
ofourtrademarksinconnectionwiththeirservices.Ifthelicenseesofourtrademarksarenotusingourtrademarksproperly,itmaylimitourabilityto
protectourtrademarksandcouldultimatelyresultinourtrademarksbeingdeclaredinvalidorunenforceable.Wehaveapolicydesignedtoassist
thirdpartiesintheproperuseofourbrand,trademarksandotherassets,andwehaveaninternalteamdedicatedtoenforcingourpolicyand
protectingourbrand.OurbrandprotectionteamroutinelyreceivesandreviewsreportsofimproperandunauthorizeduseoftheTwitterbrand,
trademarksorassetsandissuestakedownnoticesorinitiatesdiscussionswiththethirdpartiestocorrecttheissues.However,therecanbeno
assurancethatwewillbeabletoprotectagainsttheunauthorizeduseofourbrand,trademarksorotherassets.Ifwefailtomaintainandenforceour
trademarkrights,thevalueofourbrandcouldbediminished.Thereisalsoariskthatoneormoreofourtrademarkscouldbecomegeneric,which
couldresultinthembeingdeclaredinvalidorunenforceable.Forexample,thereisariskthatthewordTweetcouldbecomesocommonlyused
thatitbecomessynonymouswithanyshortcommentpostedpubliclyontheInternet,andifthishappens,wecouldloseprotectionofthistrademark.

26


WealsoseektoobtainpatentprotectionforsomeofourtechnologyandasofDecember31,2015,wehad990issuedU.S.patents.Wemay
beunabletoobtainpatentprotectionforourtechnologies,andourexistingpatents,andanypatentsthatmaybeissuedinthefuture,maynot
provideuswithcompetitiveadvantagesordistinguishourproductsandservicesfromthoseofourcompetitors.Inaddition,anypatentsmaybe
contested,circumvented,orfoundunenforceableorinvalid,andwemaynotbeabletopreventthirdpartiesfrominfringingorotherwiseviolating
them.Effectiveprotectionofpatentrightsisexpensiveanddifficulttomaintain,bothintermsofapplicationandmaintenancecosts,aswellasthe
costsofdefendingandenforcingthoserights.

OurInnovatorsPatentAgreement,orIPA,alsolimitsourabilitytopreventinfringementofourpatents.InMay2013,weimplementedtheIPA,
whichweenterintowithouremployeesandconsultants,includingourfounders.TheIPA,whichappliestoourcurrentandfuturepatents,allowsus
toassertourpatentsdefensively.TheIPAalsoallowsustoassertourpatentsoffensivelywiththepermissionoftheinventorsoftheapplicable
patent.UndertheIPA,anassertionofclaimsisconsideredforadefensivepurposeiftheclaimsareasserted:(i)againstanentitythathasfiled,
maintained,threatenedorvoluntarilyparticipatedinapatentinfringementlawsuitagainstusoranyofourusers,affiliates,customers,suppliersor
distributors;(ii)againstanentitythathasuseditspatentsoffensivelyagainstanyotherpartyinthepasttenyears,solongastheentityhasnot
institutedthepatentinfringementlawsuitdefensivelyinresponsetoapatentlitigationthreatagainsttheentity;or(iii)otherwisetodeterapatent
litigationthreatagainstusorourusers,affiliates,customers,suppliersordistributors.Inaddition,theIPAprovidesthattheabovelimitationsapplyto
anyfutureownerorexclusivelicenseeofanyofourpatents,whichcouldlimitourabilitytosellorlicenseourpatentstothirdparties.Whilewemay
beabletoclaimprotectionofourintellectualpropertyunderotherrights,suchastradesecretsorcontractualobligationswithouremployeesnotto
discloseoruseconfidentialinformation,wemaybeunabletoassertourpatentrightsagainstthirdpartiesthatwebelieveareinfringingourpatents,
evenifsuchthirdpartiesaredevelopingproductsandservicesthatcompetewithourproductsandservices.Forexample,intheeventthatan
inventorofoneofourpatentsleavesusforanothercompanyandusesourpatentedtechnologytocompetewithus,wewouldnotbeabletoassert
thatpatentagainstsuchothercompanyunlesstheassertionofthepatentrightisforadefensivepurpose.Insuchevent,wemaybelimitedinour
abilitytoassertapatentrightagainstanothercompany,andinsteadwouldneedtorelyontradesecretprotectionorthecontractualobligationofthe
inventortousnottodiscloseoruseourconfidentialinformation.Inaddition,thetermsoftheIPAcouldaffectourabilitytomonetizeourintellectual
propertyportfolio.

Significantimpairmentsofourintellectualpropertyrights,andlimitationsonourabilitytoassertourintellectualpropertyrightsagainstothers,
couldharmourbusinessandourabilitytocompete.

Also,obtaining,maintainingandenforcingourintellectualpropertyrightsiscostlyandtimeconsuming.Anyincreaseintheunauthorizeduse
ofourintellectualpropertycouldmakeitmoreexpensivetodobusinessandharmouroperatingresults.

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 impact on our business, financial condition or operating results.

CompaniesintheInternet,technologyandmediaindustriesaresubjecttolitigationbasedonallegationsofinfringement,misappropriationor
otherviolationsofintellectualpropertyorotherrights.Manycompaniesintheseindustries,includingmanyofourcompetitors,havesubstantially
largerpatentandintellectualpropertyportfoliosthanwedo,whichcouldmakeusatargetforlitigationaswemaynotbeabletoassertcounterclaims
againstpartiesthatsueusforpatent,orotherintellectualpropertyinfringement.Inaddition,variousnon-practicingentitiesthatownpatentsand
otherintellectualpropertyrightsoftenattempttoassertclaimsinordertoextractvaluefromtechnologycompanies.Fromtimetotimewereceive
claimsfromthirdpartieswhichallegethatwehaveinfringedupontheirintellectualpropertyrights.Further,fromtimetotimewemayintroducenew
products,productfeaturesandservices,includinginareaswherewecurrentlydonothaveanoffering,whichcouldincreaseourexposuretopatent
andotherintellectualpropertyclaimsfromcompetitorsandnon-practicingentities.Inaddition,althoughourstandardtermsandconditionsforour
PromotedProductsandpublicAPIsdonotprovideadvertisersandplatformpartnerswithindemnificationforintellectualpropertyclaimsagainst
them,someofouragreementswithadvertisers,platformpartnersanddatapartnersrequireustoindemnifythemforcertainintellectualproperty
claimsagainstthem,whichcouldrequireustoincurconsiderablecostsindefendingsuchclaims,andmayrequireustopaysignificantdamagesin
theeventofanadverseruling.Suchadvertisers,platformpartnersanddatapartnersmayalsodiscontinueuseofourproducts,servicesand
technologiesasaresultofinjunctionsorotherwise,whichcouldresultinlossofrevenueandadverselyimpactourbusiness.

27


Wepresentlyareinvolvedinanumberofintellectualpropertylawsuits,andaswefaceincreasingcompetitionandgainanincreasinglyhigh
profile,weexpectthenumberofpatentandotherintellectualpropertyclaimsagainstustogrow.Theremaybeintellectualpropertyorotherrights
heldbyothers,includingissuedorpendingpatents,thatcoversignificantaspectsofourproductsandservices,andwecannotbesurethatweare
notinfringingorviolating,andhavenotinfringedorviolated,anythird-partyintellectualpropertyrightsorthatwewillnotbeheldtohavedonesoor
beaccusedofdoingsointhefuture.Anyclaimorlitigationallegingthatwehaveinfringedorotherwiseviolatedintellectualpropertyorotherrights
ofthirdparties,withorwithoutmerit,andwhetherornotsettledoutofcourtordeterminedinourfavor,couldbetime-consumingandcostlyto
addressandresolve,andcoulddivertthetimeandattentionofourmanagementandtechnicalpersonnel.Someofourcompetitorshave
substantiallygreaterresourcesthanwedoandareabletosustainthecostsofcomplexintellectualpropertylitigationtoagreaterdegreeandfor
longerperiodsoftimethanwecould.Theoutcomeofanylitigationisinherentlyuncertain,andtherecanbenoassurancesthatfavorablefinal
outcomeswillbeobtainedinallcases.Inaddition,plaintiffsmayseek,andwemaybecomesubjectto,preliminaryorprovisionalrulingsinthe
courseofanysuchlitigation,includingpotentialpreliminaryinjunctionsrequiringustoceasesomeorallofouroperations.Wemaydecidetosettle
suchlawsuitsanddisputesontermsthatareunfavorabletous.Similarly,ifanylitigationtowhichweareapartyisresolvedadversely,wemaybe
subjecttoanunfavorablejudgmentthatmaynotbereverseduponappeal.Thetermsofsuchasettlementorjudgmentmayrequireustocease
someorallofouroperationsorpaysubstantialamountstotheotherparty.Inaddition,wemayhavetoseekalicensetocontinuepracticesfoundto
beinviolationofathird-partysrights.Ifwearerequired,orchoosetoenterintoroyaltyorlicensingarrangements,sucharrangementsmaynotbe
availableonreasonableterms,oratall,andmaysignificantlyincreaseouroperatingcostsandexpenses.Asaresult,wemayalsoberequiredto
developorprocurealternativenon-infringingtechnology,whichcouldrequiresignificanteffortandexpenseordiscontinueuseofthetechnology.An
unfavorableresolutionofthedisputesandlitigationreferredtoabovecouldadverselyaffectourbusiness,financialconditionandoperatingresults.

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 our
business.
Weuseopensourcesoftwareinourproductsandservicesandwilluseopensourcesoftwareinthefuture.Inaddition,weregularlycontribute
softwaresourcecodetoopensourceprojectsunderopensourcelicensesorreleaseinternalsoftwareprojectsunderopensourcelicenses,and
anticipatedoingsointhefuture.ThetermsofmanyopensourcelicensestowhichwearesubjecthavenotbeeninterpretedbyU.S.orforeign
courts,andthereisariskthatopensourcesoftwarelicensescouldbeconstruedinamannerthatimposesunanticipatedconditionsorrestrictionson
ourabilitytoprovideordistributeourproductsorservices.Additionally,wemayfromtimetotimefaceclaimsfromthirdpartiesclaimingownership
of,ordemandingreleaseof,theopensourcesoftwareorderivativeworksthatwedevelopedusingsuchsoftware,whichcouldincludeour
proprietarysourcecode,orotherwiseseekingtoenforcethetermsoftheapplicableopensourcelicense.Theseclaimscouldresultinlitigationand
couldrequireustomakeoursoftwaresourcecodefreelyavailable,purchaseacostlylicenseorceaseofferingtheimplicatedproductsorservices
unlessanduntilwecanre-engineerthemtoavoidinfringement.Thisre-engineeringprocesscouldrequiresignificantadditionalresearchand
developmentresources,andwemaynotbeabletocompleteitsuccessfully.Inadditiontorisksrelatedtolicenserequirements,useofcertainopen
sourcesoftwaremayposegreaterrisksthanuseofthird-partycommercialsoftware,asopensourcelicensorsgenerallydonotprovidewarrantiesor
controlsontheoriginofsoftware.Anyoftheseriskscouldbedifficulttoeliminateormanage,and,ifnotaddressed,couldhaveanegativeeffecton
ourbusiness,financialconditionandoperatingresults.

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.
Fromtimetotime,wemayneedadditionalfinancingtooperateorgrowourbusiness.Ourabilitytoobtainadditionalfinancing,ifandwhen
required,willdependoninvestorandlenderdemand,ouroperatingperformance,theconditionofthecapitalmarketsandotherfactors,andwe
cannotassureyouthatadditionalfinancingwillbeavailabletousonfavorabletermswhenrequired,oratall.Ifweraiseadditionalfundsthroughthe
issuanceofequity,equity-linkedordebtsecurities,thosesecuritiesmayhaverights,preferencesorprivilegesseniortotherightsofourcommon
stock,andourexistingstockholdersmayexperiencedilution.Ifweareunabletoobtainadequatefinancingorfinancingontermssatisfactorytous
whenwerequireit,ourabilitytocontinuetosupporttheoperationorgrowthofourbusinesscouldbesignificantlyimpairedandouroperatingresults
maybeharmed.

28


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 affec t our business.
Thenumberofouractiveusersiscalculatedusinginternalcompanydatathathasnotbeenindependentlyverified.Whilethesenumbersare
basedonwhatwebelievetobereasonablecalculationsfortheapplicableperiodofmeasurement,thereareinherentchallengesinmeasuringusage
anduserengagementacrossourlargeuserbasearoundtheworld.Forexample,thereareanumberoffalseorspamaccountsinexistenceonour
platform.Weestimatethatfalseorspamaccountsrepresentlessthan5%ofourMAUs.However,thisestimateisbasedonaninternalreviewofa
sampleofaccountsandweapplysignificantjudgmentinmakingthisdetermination.Assuch,ourestimationoffalseorspamaccountsmaynot
accuratelyrepresenttheactualnumberofsuchaccounts,andtheactualnumberoffalseorspamaccountscouldbehigherthanwehavecurrently
estimated.Wearecontinuallyseekingtoimproveourabilitytoestimatethetotalnumberofspamaccountsandeliminatethemfromthecalculation
ofouractiveusers,butweotherwisetreatmultipleaccountsheldbyasinglepersonororganizationasmultipleusersforpurposesofcalculatingour
activeusersbecausewepermitpeopleandorganizationstohavemorethanoneaccount.Additionally,someaccountsusedbyorganizationsare
usedbymanypeoplewithintheorganization.Assuch,thecalculationsofouractiveusersmaynotaccuratelyreflecttheactualnumberofpeopleor
organizationsusingourplatform.

Ourmetricsarealsoaffectedbymobileapplicationsthatautomaticallycontactourserversforregularupdateswithnodiscernableuseraction
involved,andthisactivitycancauseoursystemtocounttheuserassociatedwithsuchadeviceasanactiveuseronthedaysuchcontactoccurs.
ThecalculationsofMAUspresentedinthisAnnualReportonForm10-Kmaybeaffectedbythisactivity.Theimpactofthisautomaticactivityonour
metricsvariesbygeographybecausemobileapplicationusagevariesindifferentregionsoftheworld.Inaddition,ourdataregardinguser
geographiclocationisbasedontheIPaddressorphonenumberassociatedwiththeaccountwhenauserinitiallyregisteredtheaccountonTwitter.
ThatIPaddressorphonenumbermaynotalwaysaccuratelyreflectausersactuallocationatthetimeofsuchusersengagementonourplatform.

Weregularlyreviewandmayadjustourprocessesforcalculatingourinternalmetricstoimprovetheiraccuracy.Wepresentanddiscussour
totalaudiencebasedonbothinternalmetricsandrelyondatafromGoogleAnalytics,whichmeasureslogged-outvisitorstoourproperties.Our
measuresofusergrowthanduserengagementmaydifferfromestimatespublishedbythirdpartiesorfromsimilarly-titledmetricsofourcompetitors
duetodifferencesinmethodology.Ifadvertisers,platformpartnersorinvestorsdonotperceiveourusermetricstobeaccuraterepresentationsof
ouruserbaseoruserengagement,orifwediscovermaterialinaccuraciesinourusermetrics,ourreputationmaybeharmedandadvertisersand
platformpartnersmaybelesswillingtoallocatetheirbudgetsorresourcestoourproductsandservices,whichcouldnegativelyaffectourbusiness
andoperatingresults.Further,asourbusinessdevelops,wemayreviseorceasereportingmetricsifwedeterminethatsuchmetricsarenolonger
accurateorappropriatemeasuresofourperformance.Forexample,westoppeddisclosingtimelineviewsaswenolongerbelievedthatmetricwas
helpfulinmeasuringengagementonourplatform.Ifinvestors,analystsorcustomersdonotbelieveourreportedmeasuresofuserengagementare
sufficientoraccuratelyreflectourbusiness,wemayreceivenegativepublicityandouroperatingresultsmaybeharmed.

Our corporate culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the innovation,
creativity and teamwork fostered by our culture, and our business may be harmed.
Webelievethatourculturehasbeenandwillcontinuetobeakeycontributortooursuccess.FromJanuary1,2010toDecember31,2015,
weincreasedthesizeofourworkforcebyover3,700full-timeemployees,andweexpecttocontinuetomakeinvestmentsinouremployees.Ifwe
donotcontinuetodevelopourcorporatecultureormaintainourcorevaluesaswegrowandevolve,wemaybeunabletofostertheinnovation,
creativityandteamworkwebelieveweneedtosupportourgrowth.

29


We rely in part on a pplication 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 adv
ersely affected.
Werelyonapplicationmarketplaces,suchasApplesAppStoreandGooglesPlay,todrivedownloadsofourmobileapplications.Inthe
future,Apple,Googleorotheroperatorsofapplicationmarketplacesmaymakechangestotheirmarketplaceswhichmakeaccesstoourproducts
andservicesmoredifficult.WealsodependinpartonInternetsearchengines,suchasGoogle,AppleSpotlight,BingandYahoo,todrivetrafficto
ourwebsite.Forexample,whenausertypesaninquiryintoasearchengine,werelyonahighorganicsearchresultrankingofourwebpagesin
thesesearchresultstorefertheusertoourwebsite.However,ourabilitytomaintainhighorganicsearchresultrankingsisnotwithinourcontrol.
Ourcompetitorssearchengineoptimization,orSEO,effortsmayresultintheirwebsitesreceivingahighersearchresultpagerankingthanours,or
Internetsearchenginescouldrevisetheirmethodologiesinawaythatwouldadverselyaffectoursearchresultrankings.IfInternetsearchengines
modifytheirsearchalgorithmsinwaysthataredetrimentaltous,orifourcompetitorsSEOeffortsaremoresuccessfulthanours,thegrowthinour
userbasecouldslow.Ourwebsitehasexperiencedfluctuationsinsearchresultrankingsinthepast,andweanticipatesimilarfluctuationsinthe
future.Anyreductioninthenumberofusersdirectedtoourmobileapplicationsorwebsitethroughapplicationmarketplacesandsearchengines
couldharmourbusinessandoperatingresults.

More people are using devices other than personal computers to access the Internet and new platforms to produce and consume content,
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.
ThenumberofpeoplewhoaccesstheInternetthroughdevicesotherthanpersonalcomputers,includingmobilephones,tablets,videogame
consolesandtelevisionset-topdevices,hasincreaseddramaticallyinthepastfewyears.InthethreemonthsendedDecember31,2015,over85%
ofouradvertisingrevenuewasgeneratedfrommobiledevices.Sincewegenerateamajorityofouradvertisingrevenuethroughusersonmobile
devices,wemustcontinuetodriveadoptionofourmobileapplications.However,inemergingmarketslikeIndiaandPakistan,mostusersuse
featurephonesandcommunicateviaSMSmessaging,bothofwhichhavelimitedfunctionalityandneitherofwhichmaybeabletotakefull
advantageofourproductsandservicesofferedonsmartphoneorourwebsiteordesktopapplications.Inaddition,mobileusersfrequentlychangeor
upgradetheirmobiledevices.Ourbusinessandoperatingresultsmaybeharmedifourusersdonotinstallourmobileapplicationwhentheychange
orupgradetheirmobiledevice.Althoughwegeneratethemajorityofouradvertisingrevenuefromadengagementsonmobiledevices,certainofour
productsandservices,includingPromotedTrendsandPromotedAccounts,receivelessprominenceonourmobileapplicationsthantheydoonour
desktopapplications.Thishasinthepastreduced,andmayinthefuturecontinuetoreduce,theamountofrevenueweareabletogeneratefrom
theseproductsandservicesasusersincreasinglyaccessourproductsandservicesthroughmobileandalternativedevices.Inaddition,asnew
devicesandplatformsarecontinuallybeingreleased,usersmayconsumecontentinamannerthatismoredifficulttomonetize.Ifweareunableto
developproductsandservicesthatarecompatiblewithnewdevicesandplatforms,orifweareunabletodrivecontinuedadoptionofourmobile
applications,ourbusinessandoperatingresultsmaybeharmed.

Future acquisitions and investments could disrupt our business and harm our financial condition and operating results.

Oursuccesswilldepend,inpart,onourabilitytoexpandourproducts,productfeaturesandservices,andgrowourbusinessinresponseto
changingtechnologies,userandadvertiserdemands,andcompetitivepressures.Insomecircumstances,wemaydeterminetodosothroughthe
acquisitionofcomplementarybusinessesandtechnologiesratherthanthroughinternaldevelopment,including,forexample,ouracquisitionsof
Periscope,alive-streamingvideomobileapplication,Vine,amobileapplicationthatenablesuserstocreateanddistributevideosthatareuptosix
secondsinlength,MoPub,amobile-focusedadvertisingexchange;andTellApart,Inc.,amarketingtechnologycompanyprovidingretailersande-
commerceadvertiserswithuniqueretargetingcapabilities.Theidentificationofsuitableacquisitioncandidatescanbedifficult,time-consumingand
costly,andwemaynotbeabletosuccessfullycompleteidentifiedacquisitions.Theriskswefaceinconnectionwithacquisitionsinclude:
diversionofmanagementtimeandfocusfromoperatingourbusinesstoaddressingacquisitionintegrationchallenges;
retentionofkeyemployeesfromtheacquiredcompany;
culturalchallengesassociatedwithintegratingemployeesfromtheacquiredcompanyintoourorganization;

30

integrationoftheacquiredcompanysaccounting,managementinformation,humanresourcesandotheradministrativesystemsand
processes;
theneedtoimplementorimprovecontrols,procedures,andpoliciesatabusinessthatpriortotheacquisitionmayhavelacked
effectivecontrols,proceduresandpolicies;
liabilityforactivitiesoftheacquiredcompanybeforetheacquisition,includingintellectualpropertyinfringementclaims,violationsof
laws,commercialdisputes,taxliabilitiesandotherknownandunknownliabilities;
unanticipatedwrite-offsorcharges;and
litigationorotherclaimsinconnectionwiththeacquiredcompany,includingclaimsfromterminatedemployees,users,former
stockholdersorotherthirdparties.

Ourfailuretoaddresstheserisksorotherproblemsencounteredinconnectionwithourpastorfutureacquisitionsandinvestmentscould
causeustofailtorealizetheanticipatedbenefitsoftheseacquisitionsorinvestments,causeustoincurunanticipatedliabilities,andharmour
businessgenerally.Futureacquisitionscouldalsoresultindilutiveissuancesofourequitysecurities,theincurrenceofdebt,contingentliabilities,
amortizationexpenses,incrementaloperatingexpensesortheimpairmentofgoodwill,anyofwhichcouldharmourfinancialconditionoroperating
results.

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.
Asapubliccompany,wearesubjecttothereportingrequirementsoftheSecuritiesExchangeActof1934,asamended,ortheExchangeAct,
theSarbanes-OxleyActof2002,asamended,ortheSarbanes-OxleyAct,andthelistingstandardsoftheNewYorkStockExchange.The
Sarbanes-OxleyActrequires,amongotherthings,thatwemaintaineffectivedisclosurecontrolsandproceduresandinternalcontroloverfinancial
reporting.Inordertomaintainandimprovetheeffectivenessofourdisclosurecontrolsandproceduresandinternalcontroloverfinancialreporting,
wehaveexpended,andanticipatethatwewillcontinuetoexpend,significantresources,includingaccounting-relatedcostsandsignificant
managementoversight.

Anyfailuretodevelopormaintaineffectivecontrols,oranydifficultiesencounteredintheirimplementationorimprovement,couldcauseusto
besubjecttooneormoreinvestigationsorenforcementactionsbystateorfederalregulatoryagencies,stockholderlawsuitsorotheradverse
actionsrequiringustoincurdefensecosts,payfines,settlementsorjudgments.Anysuchfailurescouldalsocauseinvestorstoloseconfidencein
ourreportedfinancialandotherinformation,whichwouldlikelyhaveanegativeeffectonthetradingpriceofourcommonstock.Inaddition,ifweare
unabletocontinuetomeettheserequirements,wemaynotbeabletoremainlistedontheNewYorkStockExchange.

If currency exchange rates fluctuate substantially in the future, our operating results, which are reported in U.S. dollars, could be
adversely affected.
Aswecontinuetoexpandourinternationaloperations,wewillbecomemoreexposedtotheeffectsoffluctuationsincurrencyexchangerates.
Weincurexpensesforemployeecompensationandotheroperatingexpensesatourinternationallocationsinthelocalcurrency,andaccept
paymentfromadvertisersordatapartnersincurrenciesotherthantheU.S.dollar.SinceweconductbusinessincurrenciesotherthanU.S.dollars
butreportouroperatingresultsinU.S.dollars,wefaceexposuretofluctuationsincurrencyexchangerates.Whileweenterintoforeigncurrency
forwardcontractswithfinancialinstitutionstoreducetheriskthatourearningsmaybeadverselyaffectedbytheimpactofexchangeratefluctuations
onmonetaryassetsorliabilitiesdenominatedincurrenciesotherthanthefunctionalcurrencyofasubsidiary,exchangeratefluctuationsbetweenthe
U.S.dollarandothercurrenciescouldhaveamaterialimpactonouroperatingresults.

Servicing our convertible senior notes may require a significant amount of cash, and we may not have sufficient cash flow or the ability to
raise the funds necessary to satisfy our obligations under such notes, and our future debt may contain limitations on our ability to pay
cash upon conversion or repurchase of such notes.
In2014,weissued$935.0millionprincipalamountof0.25%convertibleseniornotesdue2019,orthe2019Notes,and$954.0million
principalamountof1.00%convertibleseniornotesdue2021,orthe2021Notesandtogetherwiththe2019Notes,theNotes,inprivateplacements
toqualifiedinstitutionalbuyers.AsofDecember31,2015,wehadatotalparvalueof$1.89billionofoutstandingNotes.

31


HoldersoftheNoteswillhavetherightundertheindenturefortheNotestorequireustorepurchasealloraportionoftheirnotesuponthe
occurrenceofafundamentalchangebeforetherelevantmaturitydate,ineachcaseatarepurchasepriceequalto100%oftheprincipalamountof
theNotes,plusaccruedandunpaidinterest,ifany,tothefundamentalchangerepurchasedate.Inaddition,uponconversionoftheNotes,unless
weelecttodeliversolelysharesofourcommonstocktosettlesuchconversion(otherthanpayingcashinlieuofdeliveringanyfractionalshares),
wewillberequiredtomakecashpaymentsinrespectoftheNotesbeingconverted.Moreover,wewillberequiredtorepaythenotesincashattheir
maturity,unlessearlierconvertedorrepurchased.

OurabilitytorefinancetheNotes,makecashpaymentsinconnectionwithconversionsoftheNotesorrepurchasetheNotesintheeventofa
fundamentalchangewilldependonmarketconditionsandourfutureperformance,whichissubjecttoeconomic,financial,competitiveandother
factorsbeyondourcontrol.WealsomaynotusethecashwehaveraisedthroughtheissuanceoftheNotesinanoptimallyproductiveandprofitable
manner.However,sinceinceptionwehaveincurredsignificantoperatinglossesandwehistoricallyhadnotbeencashflowpositiveandmaynotbe
inthefuture.Asaresult,wemaynothaveenoughavailablecashorbeabletoobtainfinancingoncommerciallyreasonabletermsoratall,atthe
timewearerequiredtomakerepurchasesofnotessurrenderedtherefororpaycashwithrespecttonotesbeingconvertedorattheirmaturityand
ourlevelofindebtednesscouldadverselyaffectourfutureoperationsbyincreasingourvulnerabilitytoadversechangesingeneraleconomicand
industryconditionsandbylimitingorprohibitingourabilitytoobtainadditionalfinancingforfuturecapitalexpenditures,acquisitionsandgeneral
corporateandotherpurposes.Inaddition,ifweareunabletomakecashpaymentsuponconversionoftheNoteswewouldberequiredtoissue
significantamountsofourcommonstock,whichwouldbedilutivetoexistingstockholders.IfwedonothavesufficientcashtorepurchasetheNotes
followingafundamentalchange,wewouldbeindefaultunderthetermsoftheNotes,whichcouldseriouslyharmourbusiness.Inaddition,the
termsoftheNotesdonotlimittheamountoffutureindebtednesswemayincur.Ifweincursignificantlymoredebt,thiscouldintensifytherisks
describedabove.

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.
Asignificantnaturaldisaster,suchasanearthquake,fire,floodorsignificantpoweroutagecouldhaveamaterialadverseimpactonour
business,operatingresults,andfinancialcondition.Ourheadquartersandcertainofourco-locateddatacenterfacilitiesarelocatedintheSan
FranciscoBayArea,aregionknownforseismicactivity.Despiteanyprecautionswemaytake,theoccurrenceofanaturaldisasterorother
unanticipatedproblemsatourdatacenterscouldresultinlengthyinterruptionsinourservices.Inaddition,actsofterrorismandothergeo-political
unrestcouldcausedisruptionsinourbusiness.Alloftheaforementionedrisksmaybefurtherincreasedifourdisasterrecoveryplansprovetobe
inadequate.Wehaveimplementedadisasterrecoveryprogram,whichallowsustomoveproductiontoaback-updatacenterintheeventofa
catastrophe.Althoughthisprogramisfunctional,wedonotcurrentlyservenetworktrafficequallyfromeachdatacenter,soifourprimarydata
centershutsdown,therewillbeaperiodoftimethatourproductsorservices,orcertainofourproductsorservices,willremaininaccessibletoour
usersorourusersmayexperiencesevereissuesaccessingourproductsandservices.

Wedonotcarrybusinessinterruptioninsurancesufficienttocompensateusforthepotentiallysignificantlosses,includingthepotentialharm
toourbusinessthatmayresultfrominterruptionsinourabilitytoprovideourproductsandservices.

32

We may have exposure to greater than anticipated tax liabilities, which could advers ely impact our operating results.
Ourincometaxobligationsarebasedinpartonourcorporateoperatingstructure,includingthemannerinwhichwedevelop,valueanduse
ourintellectualpropertyandthescopeofourinternationaloperations.Thetaxlawsapplicabletoourinternationalbusinessactivities,includingthe
lawsoftheUnitedStatesandotherjurisdictions,aresubjecttointerpretation.Thetaxingauthoritiesofthejurisdictionsinwhichweoperatemay
challengeourmethodologiesforvaluingdevelopedtechnology(orotherintangibleassets)orintercompanyarrangements,whichcouldincreaseour
worldwideeffectivetaxrateandharmourfinancialconditionandoperatingresults.WearesubjecttoreviewandauditbyU.S.federalandstateand
foreigntaxauthorities.Taxauthoritiesmaydisagreewithcertainpositionswehavetakenandanyadverseoutcomeofsucharevieworauditcould
haveanegativeeffectonourfinancialpositionandoperatingresults.Inaddition,ourfutureincometaxescouldbeadverselyaffectedbyearnings
beinglowerthananticipatedinjurisdictionsthathavelowerstatutorytaxratesandhigherthananticipatedinjurisdictionsthathavehigherstatutory
taxrates,bychangesinthevaluationofourdeferredtaxassetsandliabilities,orbychangesintaxlaws,regulationsoraccountingprinciples,aswell
ascertaindiscreteitems.Greaterthananticipatedtaxexpenses,ordisputeswithtaxauthorities,couldadverselyimpactouroperatingresults.

If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings.
UndergenerallyacceptedaccountingprinciplesintheUnitedStates,orGAAP,wereviewourintangibleassetsforimpairmentwheneventsor
changesincircumstancesindicatethecarryingvaluemaynotberecoverable.Goodwillisrequiredtobetestedforimpairmentatleastannually.As
ofDecember31,2015,wehadrecordedatotalof$1.26billionofgoodwillandintangibleassets.Anadversechangeinmarketconditions,
particularlyifsuchchangehastheeffectofchangingoneofourcriticalassumptionsorestimates,couldresultinachangetotheestimationoffair
valuethatcouldresultinanimpairmentchargetoourgoodwillorintangibleassets.Anysuchmaterialchargesmayhaveamaterialnegativeimpact
onouroperatingresults.

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
AsofDecember31,2015,wehadU.S.federalnetoperatinglosscarryforwardsofapproximately$3.37billionandstatenetoperatingloss
carryforwardsofapproximately$1.34billion.UnderSections382and383ofInternalRevenueCodeof1986,asamended,ortheCode,ifa
corporationundergoesanownershipchange,thecorporationsabilitytouseitspre-changenetoperatinglosscarryforwardsandotherpre-change
taxattributes,suchasresearchtaxcredits,tooffsetitspost-changeincomeandtaxesmaybelimited.Ingeneral,anownershipchangeoccursif
thereisacumulativechangeinourownershipby5%shareholdersthatexceeds50percentagepointsoverarollingthree-yearperiod.Similarrules
mayapplyunderstatetaxlaws.Intheeventthatitisdeterminedthatwehaveinthepastexperiencedanownershipchange,orifweexperienceone
ormoreownershipchangesasaresultoffuturetransactionsinourstock,thenwemaybelimitedinourabilitytouseournetoperatingloss
carryforwardsandothertaxassetstoreducetaxesowedonthenettaxableincomethatweearn.Anysuchlimitationsontheabilitytouseournet
operatinglosscarryforwardsandothertaxassetscouldadverselyimpactourbusiness,financialconditionandoperatingresults.

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.
Ouramendedandrestatedcertificateofincorporation,amendedandrestatedbylawsandDelawarelawcontainprovisionswhichcouldhave
theeffectofrenderingmoredifficult,delaying,orpreventinganacquisitiondeemedundesirablebyourboardofdirectors.Amongotherthings,our
amendedandrestatedcertificateofincorporationandamendedandrestatedbylawsincludeprovisions:
creatingaclassifiedboardofdirectorswhosemembersservestaggeredthree-yearterms;
authorizingblankcheckpreferredstock,whichcouldbeissuedbyourboardofdirectorswithoutstockholderapprovalandmay
containvoting,liquidation,dividendandotherrightssuperiortoourcommonstock;
limitingtheliabilityof,andprovidingindemnificationto,ourdirectorsandofficers;
limitingtheabilityofourstockholderstocallandbringbusinessbeforespecialmeetings;

33

requiringadvancenoticeofstockholderproposalsforbusinesstobeconductedatmeetingsofourstockholdersandfornominationsof
candidatesforelectiontoourboardofdirectors;and
controllingtheproceduresfortheconductandschedulingofboardofdirectorsandstockholdermeetings.

Theseprovisions,aloneortogether,coulddelayorpreventhostiletakeoversandchangesincontrolorchangesinourmanagement.

AsaDelawarecorporation,wearealsosubjecttoprovisionsofDelawarelaw,includingSection203oftheDelawareGeneralCorporation
law,whichpreventscertainstockholdersholdingmorethan15%ofouroutstandingcommonstockfromengagingincertainbusinesscombinations
withoutapprovaloftheholdersofatleasttwo-thirdsofouroutstandingcommonstocknotheldbysuch15%orgreaterstockholder.

Anyprovisionofouramendedandrestatedcertificateofincorporation,amendedandrestatedbylawsorDelawarelawthathastheeffectof
delaying,preventingordeterringachangeincontrolcouldlimittheopportunityforourstockholderstoreceiveapremiumfortheirsharesofour
commonstock,andcouldalsoaffectthepricethatsomeinvestorsarewillingtopayforourcommonstock.

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.

Themarketpriceofourcommonstockhasbeenandmaycontinuetobehighlyvolatileinresponsetovariousfactors,someofwhichare
beyondourcontrol.SincesharesofourcommonstockweresoldinourinitialpublicofferinginNovember2013atapriceof$26.00pershare,the
reportedhighandlowsalespricesofourcommonstockhasrangedfrom$74.73to$21.01,throughDecember31,2015.Inadditiontothefactors
discussedinthisRiskFactorssectionandelsewhereinthisAnnualReportonForm10-K,factorsthatcouldcausefluctuationsinthemarketprice
ofourcommonstockincludethefollowing:
priceandvolumefluctuationsintheoverallstockmarketfromtimetotime;
volatilityinthemarketpricesandtradingvolumesoftechnologystocks;
changesinoperatingperformanceandstockmarketvaluationsofothertechnologycompaniesgenerally,orthoseinourindustryin
particular;
salesofsharesofourcommonstockbyusorourstockholders;
ourissuanceofsharesofourcommonstock,whetherinconnectionwithanacquisitionoruponconversionofsomeorallofour
outstandingNotes;
failureofsecuritiesanalyststomaintaincoverageofus,changesinfinancialestimatesbysecuritiesanalystswhofollowourcompany,
orourfailuretomeettheseestimatesortheexpectationsofinvestors;
thefinancialornon-financialmetricprojectionswemayprovidetothepublic,anychangesinthoseprojectionsorourfailuretomeet
thoseprojections;
announcementsbyusorourcompetitorsofnewproductsorservices;
thepublicsreactiontoourpressreleases,otherpublicannouncementsandfilingswiththeSEC;
rumorsandmarketspeculationinvolvingusorothercompaniesinourindustry;
actualoranticipatedchangesinouroperatingresultsorfluctuationsinouroperatingresults;
actualoranticipateddevelopmentsinourbusiness,ourcompetitorsbusinessesorthecompetitivelandscapegenerally;
litigationinvolvingus,ourindustryorboth,orinvestigationsbyregulatorsintoouroperationsorthoseofourcompetitors;
developmentsordisputesconcerningourintellectualpropertyorotherproprietaryrights;
announcedorcompletedacquisitionsofbusinessesortechnologiesbyusorourcompetitors;
newlawsorregulationsornewinterpretationsofexistinglawsorregulationsapplicabletoourbusiness;

34

changesinaccountingstandards,policies,guidelines,interpretationsorprinciples;
anysignificantchangeinourmanagement;and
generaleconomicconditionsandslowornegativegrowthofourmarkets.

Inaddition,inthepast,followingperiodsofvolatilityintheoverallmarketandthemarketpriceofaparticularcompanyssecurities,securities
classactionlitigationhasoftenbeeninstitutedagainstthesecompanies.Thislitigation,ifinstitutedagainstus,couldresultinsubstantialcostsanda
diversionofourmanagementsattentionandresources.

The note hedge and warrant transactions may affect the value of our common stock.
ConcurrentlywiththeissuanceoftheNotes,weenteredintonotehedgetransactionswithcertainfinancialinstitutions,whichwerefertoas
theoptioncounterparties.ThenotehedgetransactionsaregenerallyexpectedtoreducethepotentialdilutionuponanyconversionoftheNotes
and/oroffsetanycashpaymentswearerequiredtomakeinexcessoftheprincipalamountofconvertedNotes,asthecasemaybe.Wealso
enteredintowarranttransactionswiththeoptioncounterparties.However,thewarranttransactionscouldseparatelyhaveadilutiveeffecttothe
extentthatthemarketpricepershareofourcommonstockexceedstheapplicablestrikepriceofthewarrants.

Theoptioncounterpartiesortheirrespectiveaffiliatesmaymodifytheirinitialhedgepositionsbyenteringintoorunwindingvariousderivatives
contractswithrespecttoourcommonstockand/orpurchasingorsellingourcommonstockorothersecuritiesofoursinsecondarymarket
transactionspriortothematurityoftheNotes(andarelikelytodosoduringanyobservationperiodrelatedtoaconversionofNotesorfollowingany
repurchaseofNotesbyusonanyfundamentalchangerepurchasedateorotherwise).Thisactivitycouldcauseoravoidanincreaseoradecrease
inthemarketpriceofourcommonstock.

Inaddition,ifanysuchconvertiblenotehedgeandwarranttransactionsfailtobecomeeffective,theoptioncounterpartiesortheirrespective
affiliatesmayunwindtheirhedgepositionswithrespecttoourcommonstock,whichcouldadverselyaffectthevalueofourcommonstock.

If securities or industry analysts do not publish or 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.
Thetradingmarketforourcommonstockisinfluenced,tosomeextent,bytheresearchandreportsthatsecuritiesorindustryanalystspublish
aboutus,ourbusiness,ourindustry,ourmarketorourcompetitors.Ifanyoftheanalystswhocoveruschangetheirrecommendationregardingour
commonstockadversely,orprovidemorefavorablerelativerecommendationsaboutourcompetitors,thepriceofourcommonstockwouldlikely
decline.Ifanyanalystswhocoverusweretoceasecoverageofourcompanyorfailtoregularlypublishreportsonus,wecouldlosevisibilityinthe
financialmarkets,whichinturncouldcausethepriceofourcommonstockortradingvolumetodecline.

