Convertible Notes |
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| Convertible Notes | Note 8 - Convertible Notes In September 2025, the Company completed its IPO which qualified as Qualified Initial Public Offering ("Qualified IPO") as defined in the respective indentures governing the 2028 Notes and the 2029 Notes. As a result, the conversion rate for the 2028 Notes was finalized at 42.1046 shares of Class B common stock per $1,000 principal amount, representing a conversion price of approximately $23.75 per share. The conversion rate for the 2029 Notes was finalized at 40.4858 shares of Class B common stock per $1,000 principal amount, representing a conversion price of approximately $24.70 per share. 2028 Notes In December 2022, the Company issued $401.0 million of the 2028 Notes under an indenture with U.S. Bank Trust Company, National Association, as trustee. In April 2025, the 2028 Notes were amended to extend the maturity to December 15, 2028, upon a Qualified IPO, to modify the optional repurchase period to 120 - 91 days before the new maturity date, and to adjust redemption conditions post-Qualified IPO. The 2028 Notes accrue interest at 3.75% per annum, payable quarterly in cash or PIK at the Company's election, and are convertible into the Company's Class B common stock. The Company may redeem the notes after the one-year anniversary of a Qualified IPO if the stock price exceeds 200% (or 230% post-December 15, 2027) of the conversion price for a specific period unless it is a redemption in connection with a change in tax law, or Tax Redemption. Holders may request the Company to repurchase their 2028 Notes with a minimum return of 14.0% compounded quarterly, or upon a fundamental change at a premium of 140% - 170% of principal, depending on timing. The Company elected the fair value option under ASC 825. 2029 Notes In September 2024, the Company issued $75.0 million of the 2029 Notes under an indenture with U.S. Bank Trust Company, National Association, as trustee. The 2029 Notes accrue interest at 3.00% per annum, payable quarterly in cash or PIK, and are convertible into the Company's Class B common stock. Conversion, redemption, and repurchase terms are substantially similar to the 2028 Notes, except for a minimum return of 13.5% compounded quarterly for optional repurchase and a $50.0 million minimum outstanding threshold for partial redemptions. The notes are accounted for under the fair value option. The change in the fair value of the 2028 Notes and 2029 Notes, and the related impact on the condensed consolidated statement of operations and the condensed consolidated statements of comprehensive loss, are presented below (in thousands):
PIK interest expense included in the fair value changes for the 2028 Notes was $4.1 million and $4.0 million for the three months ended April 30, 2026 and 2025, respectively. For the 2029 Notes, PIK interest expense was $0.6 million and $0.6 million for the three months ended April 30, 2026 and 2025, respectively. |
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