v3.25.4
Convertible Senior Notes
 12 Months Ended
Dec. 31, 2025
Debt Disclosure [Abstract]  
Convertible Senior Notes Convertible Senior Notes
In August 2020, we issued $1.0 billion in aggregate principal amount of 0% convertible senior notes due in 2026 (2026 notes). The 2026 notes bear no interest and will mature on September 1, 2026, unless repurchased, redeemed or converted in accordance with their terms prior to such date. As of December 31, 2025, the total principal amount of 2026 notes outstanding was $53.9 million and 9,297,800 shares remained underlying the 2026 notes.

In March/April 2019, we issued $800 million in aggregate principal amount of 0.125% convertible senior notes due in 2025 (2025 notes). The 2025 notes matured on March 15, 2025 and we paid $358.9 million to repay the outstanding 2025 notes which was classified as a financing activity on our consolidated statements of cash flows.

Each $1,000 principal amount of the 2026 notes will initially be convertible into 9.2978 shares of our common stock. This is equivalent to an initial conversion price of approximately $107.55 per share, which is subject to adjustment in certain circumstances. Prior to the close of business on the business day immediately preceding June 1, 2026 for the 2026 notes, the notes are convertible at the option of holders only upon satisfaction of certain circumstances. As of December 31, 2025, the circumstances allowing holders of the 2026 notes to convert were not met. On or after June 1, 2026 until the close of business on the second scheduled trading day immediately preceding the maturity dates, holders may convert their notes at any time, regardless of the circumstances. Upon conversion, the notes may be settled in shares of our common stock, cash or a combination of cash and shares of our common stock, at our election. As of December 31, 2025, the 2026 notes were classified as a current liability on our consolidated balance sheets as they will be convertible at the option of the holders at any time beginning June 1, 2026 and will mature on September 1, 2026, both of which are within the next twelve months.

In December 2025, in connection with our securities repurchase program, we extinguished $8.9 million aggregate principal amount of the 2026 notes in privately-negotiated transactions for a total consideration of $8.3 million, which was paid to the holders in cash. We also incurred an immaterial amount of fees resulting in a total reacquisition price of $8.4 million. The carrying amount of the extinguished notes was $8.8 million resulting in a $0.5 million gain on early extinguishment of debt. We elected to reacquire and not cancel the extinguished 2026 notes and left the associated capped call transactions outstanding.

In March 2025, in connection with our securities repurchase program, we extinguished $65.2 million aggregate principal amount of the 2026 notes in privately-negotiated transactions for a total consideration of $57.4 million, which was paid to the holders in cash. We also incurred approximately $0.2 million in fees resulting in a total reacquisition price of $57.6 million. The carrying amount of the extinguished notes was $64.9 million resulting in a $7.4 million gain on early extinguishment of debt. We elected to reacquire and not cancel the extinguished 2026 notes and left the associated capped call transactions outstanding.
The following table presents the net carrying amount of the notes (in thousands):
December 31, 2025December 31, 2024
2026 Notes2025 Notes2026 Notes2025 Notes
Principal amount$53,860 $— $127,906 $358,914 
Unamortized issuance costs(95)— (562)(309)
Net carrying amount$53,765 $— $127,344 $358,605 
    
The following table presents the total interest expense recognized related to the notes (in thousands):
Years Ended December 31,
202520242023
2026 notes:
Contractual interest expense
$— $— $— 
Amortization of issuance costs192 620 1,035 
Total 2026 notes interest expense$192 $620 $1,035 
2025 notes:
Contractual interest expense$90 $443 $621 
Amortization of issuance costs308 1,527 2,121 
Total 2025 notes interest expense$398 $1,970 $2,742 

Capped Call Transactions

Concurrently with the offering of the 2026 notes, we used $103.4 million of the net proceeds to enter into privately negotiated capped call transactions which are expected to reduce or offset potential dilution to holders of our common stock upon conversion of the notes or offset the potential cash payments we would be required to make in excess of the principal amount of any converted notes. The capped call transactions automatically exercise upon conversion of the notes and as of December 31, 2025, cover 9,297,800 shares of our common stock for the 2026 notes. These are intended to effectively increase the overall conversion price from $107.55 to $156.44 per share for the 2026 notes. The effective increase in conversion price as a result of the capped call transactions serves to reduce potential dilution to holders of our common stock and/or offset the cash payments we are required to make in excess of the principal amount of any converted notes. As these transactions meet certain accounting criteria, they are recorded in stockholders’ equity as a reduction of additional paid-in capital on our consolidated balance sheets and are not accounted for as derivatives. The fair value of the capped call instrument is not remeasured each reporting period. The cost of the capped call is not expected to be deductible for tax purposes.