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

Wedonotanticipatedeclaringanycashdividendstoholdersofourcommonstockintheforeseeablefuture.Inaddition,ourcreditfacility
containsrestrictionsonpaymentsincludingpaymentsofcashdividends.Consequently,investorsmayneedtorelyonsalesofourcommonstock
afterpriceappreciation,whichmayneveroccur,astheonlywaytorealizeanyfuturegainsontheirinvestment.

Item 1B. UNRESOLVED STAFF COMMENTS

None.

35

It em 2. PROPERTIES
Facilities
AsofDecember31,2015,weleasedofficefacilitiesaroundtheworldtotalingapproximately1,732,000squarefeet,including839,000square
feetforourcorporateheadquartersinSanFrancisco,California.WealsoleasedatacenterfacilitiesintheUnitedStatespursuanttovariouslease
agreementsandco-locationarrangementswithdatacenteroperators.Webelieveourfacilitiesaresufficientforourcurrentneeds.

Item 3. LEGAL PROCEEDINGS

Legal Proceedings
Wearecurrentlyinvolvedin,andmayinthefuturebeinvolvedin,legalproceedings,claimsandgovernmentinvestigationsintheordinary
courseofbusiness.Weareinvolvedinlitigation,andmayinthefuturebeinvolvedinlitigation,withthirdpartiesasserting,amongotherthings,
infringementoftheirintellectualpropertyrights.Inaddition,thenatureofourbusinessexposesustoclaimsrelatedtodefamation,rightsofpublicity
andprivacy,andpersonalinjurytortsresultingfrominformationthatispublishedormadeavailableonourplatform.Thisriskisenhancedincertain
jurisdictionsoutsidetheUnitedStateswhereourprotectionfromliabilityforcontentpublishedonourplatformbythirdpartiesmaybeunclearand
wherewemaybelessprotectedunderlocallawsthanweareintheUnitedStates.Althoughtheresultsofthelegalproceedings,claimsand
governmentinvestigationsinwhichweareinvolvedcannotbepredictedwithcertainty,wedonotbelievethatthereisareasonablepossibilitythat
thefinaloutcomeofthesematterswillhaveamaterialadverseeffectonourbusiness,financialconditionoroperatingresults.

Futurelitigationmaybenecessary,amongotherthings,todefendourselves,ourplatformpartnersandourusersbydeterminingthescope,
enforceability,andvalidityofthird-partyproprietaryrightsortoestablishourproprietaryrights.Theresultsofanycurrentorfuturelitigationcannotbe
predictedwithcertainty,andregardlessoftheoutcome,litigationcanhaveanadverseimpactonusbecauseofdefenseandsettlementcosts,
diversionofmanagementresourcesandotherfactors.

Item 4. MINE SAFETY DISCLOSURE

Notapplicable.

36

PA RT II

Item 5. MARKET FOR REGISTRANTS COMMON EQUITY RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
Market Information for Common Stock
OurcommonstockhasbeenlistedontheNewYorkStockExchangeunderthesymbolTWTRsinceNovember7,2013.Priortothatdate,
therewasnopublictradingmarketforourcommonstock.Thefollowingtablesetsforththehighandlowsalespricepershareofourcommonstock
asreportedontheNewYorkStockExchangefortheperiodsindicated:

2015 2014
High Low High Low
FirstQuarter $ 51.87 $ 35.54 $ 70.43 $ 43.31
SecondQuarter 53.49 33.51 47.59 29.51
ThirdQuarter 38.82 21.01 53.64 35.95

FourthQuarter 31.87 21.99 55.99 34.62

Holders of Record
AsofFebruary17,2016,therewere962holdersofrecordofourcommonstock.Becausemanyofoursharesofcommonstockareheldby
brokersandotherinstitutionsonbehalfofstockholders,weareunabletoestimatethetotalnumberofstockholdersrepresentedbytheserecord
holders.

Dividend Policy
Wehaveneverdeclaredorpaidanycashdividendsonourcapitalstock.Weintendtoretainanyfutureearningsanddonotexpecttopayany
dividendsintheforeseeablefuture.Anyfuturedeterminationtodeclarecashdividendswillbemadeatthediscretionofourboardofdirectors,
subjecttoapplicablelaws,andwilldependonanumberoffactors,includingourfinancialcondition,resultsofoperations,capitalrequirements,
contractualrestrictions,generalbusinessconditionsandotherfactorsthatourboardofdirectorsmaydeemrelevant.Inaddition,thecreditfacility
containsrestrictionsonpaymentsincludingcashpaymentsofdividends.

Unregistered Sales of Equity Securities

Shares Issued in Connection with Acquisitions
FromJanuary1,2015throughDecember31,2015,weissuedanaggregateof5,703,385sharesofourcommonstockinconnectionwithour
acquisitionsofcertaincompaniesortheirassets.

Noneoftheforegoingtransactionsinvolvedanyunderwriters,underwritingdiscountsorcommissions,oranypublicoffering.Webelievethe
offers,salesandissuancesoftheabovesecuritieswereexemptfromregistrationundertheSecuritiesActbyvirtueofSection4(2)oftheSecurities
Actbecausetheissuanceofsecuritiestotherecipientsdidnotinvolveapublicoffering.Therecipientsofthesecuritiesineachofthesetransactions
representedtheirintentionstoacquirethesecuritiesforinvestmentonlyandnotwithaviewtoorforsaleinconnectionwithanydistributionthereof,
andappropriatelegendswereplaceduponthestockcertificatesissuedinthesetransactions.Allrecipientshadadequateaccess,throughtheir
relationshipswithus,toinformationaboutus.Thesalesofthesesecuritiesweremadewithoutanygeneralsolicitationoradvertising.

Performance Graph
This performance graph shall not be deemed soliciting material or to be filed with the SEC for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liabilities under that Section, and shall not be deemed to be
incorporated by reference into any filing of Twitter, Inc. under the Securities Act of 1933, as amended, or the Exchange Act.

37


Thefollowinggraphcomparesthecumulativetotalreturntostockholdersonourcommonstockrelativetothecumulativetotalreturnsofthe
Standard&Poors500Index,orS&P500,andtheDowJonesInternetCompositeIndex,orDJInternetComposite.Aninvestmentof$100(with
reinvestmentofalldividends)isassumedtohavebeenmadeinourcommonstockandineachindexonNovember7,2013,thedateourcommon
stockbegantradingontheNYSE,anditsrelativeperformanceistrackedthroughDecember31,2015.Thereturnsshownarebasedonhistorical
resultsandarenotintendedtosuggestfutureperformance.

Item 6. SELECTED FINANCIAL DATA

ThefollowingselectedhistoricalconsolidatedfinancialdatashouldbereadinconjunctionwithPartII,Item7,ManagementsDiscussionand
AnalysisofFinancialConditionandResultsofOperations,ourconsolidatedfinancialstatementsandtherelatednotesincludedinItem8,Financial
StatementsandSupplementaryDataofthisAnnualReportonForm10-K.

38


TheconsolidatedstatementsofoperationsdatafortheyearsendedDecember31,2015,2014and2013andtheconsolidatedbalancesheet
dataasofDecember31,2015and2014arederivedfromourauditedconsolidatedfinancialstatementsincludedinPartII,Item8,Financial
StatementsandSupplementaryDatainthisAnnualReportonForm10K.Theconsolidatedstatementsofoperationsdatafortheyearended
December31,2012and2011andtheconsolidatedbalancesheetdataasofDecember31,2013,2012and2011arederivedfromouraudited
consolidatedfinancialstatementsnotincludedinthisAnnualReportonForm10-K.Ourhistoricalresultsarenotnecessarilyindicativeoftheresults
thatmaybeexpectedinthefuture.

Year Ended December 31,

2015 2014 2013 2012 2011
(Inthousands,exceptpersharedata)
Consolidated Statement of Operations Data:
Revenue $ 2,218,032 $ 1,403,002 $ 664,890 $ 316,933 $ 106,313
Costsandexpenses(1)
Costofrevenue 729,256 446,309 266,718 128,768 61,803
Researchanddevelopment 806,648 691,543 593,992 119,004 80,176
Salesandmarketing 871,491 614,110 316,216 86,551 25,988
Generalandadministrative 260,673 189,906 123,795 59,693 65,757
Totalcostsandexpenses 2,668,068 1,941,868 1,300,721 394,016 233,724
Lossfromoperations (450,036) (538,866) (635,831) (77,083) (127,411)
Interestexpense (98,178) (35,918) (7,576) (3,255) (1,271)
Otherincome(expense),net 14,909 (3,567) (3,739) 1,168 (1,064)
Lossbeforeincometaxes (533,305 ) (578,351 ) (647,146 ) (79,170 ) (129,746 )
Provision(benefit)forincometaxes (12,274) (531) (1,823) 229 (1,444)
Netloss $ (521,031 ) $ (577,820 ) $ (645,323 ) $ (79,399 ) $ (128,302 )
Deemeddividendtoinvestorsinrelationtothetenderoffer 35,816
Netlossattributabletocommonstockholders $ (521,031 ) $ (577,820 ) $ (645,323 ) $ (79,399 ) $ (164,118 )
Netlosspershareattributabletocommonstockholders:
Basicanddiluted $ (0.79) $ (0.96) $ (3.41) $ (0.68) $ (1.60)
Weighted-averagesharesusedtocomputenetlosspershare
attributabletocommonstockholders:
Basicanddiluted 662,424 604,990 189,510 117,401 102,544
Other Financial Information: (2)
AdjustedEBITDA $ 557,807 $ 300,896 $ 75,430 $ 21,164 $ (42,835)
Non-GAAPnetincome(loss) $ 276,629 $ 101,071 $ (34,330) $ (35,191) $ (65,533)

39

(1) Costsandexpensesincludestock-basedcompensationexpenseasfollows:

Year Ended December 31,

2015 2014 2013 2012 2011
(In thousands)
Costofrevenue $ 40,705 $ 50,536 $ 50,942 $ 800 $ 1,820
Researchanddevelopment 401,537 360,726 379,913 12,622 33,559
Salesandmarketing 156,904 157,263 114,440 1,346 1,553
Generalandadministrative 82,972 63,072 55,072 10,973 23,452

Totalstock-basedcompensation $ 682,118 $ 631,597 $ 600,367 $ 25,741 $ 60,384

(2) SeethesectiontitledNon-GAAPFinancialMeasuresbelowforadditionalinformationandareconciliationofnetlosstoAdjustedEBITDA
andnetlosstonon-GAAPnetincome(loss).

As of December 31,
2015 2014 2013 2012 2011
(In thousands)
Consolidated Balance Sheet Data:
Cashandcashequivalents $ 911,471 $ 1,510,724 $ 841,010 $ 203,328 $ 218,996
Short-terminvestments 2,583,877 2,111,154 1,393,044 221,528 330,543
Workingcapital 3,875,753 3,862,059 2,349,249 444,587 548,324
Propertyandequipment,net 735,299 557,019 332,662 185,574 61,983
Totalassets 6,442,439 5,583,082 3,366,240 831,568 720,675
Convertiblenotes 1,455,095 1,376,020
Totalliabilities 2,074,392 1,956,679 416,234 207,204 87,391
Redeemableconvertiblepreferredstock 37,106 49
Convertiblepreferredstock 835,430 835,073
Totalstockholders'equity(deficit) 4,368,047 3,626,403 2,950,006 (248,172) (201,838)

Non-GAAP Financial Measures

TosupplementourconsolidatedfinancialstatementspresentedinaccordancewithgenerallyacceptedaccountingprinciplesintheUnited
States,orGAAP,weconsidercertainfinancialmeasuresthatarenotpreparedinaccordancewithGAAP,includingAdjustedEBITDA,non-GAAP
netincome(loss),revenueexcludingforeignexchangeeffectandadvertisingrevenueexcludingforeignexchangeeffect.Thesenon-GAAPfinancial
measuresarenotbasedonanystandardizedmethodologyprescribedbyGAAPandarenotnecessarilycomparabletosimilarly-titledmeasures
presentedbyothercompanies.

Adjusted EBITDA
WedefineAdjustedEBITDAasnetlossadjustedtoexcludestock-basedcompensationexpense,depreciationandamortizationexpense,
interestandotherexpenses,provision(benefit)forincometaxesandrestructuringcharges.

ThefollowingtablepresentsareconciliationofnetlosstoAdjustedEBITDAforeachoftheperiodsindicated:

Year Ended December 31,

2015 2014 2013 2012 2011
(In thousands)
Reconciliation of Net Loss to Adjusted EBITDA
Netloss $ (521,031) $ (577,820) $ (645,323) $ (79,399) $ (128,302)
Stock-basedcompensationexpense 682,118 631,597 600,367 25,741 60,384
Depreciationandamortizationexpense 312,823 208,165 110,894 72,506 24,192
Interestandotherexpense,net 83,269 39,485 11,315 2,087 2,335
Provision(benefit)forincometaxes (12,274) (531) (1,823) 229 (1,444)
Restructuringcharges 12,902
AdjustedEBITDA $ 557,807 $ 300,896 $ 75,430 $ 21,164 $ (42,835)

40


Non-GAAP Net Income (Loss)

Wedefinenon-GAAPnetincome(loss)asnetlossadjustedtoexcludestock-basedcompensationexpense,amortizationofacquired
intangibleassets,non-cashinterestexpenserelatedtoourconvertiblenotes,non-cashexpenserelatedtoacquisitions,incometaxeffectsrelatedto
acquisitionsandrestructuringcharges.

Thefollowingtablepresentsareconciliationofnetlosstonon-GAAPnetincome(loss)foreachoftheperiodsindicated:

Year Ended December 31,

2015 2014 2013 2012 2011
(In thousands)
Reconciliation of Net Loss to Non-GAAP Net Income (Loss)
Netloss $ (521,031) $ (577,820) $ (645,323) $ (79,399) $ (128,302)
Stock-basedcompensationexpense 682,118 631,597 600,367 25,741 60,384
Amortizationofacquiredintangibleassets 54,659 36,563 16,530 18,687 4,697
Non-cashinterestexpenserelatedtoconvertiblenotes 69,185 18,823
Non-cashexpenserelatedtoacquisition 926
Incometaxeffectsrelatedtoacquisitions (22,130) (8,092) (5,904) (220) (2,312)
Restructuringcharges 12,902
Non-GAAPnetincome(loss) $ 276,629 $ 101,071 $ (34,330) $ (35,191) $ (65,533)

Weusethenon-GAAPfinancialmeasuresofAdjustedEBITDAandnon-GAAPnetincome(loss)inevaluatingouroperatingresultsandfor
financialandoperationaldecision-makingpurposes.WebelievethatAdjustedEBITDAandnon-GAAPnetincome(loss)helpidentifyunderlying
trendsinourbusinessthatcouldotherwisebemaskedbytheeffectoftheexpensesthatweexcludeinAdjustedEBITDAandnon-GAAPnetincome
(loss).WebelievethatAdjustedEBITDAandnon-GAAPnetincome(loss)provideusefulinformationaboutouroperatingresults,enhancethe
overallunderstandingofourpastperformanceandfutureprospectsandallowforgreatertransparencywithrespecttokeymetricsusedbyour
managementinitsfinancialandoperationaldecision-making.

Thesenon-GAAPfinancialmeasuresshouldnotbeconsideredinisolationfrom,orasasubstitutefor,financialinformationpreparedin
accordancewithGAAP.Thereareanumberoflimitationsrelatedtotheuseofthesenon-GAAPfinancialmeasuresratherthannetloss,whichisthe
nearestGAAPequivalentofthesefinancialmeasures.Someoftheselimitationsare:
Thesenon-GAAPfinancialmeasuresexcluderestructuringchargesandcertainrecurring,non-cashchargessuchasstock-based
compensationexpense,amortizationofacquiredintangibleassetsandnon-cashinterestexpenserelatedtoconvertiblenotes;
Stock-basedcompensationexpensehasbeen,andwillcontinuetobefortheforeseeablefuture,asignificantrecurringexpenseinour
businessandanimportantpartofourcompensationstrategy;
AdjustedEBITDAdoesnotreflecttaxpaymentsthatreducecashavailabletous;
AdjustedEBITDAexcludesdepreciationandamortizationexpenseand,althoughthesearenon-cashcharges,thepropertyand
equipmentbeingdepreciatedandamortizedmayhavetobereplacedinthefuture;and
Theexpensesthatweexcludeinourcalculationofthesenon-GAAPfinancialmeasuresmaydifferfromtheexpenses,ifany,thatour
peercompaniesmayexcludefromsimilarly-titlednon-GAAPmeasureswhentheyreporttheirresultsofoperations.

WehaveattemptedtocompensatefortheselimitationsbyprovidingthenearestGAAPequivalentsofthesenon-GAAPfinancialmeasures
anddescribingtheseGAAPequivalentsunderthesectiontitledManagementsDiscussionandAnalysisofFinancialConditionandResultsof
OperationsResultsofOperations.

41

It em 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated
financial statements and related notes thereto included in Item 8 Financial Statements and Supplemental Data in this Annual Report on Form 10-K.
This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those
discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those
discussed in the section titled Risk Factors included elsewhere in this Annual Report on Form 10-K.

FY 2015 Overview and Highlights

Totalrevenuewas$2.22billion,anincreaseof58%comparedto2014.
Advertisingrevenuetotaled$1.99billion,anincreaseof59%comparedto2014.
Excludingtheimpactofyear-over-yearchangesinforeignexchangerates,advertisingrevenuewouldhaveincreased65%
AdvertisingrevenuegeneratedfromthesaleofouradvertisingservicesonTwitterin2015was$1.80billionascomparedto$1.24
billionin2014.AdvertisingrevenuegeneratedfromthesaleofouradvertisingservicesoffTwitteronthirdpartypublisherswebsites,
applicationsandotherofferingsin2015was$194.2millionascomparedto$11.4millionin2014.
Mobileadvertisingrevenuewasover85%oftotaladvertisingrevenue
Datalicensingandotherrevenuetotaled$224.0million,anincreaseof52%comparedto2014.
U.S.revenuetotaled$1.44billion,anincreaseof53%comparedto2014.
Internationalrevenuetotaled$774.8million,anincreaseof69%comparedto2014.

Netlosswas$521.0millionandadjustedEBITDAwas$557.8million,resultinginanadjustedEBITDAmarginof25%,anincreaseof21%
comparedto2014.

Cash,cashequivalentsandshort-terminvestmentsinmarketablesecuritiestotaled$3.50billionasofDecember31,2015.

Totalaveragemonthlyactiveusers(MAUs)were320millionforthethreemonthsendedDecember31,2015,up9%comparedtothethree
monthsendedDecember31,2014.MobileMAUsrepresentedapproximately80%oftotalMAUs.

42

Key Metrics
Wereviewanumberofmetrics,includingthefollowingkeymetrics,toevaluateourbusiness,measureourperformance,identifytrends
affectingourbusiness,formulatebusinessplansandmakestrategicdecisions.

Monthly Active Users (MAUs) .WedefineMAUsasTwitteruserswhologgedinorwereotherwiseauthenticatedandaccessedTwitter

throughourwebsite,mobilewebsite,desktopormobileapplications,SMSorregisteredthird-partyapplicationsorwebsitesinthe30-dayperiod
endingonthedateofmeasurement.AverageMAUsforaperiodrepresenttheaverageoftheMAUsattheendofeachmonthduringtheperiod.
MAUsareameasureofthesizeofourloggedinorotherwiseauthenticatedactiveuserbase.InthethreemonthsendedDecember31,2015,we
had320millionaverageMAUs,whichrepresentsanincreaseof9%fromthethreemonthsendedDecember31,2014.ThegrowthinaverageMAUs
wasdrivenprimarilybygrowthinitiatives.InthethreemonthsendedDecember31,2015,wehad65millionaverageMAUsintheUnitedStates
and254millionaverageMAUsintherestoftheworld,whichrepresentincreasesof3%and11%,respectively,fromthethreemonthsended
December31,2014.ForadditionalinformationonhowwecalculateMAUsandfactorsthatcanaffectthismetric,seethesectiontitledNote
RegardingKeyMetrics.

Inordertosimplifyourdisclosures,wewillnolongerincludeSMSFastFollowersinourreportedtotalMAUsgoingforward.

43


Changes in Ad Engagements and Cost Per Ad Engagement .Wedefineanadengagementasauserinteractionwithoneofourpay-for-

performanceadvertisingproducts.Adengagementswithouradvertisingproductsarebasedonausercompletinganobjectivesetoutbyan
advertisersuchasexpanding,retweeting,likesorreplyingtoaPromotedTweet,playinganembeddedvideo,downloadingorengagingwitha
promotedmobileapplication,clickingonawebsitelink,signingupformarketingemailsfromadvertisers,followingtheaccountthattweetsa
PromotedTweet,orcompletingatransactiononanexternalwebsite.Webelievechangesinadengagementsareonewaytomeasureuser
engagementwithouradvertisingproducts.Webelievechangesincostperadengagementareonewaytomeasuredemand.

InthethreemonthsendedDecember31,2015,adengagementsincreased153%fromthethreemonthsendedDecember31,2014.The
increasewasdrivenbygrowthinvideoadengagements,growthinadengagementsonthird-partypublisherswebsites,applicationsandother
offerings,andstrongeradvertiserdemandforouradvertisingproductsinthefourthquarterof2015comparedtothefourthquarterof2014.Inthe
threemonthsendedDecember31,2015,averagecostperadengagementdecreased41%fromthethreemonthsendedDecember31,2014.The
decreaseincostperadengagementwasprimarilydrivenbyamixshifttoauto-playvideo,partiallyoffsetbyanincreaseinsame-formatpricesfor
themajorityofouradvertisingproducts.

Factors Affecting Our Future Performance

User Growth and Monetization .UsergrowthtrendsreflectedinthenumberofMAUsandmonetizationtrendsreflectedinadvertising
engagementsarekeyfactorsthataffectourrevenue.Asouruserbaseandthelevelofengagementofourusersgrow,webelievethepotentialto
increaseourrevenuegrows.

User Growth .Wehavegenerallyexperiencedsignificantgrowthinournumberofusersoverthelastseveralyears.Ingeneral,ahigher

proportionofInternetusersintheUnitedStatesuseTwitterthanInternetusersinothercountries.Accordingly,inthefutureweexpectouruser
growthrateincertaininternationalmarkets,suchasArgentina,Brazil,France,India,JapanandthePhilippines,tocontinuetobehigherthanour
usergrowthrateintheUnitedStates.However,weexpecttofacechallengesinenteringsomemarkets,suchasChina,whereaccesstoTwitteris
blocked,aswellascertainothercountriesthathaveintermittentlyrestrictedaccesstoTwitter.RestrictionsorlimitationsonaccesstoTwittermay
adverselyimpactourabilitytoincreasethesizeofouruserbaseandgenerateadditionalrevenueincertainmarkets.

WedonotseparatelytrackwhetheranMAUhasonlyusedTwitteronadesktoporonamobiledevice.However,inthethreemonthsended
December31,2015,approximately80%ofouraverageMAUsaccessedTwitterfromamobiledevice,roughlystablefromthethreemonthsended
December31,2014.

44


Wemayfacechallengesinincreasingthesizeofouruserbase,including,amongothers,competitionfromalternativeproductsandservices,
adeclineinthenumberofinfluentialusersonTwitteroraperceiveddeclineinthequalityofcontentoruserexperienceavailableonTwitter.We
intendtodrivegrowthinouruserbasebycontinuingtodemonstratethevalueandusefulnessofourproductsandservicestopotentialnewusers,
byintroducingnewproducts,servicesandfeaturesandrefiningourcoreservice.Ourusergrowthratehasslowedovertime,andweanticipatethat
itmaycontinuetoslowordecline.Totheextentourlogged-inusergrowthorusergrowthratecontinuestoslowortheabsolutenumberofloggedin
usersdeclines,ourrevenuegrowthwillbecomeincreasinglydependentonourabilitytoincreaselevelsofuserengagementonTwitterand
monetizingourtotalaudienceonlogged-outusageandsyndicatedpropertiesaswellasincreasingrevenuegrowthfromthirdpartypublishers
websites,applicationsandotherofferings.

Monetization .Therearemanyvariablesthatimpactthemonetizationofourplatform,suchasthenumberofMAUs,ouruserslevelof
engagementwithourplatform,adload(whichisafunctionoftheamountofadvertisingwechoosetodisplay),ourusersengagementwithour
PromotedProducts,advertiserdemandandcostperadengagement.Generally,wedesignouralgorithmsforourpay-for-performancePromoted
ProductsonTwittertooptimizetheoveralluserexperienceandthevaluewedelivertoadvertisers.Wehave,andmayinthefuture,increaseadload
totheextentthatweareabletocontinuetoreachtherightbalanceofadvertiservalueandtheoveralluserexperience.Inordertoimprove
monetization,weplantoincreasethevalueofouradvertisingservicesbycontinuingtoincreasethesizeandengagementofouruserbaseaswell
asimproveourabilitytotargetadvertisingtoourusersinterestsandtheabilityofouradvertiserstooptimizetheircampaignsandmeasurethe
resultsoftheircampaigns.

AlthoughthemajorityofthePromotedProductsweselltoouradvertisersareplacedonTwitter,wehavebeengrowingouradvertising
revenuebysellingtoadvertisersouradvertisingproductsthatweplaceonthird-partypublisherswebsites,applicationsorotherofferings.Forthe
lattercategoryofadvertisingplacements,weincuradditionalcosts,particularlytrafficacquisitioncosts,tofulfillourservicestoadvertisers.Thismix
shiftofadditionaladvertisingrevenuebeinggeneratedfromsuchthird-partyplacementsmaycontinueinthefuture.

InthethreemonthsendedDecember31,2015,over85%ofouradvertisingrevenuewasgeneratedfrommobiledevices.Wehave
experiencedstronggrowthinadvertisingrevenuefrommobiledevicesbecauseuserengagementissignificantlyhigheronmobileapplicationsthan
onourdesktopapplications,andweexpectthistrendtocontinue.However,PromotedAccountsandPromotedTrendsreceivelessprominenceon
ourmobileapplicationsthantheydoonourdesktopapplications,whichmeansthatfewerusersseethemdisplayedonourmobileapplications,
resultinginfeweradengagementswithPromotedAccountsandfewerimpressionsofPromotedTrendsonmobileapplications.Primarilyasaresult
ofPromotedAccountsandPromotedTrendsreceivinglessprominenceonmobileapplications,wehavegeneratedhighermonetizationofourad
engagementsonourdesktopapplicationsthanonourmobileapplications.Althoughourcostperadengagementonourdesktopapplicationsis
higherthanourcostperadengagementonourmobileapplications,thesubstantialmajorityofouradengagementsandadvertisingrevenueis
generatedfrommobileapplications.

Weintendtocontinuetoincreasethemonetizationofourplatformbyimprovingthetargetingcapabilitiesofouradvertisingservicesto
enhancethevalueofourPromotedProductsforadvertisers,expandingoursaleseffortstoreachadvertisersinadditionalinternationalmarkets,
openingourplatformtoadditionaladvertisersthroughourself-serveadvertisingplatformanddevelopingnewadformatsforadvertisers.

Effectiveness of Our Advertising Services .AdvertiserscanuseTwittertocommunicatedirectlywiththeirfollowersforfree,butmanychoose

topurchaseouradvertisingservicestoreachabroaderaudienceandfurtherpromotetheirbrands,productsandservices.Webelievethat
increasingtheeffectivenessofourPromotedProductsforadvertiserswillincreasetheamountthatadvertisersspendwithus.Weaimtoincrease
thevalueofourPromotedProductsbyincreasingthesizeandengagementofouruserbase,improvingourabilitytotargetadvertisingtoourusers
interestsandimprovingtheabilityofouradvertiserstooptimizetheircampaignsandmeasuretheresultsoftheircampaigns.Wemayalsodevelop
newadvertisingproductsandservices.

International Expansion. Weintendtoinvestinourinternationaloperationsinordertoexpandouruserbaseandadvertiserbaseand

increaseuserengagementandmonetizationinternationally.InthethreemonthsendedDecember31,2015,wehad254millionaverageMAUs
internationallycomparedto65millionaverageMAUsintheUnitedStates.Inaddition,ournumberofusersisgrowingatafasterrateinmany
internationalmarkets,suchasArgentina,Brazil,France,India,JapanandthePhilippines.However,wederivethemajorityofouradvertising
revenuefromadvertisersintheUnitedStates.Inordertoincreaseourinternationaladvertisingrevenue,weplantoinvestinourinternational
operations.Inthenearterm,weplantoincreasethesizeofoursalesandmarketingsupportteamsininternationalmarketssuchasBrazil,Ireland,
Japan,MiddleEastandUK.

45


Wefacechallengesinincreasingouradvertisingrevenueinternationally,includinglocalcompetition,differencesinadvertiserdemand,
differencesinthedigitaladvertisingmarketandconventions,anddifferencesinthemannerinwhichTwitterisaccessedandusedinternationally.
Wefacecompetitionfromwell-establishedcompetitorsincertaininternationalmarkets.Inaddition,certaininternationalmarketsarenotasfamiliar
withdigitaladvertisingingeneral,orwithnewformsofdigitaladvertising,suchasourPromotedProducts.Inthesejurisdictionsweareinvestingto
educateadvertisersaboutthebenefitsofouradvertisingservices.However,weexpectthatitmayrequireasignificantinvestmentoftimeand
resourcestoeducateadvertisersinmanyinternationalmarkets.Wealsofacechallengesinprovidingcertainadvertisingproducts,featuresor
analyticsincertaininternationalmarkets,suchastheEuropeanUnion,duetogovernmentregulation.Inaddition,incertainemergingmarkets,
manyusersaccessTwitterthroughfeaturephoneswithlimitedfunctionality,ratherthanthroughsmartphones,ourwebsiteordesktopapplications.
Thislimitsourabilitytodelivercertainfeaturestotheseusersandmaylimittheabilityofadvertiserstodelivercompellingadstousersinthese
markets.Weareinvestingtoimproveourapplicationsforfeaturephonesinordertoimproveourabilitytomonetizeourproductsandservicesin
internationalmarkets.

Competition .Wefacesignificantcompetitionforusersandadvertisers.Wecompeteagainstmanycompaniestoattractandengageusers
andforadvertiserspend,includingcompanieswithgreaterfinancialresourcesandsubstantiallylargeruserbaseswhichofferavarietyofInternet
andmobiledevice-basedproducts,servicesandcontent.Inrecentyearstherehasbeenasignificantnumberofacquisitionsandconsolidation
activitybyandamongouractualandpotentialcompetitors.Wemustcompeteeffectivelyforusersandadvertisersinordertogrowourbusinessand
increaseourrevenue.Webelievethatourabilitytocompeteeffectivelyforusersdependsuponanumberoffactors,includingthequalityofour
productsandservices;andourabilitytocompeteeffectivelyforadvertisersdependsuponanumberoffactors,includingourabilitytoofferattractive
advertisingproductswithuniquetargetingcapabilitiesandthesizeofouractiveuserbase.Weintendtocontinuetoinvestinresearchand
developmenttoimproveourproductsandservicesforusersandadvertisersandtogrowouractiveuserbaseinordertoaddressthecompetitive
challengesinourindustry.Aspartofourstrategytoimproveourproductsandservices,wemayacquireothercompaniestoaddengineeringtalent
orcomplementaryproductsandtechnologies.

Investment in Infrastructure .Weintendtoincreasethecapacityandenhancethecapabilityandreliabilityofourinfrastructure.Our

infrastructureiscriticaltoprovidingusers,platformpartners,advertisersanddatapartnersaccesstoourplatform,particularlyduringmajorplanned
andunplannedevents,suchaselections,sportingeventsornaturaldisasters,whenactivityonourplatformincreasesdramatically.Asouruserbase
andtheactivityonourplatformgrow,weexpectthatinvestmentsandexpensesassociatedwithourinfrastructurewillcontinuetogrow.These
investmentsandexpensesincludetheexpansionofourdatacenteroperationsandrelatedoperatingcosts,additionalserversandnetworking
equipmenttoincreasethecapacityofourinfrastructureandincreasedbandwidthcosts.

Products and Services Innovation .Ourabilitytoincreasethesizeandengagementofouruserbase,attractadvertisersandincreaseour

revenuewilldepend,inpart,onourabilitytoimproveexistingproductsandservicesandtosuccessfullydeveloporacquirenewproductsand
services.Weplantocontinuetomakesignificantinvestmentsinresearchanddevelopmentand,fromtimetotime,wemayacquirecompaniesto
enhanceourproducts,servicesandtechnicalcapabilities.

Investment in Talent .Weintendtoinvestinhiringandretainingtalentedemployeestogrowourbusinessandincreaseourrevenue.Asof

December31,2015,wehad3,898full-timeemployees,anincreaseofover260full-timeemployees,orapproximately7%,fromDecember31,2014.
Weexpecttoincreaseheadcountfortheforeseeablefutureaswecontinuetoinvestinourbusiness.Wehavealsomade,andintendtocontinueto
make,acquisitionsthataddengineers,designers,productmanagersandotherpersonnelwithspecifictechnologyexpertise.Inaddition,wemust
retainourhigh-performingpersonnelinordertocontinuetodevelop,sellandmarketourproductsandservicesandmanageourbusiness.

Seasonality .Advertisingspendingistraditionallystrongestinthefourthquarterofeachyear.Historically,thisseasonalityinadvertising
spendinghasaffectedourquarterlyresults,withhighersequentialadvertisingrevenuegrowthfromthethirdquartertothefourthquartercompared
tosequentialadvertisingrevenuegrowthfromthefourthquartertothesubsequentfirstquarter.Forexample,ouradvertisingrevenueincreased
43%,35%and25%betweenthethirdandfourthquartersof2013,2014and2015,respectively,whileadvertisingrevenueforthefirstquarterof
2014and2015increased3%anddecreased10%comparedtothefourthquarterof2013and2014,respectively.Therapidgrowthinourbusiness
mayhavepartiallymaskedseasonalitytodateandtheseasonalimpactsmaybemorepronouncedinthefuture.

46


Stock-Based Compensation Expense .Wehavehistoricallyutilized,andintendtocontinuetoutilize,variousformsofstock-basedawardsin

ordertohireandretaintalentedemployees.DuringthetwelvemonthsendedDecember31,2015and2014,werecognized$682.1millionand
$631.6millionofexpenserelatedtostock-basedcompensation,respectively.AsofDecember31,2015,wehadunrecognizedstock-based
compensationexpenseofapproximately$1.25billionrelatedtooutstandingequityawards,aftergivingeffecttoestimatedforfeitures,whichwe
expecttorecognizeoveraweighted-averageperiodofapproximatelythreeyears.Thestock-basedcompensationexpensesrelatedtoour
outstandingequityawardshaveasignificantimpactonourabilitytogeneratenetincomeonaGAAPbasisinfutureperiods.

Results of Operations
Thefollowingtablessetforthourconsolidatedstatementofoperationsdataforeachoftheperiodspresented:

Year Ended December 31,

2015 2014 2013
(in thousands)
Revenue
Advertisingservices $ 1,994,036 $ 1,255,688 $ 594,546
Datalicensingandother 223,996 147,314 70,344
TotalRevenue 2,218,032 1,403,002 664,890
Costsandexpenses(1)
Costofrevenue 729,256 446,309 266,718
Researchanddevelopment 806,648 691,543 593,992
Salesandmarketing 871,491 614,110 316,216
Generalandadministrative 260,673 189,906 123,795
Totalcostsandexpenses 2,668,068 1,941,868 1,300,721
Lossfromoperations (450,036) (538,866) (635,831)
Interestexpense (98,178) (35,918) (7,576)
Otherincome(expense),net 14,909 (3,567) (3,739)
Lossbeforeincometaxes (533,305 ) (578,351 ) (647,146 )
Benefitfromincometaxes (12,274) (531) (1,823)
Netloss $ (521,031 ) $ (577,820 ) $ (645,323 )

(1) Costsandexpensesincludestock-basedcompensationexpenseasfollows:

Year Ended December 31,

2015 2014 2013 2012 2011
(In thousands)
Costofrevenue $ 40,705 $ 50,536 $ 50,942 $ 800 $ 1,820
Researchanddevelopment 401,537 360,726 379,913 12,622 33,559
Salesandmarketing 156,904 157,263 114,440 1,346 1,553
Generalandadministrative 82,972 63,072 55,072 10,973 23,452

Totalstock-basedcompensation $ 682,118 $ 631,597 $ 600,367 $ 25,741 $ 60,384

47

Thefollowingtablesetsforthourconsolidatedstatementofoperationsdataforeachoftheperiodspresentedasapercentageofrevenue:

Year Ended December 31,

2015 2014 2013
Revenue
Advertisingservices 90% 90% 89%
Datalicensingandother 10 10 11
TotalRevenue 100 100 100
Costsandexpenses
Costofrevenue 33 32 40
Researchanddevelopment 36 49 89
Salesandmarketing 39 44 48
Generalandadministrative 12 14 19
Totalcostsandexpenses 120 138 196
Lossfromoperations (20 ) (38 ) (96 )
Interestexpense (4) (3) (1)
Otherincome(expense),net 1 (0) (1)
Lossbeforeincometaxes (24 ) (41 ) (97 )
Benefitfromincometaxes (1) (0) (0)
Netloss (23 )% (41 )% (97 )%

Years Ended December 31, 2015, 2014 and 2013

Revenue
Wegeneratethesubstantialmajorityofourrevenuefromthesaleofadvertisingservices.Wealsogeneraterevenuebylicensingourdatato
thirdpartiesandprovidingmobileadvertisingexchangeservices.

Advertising Services
WegeneratemostofouradvertisingrevenuebysellingourPromotedProducts.Currently,ourPromotedProductsconsistofthefollowing:
Promoted Tweets .PromotedTweets,whicharelabeledaspromoted,appearwithinauserstimeline,searchresultsorprofilepages
justlikeanordinaryTweetregardlessofdevice,whetheritbedesktopormobile.Usingourproprietaryalgorithmsandunderstandingof
theinterestsofeachuser,wecandeliverPromotedTweetsthatareintendedtoberelevanttoaparticularuser.Weenableour
advertiserstotargetanaudiencebasedonourusersInterestGraphs.OurPromotedTweetsarepay-for-performanceadvertisingthat
ispricedthroughanauction.OurPromotedTweetsincludeobjective-basedfeaturesthatallowadvertiserstopayonlyforthetypesof
engagementselectedbytheadvertisers,suchasTweetengagements(e.g.,retweets,repliesandlikes),websiteclicksorconversions,
mobileapplicationinstallsorengagements,obtainingnewfollowers,orvideoviews.Werecognizeadvertisingrevenuewhenauser
engageswithaPromotedTweet.
Promoted Accounts .PromotedAccounts,whicharelabeledaspromoted,appearinthesameformatandplaceasaccounts
suggestedbyourWhotoFollowrecommendationengine,orinsomecases,inTweetsinauserstimeline.PromotedAccountsprovide
awayforouradvertiserstogrowacommunityofuserswhoareinterestedintheirbusiness,productsorservices.OurPromoted
Accountsarepay-for-performanceadvertisingthatispricedthroughanauction.Werecognizeadvertisingrevenuewhenauserfollows
aPromotedAccount.
Promoted Trends .PromotedTrends,whicharelabeledaspromoted,appearatthetopofthelistoftrendingtopicsforanentireday
inaparticularcountryoronaglobalbasis.WhenauserclicksonaPromotedTrend,searchresultsforthattrendareshownina
timelineandaPromotedTweetcreatedbytheadvertiserisdisplayedtotheuseratthetopofthosesearchresults.Wesellour
PromotedTrendsonafixed-fee-per-daybasis.WefeatureonePromotedTrendperdaypergeography,andrecognizeadvertising
revenuefromaPromotedTrendwhenitisdisplayedonourplatform.

48


WhilethemajorityofthePromotedProductsweselltoouradvertisersareplacedonTwitter,wealsogenerateadvertisingrevenuebyplacing
advertisingproductsthatweselltoadvertisersonthird-partypublisherswebsites,applicationsorotherofferings.

