Debt |
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Jun. 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt | 7. Debt Revolving Credit Facility The Company maintains a revolving credit facility (the “Credit Facility”) under a credit agreement with Bank of America, N.A., as administrative agent, as amended (the “Credit Agreement”), providing for borrowings of up to $150.0 million, including a $15.0 million sublimit for letters of credit and a $10.0 million swingline subfacility. The Credit Facility matures on the earlier of (a) May 1, 2029 or (b) the date that is 91 days prior to the scheduled maturity date or mandatory conversion date of the Company’s outstanding 2028 Convertible Notes. Borrowings under the Credit Facility bear interest, at the Company’s election, based on a base rate or the Secured Overnight Financing Rate (“SOFR”), plus an applicable margin, and the Company pays a quarterly commitment fee on the unused portion of the Credit Facility, in each case, based on the Company’s consolidated total leverage ratio. The Credit Agreement contains financial covenants requiring the Company to maintain a maximum consolidated senior secured leverage ratio and a minimum consolidated fixed charge coverage ratio, and the Credit Facility is secured by substantially all of the assets of the Company and its domestic subsidiaries. See Note 7, “Debt,” in the Company’s Annual Report on Form 10-K filed with the SEC on February 19, 2026, for further information regarding the terms of the Credit Facility. As of June 30, 2026, unamortized debt issuance costs related to the Credit Facility were $0.6 million, of which $0.2 million were included in prepaid expenses and other current assets and $0.4 million were included in other long-term assets. As of December 31, 2025, unamortized debt issuance costs were $0.7 million, of which $0.2 million were included in prepaid expenses and other current assets and $0.5 million were included in other long-term assets. As of June 30, 2026, the Company had no outstanding borrowings under the Credit Facility and was in compliance with all financial and non-financial covenants for all periods presented. As of June 30, 2026, the available borrowing capacity under the Credit Facility was $150.0 million. On July 25, 2026, the Company entered into a third amendment to the Credit Agreement. Effective as of July 25, 2026, the Credit Agreement was amended to increase the aggregate amount of certain restricted payments the Company is permitted to make in any fiscal year from $20.0 million to $40.0 million, or if greater, 20% of TTM consolidated EBITDA, subject to the Company maintaining a pro forma consolidated senior secured leverage ratio at least 0.50 to 1.00 inside the maximum then-applicable consolidated senior secured leverage ratio covenant. Convertible Senior Notes and Capped Call Transactions 2026 Convertible Notes In February 2020, the Company issued $400.0 million aggregate principal amount of 0.25% Convertible Notes due 2026 (the “2026 Convertible Notes”). The 2026 Convertible Notes matured on March 1, 2026, at which time the Company paid the remaining $7.6 million outstanding principal and accrued interest in cash to settle the 2026 Convertible Notes in full. No 2026 Convertible Notes remain outstanding. 2028 Convertible Notes In March 2021, the Company issued $250.0 million aggregate principal amount of 0.50% Convertible Notes due 2028 (the “2028 Convertible Notes”), which mature on April 1, 2028 unless earlier repurchased, redeemed, or converted. Each $1,000 principal amount is initially convertible into 5.5781 shares of the Company's Class A common stock, equivalent to an initial conversion price of approximately $179.27 per share. See Note 7, “Debt,” in the Company’s Annual Report on Form 10-K filed with the SEC on February 19, 2026, for further information regarding the terms of the 2028 Convertible Notes, including redemption, conversion, and fundamental change provisions. During March 2026, the Company entered into separate, privately negotiated repurchase agreements with a limited number of holders of the 2028 Convertible Notes (the “March 2026 Repurchases”) to repurchase approximately $100.0 million aggregate principal amount of the 2028 Convertible Notes for an aggregate cash price of approximately $92.0 million. The March 2026 Repurchases closed on March 4, 2026. The difference between the consideration used for the March 2026 Repurchases and the carrying value of the 2028 Convertible Notes resulted in a gain on extinguishment of debt of $7.3 million for the three months ended March 31, 2026. During June 2026, the Company entered into separate, privately negotiated repurchase agreements with a limited number of holders of the 2028 Convertible Notes (the “June 2026 Repurchases”) to repurchase approximately $122.5 million aggregate principal amount of the 2028 Convertible Notes for an aggregate cash price of approximately $116.5 million. The June 2026 Repurchases closed on June 18, 2026. The difference between the consideration used for the June 2026 Repurchases and the carrying value of the 2028 Convertible Notes resulted in a gain on extinguishment of debt of $5.2 million for the three months ended June 30, 2026. In the aggregate, the March 2026 Repurchases and June 2026 Repurchases resulted in a gain of $12.5 million on the extinguishment of debt recorded within net gain on extinguishment of debt on the Company’s condensed consolidated statements of operations for the six months ended June 30, 2026. Following the March 2026 Repurchases and June 2026 Repurchases, approximately $27.5 million aggregate principal amount of the 2028 Convertible Notes remains outstanding. The capped call transactions entered into in connection with the 2028 Convertible Notes remain in effect notwithstanding the repurchases. During the three and six months ended June 30, 2026, the conditions allowing the holders of the 2028 Convertible Notes to convert were not met. 2032 Convertible Notes On June 18, 2026, the Company issued $316.3 million aggregate principal amount of 0% Convertible Notes due July 1, 2032 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act (the “2032 Convertible Notes” and, together with the 2028 Convertibles Notes, the “Convertible Notes”). The notes will not bear regular interest, and the principal amount will not accrete. The 2032 Convertible Notes may bear special interest under specified circumstances relating to the Company’s failure to comply with its reporting obligations under the indenture governing the 2032 Convertible Notes (the “2032 Indenture”) or additional interest if the 2032 Convertible Notes are not freely tradeable as required by the 2032 Indenture. The 2032 Convertible Notes will mature on