Long-term Debt |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term Debt | Long-term Debt 2031 Convertible senior notes In May 2026, the Company issued $1,350.0 million aggregate principal amount of 0% Convertible Senior Notes due 2031 (the “Notes”), which included the full exercise of the initial purchasers’ option to purchase an additional $150.0 million principal amount of the Notes. The Notes are general unsecured obligations of the Company and will mature on June 15, 2031, unless earlier converted, redeemed or repurchased. The Notes do not bear regular cash interest. The total net proceeds from the issuance of the Notes, after deducting initial purchasers’ discounts and commissions and debt issuance costs, were approximately $1,316.8 million. Each $1,000 principal amount of the Notes is initially convertible into 0.9611 shares of the Company's common stock, which is equivalent to an initial conversion price of approximately $1,040.47 per share of common stock, subject to adjustment upon the occurrence of specified events. The initial conversion price represents a premium of approximately 50% to the $693.66 per share closing price of the Company’s common stock on May 19, 2026. The Notes are convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding March 15, 2031, only under the following conditions: (1)at any time during the 30 consecutive trading day period beginning on, and including, the 21st trading day of any calendar quarter commencing after the calendar quarter ending on September 30, 2026, if the last reported sale price of the Company's common stock exceeds 130% of the conversion price for each of at least 5 trading days (whether or not consecutive) during the first 20 consecutive trading days of such calendar quarter; (2)during the 5 business day period after any 10 consecutive trading day period (the “Measurement Period”) in which the trading price per $1,000 principal amount of the Notes for each trading day of such Measurement Period was less than 98% of the product of the last reported sale price of the Company's common stock and the conversion rate on each such trading day; (3)if the Company calls any Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (4)upon the occurrence of specified distributions or corporate events. On or after March 15, 2031 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Notes at their option at any time, regardless of the foregoing conditions. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company's common stock, or a combination of cash and shares of the Company's common stock, at the Company's election. The Company may redeem for cash all or any portion of the Notes (subject to the partial redemption limitation as set forth in the indenture), at its option, on a redemption date on or after June 20, 2029 if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus any accrued and unpaid special interest, if any, to, but excluding, the redemption date. In addition, the Company may also redeem for cash all, but not less than all, of the Notes at any time if the principal amount of the Notes outstanding at such time is less than 25% of the aggregate principal amount of the Notes initially issued under the indenture at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the relevant redemption date. If the Company undergoes a fundamental change which may include, but not limited to, events such as liquidation of the Company, sale/lease/transfer of all assets of the Company and other events as defined in the indenture, subject to certain conditions, holders of the Notes may require the Company to repurchase for cash all or any portion of their notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid special interest to, but excluding, the fundamental change repurchase date. There have been no changes to the initial conversion price of the Notes since issuance. During the three months ended June 30, 2026, none of the conditions described above allowing holders of the Notes to convert the Notes were met and were hence not convertible during this period. The Notes are accounted for as a single liability and were classified as long-term liabilities in the Company’s Consolidated Balance Sheets as of June 30, 2026. The issuance cost related to the Notes is amortized into interest expense over the term of the Notes at an effective interest rate of 0.49%. As of June 30, 2026, the estimated fair value of the Notes was $1,499.6 million. The fair value was determined based on quoted price of the Notes in an inactive market on the last trading day of the reporting period and have been classified as Level 2 in the fair value hierarchy. The net carrying amount of the Notes was as follows:
Interest expense related to the Notes was $0.7 million for the three and six months ended June 30, 2026, consisting of amortization of debt issuance costs. The Notes do not bear contractual interest. Capped call transactions In connection with the issuance of the Notes, the Company entered into privately negotiated capped call transactions (the “Capped Call”) with the underwriters or their affiliates and certain other financial institutions. The Capped Call is expected generally to reduce the potential dilution to the Company’s common stock upon any conversion of the Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap based on the cap price. The cap price of the Capped Call is initially $1,734.15 per share, and is subject to certain adjustments under the terms of the Capped Call. The Capped Call covers approximately 1.3 million shares of the Company’s common stock, subject to adjustments under the terms of the Capped Call. The Capped Call meets the conditions under the related accounting criteria for equity classification, and is recorded in Additional paid-in capital. The Capped Call will not be remeasured as long as it continues to meet the conditions for equity classification. Revolving credit facility On June 30, 2026, the Company entered into a Credit Agreement with Wells Fargo Bank, National Association as administrative agent and the lenders party thereto (the "Credit Agreement"), which provides a $200.0 million revolving credit facility. As of June 30, 2026, unamortized deferred financing costs of $0.4 million associated with the revolving credit facility were recorded in Other current assets and $1.6 million were recorded in Other assets. The costs are amortized on a straight-line basis, which approximates the effective interest method, over the contractual term of the revolving credit facility of five years. No amounts were outstanding under the revolving credit facility as of June 30, 2026. Borrowings under the revolving credit facility bear interest at variable rates based on SOFR or an alternate base rate, plus an applicable margin. The Company is also required to pay a commitment fee on the unused portion of the revolving credit facility. The Credit Agreement contains customary affirmative and negative covenants, including restrictions on liens, investments, indebtedness, fundamental changes, restricted payments, affiliate transactions and certain other matters. In addition, the Credit Agreement contains financial covenants requiring the Company to maintain a maximum Total Net Leverage Ratio of 4.50:1.00 for the fiscal quarter ending September 30, 2026, 4.00:1.00 for the fiscal quarters ending December 31, 2026 and March 31, 2027, and 3.50:1.00 for the fiscal quarter ending June 30, 2027 and each fiscal quarter thereafter, as well as a minimum Interest Coverage Ratio of 3.00:1.00. The Total Net Leverage Ratio covenant is subject to a 0.50:1.00 increase for four fiscal quarters following a material acquisition, as defined in the Credit Agreement. As of June 30, 2026, the Company was in compliance with all applicable covenants under the Credit Agreement.
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