Data Licensing and Other

Wegeneratedatalicensingandotherrevenueby(i)offeringGnip-brandedproductsanddatalicensesthatallowourdatapartnersto
access,searchandanalyzehistoricalandreal-timedataonourplatform,whichdataconsistsofpublicTweetsandtheircontent,and(ii)providing
mobileadvertisingexchangeservicesthroughourMoPubexchange.Ourdatapartnersgenerallypurchaselicensestoaccessalloraportionofour
dataforafixedperiod.Werecognizedatalicensingrevenueasthelicenseddataismadeavailabletoourdatapartners.Inaddition,weoperatea
mobileadexchangeandreceiveservicefeesfromtransactionscompletedontheexchange.Ourmobileadexchangeenablesbuyersandsellersto
purchaseandselladvertisinginventoryandmatchesbuyersandsellers.Wehavedeterminedwearenottheprincipalinthepurchaseandsaleof
advertisinginventoryintransactionsbetweenthirdpartybuyersandsellersontheexchange.Thereforewereportrevenuerelatedtoourad
exchangeservicesonanetbasis.

Year Ended December 31, 2014 to 2015 2013 to 2014

2015 2014 2013 % Change % Change
(in thousands)
Advertisingservices $ 1,994,036 $ 1,255,688 $ 594,546 59% 111%
Datalicensingandother 223,996 147,314 70,344 52% 109%
TotalRevenue $ 2,218,032 $ 1,403,002 $ 664,890 58% 111%

2015 Compared to 2014 .Revenuein2015increasedby$815.0millioncomparedto2014.Onaconstantcurrencybasis,revenuein2015,

usingtheprioryearsmonthlyexchangeratesforoursettlementcurrenciesotherthantheU.S.dollar,wouldhaveincreasedby$896.7millionor
64%comparedto2014.

In2015,advertisingrevenueincreasedby59%comparedto2014.Onaconstantcurrencybasis,advertisingrevenuein2015,usingtheprior
yearsmonthlyexchangeratesforoursettlementcurrenciesotherthantheU.S.dollar,wouldhaveincreased65%comparedto2014.The
substantialmajorityofouradvertisingrevenuewasgeneratedfromourownedandoperatedplatform.Advertisingrevenuegeneratedfromthesale
ofouradvertisingservicesonourownedandoperatedplatformin2015was$1.80billionascomparedto$1.24billionin2014.Advertisingrevenue
generatedfromthesaleofouradvertisingservicesonthirdpartypublisherswebsites,applicationsandotherofferingsin2015was$194.2millionas
comparedto$11.4millionin2014,whichincreasewasdriven,inpart,bytheacquisitionofTellApart.Theoverallincreaseinadvertisingrevenue
wasprimarilyattributabletoa107%increaseinthenumberofadengagementsoffsetbya23%decreaseinaveragecostperadengagementin
2015comparedto2014.Theincreaseinadengagementswasprimarilytheresultofourmovetoauto-playvideoinlate2015,aswellasgrowthin
ouradvertisingrevenuegeneratedfromthirdpartypublisherswebsites,applicationsandotherofferings,andanincreaseinadload.Thedecrease
inaveragecostperadengagementwasdueprimarilytotheshifttoauto-playvideo,whichdeliversmoreengagementatamuchloweraveragecost
perengagementthanclick-to-playvideoads.Advertisingrevenuecontinuedtobedrivenbygrowthindemandforouradvertisingproducts,
particularlyvideoandwebsitecardformatsaswellasgrowthinouradvertisingbase.

In2015,datalicensingandotherrevenueincreasedby52%comparedto2014.Theincreasewasprimarilyattributabletogrowthinmobile
advertisingexchangeservicesaswellastheincreaseindatalicensingfeesfromtheofferingofGnip-brandedproductsforafullyearin2015as
comparedtothepartialyearin2014.

2014 Compared to 2013 .Revenuein2014increasedby$738.1millioncomparedto2013.

In2014,advertisingrevenueincreasedby111%comparedto2013.Theincreasewasprimarilyattributabletoa175%increaseinthenumber
ofadengagementsin2014offsetbya23%decreaseinaveragecostperadengagementin2014comparedto2013.Advertisingrevenuealso
benefitedfromsalesofourPromotedProductsonourmobileapplicationsaswellasfromanincreaseininternationalrevenue.

In2014,datalicensingandotherrevenueincreasedby109%comparedto2013.Themajorityofthisincreasewasattributabletoafullyearof
revenuegeneratedfrommobileadvertisingexchangeservicesin2014ascomparedtothepartialyearofrevenuegeneratedintheprioryear.

49


Cost of Revenue
Costofrevenueincludesinfrastructurecosts,otherdirectcosts,amortizationofacquiredintangibleassetsandcapitalizedlaborcosts,
allocatedfacilitiescosts,aswellastrafficacquisitioncosts(TAC).Infrastructurecostswhichconsistprimarilyofdatacentercostsrelatedtoourco-
locatedfacilities,whichincludeleaseandhostingcosts,relatedsupportandmaintenancecostsandenergyandbandwidthcosts,aswellas
depreciationofourserversandnetworkingequipment,andpersonnel-relatedcosts,includingsalaries,benefitsandstock-basedcompensation,for
ouroperationsteams.TACconsistsofcostsweincurwiththirdpartiesinconnectionwiththesaletoadvertisersofouradvertisingproductsthatwe
placeonthird-partypublisherswebsites,applicationsorotherofferingscollectivelyresultingfromacquisitions,andfromourorganically-built
advertisingnetwork,TwitterAudiencePlatform.Manyoftheelementsofourcostofrevenuearerelativelyfixed,andcannotbereducedinthenear
termtooffsetanydeclineinourrevenue.

Year Ended December 31, 2014 to 2015 2013 to 2014

2015 2014 2013 % Change % Change
(in thousands)
Costofrevenue $ 729,256 $ 446,309 $ 266,718 63% 67%

Costofrevenueasapercentageofrevenue 33% 32% 40%

2015 Compared to 2014 .In2015,costofrevenue,whichincludedTACof$121.8million,increasedby$282.9millioncomparedto2014.The

increasewasprimarilyattributabletoa$113.7millionincreaseinTAC,a$79.5millionincreaseinnetworking,hostinganddatacentercostsrelated
toourco-locatedfacilities,a$76.3millionincreaseindepreciationexpenserelatedtoadditionalserverandnetworkingequipmentandamortization
ofacquiredintangibleassets,anda$24.1millionincreaseinotherdirectcosts,offsetbya$10.7milliondecreaseinpersonnel-relatedcosts,mainly
drivenbyadecreaseinaverageemployeeheadcountandstock-basedcompensationexpense.

2014 Compared to 2013 .In2014,costofrevenueincreasedby$179.6millioncomparedto2013.Theincreasewasprimarilyattributabletoa

$75.5millionincreaseindepreciationexpenserelatedtoadditionalserverandnetworkingequipmentandamortizationofacquiredintangibleassets,
a$60.2millionincreaseinnetworking,hostinganddatacentercostsrelatedtoourco-locatedfacilities,a$27.0millionincreaseinallocatedfacilities
andothersupportingoverheadcostsduetothecontinuedexpansionofourrealestatefootprintandincreaseinsupportfunctions,anda
$16.9millionincreaseinpersonnel-relatedcosts,mainlydrivenbyanincreaseinaverageemployeeheadcount.

Weplantocontinueincreasingthecapacityandenhancingthecapabilityandreliabilityofourinfrastructuretosupportusergrowthand
increasedactivityonourplatform.Wealsoexpectthattheamountofrevenuegeneratedfromthesaleofouradvertisingservicesonthirdparty
publisherswebsites,applicationsandotherofferingswillincrease,whichwillalsoresultinanincreaseintheamountofTACthatweincur.Asa
result,weexpectthatcostofrevenue,inparticularTAC,willincreaseinabsolutedollaramountsfortheforeseeablefutureandvaryinthenearterm
fromperiodtoperiodasapercentageofrevenue.

Research and Development

Researchanddevelopmentexpensesconsistprimarilyofpersonnel-relatedcosts,includingsalaries,benefitsandstock-basedcompensation,
forourengineersandotheremployeesengagedintheresearchanddevelopmentofourproductsandservices.Inaddition,researchand
developmentexpensesincludeamortizationofacquiredintangibleassets,allocatedfacilitiesandothersupportingoverheadcosts.

Year Ended December 31, 2014 to 2015 2013 to 2014

2015 2014 2013 % Change % Change
(in thousands)
Researchanddevelopment $ 806,648 $ 691,543 $ 593,992 17% 16%

Researchanddevelopmentasapercentageof
revenue 36% 49% 89%

2015 Compared to 2014 .In2015,researchanddevelopmentexpensesincreasedby$115.1millioncomparedto2014.Theincreasewas

primarilyattributabletoan$87.0millionincreaseinpersonnel-relatedcosts,mainlydrivenbyanincreaseincompensationandrecognitionofstock-
basedcompensationexpense,anda$41.4millionincreaseinallocatedfacilitiesandothersupportingoverheadexpensesduetothecontinued
expansionofourrealestatefootprintandincreaseinsupportfunctions.Theseincreaseswerepartiallyoffsetbya$13.3millionincreaseinthe
capitalizationofcostsassociatedwithdevelopingsoftwareforinternaluse.

50


2014 Compared to 2013 .In2014,researchanddevelopmentexpensesincreasedby$97.6millioncomparedto2013.Theincreasewas

primarilyattributabletoa$107.2millionincreaseinpersonnel-relatedcosts,mainlydrivenbyanincreaseinaverageemployeeheadcount,anda
$34.3millionincreaseinallocatedfacilitiesandothersupportingoverheadexpensesduetothecontinuedexpansionofourrealestatefootprintand
increaseinsupportfunctions.Theseincreaseswerepartiallyoffsetbya$43.9millionincreaseinthecapitalizationofcostsassociatedwith
developingsoftwareforinternaluse.

Weplantocontinuetohireemployeesforourengineering,productmanagementanddesignteamstosupportourresearchanddevelopment
efforts.Weexpectthatresearchanddevelopmentcostswillincreaseinabsolutedollaramountsfortheforeseeablefutureandvaryinthenearterm
fromperiodtoperiodasapercentageofrevenue.

Sales and Marketing

Salesandmarketingexpensesconsistprimarilyofpersonnel-relatedcosts,includingsalaries,commissions,benefitsandstock-based
compensationforouremployeesengagedinsales,salessupport,businessdevelopmentandmedia,marketing,corporatecommunicationsand
customerservicefunctions.Inaddition,marketingandsales-relatedexpensesalsoincludeadvertisingcosts,marketresearch,tradeshows,
branding,marketing,publicrelationscosts,amortizationofacquiredintangibleassets,aswellasallocatedfacilitiesandothersupportingoverhead
costs.

Year Ended December 31, 2014 to 2015 2013 to 2014

2015 2014 2013 % Change % Change
(in thousands)
Salesandmarketing $ 871,491 $ 614,110 $ 316,216 42% 94%

Salesandmarketingasapercentageofrevenue 39% 44% 48%

2015 Compared to 2014 .In2015,salesandmarketingexpensesincreasedby$257.4millioncomparedto2014.Theincreasewasprimarily

attributabletoa$109.2millionincreaseinmarketingandsales-relatedexpenses,mainlydrivenbyanincreaseinconsumermarketingandmarket
research,an$80.5millionincreaseinpersonnel-relatedcosts,mainlydrivenbyanincreaseinaverageemployeeheadcountfromexpansionof
sales,media,marketingandbusinessdevelopment,a$61.0millionincreaseinallocatedfacilitiesandothersupportingoverheadexpensesdueto
thecontinuedexpansionofourrealestatefootprintandincreaseinsupportfunctions,anda$6.7millionincreaseinamortizationofacquired
intangibleassets.

2014 Compared to 2013 .In2014,salesandmarketingexpensesincreasedby$297.9millioncomparedto2013.Theincreasewasprimarily

attributabletoa$153.2millionincreaseinpersonnel-relatedcosts,mainlydrivenbyanincreaseinaverageemployeeheadcount,a$98.8million
increaseinmarketingandsales-relatedexpenses,a$38.1millionincreaseinallocatedfacilitiesandothersupportingoverheadexpensesduetothe
continuedexpansionofourrealestatefootprintandincreaseinsupportfunctions,anda$7.8millionincreaseinamortizationofacquiredintangible
assets.

Weplantocontinuetoinvestinsalesandmarketingtoexpandinternationally,growouradvertiserbaseandincreaseourbrandawareness.
Weexpectthatsalesandmarketingexpenseswillincreaseinabsolutedollaramountsfortheforeseeablefutureandvaryintheneartermfrom
periodtoperiodasapercentageofrevenue.

51


General and Administrative

Generalandadministrativeexpensesconsistprimarilyofpersonnel-relatedcosts,includingsalaries,benefitsandstock-basedcompensation,
forourexecutive,finance,legal,informationtechnology,humanresourcesandotheradministrativeemployees.Inaddition,generaland
administrativeexpensesincludefeesandcostsforprofessionalservices,includingconsulting,third-partylegalandaccountingservicesandfacilities
andothersupportingoverheadcoststhatarenotallocatedtootherdepartments.

Year Ended December 31, 2014 to 2015 2013 to 2014

2015 2014 2013 % Change % Change
(in thousands)
Generalandadministrative $ 260,673 $ 189,906 $ 123,795 37% 53%

Generalandadministrativeasapercentageofrevenue 12% 14% 19%

2015 Compared to 2014 .In2015,generalandadministrativeexpenseincreasedby$70.8millioncomparedto2014.Theincreasewas

primarilyattributabletoa$63.7millionincreaseinpersonnel-relatedcosts,mainlydrivenbyanincreaseinaverageemployeeheadcount,increasein
compensationandrecognitionofstock-basedcompensationexpense,anincreaseof$11.0millioninfeesandcostsforprofessionalservices,offset
bya$3.9milliondecreaseinunallocatedfacilitiesandsupportingcosts.

2014 Compared to 2013 .In2014,generalandadministrativeexpenseincreasedby$66.1millioncomparedto2013.Theincreasewas

primarilyattributabletoa$51.3millionincreaseinpersonnel-relatedcosts,mainlydrivenbyanincreaseinaverageemployeeheadcountand
recognitionofstock-basedcompensationexpense,anincreaseof$16.3millioninfeesandcostsforprofessionalservices,partiallyoffsetbya
$1.5milliondecreaseinunallocatedfacilitiesandsupportingcosts,drivenbyslowerheadcountgrowthinthegeneralandadministrativefunction
relativetootherfunctionalareas.

Weplantocontinuetoexpandourbusinessbothdomesticallyandinternationally,andexpecttoincreasethesizeofourgeneraland
administrativefunctiontohelpgrowourbusiness.Weexpectthatgeneralandadministrativeexpenseswillincreaseinabsolutedollaramountsfor
theforeseeablefutureandvaryintheneartermfromperiodtoperiodasapercentageofrevenue.

Interest Expense
Interestexpenseconsistsprimarilyofinterestexpenseincurredinconnectionwiththe$935.0millionprincipalamountof0.25%convertible
seniornotesdue2019,orthe2019Notes,and$954.0millionprincipalamountof1.00%convertibleseniornotesdue2021,orthe2021Notesand
togetherwiththe2019Notes,theNotes,andinterestexpenserelatedtocapitalleasesandotherfinancingfacilities.

Year Ended December 31,

2015 2014 2013
(In thousands)
Interestexpense

$

98,178 $

35,918 $

7,576

2015 Compared to 2014. In2015,interestexpenseincreasedby$62.3millioncomparedto2014.Theincreasewasprimarilyattributabletoa

fullyearofinterestexpenserelatedtotheamortizationofthedebtdiscountandaccruedcouponinterestexpenseoftheNotesascomparedtoa
partialyearofinterestexpenserecordedin2014,astheNoteswereissuedinthethirdquarterof2014.Interestexpensein2015wascomprisedof
$89.4millionoftotalinterestexpenserelatedtotheNotesaswellasthecreditfacilityand$8.8millionrelatedtocapitalleasesofequipment.

2014 Compared to 2013 .In2014,interestexpenseincreasedby$28.3millioncomparedto2013.Theincreasewasprimarilyattributableto

theinterestexpenserelatedtotheamortizationofthedebtdiscountandaccruedcouponinterestexpenseoftheNotes,whichwereissuedin2014.
Interestexpensein2014wascomprisedof$25.7millionofinterestexpenserelatedtotheNotesandthecreditfacilityand$10.2millionrelatedto
capitalleasesofequipment.Historically,weincurredinterestexpenseprimarilyfromcapitalleasesofequipment.

52


Other Income (Expense), Net

Otherincome(expense),net,consistsprimarilyofunrealizedforeignexchangegainsandlossesduetore-measurementofmonetaryassets
andliabilitiesdenominatedinnon-functionalcurrenciesaswellasrealizedforeignexchangegainsandlossesonforeignexchangetransactions,and
interestincomeresultingfromourshortterminvestmentsnetoftherelatedamortizationofpremiumpaidonsuchinvestments.Weexpectour
foreignexchangegainsandlosseswillvarydependinguponmovementsintheunderlyingexchangerates.

Year Ended December 31,

2015 2014 2013
(In thousands)
Otherincome(expense),net

$

14,909 $

(3,567) $

(3,739)

2015 Compared to 2014. In2015,otherincome,net,changedby$18.5millioncomparedtootherexpense,netof$3.6millionin2014.The

changewasattributabletoanincreaseininterestincomeonourshortterminvestmentsandfavorableforeigncurrencyexchangeimpactsfrom
foreigncurrency-denominatedassetsandliabilitiesaswellasderivativefinancialinstruments.Otherincome,netin2015wascomprisedof
$13.1millionofinterestandotherincomeand$1.8millionofforeigncurrencyexchangegain.

2014 Compared to 2013. In2014,otherexpense,net,decreasedby$0.2millioncomparedto2013.Thedecreasewasprimarilyattributable

toanincreaseininterestincomeonourshortterminvestmentsoffsetbyunfavorableforeigncurrencyexchangeimpactfromforeigncurrency-
denominatedassetsandliabilities.Otherexpense,netin2014wascomprisedof$7.2millionofforeigncurrencyexchangelossnettedwith
$3.6millionofinterestandotherincome.

Provision (Benefit) for Income Taxes

Provision(benefit)forincometaxesconsistsoffederalandstateincometaxesintheUnitedStatesandincometaxesincertainforeign
jurisdictionswhichareexpectedtofluctuatebasedonthepre-taxresultswithinandoutsideoftheUnitedStatesandwillalsobeimpactedbyour
allocationofcentrallyincurredcoststoforeignjurisdictions.Ourfutureeffectivetaxratewillalsobeaffectedbythechangesintaxratesandtax
regulations,theimpactoftaxexaminations,theimpactofbusinesscombinations,andchangesinvaluationallowance.Inaddition,theprovisionis
impactedbydeferredincometaxesandchangesintherelatedvaluationallowancereflectingthenettaxeffectsoftemporarydifferencesbetween
thecarryingamountsofassetsandliabilitiesforfinancialreportingpurposesandtheamountsusedforincometaxpurposes.

Year Ended December 31,

2015 2014 2013
.

Benefitfromincometaxes

$

12,274 $

531 $

1,823

2015 Compared to 2014 .Ourbenefitfromincometaxesin2015increasedby$11.7millioncomparedtoabenefitof$0.5millionin2014.The

increasewasprimarilyduetotheincreasedincometaxbenefitarisingfromacquisitions,partiallyoffsetbytheincreasedincometaxexpensein
foreignjurisdictions.

2014 Compared to 2013 .Ourbenefitforincometaxesin2014decreasedby$1.3millioncomparedtoabenefitof$1.8millionin2013.The

decreasewasprimarilyduetotheincreasedincometaxexpenseinforeignjurisdictions,partiallyoffsetbytheincreasedincometaxbenefitarising
fromacquisitions.

OnJuly27,2015,theUnitedStatesTaxCourtissuedanopinion(AlteraCorp.etal.v.Commissioner),whichinvalidatedthe2003final
Treasuryrulethatrequiresparticipantsinqualifiedcost-sharingarrangementstosharestock-basedcompensationcosts.Afinaldecisionwas
enteredbytheU.S.TaxCourtonDecember28,2015andisbeingappealedbytheInternalRevenueService.Wefiledour2014federaltaxreturn
basedupontheopinionrenderedinthiscase,whichwebelievewillmorelikelythannotbesustained,andwhichresultedinanincreaseinthe2014
netoperatinglossintheU.S.jurisdictionwithacommensuratedecreaseintheoverallpre-taxlossinforeignjurisdictions.Aswemaintainafull
valuationallowanceonourU.S.deferredtaxassets,nobenefitwasrealizedinthefinancialstatementsasaresultofthisfilingposition.Onan
ongoingbasis,stock-basedcompensationwillbeexcludedfromintercompanycharges.

53


AsofDecember31,2015,wehad$3.37billionoffederaland$1.34billionofstatenetoperatinglosscarryforwardsavailabletoreducefuture
taxableincome.Thesenetoperatinglosscarryforwardswillbegintoexpireforfederalincometaxpurposesandstateincometaxpurposesin2027
and2016,respectively.Wealsohaveresearchcreditcarryforwardsof$188.2millionand$150.6millionforfederalandstateincometaxpurposes,
respectively.Thefederalresearchcreditcarryforwardwillbegintoexpirein2027.Thestateresearchcreditcarryforwardhasnoexpirationdate.
Additionally,wehaveCaliforniaEnterpriseZonecreditcarryforwardsof$18.0millionwhichwillbegintoexpirein2023.Utilizationofthenet
operatinglosscarryforwardsandresearchcreditcarryforwardsmaybesubjecttoanannuallimitationduetotheownershipchangelimitations
providedbytheInternalRevenueCodeof1986,asamended,andsimilarstateprovisions.Anyannuallimitationmayresultintheexpirationofnet
operatinglossesandresearchcreditsbeforeutilization.

Quarterly Results of Operations

Thefollowingtablesetsforthourunauditedconsolidatedstatementofoperationsdataforeachoftheeightquartersintheperiodended
December31,2015.Theunauditedquarterlystatementofoperationsdatasetforthbelowhavebeenpreparedonabasisconsistentwithour
auditedannualconsolidatedfinancialstatementsinthisAnnualReportonForm10-Kandinclude,inouropinion,allnormalrecurringadjustments
necessaryforafairstatementofthefinancialinformationcontainedinthosestatements.Ourhistoricalresultsarenotnecessarilyindicativeofthe
resultsthatmaybeexpectedinthefuture.Thefollowingquarterlyfinancialdatashouldbereadinconjunctionwithourauditedconsolidatedfinancial
statementsandtherelatednotesincludedelsewhereinthisAnnualReportonForm10-K.

Three Months Ended

Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,
2015 2015 2015 2015 2014 2014 2014 2014
(Unaudited, in thousands, except per share data)
Consolidated Statement of Operations Data:
Revenue
Advertisingservices $ 640,680 $ 512,867 $ 452,278 $ 388,211 $ 432,001 $ 320,196 $ 277,440 $ 226,051
Datalicensingandother 69,793 56,370 50,105 47,728 47,077 41,070 34,726 24,441
Totalrevenue 710,473 569,237 502,383 435,939 479,078 361,266 312,166 250,492
Costsandexpenses(1)
Costofrevenue 217,963 200,195 167,623 143,475 136,613 124,166 100,027 85,503
Researchanddevelopment 210,058 207,937 198,907 189,746 181,715 183,342 177,095 149,391
Salesandmarketing 277,189 208,797 201,948 183,557 203,599 164,015 140,261 106,235
Generalandadministrative 72,442 57,545 64,909 65,777 55,304 51,174 44,694 38,734
Totalcostsandexpenses 777,652 674,474 633,387 582,555 577,231 522,697 462,077 379,863
Lossfromoperations (67,179 ) (105,237 ) (131,004 ) (146,616 ) (98,153 ) (161,431 ) (149,911 ) (129,371 )
Interestexpense (24,183 ) (25,239 ) (24,437 ) (24,319 ) (24,083 ) (6,079) (2,654) (3,102)
Otherincome(expense),net 4,531 1,948 (695) 9,125 571 (7,795) 2,324 1,333
Lossbeforeincometaxes (86,831 ) (128,528 ) (156,136 ) (161,810 ) (121,665 ) (175,305 ) (150,241 ) (131,140 )
Provision(benefit)forincometaxes 3,405 3,162 (19,473 ) 632 3,687 159 (5,599) 1,222
Netloss $ (90,236 ) $ (131,690 ) $ (136,663 ) $ (162,442 ) $ (125,352 ) $ (175,464 ) $ (144,642 ) $ (132,362 )
Netlosspershareattributabletocommon
stockholders:
Basicanddiluted $ (0.13) $ (0.20) $ (0.21) $ (0.25) $ (0.20) $ (0.29) $ (0.24) $ (0.23)
Other Financial Information:
AdjustedEBITDA(2) $ 191,418 $ 142,148 $ 120,188 $ 104,053 $ 141,490 $ 68,326 $ 54,131 $ 36,949
Non-GAAPnetincome(3) $ 114,619 $ 66,984 $ 48,518 $ 46,508 $ 79,320 $ 6,972 $ 14,596 $ 183

54

(1) Costsandexpensesincludestock-basedcompensationexpenseasfollows:

Three Months Ended

Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,
2015 2015 2015 2015 2014 2014 2014 2014
(Unaudited, in thousands)
Costofrevenue $ 8,360 $ 8,973 $ 10,486 $ 12,886 $ 13,240 $ 13,596 $ 13,869 $ 9,831
Researchanddevelopment 94,707 100,673 103,121 103,036 95,942 93,973 92,493 78,318
Salesandmarketing 36,750 37,889 39,607 42,658 49,031 42,884 37,547 27,801
Generalandadministrative 18,432 18,386 21,929 24,225 19,002 19,149 14,502 10,419
Totalstock-basedcompensationexpense $ 158,249 $ 165,921 $ 175,143 $ 182,805 $ 177,215 $ 169,602 $ 158,411 $ 126,369

(2) ThefollowingtablepresentsareconciliationofnetlosstoAdjustedEBITDAforeachoftheperiodsindicated:

Three Months Ended

Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,
2015 2015 2015 2015 2014 2014 2014 2014
(Unaudited, in thousands)
Reconciliation of Net Loss to Adjusted
EBITDA:
Netloss $ (90,236 ) $ (131,690 ) $ (136,663 ) $ (162,442 ) $ (125,352 ) $ (175,464 ) $ (144,642 ) $ (132,362 )
Stock-basedcompensationexpense 158,249 165,921 175,143 182,805 177,215 169,602 158,411 126,369
Depreciationandamortizationexpense 87,446 81,464 76,049 67,864 62,428 60,155 45,631 39,951
Interestandotherexpense(income) 19,652 23,291 25,132 15,194 23,512 13,874 330 1,769
Provision(benefit)forincometaxes 3,405 3,162 (19,473 ) 632 3,687 159 (5,599) 1,222
Restructuringcharges 12,902
AdjustedEBITDA $ 191,418 $ 142,148 $ 120,188 $ 104,053 $ 141,490 $ 68,326 $ 54,131 $ 36,949

(3) Thefollowingtablepresentsareconciliationofnetlosstonon-GAAPnetincomeforeachoftheperiodsindicated:

Three Months Ended

Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,
2015 2015 2015 2015 2014 2014 2014 2014
(Unaudited, in thousands)
Reconciliation of Net Loss to Non-GAAP Net
Income:
Netloss $ (90,236 ) $ (131,690 ) $ (136,663 ) $ (162,442 ) $ (125,352 ) $ (175,464 ) $ (144,642 ) $ (132,362 )
Stock-basedcompensationexpense 158,249 165,921 175,143 182,805 177,215 169,602 158,411 126,369
Amortizationofacquiredintangibleassets 15,418 14,481 13,965 10,795 10,419 11,869 8,099 6,176
Non-cashinterestexpenserelatedto
convertiblenotes 18,046 17,495 17,006 16,638 16,412 2,411
Non-cashexpenserelatedtoacquisitions 926
Incometaxeffectsrelatedtoacquisitions 240 777 (21,859 ) (1,288) 626 (1,446) (7,272)
Restructuringcharges 12,902
Non-GAAPnetincome $ 114,619 $ 66,984 $ 48,518 $ 46,508 $ 79,320 $ 6,972 $ 14,596 $ 183

Quarterly Trends
Revenue
Spendingbyadvertisersistraditionallystrongestinthefourthquarterofeachyear.Historically,thisseasonalityinadvertisingspendinghas
affectedourquarterlyresultswithhighersequentialadvertisingrevenuegrowthfromthethirdtothefourthquartercomparedtosequential
advertisingrevenuegrowthfromthefourthquartertothesubsequentfirstquarter.Forexample,ouradvertisingrevenueincreased43%,35%and
25%betweenthethirdandfourthquartersof2013,2014and2015,respectively,whileadvertisingrevenueforthefirstquarterof2014and2015
increased3%anddecreased10%comparedtothefourthquarterof2013and2014,respectively.

55


Total Costs and Expenses

Totalcostsandexpenses,whichincludesignificantamountsofstock-basedcompensationexpense,increasedineveryquarterpresented
primarilyduetothecontinuedexpansionofourfacilitiesandanincreaseinaverageemployeeheadcount.Theincreaseintotalcostsandexpenses
inthefourthquarterof2015wastheresultofanincreaseinadvertisingcostsaswellasanincreaseintrafficacquisitioncostsasaresultofthe
growthofsaletoadvertisersofouradvertisingproductswhichweplaceonthird-partypublisherswebsites,applicationsorotherofferings.

Credit Facility
InOctober2013,weenteredintoarevolvingcreditagreementwithcertainlenderswhichprovidesfora$1.0billionrevolvingunsecuredcredit
facilitymaturingonOctober22,2018.Loansunderthecreditfacilitybearinterest,atouroption,at(i)abaseratebasedonthehighestoftheprime
rate,thefederalfundsrateplus0.50%andanadjustedLIBORrateforaone-monthinterestperiodplus1.00%,ineachcaseplusamarginranging
from0.00%to0.75%or(ii)anadjustedLIBORrateplusamarginrangingfrom1.00%to1.75%.Thismarginisdeterminedbasedonourtotal
leverageratiofortheprecedingfourfiscalquarterperiod.Wearealsoobligatedtopayothercustomaryfeesforacreditfacilityofthissizeandtype,
includinganupfrontfeeandanunusedcommitmentfee.Ourobligationsunderthecreditfacilityareguaranteedbyoneofourwholly-owned
subsidiaries.Inaddition,thecreditfacilitycontainsrestrictionsonpaymentsincludingcashpaymentofdividends.

TherevolvingcreditagreementwasamendedinSeptember2014toincreasetheamountofindebtednessthatwemayincurandincreasethe
amountofrestrictedpaymentsthatwemaymake.Thisamendmenttotherevolvingcreditagreementalsoprovidesthatifourtotalleverageratio
exceeds2.5:1.0andiftheamountoutstandingunderthecreditfacilityexceeds$500.0million,or50%oftheamountthatmaybeborrowedunder
thecreditfacility,thecreditfacilitywillbecomesecuredbysubstantiallyallofourandcertainofoursubsidiariesassets,subjecttolimited
exceptions.AsofDecember31,2015,noamountsweredrawnunderthecreditfacility.

Liquidity and Capital Resources

Year Ended December 31,

2015 2014 2013
(In thousands)
Consolidated Statements of Cash Flows Data:
Netloss $ (521,031) $ (577,820) $ (645,323)
Netcashprovidedbyoperatingactivities 383,066 81,796 1,398
Netcashusedininvestingactivities (902,421) (1,097,272) (1,306,066)
Netcashprovidedby(usedin)financingactivities (62,998) 1,691,722 1,942,176

Ourprincipalsourcesofliquidityareourcash,cashequivalents,andshort-terminvestmentsinmarketablesecurities.Ourcashequivalents
andmarketablesecuritiesareinvestedprimarilyinshort-termfixedincomesecurities,includinggovernmentandinvestment-gradedebtsecurities
andmoneymarketfunds.In2014,wealsoreceivednetproceedsofapproximately$1.86billionfromtheissuanceoftheNotes,afterdeductingthe
initialpurchasersdiscountanddebtissuancecosts.ConcurrentlywiththesalesoftheNotes,weenteredintoprivately-negotiatedconvertiblenote
hedgetransactionswithrespecttoourcommonstockforwhichwepaidapproximately$407.2millionandsoldwarrantsforwhichwereceived
approximately$289.3million.WeexpectthatwewillcontinuetoincuradditionalcashinterestexpenseforthetermoftheNotes.Seesectionentitled
ContractualObligationsbelowforfurtherinformationregardinginterestexpenserelatedtotheNotes.

AsofDecember31,2015,wehad$3.50billionofcash,cashequivalentsandshort-terminvestmentsinmarketablesecurities,ofwhich
$152.3millionwasheldbyourforeignsubsidiaries.IfthesefundsareneededforouroperationsintheU.S.,wewouldberequiredtoaccrueandpay
U.S.taxestorepatriatecertainofthesefunds.However,ourintentistoindefinitelyreinvestthesefundsoutsideoftheU.S.andourcurrentplansdo
notdemonstrateaneedtorepatriatethemtofundourU.S.operations.Inaddition,wehavearevolvingunsecuredcreditfacilityavailabletoborrow
upto$1.0billion.Webelievethatourexistingcash,cashequivalentsandshort-terminvestmentbalance,andourcreditfacility,togetherwithcash
generatedfromoperationswillbesufficienttomeetourworkingcapitalandcapitalexpenditurerequirementsforatleastthenext12months.

56


Operating Activities
Cashprovidedbyoperatingactivitiesconsistedofnetlossadjustedforcertainnon-cashitemsincludingdepreciationandamortization,stock-
basedcompensation,amortizationofdiscountonourNotes,deferredincometaxes,aswellastheeffectofchangesinworkingcapitalandother
activities.

Cashprovidedbyoperatingactivitiesin2015was$383.1million,anincreaseincashinflowof$301.3millioncomparedto2014.Cash
providedbyoperatingactivitieswasdrivenbyanetlossof$521.0million,asadjustedfortheexclusionofnon-cashexpensesandotheradjustments
totaling$1.04billion,ofwhich$678.9millionwasrelatedtostock-basedcompensationexpense,andtheeffectofchangesinworkingcapitaland
othercarryingbalancesthatresultedincashoutflowof$135.9million.

Cashprovidedbyoperatingactivitiesin2014was$81.8million,anincreaseincashinflowof$80.4millioncomparedto2013.Cashprovided
byoperatingactivitieswasdrivenbyanetlossof$577.8million,asadjustedfortheexclusionofnon-cashexpensestotaling$861.6million,ofwhich
$631.6millionwasrelatedtostock-basedcompensationexpense,andtheeffectofchangesinworkingcapitalandothercarryingbalancesthat
resultedincashoutflowof$202.0million.

Cashprovidedbyoperatingactivitiesin2013was$1.4million,anincreaseincashinflowof$29.3millioncomparedto2012.Cashprovided
byoperatingactivitieswasdrivenbyanetlossof$645.3million,asadjustedfortheexclusionofnon-cashexpensestotaling$708.1million,ofwhich
$600.4millionwasrelatedtostock-basedcompensationexpense,andtheeffectofchangesinworkingcapitalandothercarryingbalancesthat
resultedincashoutflowof$61.4million.

Investing Activities
Ourprimaryinvestingactivitiesconsistedofpurchasesofpropertyandequipment,particularlypurchasesofserversandnetworking
equipment,leaseholdimprovementsforourfacilities,purchasesanddisposalofmarketablesecurities,acquisitionsofbusinessesandother
activities.

Cashusedininvestingactivitiesin2015was$902.4million,adecreaseincashoutflowof$194.9millioncomparedto2014.Thedecreasein
cashoutflowwasduetotheincreaseinsalesandmaturitiesofmarketablesecuritiesof$987.6millionandareductioninuseofcashasacquisition
considerationof$111.8million.Suchincreasesincashinflowwerepartiallyoffsetbyincreasedpurchasesofmarketablesecuritiesof$746.4million,
propertyandequipmentof$145.7millionandotherinvestmentsof$12.4million.

Cashusedininvestingactivitiesin2014was$1.10billion,adecreaseincashoutflowof$208.8millioncomparedto2013.Thedecreasein
cashoutflowwasduetoanincreaseintheproceedsfrommaturitiesandsalesofmarketablesecuritiesof$1.82billionoffsetbyanincreaseinthe
purchasesofmarketablesecuritiesof$1.36billionanda$247.2millionincreaseinexpendituresonotherinvestingactivities,includingbusiness
combinations,purchasesofintangibleassets,purchasesofpropertyandequipmentandrestrictedcash.

Cashusedininvestingactivitiesin2013was$1.31billion,anincreaseincashoutflowof$1.36billioncomparedto2012.Theincreaseincash
outflowwasduetoanincreaseinthepurchasesofmarketablesecuritiesof$1.03billion,adecreaseintheproceedsfrommaturitiesandsalesof
marketablesecuritiesof$249.3millionanda$75.4millionincreaseinexpenditureonotherinvestingactivities,includingbusinesscombinations,
purchasesofintangibleassets,purchasesofpropertyandequipmentandrestrictedcash.

Weanticipatemakingcapitalexpendituresin2016ofapproximately$300millionto$425million,aportionofwhichwemayfinancethrough
capitalleases,aswecontinuetoexpandourco-locateddatacentersandourofficefacilities.

Financing Activities
Ourprimaryfinancingactivitiesconsistedofissuancesofsecurities(includingtheNotes,commonstockissuedunderemployeestock
purchaseplan,commonstockissuedinconnectionwithourinitialpublicofferingand,inthepast,privatesalesofconvertiblepreferredstock),capital
leasefinancingandstockoptionexercisesbyemployeesandotherserviceproviders.

57


Cashusedinfinancingactivitiesin2015was$63.0millioncomparedto$1.69billioncashprovidedbyfinancingactivitiesin2014.The
decreaseincashinflowwasduetotheabsenceofanyfinancingtransactionssimilartotheNotesin2015.

Cashprovidedbyfinancingactivitiesin2014was$1.69billion,adecreaseof$250.5millionincashinflowcomparedto2013.Thedecreasein
cashinflowwasprimarilyduetonetproceedsof$1.86billionfromtheissuanceofconvertibleseniornotesnetofinitialissuancediscountreduced
bythenetcashoutflowof$117.9millionfromthepurchaseofconvertiblenotehedgesandsaleofwarrantsclosedinconnectionwiththeissuance
ofNotesin2014comparedtonetproceedsof$2.02billionfromissuanceofcommonstockinconnectionwithourinitialpublicofferingin2013.In
addition,werecordedanincreaseof$62.4millioninproceedsfromoptionexercisesandissuanceofcommonstockunderouremployeestock
purchaseplan,partiallyoffsetbya$32.7millionincreaseinrepaymentsofcapitalleaseobligations.

Cashprovidedbyfinancingactivitiesin2013was$1.94billion,anincreaseof$1.98billionincashinflowcomparedto2012.Theincreasein
cashinflowwasprimarilyduetonetproceedsof$2.02billionfromissuanceofcommonstockinconnectionwithourinitialpublicofferingandaslight
increaseinproceedsfromoptionexercises,partiallyoffsetbyanincreaseinrepaymentsofcapitalleaseobligationsandpayrolltaxpayments
relatedtonetsharesettlementofequityawards.

Off Balance Sheet Arrangements

Wedonothaveanyoff-balancesheetarrangementsanddidnothaveanysucharrangementsin2015,2014or2013.

Contractual Obligations
OurprincipalcommitmentsconsistofobligationsundertheNotes(includingprincipalandcouponinterest),capitalandoperatingleasesfor
equipment,officespaceandco-locateddatacenterfacilities,aswellasnon-cancellablecontractualcommitments.Thefollowingtablesummarizes
ourcommitmentstosettlecontractualobligationsincashasofDecember31,2015.

