On June 25, 2020, we issued $1,150.0 million in aggregate principal amount of 0.125% Convertible Senior Notes due 2025 (the “Notes”), including the exercise in full by the initial purchasers of the Notes of their option to purchase an additional $150.0 million principal amount of the Notes. The Notes are unsecured obligations and bear interest at a rate of 0.125% per year and interest is payable semiannually in arrears on January 1 and July 1 of each year, beginning on January 1, 2021. The Notes mature on July 1, 2025, unless earlier converted, redeemed or repurchased. The total net proceeds from the offering, after deducting initial purchase discounts and other debt issuance costs, was $1,130.5 million. Refer to Note 9, Convertible Senior Notes, in the Notes to Consolidated Financial Statements included in our Fiscal 2022 Form 10-K for further information on the Notes.


	January 31,		July 31,
	2023		2022

	(in thousands)
Principal amount	$	1,149,993	$	1,149,995
Less:
Unamortized debt discount (1)	—		172,169
Unamortized debt issuance costs (1)	9,477		9,152
Net carrying amount	$	1,140,516	$	968,674

(1) Effective August 1, 2022, we adopted ASU 2020-06 using the modified retrospective method under which prior period amounts have not been adjusted. The adoption of this standard resulted in the elimination of the debt discount and related amortization as interest expense and the classification of the portion of the debt issuance costs initially allocated to equity within the carrying amount of our senior convertible notes, which is recognized as interest expense post adoption of the standard.


	Three Months Ended January 31,				Six Months Ended January 31,
	2023		2022		2023		2022

	(in thousands)
Contractual interest expense	$	360	$	359	$	719	$	719
Amortization of debt discount (1)	—		12,990		—		25,785
Amortization of debt issuance costs (1)	973		691		1,945		1,371
Total	$	1,333	$	14,040	$	2,664	$	27,875

(1) The decrease in total interest expense for the three and six months ended January 31, 2023, was due to the derecognition of unamortized debt discount partially offset by the increase in the amortization of issuance costs previously recognized in equity. These changes were the result of adoption of ASU 2020-06, as described in Note 1, Business and Summary of Significant Accounting Policies.

The total fair value of the Notes was $1,259.9 million and $1,418.5 million as of January 31, 2023 and July 31, 2022, respectively. The fair value was determined based on the closing trading price per $1,000 of the Notes as of the last day of trading for the period. We consider the fair value of the Notes as of January 31, 2023 to be a Level II measurement as they

In connection with the pricing of the Notes, we entered into capped call transactions with the option counterparties (the "Capped Calls"). The Capped Calls each have an initial strike price of $150.80 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Notes. The Capped Calls have an initial cap price of $246.76 per share, subject to certain adjustments. The Capped Calls are generally expected to reduce potential dilution to our common stock upon any conversion of the Notes and/or offset any cash payments we are required to make in excess of the principal amount of the converted Notes, as the case may be, with such reduction and/or offset subject to a cap. During the three and six months ended January 31, 2023 and 2022, we have not exercised any Capped Call options. Refer to Note 9, Convertible Senior Notes, in the Notes to Consolidated Financial Statements included in our Fiscal 2022 Form 10-K for further information on the Capped Calls.