July 1, 2032, unless earlier repurchased, redeemed by the Company, or converted pursuant to their terms. The total net proceeds from the 2032 Convertible Notes, after deducting initial purchaser discounts, costs related to the 2032 Capped Calls (as defined herein), and debt issuance costs, paid by the Company, were approximately $281.6 million. Each $1,000.0 principal amount of the 2032 Convertible Notes is initially convertible into 13.7663 shares of the Company’s Class A common stock, par value $0.001 per share, which is equivalent to an initial conversion price of approximately $72.64 per share. The conversion rate is subject to adjustment upon the occurrence of certain specified events as set forth in the 2032 Indenture. In addition, upon the occurrence of a make-whole fundamental change, as defined in the 2032 Indenture, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2032 Convertible Notes in connection with such make-whole fundamental change or during the relevant redemption period. The notes are the senior, unsecured obligations of the Company and are equal in right of payment with the Company’s existing and future senior unsecured indebtedness, including the 2028 Convertible Notes, senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated to the notes and effectively subordinated to the Company’s existing and future senior secured indebtedness (including the Credit Agreement), to the extent of the value of the collateral securing that indebtedness. The notes will be structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries. The 2032 Convertible Notes will be redeemable in whole or in part (subject to certain limitations) at the Company’s option on or after July 6, 2029, but before the fortieth (40th) scheduled trading day before the maturity date, at a cash redemption price equal to 100% of the principal amount of the 2032 Convertible Notes to be redeemed, plus accrued and unpaid special and additional interest, if any, if the last reported sale price of the Class A 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 days ending on, and including, the trading day immediately before the date the redemption notices were sent; and the trading day immediately before such notices were sent and certain other conditions are satisfied. In addition, the Company may redeem for cash all, but not less than all, of the 2032 Convertible Notes at any time if the amount of the 2032 Convertible Notes that remains outstanding at such time is less than 15% of the aggregate principal amount of the 2032 Convertible Notes initially issued under the 2032 Indenture, at a cash redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid special and additional interest, if any, to, but excluding, the redemption date. Holders may convert their notes at their option in the following circumstances: 1.during any calendar quarter commencing after the calendar quarter ending on September 30, 2026 (and only during such calendar quarter), if the last reported sale price per share of the Company’s Class A common stock exceeds (x) before July 1, 2031, 150% and (y) on or after July 1, 2031, 130%, in each case, of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; 2.during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) in which the trading price per $1,000.0 principal amount of 2032 Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s Class A common stock on such trading day and the conversion rate on such trading day; 3.upon the occurrence of certain corporate events or distributions on the Company’s Class A common stock, as described in the 2032 Indenture; 4.if the Company calls such 2032 Convertible Notes for redemption; and 5.at any time from, and including, April 1, 2032 until the close of business on the second scheduled trading day immediately before the maturity date. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of Class A common stock, or a combination of cash and shares of Class A common stock, at the Company's election. As of June 30, 2026, the 2032 Convertible Notes are classified as a long-term liability in the accompanying condensed consolidated balance sheets, based on contractual settlement provisions. The transaction costs of $12.8 million related to the 2032 Convertible Notes are accounted for as debt issuance costs that will be amortized to interest expense using the effective interest method over the contractual terms of the 2032 Convertible Notes at an annual effective interest rate of 0.688%. The net carrying amount of the Convertible Notes were as follows:
Capped Calls In connection with the offering of the 2026 Convertible Notes, the 2028 Convertible Notes, and the 2032 Convertible Notes, the Company entered into privately negotiated capped call transactions with certain counterparties (the “2026 Capped Calls”, the “2028 Capped Calls” and the “2032 Capped Calls,” respectively and, collectively, the “Capped Calls”). The initial strike price of the Capped Calls corresponds to the initial conversion price of the 2026 Convertible Notes, the 2028 Convertible Notes or the 2032 Convertible Notes, as applicable. The Capped Calls are generally intended to reduce or offset the potential dilution to the Class A common stock upon any conversion of the 2026 Convertible Notes, the 2028 Convertible Notes and the 2032 Convertible Notes with such reduction or offset, as the case may be, subject to a cap. On March 1, 2026, the 2026 Capped Calls expired, concurrently with the full settlement and satisfaction of the 2026 Convertible Notes. The 2028 Capped Calls and the 2032 Capped Calls remain outstanding as of June 30, 2026. The 2028 Capped Calls and the 2032 Capped Calls expire on April 1, 2028 for the 2028 Capped Calls and July 1, 2032 for the 2032 Capped Calls, subject to earlier exercise or termination. The 2028 Capped Calls and the 2032 Capped Calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting the Company, including a merger event, a tender offer, and a nationalization, insolvency or delisting involving the Company. In addition, the 2028 Capped Calls and the 2032 Capped Calls are subject to certain specified additional disruption events that may give rise to a termination of the 2028 Capped Calls and the 2032 Capped Calls, including changes in law, insolvency filings, and hedging disruptions. The Capped Call transactions are recorded in stockholders’ equity and are not accounted for as derivatives. The net cost to purchase the Capped Calls was recorded as a reduction to additional paid-in capital in the accompanying condensed consolidated balance sheets. The following table sets forth key terms and costs incurred for the Capped Calls related to the Convertible Notes as of June 30, 2026:
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