Payments Due by Period

Less than More than
Total 1 year 1-3 years 3-5 years 5 years
(In thousands)
2019Notes $ 944,357 $ 2,344 $ 4,675 $ 937,338 $
2021Notes 1,011,292 9,566 19,080 19,106 963,540
Operatingleaseobligations 918,150 148,001 304,511 221,850 243,788
Capitalleaseobligations 153,786 93,001 60,193 592
Othercontractualcommitments(1) 166,318 87,751 78,567

Totalcontractualobligations $ 3,193,903 $ 340,663 $ 467,026 $ 1,178,886 $ 1,207,328

(1) Othercontractualcommitmentsarenon-cancelablecontractualcommitmentsprimarilyrelatedtoourinfrastructureservices,bandwidthand
otherservicesarrangements.

AsofDecember31,2015,wehadrecordedliabilitiesof$1.1millionrelatedtouncertaintaxpositions.Duetouncertaintiesinthetimingof
potentialtaxaudits,thetimingoftheresolutionofthesepositionsisuncertainandweareunabletomakeareasonablyreliableestimateofthetiming
ofpaymentsinindividualyearsbeyond12months.Asaresult,thisamountisnotincludedintheabovetable.

Critical Accounting Policies and Estimates

WeprepareourconsolidatedfinancialstatementsinaccordancewithGAAP.Indoingso,wehavetomakeestimatesandassumptionsthat
affectourreportedamountsofassets,liabilities,revenueandexpenses,aswellasrelateddisclosureofcontingentassetsandliabilities.Tothe
extentthattherearematerialdifferencesbetweentheseestimatesandactualresults,ourfinancialconditionoroperatingresultswouldbeaffected.
Webaseourestimatesonpastexperienceandotherassumptionsthatwebelievearereasonableunderthecircumstances,andweevaluatethese
estimatesonanongoingbasis.Werefertoaccountingestimatesofthistypeascriticalaccountingpoliciesandestimates,whichwediscussfurther
below.

58


Revenue Recognition
Wegeneratethesubstantialmajorityofourrevenuefromthesaleofadvertisingserviceswiththebalancecomingfromdatalicensingand
otherarrangements.WegenerateouradvertisingrevenueprimarilyfromthesaleofourthreePromotedProducts:(i)PromotedTweets,
(ii)PromotedAccountsand(iii)PromotedTrends.PromotedTweetsandPromotedAccountsarepay-for-performanceadvertisingproductspriced
throughanauction.PromotedTrendsarefeaturedbygeographyandofferedonafixed-fee-per-daybasis.Advertisersareobligatedtopaywhena
userengageswithaPromotedTweetorfollowsaPromotedAccountorwhenaPromotedTrendisdisplayed.Theseproductsmaybesoldin
combinationasamultipleelementarrangementorseparatelyonastand-alonebasis.

Wealsogenerateadvertisingrevenuebysellingtoadvertisersadvertisingproductswhichweplaceonthirdpartypublisherswebsites,
applicationsorotherofferings.Tofulfillthesetransactions,wepurchaseadvertisinginventoryfromthirdpartypublisherswebsitesandapplications
wherewehaveidentifiedtheadvertiserstargetedaudienceandthereforeincurtrafficacquisitioncosts.Insuchtransactions,weremaintheprimary
obligortoouradvertisersfortheadvertisingservicesandproductsdelivered,havepricinglatitude,havediscretionintheselectionofthirdparty
publishersandbearcreditrisk.Wemightnotgenerateadvertisingrevenueinexcessoftrafficacquisitioncostsincurred.Therefore,wereport
advertisingrevenuegeneratedfromthesetransactionsonagrossbasis.

Feesfortheseadvertisingservicesarerecognizedintheperiodwhenadvertisingisdeliveredasevidencedbyauserengagingwitha
PromotedTweetinamannersatisfyingthetypesofengagementselectedbytheadvertisers,suchasTweetengagements(e.g.,retweets,replies
andlikes),websiteclicksorconversions,mobileapplicationinstallsorengagements,obtainingnewfollowers,orvideoviews,followingaPromoted
Account,throughthedisplayofaPromotedTrendonourplatform,orcompletionofatransactiononanexternalwebsite.

DatalicensingrevenueisgeneratedbasedonmonthlyservicefeeschargedtothedatapartnersovertheperiodinwhichTwitterdataand
dataproductsaremadeavailabletothem.Otherrevenueisprimarilygeneratedfromservicefeesfromtransactionscompletedonourmobilead
exchange.Ourmobileadexchangeenablesbuyersandsellerstopurchaseandselladvertisinginventoryandmatchesbuyersandsellers.Wehave
determinedwearenottheprincipalinthepurchaseandsaleofadvertisinginventoryintransactionsbetweenthirdpartybuyersandsellersonthe
exchange.Therefore,wereportrevenuerelatedtoouradexchangeservicesonanetbasis.

Revenueisrecognizedonlywhen(1)persuasiveevidenceofanarrangementexists;(2)thepriceisfixedordeterminable;(3)theserviceis
performed;and(4)collectabilityoftherelatedfeeisreasonablyassured.Whilethemajorityofourrevenuetransactionsarebasedonstandard
businesstermsandconditions,wealsoenterintosalesagreementswithadvertisersanddatapartnersthatsometimesinvolvemultipleelements.

Forarrangementsinvolvingmultipledeliverables,judgmentisrequiredtodeterminetheappropriateaccounting,includingdevelopingan
estimateofthestand-alonesellingpriceofeachdeliverable.Whenneithervendor-specificobjectiveevidencenorthird-partyevidenceofsellingprice
exists,weuseourbestestimateofsellingprice(BESP)toallocatethearrangementconsiderationonarelativesellingpricebasistoeach
deliverable.TheobjectiveofBESPistodeterminethesellingpriceofeachdeliverablewhenitissoldtoadvertisersonastand-alonebasis.In
determiningBESPs,wetakeintoconsiderationvariousfactors,including,butnotlimitedto,priceswechargeforsimilarofferings,salesvolume,
geographies,pricingstrategiesandmarketconditions.Multipledeliverablearrangementsprimarilyconsistofcombinationsofourpay-for-
performanceproducts,PromotedTweetsandPromotedAccounts,whicharepricedthroughanauction,andPromotedTrends,whicharepricedona
fixed-fee-perdaypergeographybasis.Forarrangementsthatincludeacombinationoftheseproducts,wedevelopanestimateofthesellingprice
fortheseproductsinordertoallocateanypotentialdiscounttoalladvertisingproductsinthearrangement.Theestimateofsellingpriceforpay-for-
performanceproductsisdeterminedbasedonthewinningbidprice;theestimateofsellingpriceforPromotedTrendsisbasedonPromotedTrends
soldonastand-alonebasisand/orseparatelypricedinabundledarrangementbyreferencetoalistpricebygeographywhichisapproved
periodically.WebelievetheuseofBESPresultsinrevenuerecognitioninamannerconsistentwiththeunderlyingeconomicsofthetransactionand
allocatesthearrangementconsiderationonarelativesellingpricebasistoeachdeliverable.

Income Taxes
WearesubjecttoincometaxesintheUnitedStatesandseveralforeignjurisdictions.Significantjudgmentisrequiredinevaluatingour
uncertaintaxpositionsanddeterminingourprovisionforincometaxes.

59


Althoughwebelievewehaveadequatelyreservedforouruncertaintaxpositions,noassurancecanbegiventhatthefinaloutcomeofthese
matterswillnotbedifferent.Weadjustthesereservesinlightofchangingfactsandcircumstances,suchastheclosingofataxaudit.Totheextent
thatthefinaloutcomeofthesemattersisdifferentthantheamountsrecorded,suchdifferencesmayimpacttheprovisionforincometaxesinthe
periodinwhichsuchdeterminationismade.Theprovisionforincometaxesincludestheimpactofreserveprovisionsandchangestoreservesthat
areconsideredappropriate,aswellasanyrelatedinterestorpenalties.

Oureffectivetaxrateshavedifferedfromthestatutoryrateprimarilyduetothetaximpactofforeignoperations,statetaxes,certainbenefits
realizedinrecordingthetaxeffectsofbusinesscombinations,andtherecordingofU.S.valuationallowance.Ourfutureprovisionforincometaxes
couldbeadverselyaffectedbyearningsbeinglowerthananticipatedincountrieswherewehavelowerstatutoryratesandhigherthananticipatedin
countrieswherewehavehigherstatutorytaxrates,changesinthevaluationofourdeferredtaxassetsorliabilities,orchangesintaxlaws,
regulationsoraccountingprinciples.Inaddition,wearesubjecttoexaminationofourincometaxreturnsbytaxauthoritiesintheUnitedStatesand
foreignjurisdictions.Weregularlyassessthelikelihoodofadverseoutcomesresultingfromtheseexaminationstodeterminetheadequacyofour
provisionforincometaxes.

Stock-Based Compensation
Weaccountforstock-basedcompensationexpenseunderthefairvaluerecognitionandmeasurementprovisionsinaccordancewiththe
applicableaccountingstandardswhichrequireallstock-basedawardsgrantedtoemployeestobemeasuredbasedonthegrant-datefairvalueand
amortizedovertherespectiveperiodduringwhichtheemployeeisrequiredtoprovideservice.

Thefairvalueofstockoptionsgrantedandstockpurchaserightsprovidedundertheemployeestockpurchaseplanisestimatedbasedonthe
Black-Scholesoptionpricingmodelwhichrequiresinputsofjudgmentalassumptionsincludingtheexpectedtermoftheawardandstockprice
volatility.Ifanyoftheassumptionsusedinthefairvaluedeterminationchangesignificantly,stock-basedcompensationexpensemaydiffer
materially.

WehavehistoricallygrantedPre-2013RSUswhichhadbothserviceandperformance-basedvestingconditions.Asthesatisfactionofthe
performanceconditionbecameprobableuponcompletionofourinitialpublicofferinginNovember2013,westartedrecordingstock-based
compensationexpenseonanacceleratedbasisfortheawardsforwhichtheserviceconditionhadbeensatisfied.

Weamortizetheexpenseassociatedwithallotherstock-basedawardswhichareonlysubjecttoserviceconditions,includingPost-2013
RSUs,onastraight-linebasis.

Wearerequiredtorecognizestock-basedcompensationexpenseforonlythosesharesthatweexpecttovest.Weestimatetheforfeiturerate
basedonhistoricalforfeituresofourstock-basedawardsandourexpectationsregardingfuturepre-vestingterminationbehaviorofouremployees.
Whiletheforfeiturerateusedrepresentsourbestestimate,thisestimateinvolvesinherentuncertainties.Totheextenttheactualforfeituresdiffer
fromourestimates,stock-basedcompensationexpensewillbeadjustedaccordinglyandmayhaveasignificanteffectonourstock-based
compensationexpense.

Business Combinations
Weaccountforacquisitionsofentitiesthatincludeinputsandprocessesandhavetheabilitytocreateoutputsasbusinesscombinations.The
purchasepriceoftheacquisitionisallocatedtothetangibleandintangibleassetsacquiredandliabilitiesassumedbasedontheirestimatedfair
valuesattheacquisitiondates.Theexcessofthepurchasepriceoverthosefairvaluesisrecordedasgoodwill.Duringthemeasurementperiod,
whichmaybeuptooneyearfromtheacquisitiondate,wemayrecordadjustmentstotheassetsacquiredandliabilitiesassumedwiththe
correspondingoffsettogoodwill.Upontheconclusionofthemeasurementperiodorfinaldeterminationofthevaluesofassetsacquiredorliabilities
assumed,whichevercomesfirst,anysubsequentadjustmentsarerecordedtotheconsolidatedstatementsofoperations.

60


Accountingforbusinesscombinationsrequiresourmanagementtomakesignificantestimatesandassumptionsattheacquisitiondate,
includingestimatedfairvalueofacquiredintangibleassets,estimatedfairvalueofstockawardsassumedfromtheacquireesthatareincludedin
thepurchaseprice,estimatedincometaxassetsandliabilitiesassumedfromtheacquirees,anddeterminationofthefairvalueofcontractual
obligations,whereapplicable.Theestimatesoffairvaluerequiremanagementtoalsomakeestimatesof,amongotherthings,futureexpectedcash
flows,discountratesorexpectedcoststoreproduceanasset.Althoughwebelievetheassumptionsandestimateswehavemadeinthepasthave
beenreasonableandappropriate,theseestimatesarebasedonhistoricalexperienceandinformationobtainedfromthemanagementofthe
acquiredcompaniesandareinherentlyuncertain.

Impact of Recently Issued Accounting Standards

TheimpactofrecentlyissuedaccountingstandardsissetforthinNote2,SummaryofSignificantAccountingPolicies,oftheNotesto
ConsolidatedFinancialStatementsunderItem8ofthisAnnualReportonForm10-K.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

WehaveoperationsbothwithintheUnitedStatesandinternationally,andweareexposedtomarketrisksintheordinarycourseofour
business.Theserisksincludeprimarilyinterestrateandforeignexchangerisks.

Interest Rate Fluctuation Risk

Ourinvestmentportfoliomainlyconsistsofshort-termfixedincomesecurities,includinggovernmentandinvestment-gradedebtsecuritiesand
moneymarketfunds.Thesesecuritiesareclassifiedasavailable-for-saleand,consequently,arerecordedintheconsolidatedbalancesheetsatfair
valuewithunrealizedgainsorlosses,netoftaxreportedasaseparatecomponentofaccumulatedothercomprehensiveloss.Ourinvestmentpolicy
andstrategyisfocusedonthepreservationofcapitalandsupportingourliquidityrequirements.Wedonotenterintoinvestmentsfortradingor
speculativepurposes.

Ariseininterestratescouldhaveamaterialadverseimpactonthefairvalueofourinvestmentportfolio.Basedonourinvestmentportfolio
balanceasofDecember31,2015,ahypotheticalincreaseininterestratesof100basispointswouldresultinadecreaseofapproximately
$15.4millioninthefairvalueofouravailable-for-salesecurities.Wecurrentlydonothedgetheseinterestrateexposures.

In2014,weissuedNoteswithaggregateprincipalamountof$1.89billion.WecarrytheNotesatfacevaluelessamortizeddiscountonthe
consolidatedbalancesheet.SincetheNotesbearinterestatfixedrates,wehavenofinancialstatementriskassociatedwithchangesininterest
rates.However,thefairvalueoftheNoteschangesprimarilywhenthemarketpriceofourstockfluctuatesorinterestrateschange.

Foreign Currency Exchange Risk

Transaction Exposure
Wetransactbusinessinvariousforeigncurrenciesandhaveinternationalrevenue,aswellascostsdenominatedinforeigncurrencies,
primarilytheEuro,BritishPoundandJapaneseYen.Thisexposesustotheriskoffluctuationsinforeigncurrencyexchangerates.Accordingly,
changesinexchangerates,andinparticularastrengtheningoftheU.S.dollar,wouldnegativelyaffectourrevenueandotheroperatingresultsas
expressedinU.S.dollars.

Wehaveexperiencedandwillcontinuetoexperiencefluctuationsinournetlossasaresultoftransactiongainsorlossesrelatedtorevaluing
andultimatelysettlingcertainassetandliabilitybalancesthataredenominatedincurrenciesotherthanthefunctionalcurrencyoftheentitiesin
whichtheyarerecorded.Netrealizedandunrealizedforeigncurrencygainswere$1.8millionin2015andnetrealizedandunrealizedforeign
currencylosseswere$7.2millionin2014.Foreigncurrencygainsandlosseswerenotmaterialin2013.Basedonourforeigncurrencyexposures
frommonetaryassetsandliabilities,weestimatedthata5%changeinexchangeratesagainsttheU.S.dollarswouldresultinagainorlossof
approximately$16.6millionasofDecember31,2015.Wecurrentlyutilizeforeigncurrencyforwardcontractswithfinancialinstitutionstoreducethe
riskthatourearningsmaybeadverselyaffectedbytheimpactofexchangeratefluctuationsonmonetaryassetsorliabilitiesdenominatedin
currenciesotherthanthelocalcurrencyofasubsidiary.Thesecontractsarenotdesignatedashedginginstruments.Wemayinthefutureenterinto
otherderivativefinancialinstrumentsifitisdeterminedthatsuchhedgingactivitiesareappropriatetofurtherreduceourforeigncurrencyexchange
risk.

61


Translation Exposure
WearealsoexposedtoforeignexchangeratefluctuationsaswetranslatethefinancialstatementsofourforeignsubsidiariesintoU.S.dollars
inconsolidation.Ifthereisachangeinforeigncurrencyexchangerates,thetranslatingadjustmentsresultingfromtheconversionofourforeign
subsidiariesfinancialstatementsintoU.S.dollarswouldresultinagainorlossrecordedasacomponentofaccumulatedothercomprehensiveloss
whichispartofstockholdersequity.

62

It em 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page
ReportofIndependentRegisteredPublicAccountingFirm 64
ConsolidatedBalanceSheets 65
ConsolidatedStatementsofOperations 66
ConsolidatedStatementsofComprehensiveLoss 67
ConsolidatedStatementsofRedeemableConvertiblePreferredStock,ConvertiblePreferredStockandStockholdersEquity 68
ConsolidatedStatementsofCashFlows 69
NotestoConsolidatedFinancialStatements 70

ThesupplementaryfinancialinformationrequiredbythisItem8isincludedinItem7underthecaptionQuarterlyResultsofOperations.

63

RE PORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TotheBoardofDirectorsandStockholdersof
Twitter,Inc.

Inouropinion,theaccompanyingconsolidatedbalancesheetsandtherelatedconsolidatedstatementsofoperations,ofcomprehensiveloss,of
redeemableconvertiblepreferredstock,convertiblepreferredstockandstockholdersequityandofcashflowspresentfairly,inallmaterialrespects,
thefinancialpositionofTwitter,Inc.anditssubsidiariesatDecember31,2015and2014,andtheresultsoftheiroperationsandtheircashflowsfor
eachofthethreeyearsintheperiodendedDecember31,2015inconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesof
America.Inaddition,inouropinion,thefinancialstatementschedulelistedintheindexappearingunderItem15.2presentsfairly,inallmaterial
respects,theinformationsetforththereinwhenreadinconjunctionwiththerelatedconsolidatedfinancialstatements.Alsoinouropinion,the
Companymaintained,inallmaterialrespects,effectiveinternalcontroloverfinancialreportingasofDecember31,2015,basedoncriteria
establishedinInternal Control - Integrated Framework (2013)issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission
(COSO).TheCompany'smanagementisresponsibleforthesefinancialstatementsandfinancialstatementschedule,formaintainingeffective
internalcontroloverfinancialreportingandforitsassessmentoftheeffectivenessofinternalcontroloverfinancialreporting,includedin
Management'sReportonInternalControloverFinancialReportingappearingunderItem9A.Ourresponsibilityistoexpressopinionsonthese
financialstatements,onthefinancialstatementschedule,andontheCompany'sinternalcontroloverfinancialreportingbasedonouraudits(which
wereintegratedauditsin2015and2014).WeconductedourauditsinaccordancewiththestandardsofthePublicCompanyAccountingOversight
Board(UnitedStates).Thosestandardsrequirethatweplanandperformtheauditstoobtainreasonableassuranceaboutwhetherthefinancial
statementsarefreeofmaterialmisstatementandwhethereffectiveinternalcontroloverfinancialreportingwasmaintainedinallmaterial
respects.Ourauditsofthefinancialstatementsincludedexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthe
financialstatements,assessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,andevaluatingtheoverallfinancial
statementpresentation.Ourauditofinternalcontroloverfinancialreportingincludedobtaininganunderstandingofinternalcontroloverfinancial
reporting,assessingtheriskthatamaterialweaknessexists,andtestingandevaluatingthedesignandoperatingeffectivenessofinternalcontrol
basedontheassessedrisk.Ourauditsalsoincludedperformingsuchotherproceduresasweconsiderednecessaryinthecircumstances.We
believethatourauditsprovideareasonablebasisforouropinions.

AsdiscussedinNote2totheconsolidatedfinancialstatements,theCompanychangedthemannerinwhichitclassifiesdeferredtaxassetsand
liabilitiesin2015.

Acompanysinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancial
reportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples.A
companysinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat(i)pertaintothemaintenanceofrecordsthat,in
reasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofthecompany;(ii)providereasonableassurancethat
transactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples,
andthatreceiptsandexpendituresofthecompanyarebeingmadeonlyinaccordancewithauthorizationsofmanagementanddirectorsofthe
company;and(iii)providereasonableassuranceregardingpreventionortimelydetectionofunauthorizedacquisition,use,ordispositionofthe
companysassetsthatcouldhaveamaterialeffectonthefinancialstatements.

Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Also,projectionsofany
evaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthat
thedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.

/s/PricewaterhouseCoopersLLP

SanJose,California

February29,2016

64

TWITTER, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)

December 31, December 31,

2015 2014
Assets
Currentassets:
Cashandcashequivalents $ 911,471 $ 1,510,724
Short-terminvestments 2,583,877 2,111,154
Accountsreceivable,netofallowancefordoubtfulaccountsof$8,121and$5,507
asofDecember31,2015and2014,respectively 638,694 418,454
Prepaidexpensesandothercurrentassets 247,750 215,521
Totalcurrentassets 4,381,792 4,255,853
Propertyandequipment,net 735,299 557,019
Intangibleassets 141,015 105,011
Goodwill 1,122,728 622,570
Otherassets 61,605 42,629
Totalassets $ 6,442,439 $ 5,583,082
Liabilities and stockholders' equity
Currentliabilities:
Accountspayable $ 134,081 $ 53,241
Accruedandothercurrentliabilities 283,792 228,233
Capitalleases,short-term 88,166 112,320
Totalcurrentliabilities 506,039 393,794
Convertiblenotes 1,455,095 1,376,020
Capitalleases,long-term 59,695 118,950
Deferredandotherlong-termtaxliabilities,net 2,978 24,706
Otherlong-termliabilities 50,585 43,209
Totalliabilities 2,074,392 1,956,679
Commitmentsandcontingencies(Note14)
Stockholders'equity:
Preferredstock,$0.000005parvalue--200,000sharesauthorized;noneissuedandoutstanding
Commonstock,$0.000005parvalue--5,000,000sharesauthorized;694,132and642,385shares
issuedandoutstandingasofDecember31,2015and2014,respectively 3 3
Additionalpaid-incapital 6,507,087 5,208,870
Accumulatedothercomprehensiveloss (45,566) (10,024)
Accumulateddeficit (2,093,477) (1,572,446)
Totalstockholders'equity 4,368,047 3,626,403
Totalliabilitiesandstockholders'equity $ 6,442,439 $ 5,583,082

Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements.

65

TWITTER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

Year Ended December 31,

2015 2014 2013
Revenue $ 2,218,032 $ 1,403,002 $ 664,890
Costsandexpenses
Costofrevenue 729,256 446,309 266,718
Researchanddevelopment 806,648 691,543 593,992
Salesandmarketing 871,491 614,110 316,216
Generalandadministrative 260,673 189,906 123,795
Totalcostsandexpenses 2,668,068 1,941,868 1,300,721
Lossfromoperations (450,036) (538,866) (635,831)
Interestexpense (98,178) (35,918) (7,576)
Otherincome(expense),net 14,909 (3,567) (3,739)
Lossbeforeincometaxes (533,305 ) (578,351 ) (647,146 )
Benefitfromincometaxes (12,274) (531) (1,823)
Netloss $ (521,031 ) $ (577,820 ) $ (645,323 )
Netlosspershareattributabletocommonstockholders:
Basic $ (0.79) $(0.96) $ (3.41)
Diluted $ (0.79) $(0.96) $ (3.41)
Weighted-averagesharesusedtocomputenetloss
pershareattributabletocommonstockholders:
Basic 662,424 604,990 189,510

Diluted 662,424 604,990 189,510

Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements.

66

TWITTER, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)

Year Ended December 31,

2015 2014 2013
Netloss $ (521,031 ) $ (577,820 ) $ (645,323)
Othercomprehensiveincome(loss):
Unrealizedlossoninvestmentsinavailable-for-salesecurities,netoftax (3,019) (877) (76)
Foreigncurrencytranslationadjustment (32,523) (8,824) 410
Netchangeinaccumulatedothercomprehensiveloss (35,542) (9,701) 334
Comprehensiveloss $ (556,573) $ (587,521) $ (644,989)

Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements.

67

TWITTER, INC.
CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK,
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS EQUITY
(In thousands)

Year Ended December 31,

2015 2014 2013
Shares Amount Shares Amount Shares Amount
Redeemable convertible preferred stock
Balance,beginningofperiod $ $ 3,569 $ 37,106
Forfeitureofrestrictedstock (45 )
ConversionofRedeemableClassAjuniorpreferredstocktocommon
stock (3,524 ) (37,106 )
Balance,endofperiod $ $ - $
Convertible preferred stock
Balance,beginningofperiod $ $ 329,575 $ 835,430
Conversionofconvertiblepreferredstocktocommonstock (329,575 ) (835,430 )
Balance,endofperiod $ $ $
Stockholders' equity
Common stock
Balance,beginningofperiod 642,385 $ 3 569,922 $ 3 125,597 $ 1
IssuanceofcommonstockinconnectionwithRSUvesting 24,002 42,748
Issuanceofcommonstockinconnectionwithacquisitions 13,613 3,326 17,665
Issuanceofrestrictedstockinconnectionwithacquisitionsaccountedfor
stock-basedcompensation 2,533 2,337 5,775
Exerciseofstockoptions 10,992 22,447 7,408
Issuanceofcommonstockuponpurchasesunderemployeestock
purchaseplan 1,525 1,887
Issuanceofcommonstockuponinitialpublicoffering 80,500
ConversionofRedeemableClassAjuniorpreferredstocktocommon
stock 3,524
Conversionofconvertiblepreferredstocktocommonstock 329,575 2
Shareswithheldrelatedtonetsharesettlementofequityawards (281 ) (307 )
Otheractivities (637 ) 25 (122 )
Balance,endofperiod 694,132 $ 3 642,385 $ 3 569,922 $ 3
Additional paid-in capital
Balance,beginningofperiod $ 5,208,870 $ 3,944,952 $ 101,787
Issuanceofcommonstockinconnectionwithacquisitions 516,538 147,958 335,913
Exerciseofstockoptions 17,914 28,881 8,751
Issuanceofcommonstockuponpurchasesunderemployeestock
purchaseplan 39,295 42,402
Issuanceofcommonstockuponinitialpublicoffering,netofissuance
costs (240 ) 2,019,741
Conversionofpreferredstocktocommonstock 872,534
Shareswithheldrelatedtonetsharesettlementofequityawards (11,101 ) (17,053 ) (14,637 )
Stock-basedcompensation 729,193 672,371 596,148
Reclassificationofpreferredstockliabilityandpreferredstockwarrant
liabilitytoadditionalpaid-incapital 24,241
Equitycomponentoftheconvertiblenoteissuance,net 505,982
Purchaseofconvertiblenotehedge (407,169 )
Issuanceofwarrants 289,272
Otheractivities - 6,378 1,514 474
Balance,endofperiod $ 6,507,087 $ 5,208,870 $ 3,944,952
Accumulated other comprehensive loss
Balance,beginningofperiod $ (10,024 ) $ (323 ) $ (657 )
Othercomprehensiveincome(loss) (35,542 ) (9,701 ) 334
Balance,endofperiod $ (45,566 ) $ (10,024 ) $ (323 )
Accumulated deficit
Balance,beginningofperiod $ (1,572,446 ) $ (994,626 ) $ (349,303 )
Netloss (521,031 ) (577,820 ) (645,323 )
Balance,endofperiod $ (2,093,477 ) $ (1,572,446 ) $ (994,626 )
Total stockholders' equity 694,132 $ 4,368,047 642,385 $ 3,626,403 569,922 $ 2,950,006

Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements.

68

TWI TTER, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Year Ended December 31,

2015 2014 2013
Cash flows from operating activities
Netloss $ (521,031) $ (577,820) $ (645,323)
Adjustmentstoreconcilenetlosstonetcashprovidedbyoperatingactivities:
Depreciationandamortization 312,823 208,165 110,894
Stock-basedcompensationexpense 678,924 631,597 600,367
Amortizationofdiscountonconvertiblenotes 69,185 18,823
Provisionforbaddebt 5,765 4,632 1,557
Deferredincometaxbenefit (28,125) (9,609) (8,902)
Otheradjustments 1,438 7,983 4,161
Changesinassetsandliabilities,netofassetsacquiredandliabilitiesassumedfrom
acquisitions:
Accountsreceivable (216,585) (177,583) (112,060)
Prepaidexpensesandotherassets (50,170) (165,395) (12,045)
Accountspayable 76,355 18,059 7,957
Accruedandotherliabilities 54,487 122,944 54,792
Netcashprovidedbyoperatingactivities 383,066 81,796 1,398
Cash flows from investing activities
Purchasesofpropertyandequipment (347,280) (201,630) (75,744)
Purchasesofmarketablesecurities (3,683,488) (2,937,033) (1,573,489)
Proceedsfrommaturitiesofmarketablesecurities 2,821,745 2,029,518 355,270
Proceedsfromsalesofmarketablesecurities 383,413 188,092 42,816
Changesinrestrictedcash (3,549) (11,042) (10,847)
Businesscombinations,netofcashacquired (51,644) (163,477) (8,072)
Otherinvestingactivities (21,618) (1,700) (36,000)
Netcashusedininvestingactivities (902,421) (1,097,272) (1,306,066)
Cash flows from financing activities
Netproceedsfromissuanceofcommonstockuponinitialpublicoffering 2,018,579
Proceedsfromissuanceofconvertiblenotes 1,889,000
Convertiblenotesinitialissuancediscount (28,810)
Purchasesofconvertiblenotehedges (407,169)
Proceedsfromissuanceofwarrants 289,272
Taxespaidrelatedtonetsharesettlementofequityawards (11,101) (17,053) (14,637)
Repaymentsofcapitalleaseobligations (117,535) (103,135) (70,445)
Proceedsfromexerciseofstockoptions 17,361 28,658 8,679
Proceedsfromissuancesofcommonstockunderemployeestockpurchaseplan 39,295 42,402
Otherfinancingactivities 8,982 (1,443)
Netcashprovidedby(usedin)financingactivities (62,998) 1,691,722 1,942,176
Netincrease(decrease)incashandcashequivalents (582,353) 676,246 637,508
Foreignexchangeeffectoncashandcashequivalents (16,900) (6,532) 174
Cashandcashequivalentsatbeginningofperiod 1,510,724 841,010 203,328
Cashandcashequivalentsatendofperiod $ 911,471 $ 1,510,724 $ 841,010
Supplemental cash flow data
Interestpaidincash $ 15,985 $ 10,000 $ 6,850
Taxespaidincash $ 8,229 $ 14,895 $ 2,391
Supplemental disclosures of non-cash investing and financing activities
Conversionofpreferredstocktocommonstock $ $ $ 872,536
Commonstockissuedinconnectionwithacquisitions $ 516,538 $ 147,958 $ 331,766
Equipmentpurchasesundercapitalleases $ 31,215 $ 140,685 $ 155,722
Changesinaccruedequipmentpurchases $ 3,902 $ 6,562 $ (1,602)
Unpaiddeferredofferingcosts

$




$




$

1,162

Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements.

69

TWITTER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. The Company

Twitter,Inc.(TwitterortheCompany)wasincorporatedinDelawareinApril2007,andisheadquarteredinSanFrancisco,California.
Twitteroffersproductsandservicesforusers,advertisers,developersandplatformanddatapartners.

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation
TheconsolidatedfinancialstatementsincludetheaccountsoftheCompanyanditswhollyownedsubsidiaries.Allsignificantintercompany
accountsandtransactionshavebeeneliminatedinconsolidation.

Use of Estimates
ThepreparationoftheCompanysconsolidatedfinancialstatementsinconformitywithgenerallyacceptedaccountingprinciplesintheUnited
StatesofAmerica(GAAP)requiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsofassets,liabilities,revenue
andexpenses,aswellasrelateddisclosureofcontingentassetsandliabilities.ActualresultscoulddiffermateriallyfromtheCompanysestimates.
Totheextentthattherearematerialdifferencesbetweentheseestimatesandactualresults,theCompanysfinancialconditionoroperatingresults
willbeaffected.TheCompanybasesitsestimatesonpastexperienceandotherassumptionsthattheCompanybelievesarereasonableunderthe
circumstances,andtheCompanyevaluatestheseestimatesonanongoingbasis..Certainpriorperiodamountshavebeenreclassifiedtoconform
tothecurrentperiodpresentation.

Revenue Recognition
TheCompanygeneratesthesubstantialmajorityofitsrevenuefromthesaleofadvertisingservicesand,toalesserextent,fromenteringinto
datalicensingandotherarrangements.

TheCompanysadvertisingservicesincludethreeprimaryproducts:(i)PromotedTweets,(ii)PromotedAccountsand(iii)PromotedTrends.
PromotedTweetsandPromotedAccountsarepay-for-performanceadvertisingproductspricedthroughanauction.PromotedTrendsarefeatured
bygeographyandofferedonafixed-fee-per-daybasis.AdvertisersareobligatedtopaywhenauserengageswithaPromotedTweetorfollowsa
PromotedAccountorwhenaPromotedTrendisdisplayed.Theseproductsmaybesoldincombinationasamultipleelementarrangementor
separatelyonastand-alonebasis.

TheCompanyalsogeneratesadvertisingrevenuebysellingtoadvertisersadvertisingproductswhichitplacesonthirdpartypublishers
websites,applicationsorotherofferings.Tofulfillthesetransactions,theCompanypurchasesadvertisinginventoryfromthirdpartypublishers
websitesandapplicationswhereithasidentifiedtheadvertiserstargetedaudienceandthereforeincurstrafficacquisitioncosts.Insuch
transactions,theCompanyremainstheprimaryobligortoitsadvertisersfortheadvertisingservicesandproductsdelivered,haspricinglatitude,has
discretionintheselectionofthirdpartypublishersandbearscreditrisk.TheCompanymightnotgenerateadvertisingrevenueinexcessoftraffic
acquisitioncostsincurred.Therefore,theCompanyreportsadvertisingrevenuegeneratedfromthesetransactionsonagrossbasis.

Feesfortheseadvertisingservicesarerecognizedintheperiodwhenadvertisingisdeliveredasevidencedbyauserengagingwitha
PromotedTweetinamannersatisfyingthetypesofengagementselectedbytheadvertisers,suchasTweetengagements(e.g.,retweets,replies
andlikes),websiteclicksorconversions,mobileapplicationinstallsorengagements,obtainingnewfollowers,orvideoviews,followingaPromoted
Account,throughthedisplayofaPromotedTrendontheCompanysplatform,orcompletionofatransactiononanexternalwebsite.Datalicensing
revenueisgeneratedbasedonmonthlyservicefeeschargedtothedatapartnersovertheperiodinwhichtheCompanysdataanddataproducts
aremadeavailabletothem.OtherrevenueisprimarilygeneratedfromservicefeesfromtransactionscompletedontheCompanysmobilead
exchange.TheCompanysmobileadexchangeenablesbuyersandsellerstopurchaseandselladvertisinginventoryandmatchesbuyersand
sellers.TheCompanyhasdetermineditisnottheprincipalinthepurchaseandsaleofadvertisinginventoryintransactionsbetweenthirdparty
buyersandsellersontheexchange.Therefore,theCompanyreportsrevenuerelatedtoitsadexchangeservicesonanetbasis.

70


Revenueisrecognizedonlywhen(1)persuasiveevidenceofanarrangementexists;(2)thepriceisfixedordeterminable;(3)theserviceis
performed;and(4)collectabilityoftherelatedfeeisreasonablyassured.WhilethemajorityoftheCompanysrevenuetransactionsarebasedon
standardbusinesstermsandconditions,theCompanyalsoentersintosalesagreementswithadvertisersanddatapartnersthatsometimesinvolve
multipleelements.

Forarrangementsinvolvingmultipledeliverables,judgmentisrequiredtodeterminetheappropriateaccounting,includingdevelopingan
estimateofthestand-alonesellingpriceofeachdeliverable.Whenneithervendor-specificobjectiveevidencenorthird-partyevidenceofsellingprice
exists,theCompanyusesitsbestestimateofsellingprice(BESP)toallocatethearrangementconsiderationonarelativesellingpricebasistoeach
deliverable.TheobjectiveofBESPistodeterminethesellingpriceofeachdeliverablewhenitissoldtoadvertisersonastand-alonebasis.In
determiningBESPs,theCompanytakesintoconsiderationvariousfactors,including,butnotlimitedto,pricestheCompanychargesforsimilar
offerings,salesvolume,geographies,pricingstrategiesandmarketconditions.Multipledeliverablearrangementsprimarilyconsistofcombinations
oftheCompanyspay-for-performanceproducts,PromotedTweetsandPromotedAccounts,whicharepricedthroughanauction,andPromoted
Trends,whicharepricedonafixed-fee-perdaypergeographybasis.Forarrangementsthatincludeacombinationoftheseproducts,theCompany
developsanestimateofthesellingpricefortheseproductsinordertoallocateanypotentialdiscounttoalladvertisingproductsinthearrangement.
Theestimateofsellingpriceforpay-for-performanceproductsisdeterminedbasedonthewinningbidprice;theestimateofsellingpricefor
PromotedTrendsisbasedonPromotedTrendssoldonastand-alonebasisand/orseparatelypricedinabundledarrangementbyreferencetoalist
pricebygeographywhichisapprovedperiodically.TheCompanybelievestheuseofBESPresultsinrevenuerecognitioninamannerconsistent
withtheunderlyingeconomicsofthetransactionandallocatesthearrangementconsiderationonarelativesellingpricebasistoeachdeliverable.

Cost of Revenue
Costofrevenueincludesinfrastructurecosts,otherdirectcosts,amortizationexpenseoftechnologyacquiredthroughacquisitionsand
capitalizedlaborcosts,allocatedfacilitiescosts,aswellastrafficacquisitioncosts(TAC).Infrastructurecostsconsistprimarilyofdatacentercosts
relatedtotheCompanysco-locatedfacilities,whichincludeleaseandhostingcosts,relatedsupportandmaintenancecostsandenergyand
bandwidthcosts,aswellasdepreciationofitsserversandnetworkingequipment,andpersonnel-relatedcosts,includingsalaries,benefitsand
stock-basedcompensation,foritsoperationsteams.TACconsistsofcostsincurredwiththirdpartiesinconnectionwiththesaletoadvertisersof
advertisingproductsthattheCompanyplacesonthird-partypublisherswebsites,applicationsorotherofferingscollectivelyresultingfrom
acquisitionsandfromtheCompanysorganically-builtadvertisingnetwork,TwitterAudiencePlatform.

Stock-Based Compensation Expense

TheCompanyaccountsforstock-basedcompensationexpenseunderthefairvaluerecognitionandmeasurementprovisionsofGAAP.
Stock-basedawardsgrantedtoemployeesaremeasuredbasedonthegrant-datefairvaluewiththeresultingexpenserecognizedoverthe
respectiveperiodduringwhichtheawardrecipientisrequiredtoprovideservice.

Pre-2013RSUs,asdefinedandfurtherdescribedinNote12Common Stock and Stockholders Equity ,vestuponsatisfactionofbotha

serviceconditionandaperformancecondition.Theserviceconditionfortheseawardsisgenerallysatisfiedoverfouryears.Theperformance
conditionwassatisfiedinFebruary2014pursuanttothetermsoftheCompanys2007EquityIncentivePlan.PriortotheclosingoftheCompanys
initialpublicofferinginNovember2013,theCompanyhadnotrecognizedanystock-basedcompensationexpenseforthePre-2013RSUs,because
theperformanceconditionhadnotbeensatisfied.Asthesatisfactionoftheperformanceconditionbecameprobableuponcompletionofthe
CompanysinitialpublicofferingforthePre-2013RSUsforwhichtheserviceconditionhadbeensatisfiedasofsuchdate,theCompanyrecorded
thecumulativestock-basedcompensationexpensefortheseRSUsduringthethreemonthsendedDecember31,2013,usingtheaccelerated
attributionmethod.Theremainingunrecognizedstock-basedcompensationexpenserelatedtothePre-2013RSUswillberecordedoverthe
remainingrequisiteserviceperiodusingtheacceleratedattributionmethod.

