Convertible Senior Notes |
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| Convertible Senior Notes | Convertible Senior Notes 2028 Convertible Senior Notes On July 3, 2025, we issued $1,725.0 million in aggregate principal amount of 0.0% convertible senior notes due 2028 (the "2028 Notes"), including the exercise in full by the initial purchasers of their option to purchase an additional $225.0 million principal amount of the 2028 Notes. The 2028 Notes are unsecured obligations and do not bear regular cash interest and the principal amount of the 2028 Notes will not accrete. The 2028 Notes mature on July 15, 2028, unless earlier converted or repurchased. The total net proceeds from the offering, after deducting initial purchase discounts and other debt issuance costs, was $1,700.0 million. Refer to Note 10, Convertible Senior Notes, to the audited consolidated financial statements included in our Fiscal 2025 Form 10-K for further information on the 2028 Notes. During the three months ended April 30, 2026, the conditions allowing holders of the 2028 Notes to convert were not met. Since we have the election of repaying the 2028 Notes in cash, shares of our common stock, or a combination of both, we have classified the 2028 Notes as a noncurrent liability in the condensed consolidated balance sheet as of April 30, 2026. During the three months ended October 31, 2025, we entered into interest rate swap contracts designated as fair value hedges covering a portion of the outstanding 2028 Notes. For further information refer to Note 8, Derivative Instruments. The net carrying amount of the 2028 Notes consisted of the following:
The total fair value of the 2028 Notes was $1,569.4 million and $1,686.5 million as of April 30, 2026 and July 31, 2025. The fair value was determined based on the closing trading price per $1,000 of the 2028 Notes as of the last day of trading for the reporting period. We considered the fair value of the 2028 Notes as of April 30, 2026 to be a Level II measurement as they are not actively traded. The interest expense of the 2028 Notes for the three and nine months ended April 30, 2026 was $2.0 million and $6.1 million, which consisted of the amortization of debt issuance costs. 2028 Capped Call Transactions In connection with the pricing of the 2028 Notes, we entered into capped call transactions (the "2028 Capped Calls") with certain financial institutions (the "Option Counterparties"). The 2028 Capped Calls have an initial strike price of $439.52 per share of our common stock, subject to certain adjustments, which corresponds to the initial conversion price of the 2028 Notes. The 2028 Capped Calls have an initial cap price of $784.85 per share of our common stock, subject to certain adjustments. The 2028 Capped Calls cover, subject to anti-dilution adjustments substantially similar to those applicable to the 2028 Notes, the number of shares of our common stock underlying the 2028 Notes. The 2028 Capped Calls are generally expected to reduce potential dilution to our common stock upon any conversion of the 2028 Notes and/or offset any cash payments we are required to make in excess of the principal amount of the converted 2028 Notes, as the case may be, with such reduction and/or offset subject to a cap. As of April 30, 2026, the terms of the 2028 Capped Calls have not been adjusted. Refer to Note 10, Convertible Senior Notes, to the audited consolidated financial statements included in our Fiscal 2025 Form 10-K for further information on the 2028 Capped Calls. 2025 Convertible Senior Notes and 2025 Capped Call Transactions On June 25, 2020, we issued $1,150.0 million in aggregate principal amount of 0.125% convertible senior notes due 2025 (the "2025 Notes"). The 2025 Notes were unsecured obligations and bore a contractual interest rate of 0.125% per year with interest payable semiannually in arrears on January 1 and July 1 of each year. The 2025 Notes matured on July 1, 2025. We repaid the 2025 Notes in full by paying the principal amount of $1,150.0 million in cash and settling the premium amount by issuing 3.8 million new shares of our common stock. Additionally, we received 2.4 million shares of our common stock from the capped call transactions related to the 2025 Notes. The interest expense of the 2025 Notes consisted of the following:
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