Post-2013RSUs,asdefinedandfurtherdescribedinNote12Common Stock and Stockholders Equity ,arenotsubjecttoaperformance

conditioninordertovest.Theserviceconditionfortheseawardsisgenerallysatisfiedoverfouryears.Thecompensationexpenserelatedtothese
RSUsisrecognizedonastraight-linebasisovertherequisiteserviceperiod.

71


TheCompanyestimatesthefairvalueofstockoptionsgrantedandstockpurchaserightsprovidedundertheCompanysemployeestock
purchaseplanusingtheBlack-Scholesoptionpricingmodelonthedatesofgrant.CalculatingthefairvalueusingtheBlack-Scholesmodelrequires
variousjudgmentalassumptionsincludingtheexpectedtermandstockpricevolatility.TheCompanyestimatestheexpectedtermofstockoptions
grantedbasedonthesimplifiedmethod.TheCompanyestimatestheexpectedvolatilityofitscommonstockonthedatesofgrantbasedona
combinationoftheCompanyshistoricalstockpricevolatilityandimpliedvolatilityintheCompanystradedoptionswhensuchinformationis
available.WhentheCompanyshistoricalandimpliedvolatilitydataarenotavailablefortherelatedawardsexpectedterm,anaverageofvolatility
ratesincludingthehistoricalvolatilityofagroupofcomparable,publicly-tradedcompaniesisused.Therisk-freeinterestrateisbasedontheU.S.
Treasuryyieldcurveineffectatthetimeofgrant.ExpecteddividendyieldiszeropercentastheCompanyhasnotpaidanddoesnotanticipate
payingdividendsonitscommonstock.Thecompensationexpenserelatedtostockoptionsandemployeestockpurchaserightsisrecognizedona
straight-linebasisovertherequisiteserviceperiod.

TheCompanyissuesrestrictedstocksubjecttoalapsingrightofrepurchasetocontinuingemployeesofcertainacquiredcompanies.Since
theseissuancesaresubjecttopost-acquisitionemployment,theCompanyaccountsforthemaspost-acquisitionstock-basedcompensation
expense.Thegrant-datefairvalueofrestrictedstockgrantedinconnectionwithacquisitionsisrecognizedasstock-basedcompensationexpense
onastraight-linebasisovertherequisiteserviceperiod.

Stock-basedcompensationexpenseisrecordednetofestimatedforfeitures.TheCompanyestimatestheforfeitureratebasedonhistorical
forfeituresofstock-basedawardsandadjuststheratetoreflectchangesinfactsandcircumstances,ifany.

Acquisitions
TheCompanyaccountsforacquisitionsofentitiesthatincludeinputsandprocessesandhavetheabilitytocreateoutputsasbusiness
combinationsinaccordancewithAccountingStandardsCodification(ASC)Topic805Business Combinations .Thepurchasepriceofthe
acquisitionisallocatedtothetangibleandintangibleassetsacquiredandliabilitiesassumedbasedontheirestimatedfairvaluesattheacquisition
dates.Theexcessofthepurchasepriceoverthosefairvaluesisrecordedasgoodwill.Duringthemeasurementperiod,whichmaybeuptoone
yearfromtheacquisitiondate,theCompanymayrecordadjustmentstotheassetsacquiredandliabilitiesassumedwiththecorrespondingoffsetto
goodwill.Upontheconclusionofthemeasurementperiodorfinaldeterminationofthevaluesofassetsacquiredorliabilitiesassumed,whichever
comesfirst,anysubsequentadjustmentsarerecordedtotheconsolidatedstatementsofoperations.

CoststoexitorrestructurecertainactivitiesofanacquiredcompanyortheCompanysinternaloperationsareaccountedforasone-time
terminationandexitcostsandareaccountedforseparatelyfromthebusinesscombination.Restructuringandotheracquisition-relatedcostsare
expensedasincurred.

Operating and Capital Leases

TheCompanyleasesofficespaceanddatacenterfacilitiesunderoperatingleases.Certainleaseagreementscontainfreeorescalatingrent
paymentprovisions.TheCompanyrecognizesrentexpenseundersuchleasesonastraight-linebasisoverthetermofthelease.Leaserenewal
periodsareconsideredonalease-by-leasebasisindeterminingtheleaseterm.

TheCompanyalsoentersintoserverandnetworkingequipmentleasearrangementswithoriginalleasetermsrangingfromthreetofour
years.TheclassificationofeachleasearrangementisdeterminedinaccordancewiththecriteriaoutlinedinASCTopic840Leases .The
Companysserverandnetworkingequipmentleasestypicallyareaccountedforascapitalleasesastheymeetoneormoreofthefourcapitallease
classificationcriteria.Assetsacquiredundercapitalleasesareamortizedovertheirestimatedusefullife.AsofDecember31,2015and2014,the
Companyhadcapitalleaseobligationsincludedinshort-termandlong-termcapitalleaseobligationsintheconsolidatedbalancesheetsof$147.9
millionand$231.3million,respectively.IntheyearsendedDecember31,2015,2014and2013,theCompanyrecordedapproximately$8.8million,
$10.2millionand$7.0million,respectively,ofinterestexpenseinrelationtothesecapitalleasearrangements.

72


Cash, Cash Equivalents and Investments

TheCompanyinvestsitsexcesscashprimarilyinshort-termfixedincomesecurities,includinggovernmentandinvestment-gradedebt
securitiesandmoneymarketfunds.TheCompanyclassifiesallliquidinvestmentswithstatedmaturitiesofthreemonthsorlessfromdateof
purchaseascashequivalents.TheCompanyclassifiesallmarketablesecuritiesforuseincurrentoperations,evenifthesecuritymaturesbeyond
12months,andpresentsthemasshort-terminvestmentsintheconsolidatedbalancesheets.AsofDecember31,2015and2014,theCompanyhas
recordedrestrictedcashbalancesof$3.0millionand$2.6million,respectively,withinprepaidexpensesandothercurrentassetsand$31.1million
and$28.3million,respectively,inotherassetsontheaccompanyingconsolidatedbalancesheetsbaseduponthetermoftheremainingrestrictions.
Theserestrictedcashbalancesareprimarilyrelatedtocertainoperatingleasearrangements.

TheCompanydeterminestheappropriateclassificationofitsinvestmentsinmarketablesecuritiesatthetimeofpurchaseandreevaluates
suchdesignationateachbalancesheetdate.TheCompanyhasclassifiedandaccountedforitsmarketablesecuritiesasavailable-for-sale.After
consideringtheCompanyscapitalpreservationobjectives,aswellasitsliquidityrequirements,theCompanymaysellsecuritiespriortotheirstated
maturities.TheCompanycarriesitsavailable-for-salesecuritiesatfairvalue,andreportstheunrealizedgainsandlosses,netoftaxes,asa
componentofstockholdersequity,exceptforunrealizedlossesdeterminedtobeotherthantemporarywhicharerecordedasotherincome
(expense),net.TheCompanydeterminesanyrealizedgainsorlossesonthesaleofmarketablesecuritiesonaspecificidentificationmethodand
recordssuchgainsandlossesasacomponentofotherincome(expense),net.Interestearnedoncash,cashequivalents,andmarketablesecurities
was$9.1million,$1.9million,and$0.7millionduringtheyearsendedDecember31,2015,2014and2013,respectively.Thesebalancesare
recordedinotherincome(expense),netintheaccompanyingconsolidatedstatementsofoperations.

TheCompanyevaluatestheinvestmentsperiodicallyforpossibleother-than-temporaryimpairment.Adeclineinfairvaluebelowthe
amortizedcostsofdebtsecuritiesisconsideredanother-than-temporaryimpairmentiftheCompanyhastheintenttosellthesecurityoritismore
likelythannotthattheCompanywillberequiredtosellthesecuritybeforerecoveryoftheentireamortizedcostbasis.Inthoseinstances,an
impairmentchargeequaltothedifferencebetweenthefairvalueandtheamortizedcostbasisisrecognizedinearnings.Regardlessofthe
Companysintentorrequirementtoselladebtsecurity,impairmentisconsideredother-than-temporaryiftheCompanydoesnotexpecttorecover
theentireamortizedcostbasis.

Concentration of Credit Risk

FinancialinstrumentsthatpotentiallysubjecttheCompanytosignificantconcentrationofcreditriskconsistprimarilyofcash,cashequivalents,
short-terminvestmentsandaccountsreceivable.TheprimaryfocusoftheCompanysinvestmentstrategyistopreservecapitalandmeetliquidity
requirements.TheCompanysinvestmentpolicyaddressesthelevelofcreditexposurebylimitingtheconcentrationinanyonecorporateissueror
sectorandestablishingaminimumallowablecreditrating.Tomanagetheriskexposure,theCompanyinvestscash,cashequivalentsandshort-
terminvestmentsinavarietyoffixedincomesecurities,includinggovernmentandinvestment-gradedebtsecuritiesandmoneymarketfunds.The
Companyplacesitscashprimarilyincheckingandmoneymarketaccountswithreputablefinancialinstitutions.Depositsheldwiththesefinancial
institutionsmayexceedtheamountofinsuranceprovidedonsuchdeposits,ifany.

TheCompanysaccountsreceivablearetypicallyunsecuredandarederivedfromcustomersaroundtheworldindifferentindustries.The
Companyperformsongoingcreditevaluationsofitscustomersandmaintainsallowancesforpotentialcreditlosses.Historically,suchlosseshave
beenwithinmanagementsexpectations.AsofDecember31,2015and2014,nosinglecustomeraccountedformorethan10%oftheCompanys
netaccountsreceivablebalance.Nosinglecustomeraccountedformorethan10%oftheCompanysrevenueintheyearsendedDecember31,
2015,2014and2013.

TheCompanysnotehedgetransactions,enteredintoinconnectionwiththeNotes,anditsderivativefinancialinstrumentsexposethe
Companytocreditrisktotheextentthatitscounterpartiesmaybeunabletomeetthetermsofthetransactions.TheCompanymitigatesthisriskby
limitingitscounterpartiestomajorfinancialinstitutions.

73


Accounts Receivable, Net

TheCompanyrecordsaccountsreceivableattheinvoicedamount.TheCompanymaintainsanallowancefordoubtfulaccountstoreservefor
potentiallyuncollectiblereceivableamounts.InevaluatingtheCompanysabilitytocollectoutstandingreceivablebalances,theCompanyconsiders
variousfactorsincludingtheageofthebalance,thecreditworthinessofthecustomer,whichisassessedbasedonongoingcreditevaluationsand
paymenthistory,andthecustomerscurrentfinancialcondition.

Property and Equipment, Net

Propertyandequipmentarestatedatcostanddepreciatedusingthestraight-linemethodovertheestimatedusefullivesoftheassets.
Leaseholdimprovementsareamortizedusingthestraight-linemethodovertheshorteroftheleasetermortheestimatedusefullife.Theestimated
usefullivesofpropertyandequipmentaredescribedbelow:

Property and Equipment Estimated Useful Life

Computerhardware,networkingandofficeequipment Threetofiveyears
Computersoftware Onetofouryears
Furnitureandfixture Fiveyears
Leaseholdimprovements Lesserofestimatedusefullifeorremainingleaseterm

Costsofmaintenanceandrepairsthatdonotimproveorextendthelivesoftherespectiveassetsareexpensedasincurred.Uponretirement
orsale,thecostandrelatedaccumulateddepreciationareremovedfromthebalancesheetandtheresultinggainorlossisreflectedinoperating
expenses.

Capitalization of Interest
InterestcostsiscapitalizedforassetsthatareconstructedfortheCompanysowninternaluse,thisincludesinternallydevelopedsoftware
andpropertyandequipment,fortheperiodoftimetogetthemreadyforitsintendeduse.DuringtheyearendedDecember31,2015,theCompany
capitalized$5.0millionofinterestexpense.Capitalizedinterestwasnotmaterialin2014.Nointerestwascapitalizedin2013.

Goodwill
Goodwillrepresentstheexcessofthepurchasepriceoverthefairvalueofthenettangibleandintangibleassetsacquiredinabusiness
combination.Goodwillisnotamortized,butistestedforimpairmentatleastannuallyormorefrequentlyifeventsorchangesincircumstances
indicatethattheassetmaybeimpaired.TheCompanysimpairmenttestsarebasedonasingleoperatingsegmentandreportingunitstructure.If
thecarryingvalueofthereportingunitexceedsitsfairvalue,thesecondstepofthetestisperformedbycomparingthecarryingvalueofthegoodwill
inthereportingunittoitsimpliedfairvalue.Animpairmentchargeisrecognizedfortheexcessofthecarryingvalueofgoodwilloveritsimpliedfair
value.

TheCompanyconducteditsannualgoodwillimpairmenttestduringthefourthquarterof2015anddeterminedthatgoodwillwasnotimpaired.
Assuch,noimpairmentchargewasrecordedinanyoftheperiodspresentedintheaccompanyingconsolidatedfinancialstatements.

Intangible Assets
Intangibleassetsarecarriedatcostandamortizedonastraight-linebasisovertheirestimatedusefullives,whichrangefromonetoeleven
years.TheCompanyreviewsidentifiableamortizableintangibleassetstobeheldandusedforimpairmentwhenevereventsorchangesin
circumstancesindicatethatthecarryingvalueoftheassetsmaynotberecoverable.Determinationofrecoverabilityisbasedonthelowestlevelof
identifiableestimatedundiscountedcashflowsresultingfromuseoftheassetanditseventualdisposition.Measurementofanyimpairmentlossis
basedontheexcessofthecarryingvalueoftheassetoveritsfairvalue.Therehasbeennoimpairmentchargesrecordedinanyoftheperiods
presentedintheaccompanyingconsolidatedfinancialstatements.SeeNote6Goodwill and Intangible Assets foradditionalinformation.

74


Fa ir Value Measurements
TheFinancialAccountingStandardsBoard(theFASB)sauthoritativeguidanceonfairvaluemeasurementsestablishesaframeworkfor
measuringfairvalueandrequiresdisclosureaboutthefairvaluemeasurementsofassetsandliabilities.ThisguidancerequirestheCompanyto
classifyanddiscloseassetsandliabilitiesmeasuredatfairvalueonarecurringbasis,aswellasfairvaluemeasurementsofassetsandliabilities
measuredonanonrecurringbasisinperiodssubsequenttoinitialmeasurement,inathree-tierfairvaluehierarchyasdescribedbelow.

Theguidancedefinesfairvalueastheexchangepricethatwouldbereceivedforanassetorpaidtotransferaliabilityintheprincipalormost
advantageousmarketfortheassetorliabilityinanorderlytransactionbetweenmarketparticipantsonthemeasurementdate.Valuationtechniques
usedtomeasurefairvaluemustmaximizetheuseofobservableinputsandminimizetheuseofunobservableinputs.Theguidancedescribesthree
levelsofinputsthatmaybeusedtomeasurefairvalue:
Level1Observableinputs,suchasquotedpricesinactivemarketsforidenticalassetsorliabilities.
Level2ObservableinputsotherthanLevel1prices,suchasquotedpricesforsimilarassetsorliabilities,quotedpricesinmarketsthatare
notactiveorotherinputsthatareobservableorcanbecorroboratedbyobservablemarketdataforsubstantiallythefulltermoftheassetsor
liabilities.
Level3Unobservableinputsthataresupportedbylittleornomarketactivityandthataresignificanttothefairvalueoftheassetsor
liabilities.

Internal Use Software and Website Development Costs

TheCompanycapitalizescertaincostsincurredindevelopingsoftwareprogramsorwebsitesforinternaluse.Intheyearsended
December31,2015,2014and2013,theCompanycapitalizedcoststotalingapproximately$92.8million,$79.5millionand$35.6million,
respectively.Capitalizedinternalusesoftwaredevelopmentcostsareincludedinpropertyandequipment,net.Includedinthecapitalizedamounts
aboveare$50.3million,$40.8millionand$13.6millionofstock-basedcompensationexpenseintheyearsendedDecember31,2015,2014and
2013,respectively.

Theestimatedusefullifeofcostscapitalizedisevaluatedforeachspecificprojectandisonetofouryears.IntheyearsendedDecember31,
2015,2014and2013,theamortizationofcapitalizedcostsincludedincostofrevenuetotaledapproximately$37.8million,$15.2millionand
$6.7million,respectively.

Income Taxes
TheCompanyaccountsforitsincometaxesusingtheassetandliabilitymethodwherebydeferredtaxassetsandliabilitiesaredetermined
basedontemporarydifferencesbetweenthebasesusedforfinancialreportingandincometaxreportingpurposes,aswellasforoperatinglossand
taxcreditcarryforwards.Deferredincometaxesareprovidedbasedontheenactedtaxratesexpectedtobeineffectatthetimesuchtemporary
differencesareexpectedtoreverse.Avaluationallowanceisprovidedfordeferredtaxassetsifitismore-likely-than-notthattheCompanywillnot
realizethosetaxassetsthroughfutureoperations.

TheCompanyevaluatesandaccountsforuncertaintaxpositionsusingatwo-stepapproach.Recognition(stepone)occurswhenthe
Companyconcludesthatataxposition,basedsolelyonitstechnicalmerits,ismore-likely-than-nottobesustainableuponexamination.
Measurement(steptwo)determinestheamountofbenefitthatisgreaterthan50%likelytoberealizeduponultimatesettlementwithataxing
authoritythathasfullknowledgeofallrelevantinformation.De-recognitionofataxpositionthatwaspreviouslyrecognizedwouldoccurwhenthe
Companysubsequentlydeterminesthatataxpositionnolongermeetsthemore-likely-than-notthresholdofbeingsustained.

Foreign Currency
ThefunctionalcurrencyoftheCompany'sforeignsubsidiariesisgenerallythelocalcurrency.Thefinancialstatementsofthesesubsidiaries
aretranslatedintoU.S.dollarsusingperiod-endratesofexchangeforassetsandliabilities,historicalratesofexchangeforequity,andaveragerates
ofexchangeforrevenueandexpenses.Translationgains(losses)arerecordedinaccumulatedothercomprehensiveincome(loss)asacomponent
ofstockholdersequity.Unrealizedforeignexchangegainsandlossesduetore-measurementofmonetaryassetsandliabilitiesdenominatedinnon-
functionalcurrenciesaswellasrealizedforeignexchangegainsandlossesonforeignexchangetransactionsarerecordedinotherincome
(expense),netintheaccompanyingconsolidatedstatementsofoperations.

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Advertising Costs
Advertisingcostsareexpensedwhenincurredandareincludedinsalesandmarketingexpenseintheaccompanyingconsolidated
statementsofoperations.Advertisingexpensetotaled$119.7million,$46.6millionand$3.1millionfortheyearsendedDecember31,2015,2014
and2013respectively.

Comprehensive Loss
Comprehensivelossconsistsoftwocomponents,netlossandothercomprehensiveincome(loss).Othercomprehensiveincome(loss)refers
togainsandlossesthatarerecordedasanelementofstockholdersequityandareexcludedfromnetloss.TheCompanysothercomprehensive
income(loss)iscomprisedofunrealizedgainsorlossesonavailable-for-salesecurities,netoftax,andforeigncurrencytranslationadjustment.

Recent Accounting Pronouncements

InMay2014,theFASBissuedanewaccountingstandardupdateonrevenuerecognitionfromcontractswithcustomers.Thenewguidance
willreplaceallcurrentGAAPguidanceonthistopicandeliminateindustry-specificguidance.Accordingtothenewguidance,revenueisrecognized
whenpromisedgoodsorservicesaretransferredtocustomersinanamountthatreflectstheconsiderationforwhichtheCompanyexpectstobe
entitledinexchangeforthosegoodsorservices.InJuly2015,theFASBdecidedtodelaytheeffectivedateoftheguidancebyoneyearandpermit
earlyadoptionforannualandinterimperiodsbeginningafterDecember15,2016.Asaresultoftherevision,theguidancewillbeeffectiveforfiscal
yearsandinterimperiodswiththosefiscalyears,beginningafterDecember15,2017andcanbeappliedeitherretrospectivelytoeachperiod
presentedorasacumulative-effectadjustmentasofthedateofadoption.TheCompanyhasnotyetselectedatransitionmethodandisevaluating
theimpactofadoptingthisnewaccountingstandardupdateonthefinancialstatementsandrelateddisclosures.

InJune2014,theFASBissuedanewaccountingstandardupdateonstock-basedcompensationwhenthetermsofanawardprovidethata
performancetargetcouldbeachievedaftertherequisiteserviceperiod.Thenewguidancerequiresthataperformancetargetthataffectsvesting,
andthatcouldbeachievedaftertherequisiteserviceperiod,betreatedasaperformancecondition.Assuch,theperformancetargetshouldnotbe
reflectedinestimatingthegrant-datefairvalueoftheaward.Thisupdatefurtherclarifiesthatcompensationcostshouldberecognizedintheperiod
inwhichitbecomesprobablethattheperformancetargetwillbeachievedandshouldrepresentthecompensationcostattributabletotheperiodsfor
whichtherequisiteservicehasalreadybeenrendered.Thisguidancewillbeeffectiveforfiscalyears,andinterimperiodswithinthosefiscalyears,
beginningafterDecember15,2015andcanbeappliedeitherprospectivelyorretrospectivelytoallawardsoutstandingasofthebeginningofthe
earliestannualperiodpresentedasanadjustmenttoopeningretainedearnings.Earlyadoptionispermitted.Adoptionofthisnewaccounting
standardupdateisexpectedtohavenoimpacttotheCompanysfinancialstatements.

InFebruary2015,theFASBissuedanewaccountingstandardupdateonconsolidationanalysis.Thenewguidanceamendsthecurrent
consolidationguidancewithrespecttotheanalysisthatareportingentitymustperformtodeterminewhetheritshouldconsolidatecertaintypesof
legalentities.Thisguidancewillbeeffectiveforfiscalyears,andinterimperiodswithinthosefiscalyears,beginningafterDecember15,2015.Early
adoptionispermitted,buttheguidancemustbeappliedasofthebeginningofthefiscalyearcontainingtheadoptiondate.Adoptionofthisnew
accountingstandardupdateisnotexpectedtohaveamaterialimpactontheCompanysfinancialstatements.

InApril2015,theFASBissuedanewaccountingstandardupdateonthepresentationofdebtissuancecosts.Thenewguidancerequiresthe
debtissuancecostsrelatedtoarecognizeddebtliabilitybepresentedinthebalancesheetasadirectdeductionfromthecarryingamountofthat
debtliability.Thisguidancewillbeeffectiveforfiscalyears,andinterimperiodswithinthosefiscalyears,beginningafterDecember15,2015.Early
adoptionispermitted.AdoptionofthisnewaccountingstandardupdateisnotexpectedtohaveamaterialimpactontheCompanysfinancial
statements.

InSeptember2015,theFASBissuedanewaccountingstandardupdateonsimplifyingtheaccountingformeasurement-periodadjustmentsin
businesscombinations.Thenewguidancerequiresthattheadjustmentstoprovisionalamountsthatareidentifiedduringthemeasurementperiod
berecognizedinthereportingperiodwhentheadjustmentsaredetermined.Inaddition,theeffectonearningsofchangesasaresultofthechange
totheprovisionalamountsisrequiredtoberecordedinthesameperiodsfinancialstatements.Thisguidancewillbeeffectiveforfiscalyears,and
interimperiodswithinthosefiscalyears,beginningafterDecember15,2015.Earlyadoptionispermitted.Adoptionofthisnewaccountingstandard
updateisnotexpectedtohaveamaterialimpactontheCompanysfinancialstatements.

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InNovember2015,theFASBissuedanewaccountingstandardupdateonsimplifyingthepresentationofdeferredincometaxes.Thenew
guidancerequiresthatthedeferredtaxliabilitiesandassetsbeclassifiedasnoncurrentinthebalancesheet.Thisguidancewillbeeffectivefor
fiscalyears,andinterimperiodswithinthosefiscalyears,beginningafterDecember15,2016.Earlyadoptionispermitted.TheCompanyearly
adoptedthisguidanceprospectivelyfortheyearendedDecember31,2015.Theadoptionofthisguidanceresultedinareclassificationofthenet
currentdeferredtaxassetstononcurrentdeferredtaxassetsontheCompanysconsolidatedbalancesheetatDecember31,2015.Nopriorperiods
wereretroactivelyadjusted.

Note 3. Cash, Cash Equivalents and Short-term Investments

Cash,cashequivalentsandshort-terminvestmentsconsistofthefollowing(inthousands):

December 31, December 31,

2015 2014
Cashandcashequivalents:
Cash $ 300,363 $ 147,848
Moneymarketfunds 141,700 882,443
U.S.governmentandagencysecuritiesincluding
treasurybills 271,418
Corporatenotes,certificatesofdepositandcommercial
paper 469,408 209,015
Totalcashandcashequivalents $ 911,471 $ 1,510,724
Short-terminvestments:
U.S.governmentandagencysecuritiesincluding
treasurybills $ 1,156,418 $ 1,009,541
Corporatenotes,certificatesofdepositandcommercial
paper 1,427,459 1,101,613

Totalshort-terminvestments $ 2,583,877 $ 2,111,154

Thefollowingtablessummarizeunrealizedgainsandlossesrelatedtoavailable-for-salesecuritiesclassifiedasshort-terminvestmentsonthe
CompanysconsolidatedbalancesheetsasofDecember31,2015and2014(inthousands):

December 31, 2015

Gross Gross Gross Aggregated
Amortized Unrealized Unrealized Estimated
Costs Gains Losses Fair Value
U.S.governmentandagencysecuritiesincluding
treasurybills $ 1,158,479 $ 6 $ (2,067) $ 1,156,418
Corporatenotes,certificatesofdepositand
commercialpaper 1,429,374 21 (1,936) 1,427,459
Totalavailable-for-salesecuritiesclassifiedas
short-terminvestments $ 2,587,853 $ 27 $ (4,003) $ 2,583,877

December 31, 2014

Gross Gross Gross Aggregated
Amortized Unrealized Unrealized Estimated
Costs Gains Losses Fair Value
U.S.governmentandagencysecuritiesincluding
treasurybills $ 1,009,827 $ 8 $ (294) $ 1,009,541
Corporatenotes,certificatesofdepositand
commercialpaper 1,102,275 4 (666) 1,101,613
Totalavailable-for-salesecuritiesclassifiedas
short-terminvestments $ 2,112,102 $ 12 $ (960) $ 2,111,154

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Theavailable-for-salesecuritiesclassifiedascashandcashequivalentsontheconsolidatedbalancesheetsarenotincludedinthetables
aboveasthegrossunrealizedgainsandlosseswereimmaterialforeachperiodandtheircarryingvalueapproximatesfairvaluebecauseofthe
shortmaturityperiodoftheseinstruments.

Thecontractualmaturitiesofsecuritiesclassifiedasavailable-for-saleasofDecember31,2015wereasfollows(inthousands):

December 31,
2015
Aggregated
Estimated
Fair Value
Duewithinoneyear $ 1,912,531
Dueafteroneyearthroughtwoyears 671,346

Total $ 2,583,877

Therewerenosecuritiesinacontinuouslosspositionfor12monthsorlongerasofDecember31,2015and2014.

Investmentsarereviewedperiodicallytoidentifypossibleother-than-temporaryimpairments.Noimpairmentlosshasbeenrecordedonthe
securitiesincludedinthetablesaboveastheCompanybelievesthatthedecreaseinfairvalueofthesesecuritiesistemporaryandexpectsto
recoverupto(orbeyond)theinitialcostofinvestmentforthesesecurities.

Note 4. Fair Value Measurements

TheCompanymeasuresitscashequivalents,short-terminvestmentsandderivativefinancialinstrumentsatfairvalue.TheCompany
classifiesitscashequivalents,short-terminvestmentsandderivativefinancialinstrumentswithinLevel1orLevel2becausetheCompanyvalues
theseinvestmentsusingquotedmarketpricesoralternativepricingsourcesandmodelsutilizingmarketobservableinputs.Thefairvalueofthe
CompanysLevel1financialassetsisbasedonquotedmarketpricesoftheidenticalunderlyingsecurity.ThefairvalueoftheCompanysLevel2
financialassetsisbasedoninputsthataredirectlyorindirectlyobservableinthemarket,includingthereadily-availablepricingsourcesforthe
identicalunderlyingsecuritythatmaynotbeactivelytraded.

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ThefollowingtablessetforththefairvalueoftheCompanysfinancialassetsandliabilitiesmeasuredatfairvalueonarecurringbasisasof
December31,2015and2014basedonthethree-tierfairvaluehierarchy(inthousands):

December 31, 2015

Level 1 Level 2 Level 3 Total
Assets
Cashequivalents:
Moneymarketfunds $ 141,700 $ $ $ 141,700
Commercialpaper 419,110 419,110
Certificatesofdeposit 50,298 50,298
Short-terminvestments:
Treasurybills 29,953 29,953
U.S.governmentsecurities 537,168 537,168
Agencysecurities 589,297 589,297
Corporatenotes 693,593 693,593
Commercialpaper 229,965 229,965
Certificatesofdeposit 503,901 503,901
Othercurrentassets:
Foreigncurrencyforwardcontracts 6,804 6,804
Total $ 171,653 $ 3,030,136 $ $ 3,201,789
Liabilities
Othercurrentliabilities:
Foreigncurrencyforwardcontracts 3,005 3,005

Total $ $ 3,005 $ $ 3,005

December 31, 2014

Level 1 Level 2 Level 3 Total
Assets
Cashequivalents:
Moneymarketfunds $ 882,443 $ $ $ 882,443
Treasurybills 73,525 73,525
U.S.governmentsecurities 157,895 157,895
Agencysecurities 39,998 39,998
Corporatenotes 13,684 13,684
Commercialpaper 185,321 185,321
Certificatesofdeposit 10,010 10,010
Short-terminvestments:
Treasurybills 167,575 167,575
U.S.governmentsecurities 746,128 746,128
Agencysecurities 95,838 95,838
Corporatenotes 551,604 551,604
Commercialpaper 300,589 300,589
Certificatesofdeposit 249,420 249,420
Total $ 1,123,543 $ 2,350,487 $ $ 3,474,030

In2014,theCompanyissued$935.0millionprincipalamountof0.25%convertibleseniornotesduein2019(the2019Notes)and
$954.0millionprincipalamountof1.00%convertibleseniornotesduein2021(the2021Notesandtogetherwiththe2019Notes,theNotes)ina
privateplacementtoqualifiedinstitutionalbuyerspursuanttoRule144AundertheSecuritiesActof1933,asamended.RefertoNote9
ConvertibleSeniorNotesforfurtherdetailsontheNotes.Theestimatedfairvalueofthe2019Notesand2021Notesbasedonamarketapproach
asofDecember31,2015wasapproximately$797.4millionand$797.9millionrespectively,whichrepresentsaLevel2valuation.Theestimatedfair
valuewasdeterminedbasedontheestimatedoractualbidsandoffersoftheNotesinanover-the-countermarketonDecember31,2015.

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Derivative Financial Instruments
TheCompanyentersintoforeigncurrencyforwardcontractswithfinancialinstitutionstoreducetheriskthatitsearningsmaybeadversely
affectedbytheimpactofexchangeratefluctuationsonmonetaryassetsorliabilitiesdenominatedincurrenciesotherthanthefunctionalcurrencyof
asubsidiary.ThesecontractsdonotsubjecttheCompanytomaterialbalancesheetriskduetoexchangeratemovementsbecausegainsand
lossesonthesederivativesareintendedtooffsetgainsandlossesonthehedgedforeigncurrencydenominatedassetsandliabilities.Theseforeign
currencyforwardcontractsarenotdesignatedashedginginstruments.

TheCompanyrecognizesthesederivativeinstrumentsaseitherassetsorliabilitiesintheconsolidatedbalancesheetsatfairvaluebasedon
aLevel2valuation.TheCompanyrecordschangesinthefairvalue(i.e.,gainsorlosses)ofthederivativesasotherincome(expense),netinthe
consolidatedstatementsofoperations.Thenotionalprincipalofforeigncurrencyforwardcontractsoutstandingwasequivalentto$425.2millionat
December31,2015.TherewerenooutstandingforeigncurrencyforwardcontractsasofDecember31,2014.

Thefairvaluesofoutstandingderivativeinstrumentsfortheperiodspresentedonagrossbasisareasfollows(inthousands):

December 31,
Balance Sheet Location 2015
Assets
Foreigncurrencyforwardcontractsnot
designatedashedginginstruments Othercurrentassets $ 6,804
Liabilities
Foreigncurrencyforwardcontractsnot
designatedashedginginstruments Othercurrentliabilities 3,005

Total $ 3,799

TheCompanyrecognized$0.4milliongainsontheforeigncurrencycontractsintheyearendedDecember31,2015.TheCompanydidnot
haveanyderivativefinancialinstrumentsintheyearendedDecember31,2014.

Note 5. Property and Equipment, Net

Thefollowingtablepresentsthedetailofpropertyandequipment,netfortheperiodspresented(inthousands):

December 31, December 31,

2015 2014
Property and equipment, net
Equipment $ 720,421 $ 584,561
Furnitureandleaseholdimprovements 297,274 131,851
Capitalizedsoftware 211,241 82,052
Constructioninprogress 85,073 89,806
Total 1,314,009 888,270
Less:Accumulateddepreciationandamortization (578,710) (331,251)

Propertyandequipment,net $ 735,299 $ 557,019

Thegrosscarryingamountofpropertyandequipmentincludes$370.3millionand$411.3millionofserverandnetworkingequipment
acquiredundercapitalleasesasofDecember31,2015and2014,respectively.Theaccumulateddepreciationoftheequipmentundercapitalleases
totaled$226.9millionand$182.4millionasofDecember31,2015and2014,respectively.

Depreciationexpensetotaled$257.2million,$171.6millionand$94.4millionfortheyearsendedDecember31,2015,2014and2013,
respectively.Includedintheseamountsweredepreciationexpenseforserverandnetworkingequipmentacquiredundercapitalleasesinthe
amountof$118.7million,$108.7millionand$70.4millionfortheyearsendedDecember31,2015,2014and2013,respectively.

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Note 6. Goodwill and Intangible Assets

Thefollowingtablepresentsthegoodwillactivitiesfortheperiodspresented(inthousands):

Goodwill
BalanceasofDecember31,2013 $ 363,477
Gnipacquisition 104,747
Otheracquisitions 155,054
Foreigncurrencytranslationadjustment (708)
BalanceasofDecember31,2014 $ 622,570
TellApartacquisition 394,989
Otheracquisitions 106,198
Foreigncurrencytranslationadjustment (1,029)

BalanceasofDecember31,2015 $ 1,122,728

Foreachoftheperiodspresented,grossgoodwillbalanceequaledthenetbalancesincenoimpairmentchargeshavebeenrecorded.Refer
toNote8Acquisitions forfurtherdetailsaboutgoodwill.

Thefollowingtablepresentsthedetailofintangibleassetsfortheperiodspresented(inthousands):

Gross Carrying Accumulated Net Carrying

Value Amortization Value
December31,2015:
Patentsanddevelopedtechnologies $ 132,444 $ (43,991) $ 88,453
Publisherandadvertiserrelationships 75,300 (23,803) 51,497
Assembledworkforce 1,960 (1,714) 246
Otherintangibleassets 2,100 (1,281) 819
Total $ 211,804 $ (70,789) $ 141,015
December31,2014:
Patentsanddevelopedtechnologies $ 105,052 $ (23,165) $ 81,887
Publisherandadvertiserrelationships 32,000 (9,831) 22,169
Assembledworkforce 1,960 (1,457) 503
Otherintangibleassets 1,100 (648) 452

Total $ 140,112 $ (35,101) $ 105,011

Patentsanddevelopedtechnologiesareamortizedoveraperiodrangingfromonetoelevenyearsfromtherespectivepurchasedates.
Publisherandadvertiserrelationshipsareamortizedoveraperiodrangingfromtwotosixyears,andassembledworkforceandotherintangible
assetsareamortizedoveraperiodofonetofouryears.AmortizationexpenseassociatedwithintangibleassetsfortheyearsendedDecember31,
2015and2014was$54.7millionand$36.6million,respectively.DuringtheyearendedDecember31,2015,$19.0millioningrosscarryingvalue
andaccumulatedamortizationrelatedtofullyamortizedintangibleassetswaseliminated.

EstimatedfutureamortizationexpenseasofDecember31,2015isasfollows(inthousands):

YearsendingDecember31,
2016 $ 44,009
2017 29,283
2018 22,730
2019 15,136
2020 12,640
Thereafter 17,217

Total $ 141,015

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Note 7. Other Balance Sheet Components
Prepaid expenses and other current assets
Thefollowingtablepresentsthedetailofprepaidandothercurrentassetsfortheperiodspresented(inthousands):

December 31, December 31,

2015 2014
Deferredincometaxassets,net $ $ 25,882
Prepaidandother 247,750 189,639
$

Total 247,750 $ 215,521

Accrued and other current liabilities

Thefollowingtablepresentsthedetailofaccruedandothercurrentliabilitiesfortheperiodspresented(inthousands):

December 31, December 31,

2015 2014
Accruedcompensation $ 90,906 $ 68,000
Accruedsalesandmarketingexpenses 27,948 25,264
Accruedtaxliabilities 25,880 18,380
Deferredrevenue 23,674 18,679
Accruedpublisherandadnetworkcosts 23,486 27,996
Accruedother 91,898 69,914

Total $ 283,792 $ 228,233

Note 8. Acquisitions
2015 Acquisitions
InMay2015,theCompanycompleteditsacquisitionofTellApart,Inc.(TellApart),aprivatelyheldmarketingtechnologycompanywith
uniqueretargetingcapabilitiesheadquarteredinBurlingame,California.TheacquisitionisexpectedtobringthepowerofretargetingtotheCompany
tohelpadvertisersreachtheirusers.Underthetermsoftheacquisition,theCompanyagreedtopay$22.6millionincashandissueapproximately
12.2millionsharesofitscommonstockinconsiderationforalloftheissuedandoutstandingsharesofcapitalstockofTellApart.Inaddition,the
Companyagreedtoissueanaggregateof1.2millionsharesoftheCompanyscommonstockand1.3millionstockoptionsasaresultofassumed
TellApartequityawardsheldbyindividuals,whowillcontinuetoprovideservicestotheCompany.

TheacquisitionofTellAparthasbeenaccountedforasabusinesscombination.Thefairvalueofassetsacquiredandliabilitiesassumedat
theacquisitiondatewasbasedonapreliminaryvaluationandestimatesandassumptionsthataresubjecttochangewithinthemeasurementperiod.

Thefairvalueofthetotalconsiderationof$479.1million(paidinsharesoftheCompanyscommonstockhavingatotalfairvalueof
$456.5millionandcashof$22.6million)fortheacquisitionofTellApartwasallocatedtotheacquiredtangibleandintangibleassetsandassumed
liabilitiesbasedontheirestimatedfairvaluesatclosingasfollows:$21.4milliontodevelopedtechnology,$43.3milliontoadvertiserrelationships,
$2.1milliontotradename,$29.6milliontocashacquired,$19.7milliontoaccountreceivablesacquired,whichareexpectedtobesubstantially
collected,$2.2milliontoothertangibleassetsacquired,$11.8milliontoliabilitiesassumed,$22.4milliontodeferredtaxliabilityrecorded,andthe
excess$395.0millionofthepurchasepriceoverthefairvalueofnetassetsacquiredwasrecordedasgoodwill.Thisgoodwillisprimarilyattributable
totheexpectedsynergiesfrompotentialmonetizationopportunitiesandfromintegratingtheretargetingtechnologiesintotheCompanysmobile
platforms,andthevalueofacquiredtalent.GoodwillisnotdeductibleforU.S.incometaxpurposes.Developedtechnology,advertiserrelationships
andtradenameswillbeamortizedonastraight-linebasisovertheirestimatedusefullifeof12to72months.Thediscountedcashflowmethod,
whichcalculatesthefairvalueofanassetbasedonthevalueofcashflowsthattheassetisexpectedtogenerateinthefuture,wasusedtoestimate
thefairvalueoftheamortizableintangibleassetsacquired.

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DuringtheyearendedDecember31,2015,theCompanyacquiredfourothercompanies,whichwereaccountedforasbusiness
combinations.Thetotalpurchasepriceof$118.9million(paidinsharesoftheCompanyscommonstockhavingatotalfairvalueof$60.1million
andcashof$58.8million)fortheseacquisitionswasallocatedasfollows:$12.9milliontodevelopedtechnologies,$3.2milliontonettangibleassets
acquiredbasedontheirestimatedfairvalueontheacquisitiondate,$3.4milliontodeferredtaxliability,andtheexcess$106.2millionofthe
purchasepriceoverthefairvalueofnetassetsacquiredtogoodwill.Taxdeductiblegoodwillresultingfromcertainoftheseacquisitionswas
$4.1million.TheremaininggoodwillisnottaxdeductibleforU.S.incometaxpurposes.Developedtechnologieswillbeamortizedonastraight-line
basisovertheirestimatedusefullivesof12to60months.

InconnectionwithalloftheacquisitionscompletedduringtheyearendedDecember31,2015,theCompanyalsoagreedtopaycashand
issuesharesofitscommonstockwithatotalfairvalueupto$102.9million,whichistobepaidtocertainemployeesoftheacquiredentities
contingentupontheircontinuedemploymentwiththeCompany.TheCompanywillrecognizecompensationexpenserelatedtotheequity
considerationovertherequisiteserviceperiodsofupto48monthsfromtherespectiveacquisitiondatesonastraight-linebasis.Inaddition,the
Companywillrecognizeapproximately$37.2millionofstock-basedcompensationexpenseinrelationtoassumedstockoptionsovertheremaining
requisiteserviceperiodsofupto45monthsfromtherespectiveacquisitiondatesonastraight-linebasis,excludingthefairvalueoftheassumed
stockoptionsthatwasallocatedandrecordedaspartofthepurchasepricefortheportionoftheserviceperiodcompletedpriortotheclosingofthe
applicableacquisition.

TheresultsofoperationsforeachoftheseacquisitionshavebeenincludedintheCompanysconsolidatedstatementsofoperationssincethe
dateofacquisition.Actualandproformarevenueandresultsofoperationsfortheseacquisitionshavenotbeenpresentedbecausetheydonothave
amaterialimpacttotheconsolidatedrevenueandresultsofoperations,eitherindividuallyorinaggregate.

2014 Acquisitions
InMay2014,theCompanycompleteditsacquisitionofprivatelyheldGnip,Inc.(Gnip),aleadingproviderofsocialdataandanalytics
headquarteredinBoulder,Colorado.TheacquisitionwasmadetoallowtheCompanytofurtherenhanceitsdataanalyticscapabilities.Underthe
termsoftheacquisition,theCompanyagreedtopay$107.3millionincashandissueatotalof0.6millionsharesofitscommonstock,including
sharesofrestrictedstocksubjecttocontinuedemployment,inconsiderationforalloftheissuedandoutstandingsharesofcapitalstockofGnip.In
addition,theCompanyagreedtoissueupto0.4millionsharesoftheCompanyscommonstockasaresultofassumedGnipequityawardsheldby
individuals,whowillcontinuetoprovideservicestotheCompany.Thefairvalueofthetotalconsiderationof$134.1million,includingtheearned
portionofassumedstockoptionsandotherequityawards,wasallocatedtotheacquiredtangibleandintangibleassetsandassumedliabilities
basedontheirestimatedfairvaluesatclosingasfollows:$23.2milliontodevelopedtechnology,$9.3milliontocustomerrelationships,$9.1million
totangibleassetsacquired,$5.8milliontoliabilitiesassumed,$6.4milliontodeferredtaxliabilityrecorded,andtheexcess$104.7millionofthe
purchasepriceoverthefairvalueofnetassetsacquiredwasrecordedasgoodwill.Thisgoodwillisprimarilyattributabletothepotentialexpansion
andfuturedevelopmentoftheCompanysdataproducts,expectedsynergiesarisingfromtheacquisitionandthevalueofacquiredtalent.Goodwill
isnotdeductibleforU.S.incometaxpurposes.Bothdevelopedtechnologyandcustomerrelationshipswillbeamortizedonastraight-linebasisover
theirestimatedusefullifeof60months.Thediscountedcashflowmethod,whichcalculatesthefairvalueofanassetbasedonthevalueofcash
flowsthattheassetisexpectedtogenerateinthefuture,wasusedtoestimatethefairvalueoftheseintangibleassetsacquired.

DuringtheyearendedDecember31,2014,theCompanyacquiredeightothercompanies,whichwereaccountedforasbusiness
combinations.Thetotalpurchasepriceof$188.1million(paidinsharesoftheCompanyscommonstockhavingatotalfairvalueof$121.2million
andcashof$66.9million)fortheseacquisitionswaspreliminarilyallocatedasfollows:$28.1milliontodevelopedtechnologies,$1.6millionto
customerrelationships,$6.5milliontonettangibleassetsacquiredbasedontheirestimatedfairvalueontheacquisitiondate,$3.2millionto
deferredtaxliability,andtheexcess$155.1millionofthepurchasepriceoverthefairvalueofnetassetsacquiredtogoodwill.Taxdeductible
goodwillresultingfromcertainoftheseacquisitionswas$21.9millionasofDecember31,2014,theremainingamountsarenottaxdeductiblefor
U.S.incometaxpurposes.Developedtechnologiesandcustomerrelationshipswillbeamortizedonastraight-linebasisovertheirestimateduseful
livesof12to48months.

83


InconnectionwithalloftheacquisitionscompletedduringtheyearendedDecember31,2014,theCompanyalsoagreedtopaycashand
sharesoftheCompanyscommonstockwithatotalfairvalueupto$97.7million,whichistobepaidtocertainemployeesoftheacquiredentities
contingentupontheircontinuedemploymentwiththeCompany.Inaddition,thefairvalueofassumedstockoptionsdeterminedtobepartofpost-
acquisitionstock-basedcompensationamountedtoapproximately$16.9million.TheCompanyrecognizescompensationexpenseinrelationto
thesecashandequityconsiderationandassumedstockoptionsovertheremainingrequisiteserviceperiodsofupto48monthsfromtherespective
acquisitiondatesonastraight-linebasis.

TheresultsofoperationsforeachoftheseacquisitionshavebeenincludedintheCompanysconsolidatedstatementsofoperationssincethe
dateofacquisition.Actualandproformarevenueandresultsofoperationsfortheseacquisitionshavenotbeenpresentedbecausetheydonothave
amaterialimpacttotheconsolidatedrevenueandresultsofoperations,eitherindividuallyorinaggregate.

2013 Acquisitions
InJanuary2013,theCompanyacquiredCrashlytics,Inc.(Crashlytics),aprivately-heldcompanybasedinCambridge,Massachusetts,which
developedmobileapplicationcrashreportingandanalysissolutionsformobileapplicationdevelopers.TheacquisitionofCrashlyticshasbeen
accountedforasabusinesscombination.Thepurchasepriceof$38.2millionpaidintheCompanyscommonstockwasallocatedasfollows:
$5.0milliontodevelopedtechnology,$0.3milliontoassetsacquired,$0.3milliontodeferredtaxliabilityrecordedand$0.1milliontoliabilities
assumed,andtheexcess$33.3millionofthepurchasepriceoverthefairvalueofnetassetsacquiredwasrecordedasgoodwill.Goodwillis
primarilyattributabletotheCompanysabilitytofurtherimprovetheefficiencyandtheoverallperformanceofitsmobileplatformandthevalueof
acquiredtalent.ThisgoodwillisnotdeductibleforU.S.incometaxpurposes.Developedtechnologywillbeamortizedonastraight-linebasisoverits
estimatedusefullifeof12months.Underthetermsoftheacquisition,theCompanyhastherighttothereturnofsharesissuedtonon-employee
investorsifspecifiedperformanceconditionstiedtocertainkeyemployeescontinuedemploymentattheCompanyforoneyearaftertheacquisition
arenotmet.Thefairvalueofthesecontingentlyreturnablesharesof$6.7millionisincludedinthepurchasepriceandisclassifiedaspartof
stockholdersequityontheconsolidatedbalancesheets.Theperformanceconditionwasfullysatisfiedfortheseshares.

InFebruary2013,theCompanyacquiredBluefinLabs,Inc.(Bluefin),aprivately-heldcompanybasedinCambridge,Massachusetts,which
providedsocialtelevisionanalyticsservicestobrandadvertisers,agenciesandTVnetworks.TheacquisitionofBluefinhasbeenaccountedforasa
businesscombination.Thepurchasepriceof$67.3millionpaidintheCompanyscommonstockwasallocatedasfollows:$7.4milliontodeveloped
technology,$1.8milliontoassetsacquiredand$1.9milliontoliabilitiesassumedbasedontheirestimatedfairvalueontheacquisitiondate,andthe
excess$60.0millionofthepurchasepriceoverthefairvalueofnetassetsacquiredwasrecordedasgoodwill.Thisgoodwillisprimarilyattributable
tothepotentialforfutureproductoffering,abilitytofurtherenhancetheadvertiserexperienceinusingtheCompanysservicesandthevalueof
acquiredtalent.GoodwillisnotdeductibleforU.S.incometaxpurposes.Developedtechnologywillbeamortizedonastraight-linebasisoverits
estimatedusefullifeof18months.Underthetermsoftheacquisition,theCompanyhastherighttothereturnofsharesissuedtonon-employee
investorsifspecifiedperformanceconditionstiedtocertainkeyemployeescontinuedemploymentattheCompanyforoneyearaftertheacquisition
arenotmet.Thefairvalueofthesecontingentlyreturnablesharesof$7.9millionisincludedinthepurchasepriceandisclassifiedaspartof
stockholdersequityontheconsolidatedbalancesheets.Theperformanceconditionwasfullysatisfiedfortheseshares.

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InOctober2013,theCompanyacquired100%oftheownershipinterestinprivatelyheldMoPub,Inc.(MoPub),amobile-focusedadvertising
exchangeheadquarteredinSanFrancisco,California.Underthetermsoftheacquisition,alloftheissuedandoutstandingsharesofcapitalstockof
MoPub,includingsharesofrestrictedstocksubjecttocontinuedemployment,wereconvertedinto11.2millionsharesoftheCompanyscommon
stockand2.0millionsharesofunvestedrestrictedstock,andallequityawardstopurchasesharesofMoPubcommonstockheldbyindividuals,who
willcontinuetoprovideservicestotheCompany,wereconvertedintotherighttoreceiveanaggregateof1.2millionsharesoftheCompanysstock
options.Oftheaggregateacquisitionconsideration,approximately$218.8millionassociatedwiththecommonstockissuedandthefairvalue
attributabletotheportionofrestrictedstockandassumedstockoptionsforwhichserviceshadbeenrenderedasoftheclosingoftheacquisition
wasdeterminedtobetheaccountingpurchaseprice.Thepurchasepricewasallocatedtotheacquiredtangibleandintangibleassetsandassumed
liabilitiesbasedontheirestimatedfairvaluesatclosingasfollows:$21.1milliontopublisherandadvertiserrelationships,$12.9milliontodeveloped
technology,$1.1milliontotradename,$22.1milliontoaccountreceivablesacquired,$1.2milliontoothertangibleassetsacquired,$22.1millionto
publisherpaymentsliabilitiesassumed,$4.4milliontootherliabilitiesassumed,$5.5milliontodeferredtaxliabilityrecorded,andtheexcess
$192.4millionofthepurchasepriceoverthefairvalueofnetassetsacquiredwasrecordedasgoodwill.Thisgoodwillisprimarilyattributabletothe
potentialexpansionoftheadvertisingbusinessacrossthemobileecosystemthroughcontinuedinvestmentintheMoPubexchangeandexpected
synergiesarisingfromtheacquisition,theabilitytofurtherenhancetheadvertiserexperiencebybuildingreal-timebiddingintotheTwitterads
platformandthevalueofacquiredtalent.GoodwillisnotdeductibleforU.S.incometaxpurposes.Publisherandadvertiserrelationshipsand
developedtechnologywillbeamortizedonastraight-linebasisovertheirestimatedusefullifeof36months,andtradenamewasamortizedona
straight-linebasisoveritsestimatedusefullifeof24months.

DuringtheyearendedDecember31,2013,theCompanycompletedacquisitionsofcertainintangibleassetsforthetotalpurchasepriceof
$38.5million.Thesetransactionswereaccountedforasapurchaseofassetsand,accordingly,thetotalpurchasepricewasallocatedtothe
identifiableintangibleassetsacquiredbasedontheirrespectivefairvaluesontheacquisitiondate.Asaresultofthesetransactions,theCompany
recordedintangibleassetsof$38.5million,whichwascomprisedof$36.0millionofpatents,$2.0millionofassembledworkforceand$0.5millionof
developedtechnology.Thepatents,developedtechnologyandassembledworkforcewillbeamortizedonastraight-linebasisovertheirestimated
usefullivesof1to11years.

DuringtheyearendedDecember31,2013,theCompanycompletedacquisitionsoffiveadditionalcompanies,whichwerenotindividually
significantandaccountedforasbusinesscombinations.Thetotalpurchasepricefortheseacquisitionsof$13.2million(paidinsharesofthe
Companyscommonstockvaluedatapproximately$7.4millionandcashconsiderationof$5.8million)wasprimarilyallocatedto$4.5millionof
developedtechnologyand$0.2millionofassumedliabilitiesbasedontheirestimatedfairvalueontheacquisitiondate,andtheexcess$8.9million
ofthepurchasepriceoverthefairvalueofnetassetsacquiredwasrecordedasgoodwill.Goodwillrecordedinrelationtotheseacquisitionsis
primarilyattributabletoexpectedsynergiesandthevalueofacquiredassembledworkforce.Twooftheacquisitionsresultedintax-deductible
goodwillof$7.3millionforU.S.incometaxpurposes.Developedtechnologywillbeamortizedonastraight-linebasisovertheirestimateduseful
livesof24to36months.

Inrelationtothe2013acquisitions,theCompanyalsoagreedtopayupto$83.1millionofequityconsiderationwhichwastobepaidtocertain
employeesoftheacquiredentitiescontingentupontheircontinuedemploymentwiththeCompany.TheCompanyrecognizescompensation
expenserelatedtotheequityconsiderationovertherequisiteservicesperiodsofupto48monthsfromtherespectiveacquisitiondatesonastraight-
linebasis.TheCompanyalsograntedtocontinuingemployeesoptionstopurchaseatotalof2.0millionsharesofcommonstockinexchangefor
theiroutstandingoptionstopurchasethesharesoftheacquiredentitiesincluding1.2millionsharesgrantedinconnectionwiththeacquisitionof
MoPubdisclosedabove.Excludingthefairvalueofthestockoptionsthatwasallocatedandrecordedaspartofthepurchasepricefortheportionof
theserviceperiodcompletedpre-acquisition,theCompanywillrecognizeapproximately$24.5millionofstock-basedcompensationexpensein
relationtothesestockoptionsovertheremainingrequisiteserviceperiodsofupto48monthsfromtherespectiveacquisitiondatesonastraight-line
basis.

85


Forbusinesscombinationsclosedin2013exceptfortheacquisitionofMoPub,theCompanyhasconsideredallpotentialidentifiable
intangibleassetsanddeterminedthatitwasnotappropriatetoallocatematerialamountstoidentifiableintangibleassetsotherthanacquired
developedtechnologies.Invaluingtheseacquireddevelopedtechnologies,theCompanydeterminedthatneithertheincomeapproachnorthe
marketapproachwasrelevant,and,consistentwithamarketparticipantapproachthatwouldweighamakeversusbuydecisionwhen
consideringtheacquisitionofaparticularincrementaltechnology,appliedthecostapproachindeterminingtheamountofpurchasepriceallocated
toacquireddevelopedtechnology.Thecostapproachusestheconceptofreproductioncostasanindicatoroffairvalue.Thepremiseofthecost
approachisthataprudentinvestorwouldpaynomoreforanassetthantheamountforwhichtheassetcouldbereplacedwithanewone.
Reproductioncostreferstothecostincurredtoreproducetheassetusingtheexactsamespecifications.Inordertoapplythecostmethodto
determinethefairvalueofeachacquireddevelopedtechnology,theCompanyconsideredthefollowing:(i)theestimateddevelopmenthoursor
equivalentofpersonmonthsrequiredtoreproducethetechnology,(ii)therelatedlaborcostand(iii)anexpectedmarketparticipantprofitmargin.

TheCompanyutilizedvariousformsoftheincomeapproachtomeasurethefairvalueofthepublisherrelationships,advertiserrelationships,
developedtechnology,andtradenameacquiredintheacquisitionofMoPub.Forthepublisherrelationships,fairvaluewasdeterminedbasedonthe
multi-periodexcessearningsapproachwhichcalculatesthepresentvalueoftheafter-taxcashflowsattributabletotheintangibleassetonly.Forthe
advertiserrelationships,fairvaluewasdeterminedbasedonthedistributormethodwhichreliesuponmarket-baseddistributordatatoreasonably
isolatetherevenue,earnings,andcashflowattributabletosalesefforts.Forthedevelopedtechnologyandtradenamesacquired,fairvaluewas
determinedbasedontherelieffromroyaltymethod,whichcalculatesthepresentvalueoftheafter-taxroyaltysavingsattributabletoowningthe
intangibleassets.

Forcertaintransactionsthatwereconsideredassetacquisitions,theCompanyidentifiedassembledworkforceasanintangibleasset.The
Companyusedthecostapproachtovaluetheassembledworkforce.Thecostapproachtakesintoconsiderationtherelevantcoststoreplacethe
workforce,whichincluderecruitingandtrainingcostsrequireduntiltheemployeesbecomefullyintegrated.

TheresultsofoperationsforeachoftheseacquisitionshavebeenincludedintheCompanysconsolidatedstatementsofoperationssincethe
dateofacquisition.Revenueandlossfromoperationsarisingfromtheacquisitionscompletedin2013thatareincludedintheCompanys
consolidatedstatementsofoperationsfor2013were$9.6millionand$42.3million,respectively.

Note 9. Convertible Notes

InSeptember2014,theCompanyissued$900.0millionprincipalamountof2019Notesand$900.0millionprincipalamountof2021Notesin
aprivateplacementtoqualifiedinstitutionalbuyerspursuanttoRule144AundertheSecuritiesActof1933,asamended.InOctober2014,pursuant
totheexerciseoftheoverallotmentoptionbytheinitialpurchasers,theCompanyissuedanadditional$35.0millionprincipalamountof2019Notes
and$54.0millionprincipalamountof2021Notes.Thetotalnetproceedsfromthisofferingwereapproximately$1.86billion,afterdeducting
$28.3millionofinitialpurchasersdiscountand$0.5milliondebtissuancecostsinconnectionwiththe2019Notesandthe2021Notes.

Theinterestratesarefixedat0.25%and1.00%perannumandarepayablesemi-annuallyinarrearsonMarch15andSeptember15ofeach
year,commencingonMarch15,2015.DuringtheyearsendedDecember31,2015and2014,theCompanyrecognized$5.1millionand
$1.4million,respectively,ofinterestexpenserelatedtotheamortizationofinitialpurchasersdiscountanddebtissuancecosts,and$11.9million
and$3.3million,respectively,ofaccruedcouponinterestexpense.

86


Each$1,000ofprincipaloftheseNoteswillinitiallybeconvertibleinto12.8793sharesoftheCompanyscommonstock,whichisequivalentto
aninitialconversionpriceofapproximately$77.64pershare,subjecttoadjustmentupontheoccurrenceofspecifiedevents.Holdersofthesenotes
mayconverttheirnotesattheiroptionatanytimeuntilcloseofbusinessonthesecondscheduledtradingdayimmediatelyprecedingtherelevant
maturitydatewhichisMarch15,2019forthe2019NotesandMarch15,2021forthe2021Notes.Further,holdersofeachofthesenotesmay
converttheirnotesattheiroptionpriortotherespectivedatesabove,onlyunderthefollowingcircumstances:
1) duringanycalendarquartercommencingafterthecalendarquarterendingonDecember31,2014(andonlyduringsuch
calendarquarters),ifthelastreportedsalepriceofTwitterscommonstockforatleast20tradingdays(whetherornot
consecutive)duringaperiodof30consecutivetradingdaysendingonthelasttradingdayoftheimmediatelyprecedingcalendar
quarterisgreaterthanorequalto130%oftheconversionpricefortherelevantseriesofnotesoneachapplicabletradingday;
2) duringthefivebusinessdayperiodafteranyfiveconsecutivetradingdayperiod(themeasurementperiod)inwhichthetrading
price(asdefinedintherelatedIndenture)per$1,000principalamountof2019notesor2021notes,asapplicable,foreach
tradingdayofthemeasurementperiodwaslessthan98%oftheproductofthelastreportedsalepriceofTwitterscommon
stockandtheconversionrateforthenotesoftherelevantseriesoneachsuchtradingday;or
3) upontheoccurrenceofcertainspecifiedcorporateevents.

Uponconversionofthe2019Notesand2021Notes,theCompanywillpayordeliver,asthecasemaybe,cash,sharesofitscommonstock
oracombinationofcashandsharesofitscommonstock,attheCompanyselection.IftheCompanysatisfiesitsconversionobligationsolelyincash
orthroughpaymentanddelivery,asthecasemaybe,ofacombinationofcashandsharesofitscommonstock,theamountofcashandsharesof
commonstock,ifany,dueuponconversionwillbebasedonadailyconversionvalue(asdescribedherein)calculatedonaproportionatebasisfor
eachtradingdayina30tradingdayobservationperiod.

Ifafundamentalchange(asdefinedintherelevantindenturegoverningtheapplicableseriesofNotes)occurspriortothematuritydate,
holdersofthe2019Notesand2021NotesmayrequiretheCompanytorepurchasealloraportionoftheirnotesforcashatarepurchaseprice
equalto100%oftheprincipalamountofthenotes,plusanyaccruedandunpaidinterestto,butexcluding,therepurchasedate.Inaddition,if
specificcorporateeventsoccurpriortotheapplicablematuritydate,theCompanywillberequiredtoincreasetheconversionrateforholderswho
electtoconverttheirnotesincertaincircumstances.

Inaccordancewithaccountingguidanceonembeddedconversionfeatures,theCompanyvaluedandbifurcatedtheconversionoption
associatedwiththe2019Notesand2021Notesfromtherespectivehostdebtinstrument,whichisreferredtoasdebtdiscount,andinitiallyrecorded
theconversionoptionof$222.8millionforthe2019Notesand$283.3millionforthe2021Notesinstockholdersequity.Theresultingdebtdiscounts
onthe2019Notesand2021Notesarebeingamortizedtointerestexpenseataneffectiveinterestrateof5.75%and6.25%,respectively,overthe
contractualtermsofthenotes.TheCompanyallocated$0.1millionofdebtissuancecoststotheequitycomponent,andtheremainingdebtissuance
costsof$0.4millionarebeingamortizedtointerestexpense.

DuringtheyearsendedDecember31,2015and2014,theCompanyrecognized$74.2millionand$18.8million,respectively,ofinterest
expenserelatedtotheamortizationofthedebtdiscount.AsofDecember31,2015,thenetcarryingvalue,netoftheinitialpurchasersdiscountand
debtdiscount,of2019Notesand2021Noteswas$753.0millionand$702.1million,respectively.

87


TheNotesconsistedofthefollowing(inthousands):

December 31, 2015 December 31, 2014

2019 Notes 2021 Notes 2019 Notes 2021 Notes
Principalamounts:
Principal $ 935,000 $ 954,000 $ 935,000 $ 954,000
Unamortizedinitialpurchasers'discountanddebtdiscount (181,994) (251,911) (225,104) (287,876)
(1)
Netcarryingamount $ 753,006 $ 702,089 $ 709,896 $ 666,124
Carryingamountoftheequitycomponent(2)

$ 222,826 $ 283,283 $ 222,826 $ 283,283

(1) IncludedintheconsolidatedbalancesheetswithinconvertiblenotesandamortizedovertheremaininglivesoftheNotes.
(2) Includedintheconsolidatedbalancesheetswithinadditionalpaid-incapital.

AsofDecember31,2015,theremaininglifeofthe2019Notesand2021Notesisapproximately44monthsand68months,respectively.

ConcurrentlywiththeofferingoftheseNotesinSeptemberandOctober2014,theCompanyenteredintoconvertiblenotehedgetransactions
withcertainbankcounterpartieswherebytheCompanyhastheoptiontopurchaseinitially(subjecttoadjustmentforcertainspecifiedevents)atotal
ofapproximately24.3millionsharesofitscommonstockatapriceofapproximately$77.64pershare.Thetotalcostoftheconvertiblenotehedge
transactionswas$407.2million.Inaddition,theCompanysoldwarrantstocertainbankcounterpartieswherebytheholdersofthewarrantshavethe
optiontopurchaseinitially(subjecttoadjustmentforcertainspecifiedevents)atotalofapproximately24.3millionsharesoftheCompanyscommon
stockatapriceof$105.28.TheCompanyreceived$289.3millionincashproceedsfromthesaleofthesewarrants.

Takentogether,thepurchaseoftheconvertiblenotehedgesandthesaleofwarrantsareintendedtooffsetanyactualdilutionfromthe
conversionofthesenotesandtoeffectivelyincreasetheoverallconversionpricefrom$77.64to$105.28pershare.Asthesetransactionsmeet
certainaccountingcriteria,theconvertiblenotehedgesandwarrantsarerecordedinstockholdersequityandarenotaccountedforasderivatives.
Thenetcostincurredinconnectionwiththeconvertiblenotehedgeandwarranttransactionswasrecordedasareductiontoadditionalpaid-in
capitalintheconsolidatedbalancesheetasofDecember31,2014.

Note 10. Net Loss per Share

TheCompanycomputesnetlosspershareofcommonstockinconformitywiththetwo-classmethodrequiredforparticipatingsecurities.The
Companyconsidersthesharesissuedupontheearlyexerciseofstockoptionssubjecttorepurchasetobeparticipatingsecurities,becauseholders
ofsuchshareshavenon-forfeitabledividendrightsintheeventadividendispaidoncommonstock.Priortotheirconversiontocommonstock,the
CompanyalsoconsideredallseriesoftheCompanysredeemableconvertiblepreferredstockandconvertiblepreferredstocktobeparticipating
securitiesastheholdersofthepreferredstockwereentitledtoreceiveanoncumulativedividendonaparipassubasisintheeventthatadividend
waspaidoncommonstock.Theholdersofallseriesofconvertiblepreferredstockandtheholdersofearlyexercisedsharessubjecttorepurchase
donothaveacontractualobligationtoshareinthelossesoftheCompany.Assuch,theCompanysnetlossesfortheyearsendedDecember31,
2015,2014and2013werenotallocatedtotheseparticipatingsecurities.

88


Basicnetlosspershareiscomputedbydividingtotalnetlossattributabletocommonstockholdersbytheweighted-averagecommonshares
outstanding.Theweighted-averagecommonsharesoutstandingisadjustedforsharessubjecttorepurchasesuchasunvestedrestrictedstock
grantedtoemployeesinconnectionwithacquisitions,contingentlyreturnablesharesandescrowedsharessupportingindemnificationobligations
thatareissuedinconnectionwithacquisitionsandunvestedstockoptionsexercised.Dilutednetlosspershareiscomputedbydividingthenetloss
attributabletocommonstockholdersbytheweighted-averagenumberofcommonsharesoutstandingincludingpotentialdilutivecommonstock
instruments.IntheyearsendedDecember31,2015,2014and2013,theCompanyspotentialcommonstockinstrumentssuchasstockoptions,
RSUs,sharestobepurchasedunderthe2013EmployeeStockPurchasePlan,sharessubjecttorepurchases,conversionfeatureoftheNotesand
thewarrantswerenotincludedinthecomputationofdilutedlosspershareastheeffectofincludingthesesharesinthecalculationwouldhavebeen
anti-dilutive.

Thefollowingtablepresentsthecalculationofbasicanddilutednetlosspershareforperiodspresented(inthousands,exceptpershare
data).

Year Ended December 31,

2015 2014 2013
Netloss $ (521,031 ) $ (577,820 ) $ (645,323)
Basicshares:
Weighted-averagecommonshares 670,132 613,944 196,675
outstanding
Weighted-averagerestrictedstock
subjecttorepurchase (7,708) (8,954) (7,165)
Weighted-averagesharesusedtocompute
basicnetlosspershare 662,424 604,990 189,510
Dilutedshares:
Weighted-averagesharesusedtocompute
dilutednetlosspershare 662,424 604,990 189,510
Netlosspershareattributabletocommon
stockholders:
Basic $ (0.79) $ (0.96) $ (3.41)
Diluted $ (0.79) $ (0.96) $ (3.41)

Thefollowingnumberofpotentialcommonsharesattheendofeachperiodwereexcludedfromthecalculationofdilutednetlosspershare
attributabletocommonstockholdersbecausetheireffectwouldhavebeenanti-dilutivefortheperiodspresented(inthousands):

Year Ended December 31,

2015 2014 2013
RSUs 43,170 64,135 95,723
Warrants 24,329 24,329 117
Stockoptions 11,177 20,420 42,246

Sharessubjecttorepurchaseandothers 9,146 9,335 12,882

SincetheCompanyexpectstosettletheprincipalamountoftheoutstandingNotesincash,theCompanyusesthetreasurystockmethodfor
calculatinganypotentialdilutiveeffectoftheconversionspreadondilutednetincomepershare,ifapplicable.Theconversionspreadof24.3million
shareswillhaveadilutiveimpactondilutednetincomepershareofcommonstockwhentheaveragemarketpriceoftheCompanyscommonstock
foragivenperiodexceedstheconversionpriceof$77.64persharefortheNotes.

Iftheaveragemarketpriceofthecommonstockexceedstheexercisepriceofthewarrants,$105.28,thewarrantswillhaveadilutiveeffect
ontheearningspershareassumingthattheCompanyisprofitable.Sincetheaveragemarketpriceofthecommonstockisbelow$105.28,the
warrantsareanti-dilutive.

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Note 11. Preferred Stock
Priortotheinitialpublicoffering,theCompanyhadoutstandingsharesofClassAjuniorpreferredstockandseveralseriesofconvertible
preferredstock.Eachshareofpreferredstockwasconvertibletooneshareofcommonstock.UpontheclosingoftheCompanysinitialpublic
offeringonNovember13,2013,allsharesofoutstandingredeemableconvertiblepreferredstockandoutstandingconvertiblepreferredstockwere
automaticallyconvertedtosharesoftheCompanyscommonstock.

TheCompanyhastheauthoritytoissueupto200,000,000sharesofpreferredstockandtodeterminetheprice,rights,preferences,
privilegesandrestrictions,includingvotingrights,ofthoseshareswithoutanyfurthervoteoractionbythestockholders.AsofDecember31,2015
and2014,therewasnopreferredstockoutstanding.

Note 12. Common Stock and Stockholders Equity

Common Stock
AsofDecember31,2015,theCompanyisauthorizedtoissue5.0billionsharesof$0.000005parvaluecommonstockinaccordancewiththe
CertificateofIncorporation,asamendedandrestated.

Eachshareofcommonstockisentitledtoonevote.Theholdersofcommonstockarealsoentitledtoreceivedividendswheneverfundsare
legallyavailableandwhenandifdeclaredbytheBoardofDirectors,subjecttothepriorrightsofholdersofallclassesofstockoutstanding.Asof
December31,2015,nodividendshavebeendeclared.

Restricted Common Stock

TheCompanyhasgrantedrestrictedcommonstocktocertaincontinuingemployeesinconnectionwiththeacquisitions.Vestingofthisstock
isdependentontherespectiveemployeescontinuedemploymentattheCompanyduringtherequisiteserviceperiod,whichisuptofouryearsfrom
theissuancedate,andtheCompanyhastherighttorepurchasetheunvestedsharesuponterminationofemployment.Thefairvalueofthe
restrictedcommonstockissuedtoemployeesisrecordedascompensationexpenseonastraight-linebasisovertherequisiteserviceperiod.

TheactivitiesfortherestrictedcommonstockissuedtoemployeesfortheyearendedDecember31,2015aresummarizedasfollows(in
thousands,exceptpersharedata):

Weighted-Average
Number of Grant-Date Fair
Shares Value Per Share
UnvestedrestrictedcommonstockatDecember31,2014 4,955 $ 25.62
Granted 2,467 $ 40.00
Vested (2,534 ) $ 24.31
Canceled (348 ) $ 29.34

UnvestedrestrictedcommonstockatDecember31,2015 4,540 $ 33.88

Equity Incentive Plans

TheCompanys2013EquityIncentivePlanbecameeffectiveuponthecompletionoftheCompanysinitialpublicofferingandservesasthe
successortothe2007EquityIncentivePlan.Initially,68.3millionshareswerereservedunderthe2013EquityIncentivePlanandanysharessubject
tooptionsorothersimilarawardsgrantedunderthe2007EquityIncentivePlanthatexpire,areforfeited,arerepurchasedbytheCompanyor
otherwiseterminateunexercisedwillbecomeavailableunderthe2013EquityIncentivePlan.ThenumberofsharesoftheCompanyscommon
stockavailableforissuanceunderthe2013EquityIncentivePlanwereandwillbeincreasedonthefirstdayofeachfiscalyearbeginningwiththe
2014fiscalyear,inanamountequaltotheleastof(i)60,000,000Shares,(ii)5%oftheoutstandingSharesonthelastdayoftheimmediately
precedingfiscalyearor(iii)suchnumberofSharesdeterminedbytheCompanysBoardofDirectors.AsofDecember31,2015,thetotalnumberof
optionsandRSUsoutstandingunderthe2013EquityIncentivePlanwas28.9millionshares,and113.1millionshareswereavailableforfuture
issuance.Therewere23.3millionsharesofoptionsandRSUsoutstandingunderthe2007EquityIncentivePlanasofDecember31,2015.No
additionalshareswillbeissuedunderthe2007EquityIncentivePlan.OptionsgrantedundertheCompanysEquityIncentivePlansgenerallyexpire
10yearsafterthegrantdate.TheCompanyissuesnewsharestosatisfystockoptionexercises.

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Underthe2007EquityIncentivePlan,RSUsgrantedtodomesticandinternationalemployeespriortoFebruary2013(Pre-2013RSUs)vest
uponthesatisfactionofbothaserviceconditionandaperformancecondition.Theserviceconditionfortheseawardsisgenerallysatisfiedoverfour
years.RSUsgrantedtodomesticemployeesstartinginFebruary2013(Post-2013RSUs)arenotsubjecttoaperformanceconditioninorderto
vest.ThemajorityofPost-2013RSUsvestoveraserviceperiodoffouryears.Pursuanttothetermsofthe2007EquityIncentivePlanandthe2013
EquityIncentivePlan,thesharesunderlyingPost-2013RSUsthatsatisfytheserviceconditionaretobedeliveredtoholdersnolaterthanthe
fifteenthdayofthethirdmonthfollowingtheendofthecalendaryeartheserviceconditionissatisfied,oriflater,theendoftheCompanystaxyear.
TheCompanyundertookanetsettlementofvestedRSUsheldbytheexecutiveofficersuponsettlementoftheirPre-2013RSUsin2014,withheld
sharesandremittedincometaxonbehalfoftheapplicableexecutiveofficersof$17.1millionincashattheapplicableminimumstatutoryratesin
theyearendedDecember31,2014.ThesharesthatwerewithheldbytheCompanyasaresultofthenetsettlementofRSUsarenolonger
consideredissuedandoutstanding.

TheCompanyalsoassumedstockoptionsofacquiredentitiesinconnectionwithcertainacquisitions.Whiletherespectivestockplanswere
terminatedontheclosingofeachacquisition,theycontinuetogovernthetermsofstockoptionsassumedintherespectiveacquisition.

Employee Stock Purchase Plan

OnNovember7,2013,theCompanys2013EmployeeStockPurchasePlan(theESPP)becameeffective.TheESPPallowseligible
employeestopurchasesharesoftheCompanyscommonstockatadiscountthroughpayrolldeductionsofupto15%oftheireligiblecompensation,
subjecttoanyplanlimitations.TheESPPprovidesfortwelve-monthofferingperiods,andeachofferingperiodwillincludepurchaseperiods,which
willbetheapproximatelysix-monthperiodcommencingwithoneexercisedateandendingwiththenextexercisedate.Employeesareableto
purchasesharesat85%ofthelowerofthefairmarketvalueoftheCompanyscommonstockonthefirsttradingdayoftheofferingperiodoronthe
exercisedate.Thenumberofsharesavailableforsaleunderthe2013EmployeeStockPurchasePlanwereandwillbeincreasedannuallyonthe
firstdayofeachfiscalyear,equaltotheleastofi)11.3millionshares;ii)1%oftheoutstandingsharesoftheCompanyscommonstockasofthe
lastdayoftheimmediatelyprecedingfiscalyear;oriii)suchotheramountasdeterminedbytheBoardofDirectors.

DuringtheyearsendedDecember31,2015and2014,employeespurchasedanaggregateof1.5millionand1.9millionshares,respectively,
underthisplanataweightedaveragepriceof$25.78and$22.47pershare,respectively.

Stock Option Activity

AsummaryofstockoptionactivityfortheyearendedDecember31,2015isasfollows(inthousands,exceptyearsandpersharedata):

Options Outstanding
Weighted-
Weighted- Average
Average Remaining
Number of Exercise Contractual Life Aggregate
Shares Price Per Share (in years) Intrinsic Value
OutstandingatDecember31,2014 20,420 $ 3.33 5.78 $ 667,538
Optionsgrantedandassumedinconnectionwith 2,212 $ 12.34
acquisitions
Optionsexercised (10,992) $ 1.58
Optionscanceled (463) $ 10.05
OutstandingatDecember31,2015 11,177 $ 6.55 5.86 $ 199,576
Vestedandexpectedtovestat
December31,2015(1) 10,383 $ 5.56 5.65 $ 192,696

ExercisableatDecember31,2015 8,526 $ 3.49 5.13 $ 170,483

(1) Theexpectedtovestoptionsaretheresultofapplyingpre-vestingforfeiturerateassumptionstounvestedoptionsoutstanding.

91


Theaggregateintrinsicvalueinthetableaboverepresentsthedifferencebetweenthefairvalueofcommonstockandtheexercisepriceof
outstanding,in-the-moneystockoptions.

ThetotalintrinsicvaluesofstockoptionsexercisedintheyearsendedDecember31,2015,2014and2013were$337.2million,
$872.8millionand$123.7million,respectively.

RSU Activity
ThefollowingtablesummarizestheactivityrelatedtotheCompanysRSUsfortheyearendedDecember31,2015.Forpurposesofthis
table,vestedRSUsrepresentthesharesforwhichtheserviceconditionhadbeenfulfilledasofeachrespectivedate(inthousands,exceptpershare
data):

RSUs Outstanding
Weighted-
Average Grant-
Date Fair Value
Shares Per Share
UnvestedandoutstandingatDecember31,2014 64,135 $ 29.08
Granted 18,493 $ 35.45
Vested (24,002) $ 27.58
Canceled (15,456) $ 29.60

UnvestedandoutstandingatDecember31,2015 43,170 $ 32.46

ThetotalfairvalueofRSUsvestedduringtheyearsendedDecember31,2015andDecember31,2014wasapproximately$849.8million
and$2.02billion,respectively.

Stock-Based Compensation Expense

Stock-basedcompensationexpenseisallocatedbasedonthecostcentertowhichtheawardholderbelongs.Totalstock-based
compensationexpensebyfunctionfortheyearsendedDecember31,2015,2014and2013isasfollows(inthousands):

Year Ended December 31,

2015 2014 2013
Costofrevenue $ 40,705 $ 50,536 $ 50,942
Researchanddevelopment 401,537 360,726 379,913
Salesandmarketing 156,904 157,263 114,440
Generalandadministrative 82,972 63,072 55,072

Total $ 682,118 $ 631,597 $ 600,367

UponcompletionoftheCompanysinitialpublicofferinginNovember2013,theCompanybeganrecordingstock-basedcompensation
expenserelatedtoPre-2013RSUsbecausethesatisfactionoftheperformanceconditionforvestingbecameprobable.Duringtheyearended
December31,2013,theamountofstock-basedcompensationexpenserecordedinrelationtoPre-2013RSUstotaledapproximately$433.5million
andwascomprisedof$405.9millionofexpenseaccumulateduntiltheeffectivedateoftheinitialpublicofferingforawardsvestedand$27.6million
ofsubsequentrecognitionofexpenseduringtheyearasadditionalPre-2013RSUscontinuedtovest.DuringtheyearendedDecember31,2014,
theCompanyrecorded$84.4millionofexpenseinrelationtoPre-2013RSUsasthestock-basedcompensationcontinuedtobeamortizedfor
outstandingPre-2013RSUsonanacceleratedbasis.

During2014,theCompanymodifiedthetermsofstockoptionsandRSUsforcertainemployeesupontheirterminationorchangein
employmentstatus.TheCompanyrecordedincrementalstock-basedcompensationinrelationtothemodificationofstock-basedawardsof
approximately$32.6millionintheyearendedDecember31,2014.Theamountofincrementalstock-basedcompensationrecordedinrelationtothe
modificationofstock-basedawardswasnotmaterialfortheyearsendedDecember31,2015and2013,respectively.

Incometaxbenefitsrecognizedforstock-basedcompensationarrangementsduringtheyearsendedDecember31,2015,2014and2013
werenotmaterial.

92


TheCompanycapitalized$50.3million,$40.8millionand$13.6millionofstock-basedcompensationexpenseassociatedwiththecostfor
developingsoftwareforinternaluseintheyearsendedDecember31,2015,2014and2013,respectively.

AsofDecember31,2015,therewas$1.25billionofunamortizedstock-basedcompensationexpenserelatedtounvestedawardswhichis
expectedtoberecognizedoveraweighted-averageperiodof2.51years.

Note 13. Income Taxes

Thedomesticandforeigncomponentsofpre-taxlossfortheyearsendedDecember31,2015,2014and2013areasfollows(inthousands):

Year Ended December 31,

2015 2014 2013
Domestic $ (201,628 ) $ (164,854 ) $ (549,397)
Foreign (331,677) (413,497) (97,749)
Lossbeforeincometaxes $ (533,305) $ (578,351) $ (647,146)

ThecomponentsofthebenefitfromincometaxesfortheyearsendedDecember31,2015,2014and2013areasfollows(inthousands):

Year Ended December 31,

2015 2014 2013
Current:
Federal $ $ $
State 1,226 720 857
Foreign 14,625 8,358 6,222
Totalcurrentprovisionforincometaxes 15,851 9,078 7,079
Deferred:
Federal (23,208) (8,972) (5,412)
State (852) (128) (453)
Foreign (4,065) (509) (3,037)
Totaldeferredbenefitforincometaxes (28,125) (9,609) (8,902)
Benefitfromincometaxes $ (12,274) $ (531) $ (1,823)

ThefollowingisareconciliationofthestatutoryfederalincometaxratetotheCompanyseffectivetaxratefortheyearsendedDecember31,
2015,2014and2013:

Year Ended December 31,

2015 2014 2013
Taxatfederalstatutoryrate 35.0% 35.0 % 35.0%
Statetaxes,netoffederalbenefit (0.1) (0.1) (0.1)
Stock-basedcompensation (2.9) (4.2) (2.9)
Researchanddevelopmentcredits 7.2 25.2 3.6
ValuationAllowance 3.1 (9.4) (25.0)
Nondeductibleexpenses (5.6) (4.5) (3.0)
Foreignratedifferential (23.7) (26.4) (5.8)
Changeintaxpositions (10.7) (15.9) (2.0)
Other 0.0 0.4 0.5
Effectivetaxrate 2.3% 0.1% 0.3%

93

ThetaxeffectsoftemporarydifferencesandrelateddeferredtaxassetsandliabilitiesasofDecember31,2015and2014areasfollows(in
thousands):

December 31,
2015 2014
Deferredtaxassets:
Netoperatinglosscarryforwards $ 242,987 $ 230,417
Accrualsandreserves 36,133 20,496
Stock-basedcompensationexpense 80,106 89,159
Researchanddevelopmentcredits 209,425 168,934
CaliforniaEnterpriseZoneCredit 11,710 10,355
Fixedassetsandintangibleassets 1,457
Other 7,059 3,145
Totaldeferredtaxassets 588,877 522,506
Valuationallowance (378,448) (351,249)
Totaldeferredtaxassets,netofvaluationallowance 210,429 171,257

Deferredtaxliabilities:
Fixedassetsandintangibleassets (174,007) (132,671)
Convertiblenotes (30,002) (35,133)
Other (1,577) (420)
Totaldeferredtaxliabilities (205,586) (168,224)
Netdeferredtaxassets $ 4,843 $ 3,033

Basedontheavailableobjectiveevidence,managementbelievesitismore-likely-than-notthatthenetU.S.andBrazildeferredtaxassets
werenotfullyrealizableasoftheyearendedDecember31,2015.Accordingly,theCompanyhasestablishedafullvaluationallowanceagainstits
U.S.andBrazildeferredtaxassets.AsofDecember31,2015,theCompanyhasnet$5.2millionofdeferredtaxassetsinforeignjurisdictionswhich
itbelievesaremore-likely-than-nottobefullyrealizedgiventheexpectationoffutureearningsinthesejurisdictions.

FortheyearendedDecember31,2015,theCompanyhasnotprovidedforincometaxeson$82.4millionofitsundistributedearningsfor
certainforeignsubsidiariesbecausetheseearningsareintendedtobeindefinitelyreinvestedinoperationsoutsidetheU.S.Determiningthe
unrecognizeddeferredtaxliabilitiesassociatedwiththeseearningsisnotpracticable.

AtDecember31,2015,theCompanyhad$3.37billionoffederaland$1.34billionofstatenetoperatinglosscarryforwardsavailabletoreduce
futuretaxableincome,whichwillbegintoexpirein2027forfederaland2016forstatetaxpurposes.

Pursuanttoauthoritativeguidance,theexcesstaxbenefitfromstock-basedcompensationwillonlyberecordedtostockholdersequitywhen
cashtaxespayablearereduced.AsofDecember31,2015,theportionofnetoperatinglosscarryforwardsrelatedtotheexcesstaxbenefitfrom
stock-basedcompensationwasapproximately$3.35billion,thebenefitofwhichwillbecreditedtoadditionalpaid-incapitalwhenrealized.

TheCompanyalsohasresearchcreditcarryforwardsof$188.2millionand$150.6millionforfederalandstateincometaxpurposes,
respectively.Thefederalcreditcarryforwardwillbegintoexpirein2027.Thestateresearchtaxcreditshavenoexpirationdate.Additionally,the
CompanyhasCaliforniaEnterpriseZoneCreditcarryforwardsof$18.0millionwhichwillbegintoexpirein2023.

Utilizationofthenetoperatinglosscarryforwardsandcreditsmaybesubjecttoanannuallimitationduetotheownershipchangelimitations
providedbytheInternalRevenueCodeof1986,asamended(theCode),andsimilarstateprovisions.Anyannuallimitationmayresultinthe
expirationofnetoperatinglossesandcreditsbeforeutilization.

94


AsofDecember31,2015,theunrecognizedtaxbenefitwas$209.4million,materiallyallofwhichwouldresultincorrespondingadjustments
tovaluationallowance.Areconciliationofthebeginningandendingamountofunrecognizedtaxbenefitisasfollows(inthousands):

Year Ended December 31,

2015 2014 2013
Balanceatthebeginningoftheyear $ 182,484 $ 43,061 $ 23,352
Additionsrelatedtoprioryeartaxpositions 1,820 7,880
Reductionsrelatedtoprioryeartaxpositions (45,305) (50)
Additionsrelatedtocurrentyeartaxpositions 70,444 139,473 11,829

Balanceattheendoftheyear $ 209,443 $ 182,484 $ 43,061

TotalunrecognizedtaxbenefitsarerecordedontheCompanysconsolidatedbalancesheetsasfollows(inthousands):

December 31,
2015 2014
Totalunrecognizedtaxbenefitsbalance $ 209,443 $ 182,484
Amountsnettedagainstrelateddeferredtaxassets (208,307) (181,786)
Unrecognizedtaxbenefitsrecordedonconsolidated
balancesheets $ 1,136 $ 698

Thenetunrecognizedtaxbenefitof$1.1millionand$0.7millionasofDecember31,2015and2014,respectively,wasincludedinthe
deferredandotherlong-termtaxliabilities,netontheCompanysconsolidatedbalancesheets.TheCompanyadoptednewguidanceonthefinancial
statementpresentationofunrecognizedtaxbenefitsprospectivelyasofJanuary1,2014.Theapplicationofthisguidanceresultedina$15.8million
decreaseinnetdeferredtaxassetsandtherelatedliabilityforunrecognizedtaxbenefitsuponadoption.TheCompanydoesnotbelievethatits
unrecognizedtaxbenefitswillsignificantlychangewithinthenext12months.

TheCompanyrecognizesinterestand/orpenaltiesrelatedtoincometaxmattersasacomponentofincometaxexpense.AsofDecember31,
2015therewerenosignificantaccruedinterestandpenaltiesrelatedtouncertaintaxpositions.

OnJuly27,2015,theUnitedStateTaxCourtissuedanopinion(AlteraCorp.etal.v.Commissioner),whichinvalidatedthe2003final
Treasuryrulethatrequiresparticipantsinqualifiedcost-sharingarrangementstosharestock-basedcompensationcosts.Assuch,theCompanyfiled
its2014federaltaxreturnbasedupontheopinionrenderedinthiscase,whichresultedinanincreaseinthe2014netoperatinglossintheU.S
jurisdiction.AstheCompanymaintainsafullvaluationallowanceonitsUSdeferredtaxassets,nobenefitwasrealizedinthefinancialstatementsas
aresultofthisfilingposition.

TheCompanyissubjecttotaxationintheUnitedStatesandvariousstateandforeignjurisdictions.Earningsfromnon-USactivitiesare
subjecttolocalcountryincometax.ThematerialjurisdictionsinwhichtheCompanyissubjecttopotentialexaminationbytaxingauthoritiesinclude
theUnitedStates,CaliforniaandIreland.TheCompanyiscurrentlyunderaFederalincometaxexaminationbytheInternalRevenueService(IRS)
fortaxyears2011,2012and2013.Inthethirdquarterof2015,theCompanyconcludeditsCaliforniaincometaxexaminationfortaxyears2010and
2011withadjustmentsthatimmateriallyimpactedthedeferredtaxbalanceswithanoffsettothevaluationallowance,resultinginnoadditionalnet
taxexpenseorbenefit.However,theCompanysCaliforniaR&Dtaxcreditcarryforwardattributesremainopenandsubjecttoexaminationinfuture
yearsuntilused.TheCompanybelievesthatadequateamountshavebeenreservedinthesejurisdictions.TheCompanys2007to2015taxyears
remainsubjecttoexaminationbytheUnitedStatesandCalifornia,andits2011to2015taxyearsremainsubjecttoexaminationinIreland.The
Companyremainssubjecttopossibleexaminationinvariousotherjurisdictionsthatarenotexpectedtoresultinmaterialtaxadjustments.

95

Note 14. Commitments and Contingencies
Credit Facility
TheCompanyenteredintoarevolvingcreditagreementwithcertainlendersin2013,whichprovidedfora$1.0billionrevolvingunsecured
creditfacilitymaturingonOctober22,2018.Loansunderthecreditfacilitybearinterest,attheCompanysoption,at(i)abaseratebasedonthe
highestoftheprimerate,thefederalfundsrateplus0.50%andanadjustedLIBORrateforaone-monthinterestperiodplus1.00%,ineachcase
plusamarginrangingfrom0.00%to0.75%or(ii)anadjustedLIBORrateplusamarginrangingfrom1.00%to1.75%.Thismarginisdetermined
basedonthetotalleverageratiofortheprecedingfourfiscalquarterperiod.TheCompanyisobligatedtopayothercustomaryfeesforacredit
facilityofthissizeandtype,includinganupfrontfeeandanunusedcommitmentfee.Obligationsunderthecreditfacilityareguaranteedbyoneof
theCompanyswholly-ownedsubsidiaries.Inaddition,thecreditfacilitycontainsrestrictionsonpaymentsincludingcashpaymentsofdividends.

TherevolvingcreditagreementwasamendedinSeptember2014toincreasetheamountofindebtednessthattheCompanymayincurand
increasetheamountofrestrictedpaymentsthattheCompanymaymake.Thisamendmenttotherevolvingcreditagreementalsoprovidesthatifthe
Companystotalleverageratioexceeds2.5:1.0andiftheamountoutstandingunderthecreditfacilityexceeds$500.0million,or50%oftheamount
thatmaybeborrowedunderthecreditfacility,thecreditfacilitywillbecomesecuredbysubstantiallyalloftheCompanysandcertainofits
subsidiariesassets,subjecttolimitedexceptions.AsofDecember31,2015,noamountsweredrawnunderthecreditfacility.

Operating and Capital Leases

TheCompanyhasenteredintovariousnon-cancelableoperatingleaseagreementsforcertainofficesanddatacenterfacilitieswith
contractualleaseperiodsexpiringbetween2016and2026.TheCompanyalsohasleasearrangementsforcertainserverandnetworking
equipment..

AsummaryofgrossandnetleasecommitmentsasofDecember31,2015isasfollows(inthousands):

Operating Capital
Leases Leases
YearsendingDecember31,
2016 $ 148,001 $ 93,001
2017 155,213 49,454
2018 149,298 10,739
2019 116,764 592
2020 105,086
Thereafter 243,788
$ 918,150 153,786
Less:Amountsrepresentinginterest 5,925
Totalcapitalleaseobligation 147,861
Less:Short-termportion 88,166

Long-termportion $ 59,695

RentexpenseundertheCompanysoperatingleases,includingco-locationarrangementsfortheCompanysdatacenters,was$119.8million,
$73.9millionand$35.4millionfortheyearsendedDecember31,2015,2014and2013,respectively.

Non-cancelable Obligations
TheCompanyalsohad$166.3millionofnon-cancelablecontractualcommitmentsasofDecember31,2015,primarilyrelatedtoits
infrastructureservices,bandwidthandotherservicesarrangements.Thesecommitmentsaregenerallyduewithinonetothreeyears.

96


Legal Proceedings
TheCompanyiscurrentlyinvolvedin,andmayinthefuturebeinvolvedin,legalproceedings,claimsandgovernmentalinvestigationsinthe
normalcourseofbusiness.Legalfeesandothercostsassociatedwithsuchactionsareexpensedasincurred.TheCompanyassesses,in
conjunctionwithitslegalcounsel,theneedtorecordaliabilityforlitigationandcontingencies.Litigationaccrualsarerecordedwhenandifitis
determinedthatalossrelatedmatterisbothprobableandreasonablyestimable.Materiallosscontingenciesthatarereasonablypossibleof
occurrence,ifany,aresubjecttodisclosure.AsofDecember31,2015,therewasnolitigationorcontingencywithatleastareasonablepossibilityof
amaterialloss.NomateriallosseshavebeenrecordedduringtheyearsendedDecember31,2015,2014and2013withrespecttolitigationorloss
contingencies.

Indemnification
Intheordinarycourseofbusiness,theCompanyoftenincludesstandardindemnificationprovisionsinitsarrangementswithitscustomers,
partners,suppliersandvendors.Pursuanttotheseprovisions,theCompanymaybeobligatedtoindemnifysuchpartiesforlossesorclaimssuffered
orincurredinconnectionwithitsservice,breachofrepresentationsorcovenants,intellectualpropertyinfringementorotherclaimsmadeagainst
suchparties.Theseprovisionsmaylimitthetimewithinwhichanindemnificationclaimcanbemade.Itisnotpossibletodeterminethemaximum
potentialamountundertheseindemnificationobligationsduetothelimitedhistoryofpriorindemnificationclaimsandtheuniquefactsand
circumstancesinvolvedineachparticularagreement.TheCompanyhasneverincurredsignificantexpensedefendingitslicenseesagainstthird
partyclaims,norhasiteverincurredsignificantexpenseunderitsstandardservicewarrantiesorarrangementswithitscustomers,partners,
suppliersandvendors.Accordingly,theCompanyhadnoliabilitiesrecordedfortheseprovisionsasofDecember31,2015and2014.

Note 15. Related Party Transactions

InSeptember2015,theCompanyenteredintoapartnershipagreementfornoconsiderationwithSquare,Inc.,forwhichJackDorsey(the
CompanysChiefExecutiveOfficer)servesasChiefExecutiveOfficer,toenableU.S.politicaldonationsthroughTweets.NeitherSquare,Inc.nor
theCompanywillpayeachotheranyamountsinconnectionwiththeagreement.TheagreementhasnoimpactontheCompanysfinancial
statements.

OnOctober22,2015,theCompanyandtheJackDorseyRevocableTrustdatedDecember8,2010(theJackDorseyTrust),forwhichJack
Dorsey(theCompanysChiefExecutiveOfficer)servesastrustee,enteredintoaContributionAgreementthattheJackDorseyTrustwillgiveback
andcontributetoTwitter,withoutanycostorcharge,anaggregateof6,814,085sharesofTwitterscommonstock.UpontheCompanys
stockholdersapprovalofanequityincentiveplanattheannualmeetingofstockholderstobeheldin2016,thesamenumberofshareswillbe
grantedovertimetoemployeesandotherserviceproviders.Thecontributionwillberecordedasatreasurystocktransactioninstockholdersequity
whenandifapprovedbytheCompanysstockholders.

Note 16. Employee Benefit Plan

TheCompanyadopteda401(k)PlanthatqualifiesasadeferredcompensationarrangementunderSection401oftheCode.Underthe401(k)
Plan,participatingemployeesmaydeferaportionoftheirpretaxearningsnottoexceedthemaximumamountallowable.TheCompanymade
discretionarymatchingcontributionstothoseparticipatingemployeeswhometcertainemploymentcriteria.Thematchingcontributionsmadebythe
Companytodatewasnotmaterial.

Note 17. Segment Information and Operations by Geographic Area

TheCompanyhasasingleoperatingsegmentandreportingunitstructure.TheCompanyschiefoperatingdecision-makeristhechief
executiveofficerwhoreviewsfinancialinformationpresentedonaconsolidatedbasisforpurposesofallocatingresourcesandevaluatingfinancial
performance.

97


Revenue
Revenuebygeographyisbasedonthebillingaddressesofthecustomers.Thefollowingtablessetforthrevenuebyservicesandrevenueby
geographicarea(inthousands):

Year Ended December 31,

2015 2014 2013
Revenuebyservices:
Advertisingservices $ 1,994,036 $ 1,255,688 $ 594,546
Datalicensingandother 223,996 147,314 70,344
Totalrevenue $ 2,218,032 $ 1,403,002 $ 664,890

Year Ended December 31,
2015 2014 2013
Revenuebygeographicarea:
UnitedStates $ 1,443,240 $ 945,720 $ 492,320
International 774,792 457,282 172,570

Totalrevenue $ 2,218,032 $ 1,403,002 $ 664,890

Noindividualcountryfromtheinternationalmarketscontributedinexcessof10%ofthetotalrevenuefortheyearendedDecember31,2015.
TheUnitedKingdomaccountedfor$140.3millionand$66.5millionor10%ofthetotalrevenueforeachoftheyearsendedDecember31,2014and
2013,respectively.

Property and Equipment, net

Thefollowingtablesetsforthpropertyandequipment,netbygeographicarea(inthousands):

December 31, December 31,

2015 2014
Propertyandequipment,net:
UnitedStates $ 683,176 $ 523,810
International 52,123 33,209

Totalpropertyandequipment,net $ 735,299 $ 557,019

Note 18. Restructuring Charges

InOctober2015,theCompanyinitiatedarestructuringandreductioninforceplantoexitapproximately8%oftheCompanysglobal
workforce.TheCompanyincurred$16.1millionofcashexpenditures,substantiallyallofwhichwasseverancecosts.Totalrestructuringexpenses
was$12.9million,whichwaslowerthancashrestructuringcostsduetoacreditrelatedtonon-cashstock-basedcompensationexpensereversals
forunvestedstockawards.Therestructuringandreductioninforceplanwassubstantiallycompletedin2015.Theremainingaccruedliabilityforthe
restructuringplanwasnotmaterialasofDecember31,2015.

98

It em 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL D ISCLOSURE
None.

Item 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures
Ourmanagement,withtheparticipationofourChiefExecutiveOfficerandourChiefFinancialOfficer,hasevaluatedtheeffectivenessofour
disclosurecontrolsandproceduresasoftheendoftheperiodcoveredbythisAnnualReportonForm10-K.Thetermdisclosurecontrolsand
procedures,asdefinedinRules13a-15(e)and15d-15(e)undertheSecuritiesExchangeActof1934,asamended(theExchangeAct),means
controlsandotherproceduresofacompanythataredesignedtoensurethatinformationrequiredtobedisclosedbyacompanyinthereportsthatit
filesorsubmitsundertheExchangeActisrecorded,processed,summarizedandreported,withinthetimeperiodsspecifiedintheSECsrulesand
forms.Disclosurecontrolsandproceduresinclude,withoutlimitation,controlsandproceduresdesignedtoensurethatinformationrequiredtobe
disclosedbyacompanyinthereportsthatitfilesorsubmitsundertheExchangeActisaccumulatedandcommunicatedtothecompanys
management,includingitsprincipalexecutiveandprincipalfinancialofficers,orpersonsperformingsimilarfunctions,asappropriatetoallowtimely
decisionsregardingrequireddisclosure.Managementrecognizesthatanycontrolsandprocedures,nomatterhowwelldesignedandoperated,can
provideonlyreasonableassuranceofachievingtheirobjectivesandmanagementnecessarilyappliesitsjudgmentinevaluatingthecost-benefit
relationshipofpossiblecontrolsandprocedures.Thedesignofdisclosurecontrolsandproceduresandinternalcontroloverfinancialreportingmust
reflectthefactthatthereareresourceconstraintsandthatmanagementisrequiredtoapplyjudgmentinevaluatingthebenefitsofpossiblecontrols
andproceduresrelativetotheircosts.Basedonsuchevaluation,ourChiefExecutiveOfficerandChiefFinancialOfficerhaveconcludedthat,asof
December31,2015,ourdisclosurecontrolsandprocedureswereeffectiveatthereasonableassurancelevel.

Changes in Internal Control over Financial Reporting

TherewasnochangeinourinternalcontroloverfinancialreportingidentifiedinconnectionwiththeevaluationrequiredbyRule13a-15(d)and
15d-15(d)oftheExchangeActthatoccurredduringquarterendedDecember31,2015thathasmateriallyaffected,orisreasonablylikelyto
materiallyaffect,ourinternalcontroloverfinancialreporting.

Management's Report on Internal Control over Financial Reporting

Ourmanagementisresponsibleforestablishingandmaintainingadequateinternalcontroloverfinancialreporting(asdefinedinRule13a-
15(f)undertheExchangeAct).Ourmanagementconductedanassessmentoftheeffectivenessofourinternalcontroloverfinancialreportingbased
onthecriteriaestablishedinInternalControl-IntegratedFramework(2013)issuedbytheCommitteeofSponsoringOrganizationsoftheTreadway
Commission(COSO).Basedonthatassessment,ourmanagementhasconcludedthatourinternalcontroloverfinancialreportingwaseffectiveas
ofDecember31,2015.TheeffectivenessoftheCompanysinternalcontroloverfinancialreportingasofDecember31,2015hasbeenauditedby
PricewaterhouseCoopersLLP,anindependentregisteredpublicaccountingfirm,asstatedintheirreportwhichappearsherein.

Item 9B. OTHER INFORMATION

None.

99

Pa rt III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

TheinformationcalledforbythisitemwillbesetforthinourProxyStatementfortheAnnualMeetingofStockholderstobefiledwiththeSEC
within120daysofthefiscalyearendedDecember31,2015andisincorporatedhereinbyreference.

Ourboardofdirectorshasadoptedacodeofbusinessconductandethicsthatappliestoallofouremployees,officersanddirectors,including
ourChiefExecutiveOfficer,ChiefFinancialOfficerandotherexecutiveandseniorfinancialofficers.Thefulltextofourcodeofbusinessconductand
ethicsispostedontheinvestorrelationspageonourwebsitewhichislocatedathttp://investor.twitterinc.com.Wewillpostanyamendmentstoour
codeofbusinessconductandethics,orwaiversofitsrequirements,onourwebsite.

Item 11. EXECUTIVE COMPENSATION

TheinformationcalledforbythisitemwillbesetforthinourProxyStatementandisincorporatedhereinbyreference.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
TheinformationrequiredbythisitemwillbesetforthinourProxyStatementandisincorporatedhereinbyreference.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Theinformation,ifany,requiredbythisitemwillbesetforthinourProxyStatementandisincorporatedhereinbyreference.

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

TheinformationrequiredbythisitemwillbesetforthinourProxyStatementandisincorporatedhereinbyreference.

100

PA RT IV

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

ThefollowingdocumentsarefiledaspartofthisAnnualReportonForm10-K:
1. ConsolidatedFinancialStatements
OurConsolidatedFinancialStatementsarelistedintheIndextoConsolidatedFinancialStatementsunderPartII,Item8ofthis
AnnualReportonForm10-K.
2. FinancialStatementSchedules

SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Charged/
Balance at Credited
Beginning of Charged to to Other Balance at
Year Expenses Accounts End of Year
(In thousands)
Allowance for Deferred Tax Assets:
YearendedDecember31,2015 $ 351,249 $ 27,175 $ 24 $ 378,448
YearendedDecember31,2014 $ 227,878 $ 155,111 $ (31,740) $ 351,249
YearendedDecember31,2013 $ 42,175 $ 180,691 $ 5,012 $ 227,878

Balance at
Beginning of Additions Write-off/ Balance at
Year (Reductions) Adjustments End of Year
(In thousands)
Allowance for Doubtful Accounts:
YearendedDecember31,2015 $ 5,507 $ 5,765 $ (3,151) $ 8,121
YearendedDecember31,2014 $ 2,020 $ 4,632 $ (1,145) $ 5,507
YearendedDecember31,2013 $ 1,280 $ 1,557 $ (817) $ 2,020


Allotherfinancialstatementscheduleshavebeenomittedbecausetheyarenotrequired,notapplicable,notpresentinamounts
sufficienttorequiresubmissionoftheschedule,ortherequiredinformationisshowninourConsolidatedFinancialStatementsorNotes
thereto.
3. Exhibits
ThedocumentslistedintheExhibitIndexofthisAnnualReportonForm10-Kareincorporatedbyreferenceorarefiledwiththis
AnnualReportonForm10-K,ineachcaseasindicatedtherein(numberedinaccordancewithItem601ofRegulationS-K).

101

SIGNAT URES

PursuanttotherequirementsofSection13or15(d)oftheSecuritiesExchangeActof1934,theregistranthasdulycausedthisannualreport
onForm10-Ktobesignedonitsbehalfbytheundersigned,thereuntodulyauthorized.

Date:February29,2016.

TWITTER, INC.

By: /s/JackDorsey
JackDorsey
ChiefExecutiveOfficer

POWEROFATTORNEY

EachpersonwhosesignatureappearsbelowconstitutesandappointsJackDorseyandAnthonyNoto,andeachofthem,ashisorhertrue
andlawfulattorney-in-factandagent,withfullpowerofsubstitutionandresubstitution,forhimorherandinhisorhername,placeandstead,inany
andallcapacities,tosignanyandallamendmentstothisAnnualReportonForm10-K,andtofilethesame,withallexhibitsthereto,andother
documentsinconnectiontherewith,withtheSecuritiesandExchangeCommission,grantinguntosaidattorneys-in-factandagents,andeachof
them,fullpowerandauthoritytodoandperformeachandeveryactandthingrequisiteandnecessarytobedoneinconnectiontherewith,asfullyto
allintentsandpurposesasheorshemightorcoulddoinperson,herebyratifyingandconfirmingallthatsaidattorneys-in-factandagents,oranyof
them,ortheirorhissubstitutes,maylawfullydoorcausetobedonebyvirtuethereof.

PursuanttotherequirementsoftheSecuritiesExchangeActof1934,thisreporthasbeensignedbelowbythefollowingpersonsonbehalfof
theregistrantandinthecapacitiesandonthedatesindicated:

Signature Title Date

/s/JackDorsey ChiefExecutiveOfficerandDirector February29,2016

JackDorsey (PrincipalExecutiveOfficer)

/s/AnthonyNoto ChiefFinancialOfficer February29,2016

AnthonyNoto (PrincipalFinancialOfficer)

/s/RobertKaiden ChiefAccountingOfficer February29,2016

RobertKaiden (PrincipalAccountingOfficer)

/s/OmidKordestani ExecutiveChairmanandDirector February29,2016

OmidKordestani

/s/PeterChernin Director February29,2016

PeterChernin

/s/PeterCurrie Director February29,2016

PeterCurrie

/s/PeterFenton Director February29,2016

PeterFenton

/s/DavidRosenblatt Director February29,2016

DavidRosenblatt

/s/MarjorieScardino Director February29,2016

MarjorieScardino

/s/EvanWilliams Director February29,2016

EvanWilliams

102

EXHIBIT INDEX

Exhibit Incorporated by Reference

Number Exhibit Description Form File No. Exhibit Filing Date

2.1 AgreementandPlanofReorganizationamongTwitter,
Inc.,RaptorMergerInc.,MoPubInc.andFortis
AdvisorsLLC,asStockholdersAgent,datedasof
September9,2013. S-1 333-191552 2.1 October3,2013

3.1 RestatedCertificateofIncorporationofTwitter,Inc. S-1/A 333-191552 3.2 October22,2013

3.2

AmendedandRestatedBylawsofTwitter,Inc.

S-1/A



333-191552

3.4

October22,2013

4.1 FormofcommonstockcertificateofTwitter,Inc. S-1/A 333-191552 4.1 October22,2013

4.2 AmendedandRestatedInvestorsRightsAgreement
amongTwitter,Inc.andcertainholdersofitscapital
stock,amendedasofOctober4,2013. S-1/A 333-191552 4.2 October15,2013

4.3 Indenture,datedSeptember17,2014,betweenTwitter,
Inc.andU.S.BankNationalAssociation. 8-K 001-36164 4.1 September17,2014

4.4 FormofGlobal0.25%ConvertibleSeniorNotedue
2019(includedinExhibit4.1) 8-K 001-36164 4.2 September17,2014

4.5 Indenture,datedSeptember17,2014,betweenTwitter,
Inc.andU.S.BankNationalAssociation. 8-K 001-36164 4.3 September17,2014

4.6 FormofGlobal0.25%ConvertibleSeniorNotedue
2019(includedinExhibit4.3) 8-K 001-36164 4.4 September17,2014

4.7 FormofSellingStockholderAgreement S-3ASR 333-204775 4.4 June5,2015

10.1* FormofIndemnificationAgreementbetweenTwitter,
Inc.andeachofitsdirectorsandexecutiveofficers. S-1 333-191552 10.1 October3,2013

10.2* Twitter,Inc.2013EquityIncentivePlanandrelated
formagreements. S-1/A 333-191552 10.2 October22,2013

10.3* Twitter,Inc.2013EmployeeStockPurchasePlanand
relatedformagreements. S-8 333-192150 4.3 November7,2013

10.4* Twitter,Inc.2007EquityIncentivePlanandrelated
formagreements. S-1 333-191552 10.4 October3,2013

10.5 FormofPerformance-BasedRestrictedStockUnit
AwardAgreementforExecutives,includingNoticeof
Grant,undertheTwitter,Inc.2013EquityIncentive

Plan.

10.6* Twitter,Inc.2011AcquisitionOptionPlan. S-1 333-191552 10.5 October3,2013

10.7*

Afterlive.tvInc.2010StockPlan.

S-8



333-198055

4.4



August11,2014

10.8* Apps&Zerts,Inc.2013StockPlan. S-8 333-195743 4.2 May6,2014

10.9*

BluefinLabs,Inc.2008StockPlan.

S-1



333-191552

10.6



October3,2013

10.10* CardSpringInc.AmendedandRestated2011Equity
IncentivePlan. S-8 333-198055 4.3 August11,2014

10.11* Crashlytics,Inc.2011StockPlan. S-1 333-191552 10.7 October3,2013

10.12* Gnip,Inc.2008IncentivePlan,asamended. S-8 333-195743 4.3 May6,2014

10.13* MixerLabs,Inc.2008StockPlan. S-1 333-191552 10.8 October3,2013

103

Exhibit Incorporated by Reference
Number Exhibit Description Form File No. Exhibit Filing Date

10.14*

MoPubInc.2010EquityIncentivePlan.

S-1/A



333-191552

10.9

November4,2013

10.15* TapCommerceInc.2012StockIncentivePlan. S-8 333-198055 4.5 August11,2014

10.16* Twitter,Inc.ExecutiveIncentiveCompensationPlan. S-1 333-191552 10.9 October3,2013

10.17* Twitter,Inc.ChangeofControlandInvoluntary
TerminationProtectionPolicy. 10-Q 001-36164 10.1 August11,2014

10.18* Twitter,Inc.OutsideDirectorCompensationPolicy 10-K 001-36164 10.23 March6,2014

10.19* Twitter,Inc.2013TargetCommissionPlan. S-1/A 333-191552 10.20 October22,2013

10.20* OfferLetterbetweenTwitter,Inc.andJackDorsey,
datedasofJune11,2015. 8-K 001-36164 10.1 June11,2015

10.21* LetterAgreementbetweenTwitter,Inc.andOmidR.
Kordestani,datedasofOctober13,2015. 8-K 001-36164 10.1 October16,2015

10.22* OfferLetterbetweenTwitter,Inc.andAnthonyNoto,
datedasofJune30,2014. 8-K 333-191552 10.1 July1,2014

10.23* OfferLetterbetweenTwitter,Inc.andAdamBain,
datedasofOctober1,2013. S-1/A 333-191552 10.14 October22,2013

10.24* OfferLetterbetweenTwitter,Inc.andVijayaGadde,
datedasofOctober1,2013. S-1/A 333-191552 10.16 October22,2013

10.25* OfferLetterbetweenTwitter,Inc.andRobertKaiden,
datedasofApril24,2015. 8-K 001-36164 10.1 June4,2015

10.26* OfferLetterbetweenTwitter,Inc.andRichardCostolo,
datedasofOctober1,2013. S-1/A 333-191552 10.11 October22,2013

10.27* LetterAgreementbetweenTwitter,Inc.andRichard
Costolo,datedasofJune11,2015. 8-K 001-36164 10.1 June11,2015

10.28* OfferLetterbetweenTwitter,Inc.andPeterChernin,
datedasofOctober16,2012. S-1 333-191552 10.17 October3,2013

10.29* ChangeofControlSeverancePolicyParticipation
AgreementbetweenTwitter,Inc.andAnthonyNoto,
datedasofJune30,2014 8-K 001-36164 10.2 July1,2014

10.30* AmendedandRestatedChangeofControlSeverance
PolicyParticipationAgreementbetweenTwitter,Inc.
andMikeGupta,datedasofAugust8,2014. 10-Q 001-36164 10.2 August11,2014

10.31* ContributionAgreement,datedOctober22,2015,by
andbetweenTwitter,Inc.andtheJackDorsey
RevocableTrustdatedDecember8,2010 8-K 001-36164 10.1 October22,2015

10.32 FormofInnovatorsPatentAgreement.

S-1



333-191552

10.19

October3,2013

10.33 OfficeLeasebetweenTwitter,Inc.andSriNineMarket
SquareLLC,datedasofApril20,2011,asamended
onMay16,2011,September30,2011andJune1,
2012. S-1 333-191552 10.18 October3,2013

104

Exhibit Incorporated by Reference
Number Exhibit Description Form File No. Exhibit Filing Date

10.34 RevolvingCreditAgreementamongTwitter,Inc.,the
lenderspartytheretoandMorganStanleySenior
Funding,Inc.,asAdministrativeAgent,datedasof
October22,2013. S-1 333-191552 10.21 October22,2013

10.35 AmendmentNo.1,datedSeptember10,2014,tothe
RevolvingCreditAgreement,datedOctober22,2013,
amongTwitter,Inc.,MorganStanleySeniorFunding,
Inc.,asadministrativeagent,andthelendersfromtime
totimepartythereto. 8-K 001-36164 10.1 September10,2014

10.36 PurchaseAgreement,datedSeptember11,2014,by
andamongTwitter,Inc.andGoldman,Sachs&Co.
andMorganStanley&Co.LLC,asrepresentativesof
theinitialpurchasersnamedtherein. 8-K 001-36164 10.1 September17,2014

10.37

FormofConvertibleNoteHedgeConfirmation.



8-K



001-36164

10.2

September17,2014

10.38 FormofWarrantConfirmation. 8-K 001-36164 10.3 September17,2014

21.1 ListofsubsidiariesofTwitter,Inc. S-1 333-191552 21.1 October15,2013

23.1 ConsentofPricewaterhouseCoopersLLP,
IndependentRegisteredPublicAccountingFirm.

31.1 CertificationofChiefExecutiveOfficerpursuantto
ExchangeActRules13a-14(a)and15d-14(a),as
adoptedpursuanttoSection302oftheSarbanes-
OxleyActof2002.

31.2 CertificationofChiefFinancialOfficerpursuantto
ExchangeActRules13a-14(a)and15d-14(a),as
adoptedpursuanttoSection302oftheSarbanes-
OxleyActof2002.

32.1 CertificationsofChiefExecutiveOfficerandChief
FinancialOfficerpursuantto18U.S.C.Section1350,
asadoptedpursuanttoSection906oftheSarbanes-
OxleyActof2002.

101.INS

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* Indicatesamanagementcontractorcompensatoryplanorarrangement.

105

ThecertificationsattachedasExhibit32.1thataccompanythisAnnualReportonForm10-K,aredeemedfurnishedandnotfiledwiththe
SecuritiesandExchangeCommissionandarenottobeincorporatedbyreferenceintoanyfilingofTwitter,Inc.undertheSecuritiesActof
1933,asamended,ortheSecuritiesExchangeActof1934,asamended,whethermadebeforeorafterthedateofthisAnnualReporton
Form10-K,irrespectiveofanygeneralincorporationlanguagecontainedinsuchfiling.

106

Exhibit 10.5

TWITTER, INC.
2013 EQUITY INCENTIVE PLAN
PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT

Unlessotherwisedefinedherein,thetermsdefinedintheTwitter,Inc.2013EquityIncentivePlan(thePlan)willhavethe
samedefinedmeaningsinthisPerformance-BasedRestrictedStockUnitAgreement(theAwardAgreement),whichincludesthe
NoticeofPerformance-BasedRestrictedStockUnitGrant(theNoticeofGrant)andTermsandConditionsofPerformance-Based
Restricted Stock Unit Grant, attached hereto as Exhibit A and the Performance-Based Restricted Stock Unit Matrix (the
PerformanceMatrix),attachedheretoasExhibitB.

NOTICE OF PERFORMANCE-BASED RESTRICTED STOCK UNIT GRANT

Participant Name: <first_name><last_name>

ParticipanthasbeengrantedtherighttoreceiveanAwardofPerformance-BasedRestrictedStockUnits,subjecttotheterms
andconditionsofthePlanandthisAwardAgreement,asfollows:

GrantNumber <award_id>

DateofGrant <award_date>

VestingCommencementDate ThedatefollowinganapplicablePerformancePeriodonwhichthe
Administratordeterminesthattheapplicableperformancemetricshavebeen
satisfiedforthePerformance-BasedRestrictedStockUnits.
PerformancePeriod <performance_period>

PerformanceMatrix ThenumberofPerformance-BasedRestrictedStockUnitsinwhichParticipant
mayvestinaccordancewiththeVestingSchedulebelowwilldependupon
achievementofperformancemetricssetforthinandinaccordancewiththe
PerformanceMatrix,attachedheretoasExhibitB.AnyPerformance-Based
RestrictedStockUnitsthatareearnedbasedonachievementoftheperformance
metricssetforthintheattachedPerformanceMatrixshallbereferredtoherein
asEarnedUnitsandbeeligibleforvestinginaccordancewiththeVesting
Schedulebelow.

TargetNumberof Uptoamaximumof<shares_awarded>.

Performance-Based
RestrictedStockUnits


VestingSchedule:
Subject to any acceleration provisions contained in the Plan or set forth below (including the Exhibits hereto), any Earned
Units will vest in accordance with the following schedule, provided the participant has been continuously employed by Twitter
throughsuchvestingdate:

<vesting_schedule>
Notwithstandingtheforegoing,thevestingofthePerformance-BasedRestrictedStockUnitsshallbesubjecttoanyvesting
accelerationprovisionsapplicabletothesePerformance-BasedRestrictedStockUnitscontainedinthePlan,theAwardAgreement
and/oranyemploymentorserviceagreement,offerletter,changeincontrolseveranceagreementorpolicy,oranyotheragreement
orpolicy that, prior toandeffective asofthe dateofthisAgreement, hasbeenentered intooragreed upon, asthecasemaybe,
between Participant and the Company or any parent or subsidiary corporation of the Company (such agreement or policy, a
Separate Agreement) to the extent not otherwise duplicative of the vesting terms described above (by way of example, if a
SeparateAgreementprovidesfordifferentaccelerationofvestingprovisionsforallofParticipantsPerformance-BasedRestricted
StockUnitsuponaterminationofParticipantasaServiceProviderforgoodreasonthatisdefineddifferently,andtheParticipants
statusasaServiceProviderterminatesinamannerthatwouldtriggergoodreasonundertheSeparateAgreementbutnotunder
thisAgreement,theParticipantwouldremainentitledtotheaccelerationofvestingundertheSeparateAgreement).

IntheeventParticipantceasestobeaServiceProviderforanyornoreasonbeforeParticipantvestsinthePerformance-Based
RestrictedStockUnits,thePerformance-BasedRestrictedStockUnitsandParticipantsrighttoacquireanyShareshereunderwill
immediatelyterminate,subjecttoApplicableLaws.

ByParticipantssignatureandthesignatureoftherepresentativeofTwitter,Inc.(theCompany)below,Participantandthe
Company agree that this Award of Performance-Based Restricted Stock Units is granted under and governed by the terms and
conditionsofthePlanandthisAwardAgreement,includingtheTermsandConditionsofPerformance-BasedRestrictedStockUnit
Grant,attachedheretoasExhibitA,andthePerformanceMatrix,attachedheretoasExhibitB,allofwhicharemadeapartofthis
document.ParticipanthasreviewedthePlanandthisAwardAgreementintheirentirety,hashadanopportunitytoobtaintheadvice
of counsel prior to executing this Award Agreement and fully understands all provisions of the Plan and Award
Agreement.Participantherebyagreestoacceptasbinding,conclusiveandfinalalldecisionsorinterpretationsoftheAdministrator
uponanyquestionsrelatingtothePlanandAwardAgreement.ParticipantfurtheragreestonotifytheCompanyuponanychangein
theresidenceaddressindicatedbelow.

-2-

PARTICIPANT: TWITTER,INC.

Signed by Online Electronic Agreement

Signature By

<first_name><last_name>
PrintName Title

ResidenceAddress:

-3-

EXHIBIT A

TERMS AND CONDITIONS OF PERFORMANCE-BASED RESTRICTED STOCK UNIT GRANT

1.Grant.TheCompanyherebygrantstotheindividualnamedintheNoticeofGrant(theParticipant)underthePlanan
AwardofPerformance-BasedRestrictedStockUnits,subjecttoallofthetermsandconditionsinthisAwardAgreement,thePlan,
andtheSeparateAgreement(asapplicable),whichareincorporatedhereinbyreference.SubjecttoSection18(c)ofthePlan,inthe
eventofaconflictbetweenthetermsandconditionsofthePlanandthetermsandconditionsofthisAwardAgreement,theterms
andconditionsofthePlanwillprevail.

2.CompanysObligationtoPay.EachPerformance-BasedRestrictedStockUnitrepresentstherighttoreceiveaShareon
the date it vests. Unless and until the Performance-Based Restricted Stock Units will have vested in the manner set forth in
Sections3or4,ParticipantwillhavenorighttopaymentofanysuchPerformance-BasedRestrictedStockUnits.Priortoactual
paymentofanyvestedPerformance-BasedRestrictedStockUnits,suchPerformance-BasedRestrictedStockUnitswillrepresentan
unsecured obligation of the Company, payable (if at all) only from the general assets of the Company. Any Performance-Based
RestrictedStockUnitsthatvestinaccordancewithSections3or4willbepaidtoParticipant(orintheeventofParticipantsdeath,
tohisorherestate)inwholeShares,subjecttoParticipantsatisfyinganyobligationsforTax-RelatedItems(asdefinedinSection
7).SubjecttotheprovisionsofSection4,suchvestedPerformance-BasedRestrictedStockUnitsshallbepaidinwholeSharesas
soonaspracticableaftervesting,butineachsuchcasewithintheperiodsixty(60)daysfollowingthevestingdate.Innoeventwill
Participantbepermitted,directlyorindirectly,tospecifythetaxableyearofthepaymentofanyPerformance-BasedRestrictedStock
UnitspayableunderthisAwardAgreement.

3.VestingSchedule. Except as provided in Section 4, and subject to Section 5, the Performance-Based Restricted Stock
Units awarded by this Award Agreement will vest in accordance with the vesting provisions set forth in the Notice of
Grant.Performance-BasedRestrictedStockUnitsscheduledtovestonacertaindateorupontheoccurrenceofacertaincondition
will not vest in Participant in accordance with any of the provisions of this Award Agreement, unless Participant will have been
continuouslyaServiceProviderfromtheDateofGrantuntilthedatesuchvestingoccurs.

4.AdministratorDiscretion.TheAdministrator,initsdiscretion,mayacceleratethevestingofthebalance,orsomelesser
portionofthebalance,oftheunvestedPerformance-BasedRestrictedStockUnitsatanytime,subjecttothetermsofthePlan.Ifso
accelerated, such Performance-Based Restricted Stock Units will be considered as having vested as of the date specified by the
Administrator.ThepaymentofSharesvestingpursuanttothisSection4shallinallcasesbepaidatatimeorinamannerthatis
exemptfrom,orcomplieswith,Section409A.

ThefollowingparagraphsinthisSection4applyonlyiftheParticipantisaU.S.taxpayerorotherwisesubjecttoU.S.
taxation: Notwithstanding anything in the Plan or this Award Agreement to the contrary, if the vesting of the balance, or some
lesserportionofthe

-4-


balance, of the Performance-Based Restricted Stock Units is accelerated in connection with Participants terminationasaService
Provider(providedthatsuchterminationisaseparationfromservicewithinthemeaningofSection409A,asdeterminedbythe
Company),otherthanduetodeath, andif(x)ParticipantisaspecifiedemployeewithinthemeaningofSection409Aatthetime
ofsuchterminationasaServiceProviderand(y)thepaymentofsuchacceleratedPerformance-BasedRestrictedStockUnitswill
resultintheimpositionofadditionaltaxunderSection409AifpaidtoParticipantonorwithinthesix(6)monthperiodfollowing
ParticipantsterminationasaServiceProvider,thenthepaymentofsuchacceleratedPerformance-BasedRestrictedStockUnitswill
not be made until the date six (6) months and one (1) day following the date of Participants termination as a Service Provider ,
unlessParticipantdiesfollowinghisorherterminationasaServiceProvider,inwhichcase,thePerformance-BasedRestrictedStock
UnitswillbepaidinSharestoParticipantsestateassoonaspracticablefollowinghisorherdeath.ItistheintentofthisAward
Agreementthatitandallpaymentsandbenefitshereunderbeexemptfrom,orcomplywith,therequirementsofSection409Aso
thatnoneofthePerformance-BasedRestrictedStockUnitsprovidedunderthisAwardAgreementorSharesissuablethereunderwill
besubjecttotheadditionaltaximposedunderSection409A,andanyambiguitieshereinwillbeinterpretedtobesoexemptorso
comply.EachpaymentpayableunderthisAwardAgreementisintendedtoconstituteaseparatepaymentforpurposesofTreasury
RegulationSection1.409A-2(b)(2).ForpurposesofthisAwardAgreement,Section409AmeansSection409AoftheCode,and
anyfinalTreasuryRegulationsandInternalRevenueServiceguidancethereunder,aseachmaybeamendedfromtimetotime.

5. Forfeiture upon Termination of Status as a Service Provider . Notwithstanding any contrary provision of this Award
Agreement, the balance of the Performance-Based Restricted Stock Units that have not vested as of the time of Participants
termination as a Service Provider for any or no reason and Participants right to acquire any Shares hereunder will immediately
terminate,subjecttoApplicableLaws.ThedateofParticipantsterminationasaServiceProviderisdetailedinSection10(h).

6. Death of Participant . Any distribution or delivery to be made to Participant under this Award Agreement will, if
Participant is then deceased, be made to Participants designated beneficiary, or if no beneficiary survives Participant, the
administratororexecutorofParticipantsestate.AnysuchtransfereemustfurnishtheCompanywith(a)writtennoticeofhisorher
statusastransferee,and(b)evidencesatisfactorytotheCompanytoestablishthevalidityofthetransferandcompliancewithany
lawsorregulationspertainingtosaidtransfer.

7.ResponsibilityforTaxes.NotwithstandinganycontraryprovisionofthisAwardAgreement,nocertificaterepresentingthe
ShareswillbeissuedtoParticipant,unlessanduntilsatisfactoryarrangements(asdeterminedbytheAdministrator)willhavebeen
madebyParticipantwithrespecttothepaymentofincome,employment,socialinsurance,NationalInsuranceContributions,payroll
tax, fringe benefit tax, payment on account or other tax-related items related to Participants participation in the Plan and legally
applicabletoParticipant,including,butnotlimitedto,thegrant,vestingorsettlementofthePerformance-BasedRestrictedStock
Units, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends (Tax-RelatedItems)
which the Company determines must be withheld with respect to such Shares. Prior to vesting and/or settlement of the
Performance-

-5-


BasedRestrictedStockUnits,ParticipantwillpayormakeadequatearrangementssatisfactorytotheCompanyand/orParticipants
employer (the Employer) to satisfy all withholding and payment obligations of Tax-Related Items of the Company and/or the
Employer. In this regard, Participant authorizes the Company and/or the Employer to withhold any Tax-Related Items legally
payablebyParticipantfromhisorherwagesorothercashcompensationpaidtoParticipantbytheCompanyand/ortheEmployeror
fromproceedsofthesaleofShares.Alternatively,orinaddition,ifpermissibleunderapplicablelocallaw,theAdministrator,inits
solediscretionandpursuanttosuchproceduresasitmayspecifyfromtimetotime,maypermitorrequireParticipanttosatisfysuch
taxwithholdingobligation,inwholeorinpart(withoutlimitation)by(a)payingcash,(b)electingtohavetheCompanywithhold
otherwise deliverable Shares having a Fair Market Value equal to the minimum amount required to be withheld, (c) selling a
sufficientnumberofsuchSharesotherwisedeliverabletoParticipantthroughsuchmeansastheCompanymaydetermineinitssole
discretion (whether through a broker or otherwise) equal to the amount required to be withheld, or (d) if Participant is a U.S.
employee,deliveringtotheCompanyalreadyvestedandownedShareshavingaFairMarketValueequaltotheamountrequiredto
bewithheld.TotheextentdeterminedappropriatebytheCompanyinitsdiscretion,itwillhavetheright(butnottheobligation)to
satisfy any obligations for Tax-Related Items by reducing the number of Shares otherwise deliverable to Participant [and, until
determinedotherwisebytheCompany,thiswillbethemethodbywhichsuchtaxwithholdingobligationsaresatisfied].Further,if
Participant is subject to tax in more than one jurisdiction between the Date of Grant and a date of any relevant taxable or tax
withholdingevent,asapplicable,ParticipantacknowledgesandagreesthattheCompanyand/ortheEmployer(orformeremployer,
asapplicable)mayberequiredtowithholdoraccountfortaxinmorethanonejurisdiction.IfParticipantfailstomakesatisfactory
arrangementsforthepaymentofanyTax-RelatedItemshereunderatthetimeanyapplicablePerformance-BasedRestrictedStock
Units otherwise are scheduled t o vest pursuant to Sections 3 or 4 or Tax-Related Items related to Performance-Based Restricted
StockUnitsotherwisearedue,ParticipantwillpermanentlyforfeitsuchPerformance-BasedRestrictedStockUnitsandanyrightto
receive Shares thereunder and the Performance-Based Restricted Stock Units will be returned to the Company at no cost to the
Company.RegardlessofanyactionoftheCompanyortheEmployer,Participantacknowledgesthattheultimateliabilityforall
Tax-RelatedItemsisandremainsParticipantsresponsibilityandmayexceedtheamountactuallywithheldbytheCompanyorthe
Employer. Participant further acknowledges that the Company and the Employer (1) make no representations or undertakings
regardingthetreatmentofanyTax-RelatedItemsinconnectionwithanyaspectofthePerformance-BasedRestrictedStockUnits;
and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Performance-Based
RestrictedStockUnitstoreduceoreliminateParticipantsliabilityforTax-RelatedItemsorachieveanyparticulartaxresult.

8.RightsasStockholder.NeitherParticipantnoranypersonclaimingunderorthroughParticipantwillhaveanyoftherights
or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until certificates
representing such Shares will have been issued, recorded on the records of the Company or its transfer agents or registrars, and
delivered toParticipant. After such issuance, recordation anddelivery, Participant willhave alltherights ofastockholder ofthe
CompanywithrespecttovotingsuchSharesandreceiptofdividendsanddistributionsonsuchShares.

-6-


9.NoGuaranteeof ContinuedService.PARTICIPANTACKNOWLEDGES ANDAGREES THATTHEVESTINGOF

THE PERFORMANCE-BASED RESTRICTED STOCK UNITS PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNEDONLYBYCONTINUINGASASERVICEPROVIDERATTHEWILLOFTHECOMPANY(ORTHEPARENTOR
SUBSIDIARYEMPLOYINGORRETAININGPARTICIPANT)ANDNOTTHROUGHTHEACTOFBEINGHIRED,BEING
GRANTED THIS AWARD OF PERFORMANCE-BASED RESTRICTED STOCK UNITS OR ACQUIRING SHARES
HEREUNDER. PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AWARD AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTEANEXPRESSORIMPLIEDPROMISEOFCONTINUEDENGAGEMENTASASERVICEPROVIDERFOR
THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY WITH
PARTICIPANTS RIGHT OR THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR
RETAINING PARTICIPANT) TO TERMINATE PARTICIPANTS RELATIONSHIP AS A SERVICE PROVIDER AT ANY
TIME,WITHORWITHOUTCAUSE,SUBJECTTOAPPLICABLELAWS.

10.NatureofGrant.Inacceptingthegrant,Participantacknowledges,understandsandagreesthat:

(a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified,
amended,suspendedorterminatedbytheCompanyatanytime,totheextentpermittedbythePlan;

(b) thegrantofthePerformance-BasedRestrictedStockUnitsisvoluntaryandoccasionalanddoesnotcreateany
contractualorotherrighttoreceivefuturegrantsofPerformance-BasedRestrictedStockUnits,orbenefitsin
lieuofPerformance-BasedRestrictedStockUnits,evenifPerformance-BasedRestrictedStockUnitshavebeen
grantedinthepast;

(c) alldecisionswithrespecttofuturePerformance-BasedRestrictedStockUnitsorothergrants,ifany,willbeat
thesolediscretionoftheCompany;

(d) ParticipantisvoluntarilyparticipatinginthePlan;

(e) the Performance-Based Restricted Stock Units and the Shares subject to the Performance-Based Restricted
StockUnitsarenotintendedtoreplaceanypensionrightsorcompensation;

(f) the Performance-Based Restricted Stock Units and the Shares subject to the Performance-Based Restricted
StockUnits,andtheincomeandvalueofsame,arenotpartofnormalorexpectedcompensationforpurposesof
calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses,
long-serviceawards,pensionorretirementorwelfarebenefitsorsimilarpayments;

-7-


(g) thefuturevalueoftheunderlyingSharesisunknown,indeterminableandcannotbepredictedwithcertainty;

(h) forpurposesofthePerformance-BasedRestrictedStockUnits,ParticipantsstatusasaServiceProviderwillbe
consideredterminatedasofthedateParticipantisnolongeractivelyprovidingservicestotheCompanyorany
ParentorSubsidiary(regardlessofthereasonforsuchterminationandwhetherornotlatertobefoundinvalid
or in breach of employment laws in the jurisdiction where Participant is a Service Provider or the terms of
Participants serviceagreement, ifany),andunlessotherwise expresslyprovided inthisAwardAgreement or
determined by the Administrator, Participants right to vest in the Performance-Based Restricted Stock Units
under the Plan, if any, will terminate as of such date and will not be extended by any notice period ( e.g. ,
Participantsperiodofservicewouldnotincludeanycontractualnoticeperiodoranyperiodofgardenleave
orsimilarperiodmandatedunderemploymentlawsinthejurisdictionwhereParticipantisaServiceProvideror
the terms of Participants service agreement, if any, unless Participant is providing bona fide services during
such time); the Administrator shall have the exclusive discretion to determine when Participant is no longer
actively providing services for purposes of the Performance-Based Restricted Stock Units grant (including
whetherParticipantmaystillbeconsideredtobeprovidingserviceswhileonaleaveofabsence);

(i) unless otherwise provided in the Plan or by the Company in its discretion, the Performance-Based Restricted
Stock Units and the benefits evidenced by this Award Agreement do not create any entitlement to have the
Performance-BasedRestrictedStockUnitsoranysuchbenefitstransferredto,orassumedby,anothercompany
nor be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the
Shares;and

(j) thefollowingprovisionsapplyonlyifParticipantisprovidingservicesoutsidetheUnitedStates:

i. the Performance-Based Restricted Stock Units and the Shares subject to the Performance-Based
RestrictedStockUnitsarenotpartofnormalorexpectedcompensationorsalaryforanypurpose;

ii. Participant acknowledges and agrees that none of the Company, the Employer, or any Parent or
SubsidiaryshallbeliableforanyforeignexchangeratefluctuationbetweenParticipantslocalcurrency
andtheUnitedStatesDollarthatmayaffectthevalueofthePerformance-BasedRestrictedStockUnits
or of any amounts due to Participant pursuant to the settlement of the Performance-Based Restricted
StockUnitsorthesubsequentsaleofanySharesacquireduponsettlement;and

-8-


iii. noclaimorentitlementtocompensationordamagesshallarisefromforfeitureofthePerformance-Based
Restricted Stock Units resulting from the termination of Participants status as a Service Provider (for
anyreasonwhatsoeverwhetherornotlaterfoundtobeinvalidorinbreachofemploymentlawsinthe
jurisdiction where Participant is a Service Provider or the terms of Participants service agreement, if
any), and in consideration of the grant of the Performance-Based Restricted Stock Units to which
Participantisotherwisenotentitled,Participantirrevocablyagreesnevertoinstituteanyclaimagainstthe
Company,anySubsidiaryortheEmployer,waiveshisorherability,ifany,tobringanysuchclaim,and
releases the Company, any Parent, any Subsidiary and the Employer from any such claim; if,
notwithstandingtheforegoing,anysuchclaimisallowedbyacourtofcompetentjurisdiction,then,by
participatinginthePlan,Participantshallbedeemedirrevocablytohaveagreednottopursuesuchclaim
andagreestoexecuteanyandalldocumentsnecessarytorequestdismissalorwithdrawalofsuchclaim.

11. No Advice Regarding Grant . The Company is not providing any tax, legal or financial advice, nor is the Company
makinganyrecommendationsorassessmentsregardingParticipantsparticipationinthePlan,orParticipantsacquisitionorsaleof
the underlying Shares. Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors
regardinghisorherparticipationinthePlanbeforetakinganyactionrelatedtothePlan.

12. Data Privacy . Participant understands that the Company and the Employer may collect, where permissible under
ApplicableLawcertainpersonalinformationaboutParticipant,including,butnotlimitedto,Participantsname,homeaddressand
telephonenumber,dateofbirth,socialinsurancenumberorotheridentificationnumber,salary,nationality,jobtitle,anySharesor
directorships held in the Company, details of all Performance-Based Restricted Stock Units granted under the Plan or any other
entitlementtoSharesawarded,canceled,vested,unvestedoroutstandinginParticipantsfavor(Data),fortheexclusivepurpose
ofimplementing,administeringandmanagingthePlan.ParticipantunderstandsthatCompanymaytransferParticipantsDatato
the United States, which is not considered by the European Commission to have data protection laws equivalent to the laws in
Participants country. The Company therefore maintains an EU-US Safe Harbor certification to protect Participants data
consistentwithdataprotectionlawsoftheEU.

ParticipantunderstandsthattheCompanywilltransferParticipantsDatatoitsdesignatedbroker,orsuchotherstockplanservice
providerasmaybeselectedbytheCompanyinthefuture,whichisassistingtheCompanywiththeimplementation,administration
and management of the Plan. Participant understands that the recipients of the Data may be located in the United States or
elsewhere, and that a recipients country of operation (e.g., the United States) may have different data privacy laws that the
European Commission or Participants jurisdiction does not consider to be equivalent to the protections in Participants
country.ParticipantunderstandsthatParticipantmayrequestalistwiththenamesandaddressesofanypotentialrecipientsofthe
Data by contacting Participants local human resources representative. Participant authorizes the Company, the Company's
designatedbrokerandanyotherpossible

-9-


recipientswhichmayassisttheCompanywithimplementing,administeringandmanagingthePlantoreceive,possess,use,retain
andtransfertheData,inelectronicorotherform,forthesolepurposeofimplementing,administeringandmanagingParticipants
participationinthePlan.ParticipantunderstandsthatDatawillbeheldonlyaslongasisnecessarytoimplement,administerand
manage Participants participation in the Plan. Participant understands that Participant may, at any time, view Data, request
additionalinformationaboutthestorageandprocessingofData,requireanynecessaryamendmentstoDataorrefuseorwithdraw
theconsentsherein,inanycasewithoutcost,bycontactinginwritingParticipantslocalhumanresourcesrepresentative.Further,
Participant understands that Participant is providing the consents herein on a purely voluntary basis. If Participant does not
consent,orifParticipantlaterseekstorevokeParticipantsconsent,ParticipantsemploymentstatusorcareerwiththeCompanyor
theEmployerwillnotbeadverselyaffected;theonlyadverseconsequenceofrefusingorwithdrawingParticipantsconsentisthat
the Company would not be able to grant Participant Performance-Based Restricted Stock Units under the Plan or other equity
awards, or administer or maintain such awards. Therefore, Participant understands that refusing or withdrawing Participants
consent may affect Participants ability to participate in the Plan. For more information on the consequences of Participants
refusal to consent or withdrawal of consent, Participant understands that Participant may contact Participants local human
resourcesrepresentative.

Participant understands that Participant has the right to access, and to request a copy of, the Data held about
Participant. Participant also understands that Participant has the right to discontinue the collection, processing, or use of
ParticipantsData,orsupplement,correct,orrequestdeletionofParticipantsData.ToexerciseParticipantsrights,Participant
maycontactParticipantslocalhumanresourcesrepresentative.

Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of
ParticipantspersonaldataasdescribedintheAwardAgreementandanyotherPlanmaterialsbyandamong,asapplicable,the
Employer, the Company and its Parents, Subsidiaries and affiliates for the exclusive purpose of implementing, administering and
managingParticipantsparticipationinthePlan.ParticipantunderstandsthatParticipantsconsentwillbesoughtandobtained
foranyprocessingortransferofParticipantsdataforanypurposeotherthanasdescribedintheAwardAgreementandanyother
planmaterials.

13.AddressforNotices.AnynoticetobegiventotheCompanyunderthetermsofthisAwardAgreementwillbeaddressed
totheCompanyatTwitter,Inc.,1355MarketStreet,Suite900,SanFrancisco,CA94103,oratsuchotheraddressastheCompany
mayhereafterdesignateinwriting.

14.GrantisNotTransferable . Except to the limited extent provided inSection 6, this grant and the rights and privileges
conferredherebywillnotbetransferred,assigned,pledgedorhypothecatedinanyway(whetherbyoperationoflaworotherwise)
and will not be subject to sale under execution, attachment or similar process. Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of this grant, or any right or privilege conferred hereby, or upon any attempted sale under any
execution,attachmentorsimilarprocess,thisgrantandtherightsandprivilegesconferredherebyimmediatelywillbecomenulland
void.

-10-


15.BindingAgreement.Subjecttothelimitationonthetransferabilityofthisgrantcontainedherein,thisAwardAgreement
willbebindinguponandinuretothebenefitoftheheirs,legatees,legalrepresentatives,successorsandassignsofthepartieshereto.

16.AdditionalConditionstoIssuanceofStock.IfatanytimetheCompanywilldetermine,initsdiscretion,thatthelisting,
registration,qualificationorrulecomplianceoftheSharesuponanysecuritiesexchangeorunderanystate,federalorforeignlaw,
thetaxcodeandrelatedregulationsortheconsentorapprovalofanygovernmentalregulatoryauthorityisnecessaryordesirableasa
conditiontotheissuanceofSharestoParticipant(orhisorherestate)hereunder,suchissuancewillnotoccurunlessanduntilsuch
listing,registration,qualification,rulecompliance,consentorapprovalwillhavebeencompleted,effectedorobtainedfreeofany
conditions not acceptable to the Company. Where the Company determines that the delivery of the payment of any Shares will
violatefederalsecuritieslawsorotherapplicablelaws,theCompanywilldeferdeliveryuntiltheearliestdateatwhichtheCompany
reasonablyanticipatesthatthedeliveryofShareswillnolongercausesuchviolation.TheCompanywillmakeallreasonableefforts
tomeettherequirementsofanysuchstate,federalorforeignlaworsecuritiesexchangeandtoobtainanysuchconsentorapproval
ofanysuchgovernmentalauthorityorsecuritiesexchange.

17.AwardAgreementGoverns.ThisAwardAgreementissubjecttoalltermsandprovisionsofthePlan.Intheeventofa
conflict between one or more provisions of this Award Agreement and one or more provisions of the Plan, the provisions of the
AwardAgreementwillgovern.CapitalizedtermsusedandnotdefinedinthisAwardAgreementwillhavethemeaningsetforthin
thePlan.

18.AdministratorAuthority.TheAdministratorwillhavethepowertointerpretthePlanandthisAwardAgreementandto
adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or
revokeanysuchrules(including,butnotlimitedto,thedeterminationofwhetherornotanyPerformance-BasedRestrictedStock
Unitshavevested).AllactionstakenandallinterpretationsanddeterminationsmadebytheAdministratoringoodfaithwillbefinal
and binding upon Participant, the Company and all other interested persons. No member of the Administrator will be personally
liableforanyaction,determinationorinterpretationmadeingoodfaithwithrespecttothePlanorthisAwardAgreement.

19.ElectronicDeliveryandAcceptance.TheCompanymay,initssolediscretion,decidetodeliveranydocumentsrelatedto
Performance-BasedRestrictedStockUnitsawardedunderthePlanorfuturePerformance-BasedRestrictedStockUnitsthatmaybe
awarded underthePlanbyelectronic meansorrequest Participants consent toparticipate inthe Plan byelectronic means. Such
meansofelectronicdeliverymayincludebutdonotnecessarilyincludethedeliveryofalinktoaCompanyintranetortheInternet
siteofathirdpartyinvolvedinadministeringthePlan,thedeliveryofthedocumentviae-mailorsuchothermeansofelectronic
delivery specified by the Company. Participant consents to the electronic delivery of the Plan and this Award
Agreement. Participant acknowledges that he or she may receive from the Company a paper copy of any documents delivered
electronicallyatnocosttoParticipantbycontactingtheCompanybytelephoneorinwriting.Participantfurtheracknowledgesthat

-11-


Participant will be provided with a paper copy of any documents if the attempted electronic delivery of such documents
fails.Similarly,ParticipantunderstandsthatParticipantmustprovidetheCompanyoranydesignatedthirdpartyadministratorwith
a paper copy of any documents if the attempted electronic delivery of such documents fails. Participant may revoke his or her
consent to the electronic delivery of documents or may change the electronic mail address to which such documents are to be
delivered(ifParticipanthasprovidedanelectronicmailaddress)atanytimebynotifyingtheCompanyofsuchrevokedconsentor
revisede-mailaddressbytelephone,postalserviceorelectronicmail.Finally,Participantunderstandsthatheorsheisnotrequired
toconsenttoelectronicdeliveryofdocuments.

20.Language.IfParticipanthasreceivedthisAwardAgreementoranyotherdocumentrelatedtothePlantranslatedintoa
languageotherthanEnglishandifthemeaningofthetranslatedversionisdifferentthantheEnglishversion,theEnglishversionwill
control,subjecttoApplicableLaws.

21. Captions . Captions provided herein are for convenience only and are not to serve as a basis for interpretation or
constructionofthisAwardAgreement.

22.AgreementSeverable.IntheeventthatanyprovisioninthisAwardAgreementwillbeheldinvalidorunenforceable,
such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the
remainingprovisionsofthisAwardAgreement.

23.Amendment,SuspensionorTerminationofthePlan.ByacceptingthisAward,Participantexpresslywarrantsthatheor
shehasreceivedanAwardofPerformance-BasedRestrictedStockUnitsunderthePlan,andhasreceived,readandunderstooda
description of the Plan. Participant understands that the Plan is discretionary in nature and may be amended, suspended or
terminatedbytheCompanyatanytime.

24.GoverningLawandVenue.ThisAwardAgreementwillbegovernedbythelawsofDelawarewithoutgivingeffectto
the conflict of law principles thereof. For purposes of litigating any dispute that arises under this Award of Performance-Based
Restricted Stock Units or this Award Agreement, the parties hereby submit to and consent to the jurisdiction of the State of
California,andagreethatsuchlitigationwillbeconductedinthecourtsoftheCountyofSanFrancisco,California,orthefederal
courts for the United States for the Northern District of California, and no other courts, where this Award of Performance-Based
RestrictedStockUnitsismadeand/ortobeperformed.

25. Country-Specific Terms and Conditions and Notices . Notwithstanding any provisions in this Award Agreement, the
Performance-BasedRestrictedStockUnitgrantshallbesubjecttoanyspecialtermsandconditionssetforthinanyappendixtothis
AwardAgreementforParticipantscountry(theAppendix).Moreover,ifParticipantrelocatestooneofthecountriesincludedin
theAppendix,thespecialtermsandconditionsforsuchcountrywillapplytoParticipant,totheextenttheCompanydeterminesthat
theapplicationofsuchtermsandconditionsisnecessaryoradvisableforlegaloradministrativereasons.TheAppendixconstitutes
partofthisAwardAgreement.

-12-


26.ModificationstotheAwardAgreement.ThePlanandthisAwardAgreementconstitutestheentireunderstandingofthe
partiesonthesubjectscovered.ParticipantexpresslywarrantsthatheorsheisnotacceptingthisAwardAgreementinrelianceon
anypromises,representations,orinducementsotherthanthosecontainedherein.ModificationstothisAwardAgreementorthePlan
canbemadeonlyinanexpresswrittencontractexecutedbyadulyauthorizedofficeroftheCompany.Notwithstandinganythingto
the contrary in the Plan or this Award Agreement, the Company reserves the right to revise the Award Agreement as it deems
necessary or advisable, in its sole discretion and without the consent of Participant, subject to Applicable Laws, to comply with
Section409AortootherwiseavoidimpositionofanyadditionaltaxorincomerecognitionunderSection409Ainconnectiontothis
AwardofPerformance-BasedRestrictedStockUnits.

27.Waiver.ParticipantacknowledgesthatawaiverbytheCompanyofbreachofanyprovisionofthisAwardAgreement
shall not operate or be construed as a waiver of any other provision of this Award Agreement, or of any subsequent breach by
ParticipantoranyotherParticipant.

28. Clawback . The Performance-Based Restricted Stock Unit s (including any proceeds, gains or other economic benefit
receivedbytheParticipantfromasubsequentsaleofSharesissueduponvesting)willbesubjecttoanyCompanyclawbackpolicyas
maybeadoptedoramendedfromtimetotime.

-13-

EXHIBIT B

PERFORMANCE-BASED RESTRICTED STOCK UNIT MATRIX

ThefollowingtermsshallapplytotheAwardofPerformance-BasedRestrictedStockUnitsgrantedtotheParticipantidentifiedin
the Notice of Grant to which this Performance-Based Restricted Stock Unit Matrix is attached. Unless otherwise defined herein,
capitalizedtermsshallhavethemeaningssetforthinthePlanorAwardAgreement,asapplicable.

Performance Metrics and

Weighting:
Award Determination and Payout: TheAdministratorwilldetermineachievementoftheperformancemetricsinthefirstquarter
followingeachcompletedfiscalyear.TheactualnumberofPerformance-BasedRestricted
StockUnitssubjecttovestingundertheAwardAgreement,ifany,uponachievementofthe
performancemetricswillberoundeddowntothenearestwholenumbersoastoavoid
fractionalunits,andwillbereferredtointheAwardAgreementanditsExhibitsasEarned
Units.


SCHEDULE 1
PERFORMANCE METRICS

Fiscal Year


Exhibit 23.1

CONSENTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM

WeherebyconsenttotheincorporationbyreferenceintheRegistrationStatementsonFormS-8(Nos.333-192150,333-195743,333-198055,333-202443,333-
204774and333-207597)andtheRegistrationStatementonFormS-3(No.333-204775)ofTwitter,Inc.ofourreportdatedFebruary29,2016relatingtothe
financialstatements,financialstatementscheduleandtheeffectivenessofinternalcontroloverfinancialreporting,whichappearsinthisForm10-K.

/s/PricewaterhouseCoopersLLP

SanJose,California
February29,2016

 Exhibit 31.1

CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I,JackDorsey,certifythat:
1.IhavereviewedthisAnnualReportonForm10-KofTwitter,Inc.;
2.Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessarytomakethestatements
made,inlightofthecircumstancesunderwhichsuchstatementsweremade,notmisleadingwithrespecttotheperiodcoveredbythisreport;
3.Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterialrespectsthefinancial
condition,resultsofoperationsandcashflowsoftheregistrantasof,andfor,theperiodspresentedinthisreport;
4.Theregistrant'sothercertifyingofficerandIareresponsibleforestablishingandmaintainingdisclosurecontrolsandprocedures(asdefinedinExchangeAct
Rules13a15(e)and15d15(e))andinternalcontroloverfinancialreporting(asdefinedinExchangeActRules13a15(f)and15d15(f))fortheregistrantand
have:
(a)Designedsuchdisclosurecontrolsandprocedures,orcausedsuchdisclosurecontrolsandprocedurestobedesignedunderoursupervision,toensurethat
materialinformationrelatingtotheregistrant,includingitsconsolidatedsubsidiaries,ismadeknowntousbyotherswithinthoseentities,particularlyduringthe
periodinwhichthisreportisbeingprepared;
(b)Designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreportingtobedesignedunderoursupervision,toprovide
reasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerally
acceptedaccountingprinciples;
(c)Evaluatedtheeffectivenessoftheregistrant'sdisclosurecontrolsandproceduresandpresentedinthisreportourconclusionsabouttheeffectivenessofthe
disclosurecontrolsandprocedures,asoftheendoftheperiodcoveredbythisreportbasedonsuchevaluation;and
(d)Disclosedinthisreportanychangeintheregistrant'sinternalcontroloverfinancialreportingthatoccurredduringtheregistrant'smostrecentfiscalquarter(the
registrant'sfourthfiscalquarterinthecaseofanannualreport)thathasmateriallyaffected,orisreasonablylikelytomateriallyaffect,theregistrant'sinternal
controloverfinancialreporting;and;
5.Theregistrant'sothercertifyingofficerandIhavedisclosed,basedonourmostrecentevaluationofinternalcontroloverfinancialreporting,totheregistrant's
auditorsandtheauditcommitteeoftheregistrant'sboardofdirectors(orpersonsperformingtheequivalentfunctions):
(a)Allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancialreportingwhicharereasonablylikelyto
adverselyaffecttheregistrant'sabilitytorecord,process,summarizeandreportfinancialinformation;and
(b)Anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleintheregistrant'sinternalcontroloverfinancial
reporting.

Date:February29,2016

/s/JackDorsey
JackDorsey
ChiefExecutiveOfficer
(PrincipalExecutiveOfficer)

 Exhibit 31.2

CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I,AnthonyNoto,certifythat:
1.IhavereviewedthisAnnualReportonForm10-KofTwitter,Inc.;
2.Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessarytomakethestatements
made,inlightofthecircumstancesunderwhichsuchstatementsweremade,notmisleadingwithrespecttotheperiodcoveredbythisreport;
3.Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterialrespectsthefinancial
condition,resultsofoperationsandcashflowsoftheregistrantasof,andfor,theperiodspresentedinthisreport;
4.Theregistrant'sothercertifyingofficerandIareresponsibleforestablishingandmaintainingdisclosurecontrolsandprocedures(asdefinedinExchangeAct
Rules13a15(e)and15d15(e))andinternalcontroloverfinancialreporting(asdefinedinExchangeActRules13a15(f)and15d15(f))fortheregistrantand
have:
(a)Designedsuchdisclosurecontrolsandprocedures,orcausedsuchdisclosurecontrolsandprocedurestobedesignedunderoursupervision,toensurethat
materialinformationrelatingtotheregistrant,includingitsconsolidatedsubsidiaries,ismadeknowntousbyotherswithinthoseentities,particularlyduringthe
periodinwhichthisreportisbeingprepared;
(b)Designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreportingtobedesignedunderoursupervision,toprovide
reasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerally
acceptedaccountingprinciples;
(c)Evaluatedtheeffectivenessoftheregistrant'sdisclosurecontrolsandproceduresandpresentedinthisreportourconclusionsabouttheeffectivenessofthe
disclosurecontrolsandprocedures,asoftheendoftheperiodcoveredbythisreportbasedonsuchevaluation;and
(d)Disclosedinthisreportanychangeintheregistrant'sinternalcontroloverfinancialreportingthatoccurredduringtheregistrant'smostrecentfiscalquarter(the
registrant'sfourthfiscalquarterinthecaseofanannualreport)thathasmateriallyaffected,orisreasonablylikelytomateriallyaffect,theregistrant'sinternal
controloverfinancialreporting;and
5.Theregistrant'sothercertifyingofficerandIhavedisclosed,basedonourmostrecentevaluationofinternalcontroloverfinancialreporting,totheregistrant's
auditorsandtheauditcommitteeoftheregistrant'sboardofdirectors(orpersonsperformingtheequivalentfunctions):
(a)Allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancialreportingwhicharereasonablylikelyto
adverselyaffecttheregistrant'sabilitytorecord,process,summarizeandreportfinancialinformation;and
(b)Anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleintheregistrant'sinternalcontroloverfinancial
reporting.

Date:February29,2016

/s/AnthonyNoto
AnthonyNoto
ChiefFinancialOfficer
(PrincipalFinancialOfficer)

 Exhibit 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

I,JackDorsey,certify,pursuantto18U.S.C.Section1350,asadoptedpursuanttoSection906oftheSarbanes-OxleyActof2002,thattheAnnualReportonForm
10-KofTwitter,Inc.forthefiscalyearendedDecember31,2015fullycomplieswiththerequirementsofSection13(a)or15(d)oftheSecuritiesExchangeActof
1934andthatinformationcontainedinsuchAnnualReportonForm10-Kfairlypresents,inallmaterialrespects,thefinancialconditionandresultsofoperations
ofTwitter,Inc.

Date:February29,2016 By: /s/JackDorsey

Name: JackDorsey
Title: ChiefExecutiveOfficer

I,AnthonyNoto,certify,pursuantto18U.S.C.Section1350,asadoptedpursuanttoSection906oftheSarbanes-OxleyActof2002,thattheAnnualReporton
Form10-KofTwitter,Inc.forthefiscalyearendedDecember31,2015fullycomplieswiththerequirementsofSection13(a)or15(d)oftheSecuritiesExchange
Actof1934andthat information contained insuchAnnualReportonForm10-Kfairly presents, inall material respects, the financial condition andresults of
operationsofTwitter,Inc.

Date:February29,2016 By: /s/AnthonyNoto

Name: AnthonyNoto
Title: ChiefFinancialOfficer