Convertible Notes |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Debt Disclosure [Abstract] | |
| Convertible Notes | Line of Credit Agreement In March 2025, the Company entered into amended and restated terms for a credit agreement (the “Credit Agreement”) with Wells Fargo Bank, HSBC, and the other lenders party thereto. The Credit Agreement provides a revolving line of credit of up to $100 million, including a letter of credit subfacility in the aggregate amount of $30 million, and a swingline subfacility in the aggregate amount of $5 million. The Company also has the option to request an incremental facility of up to an additional $25 million from one or more of the lenders under the Credit Agreement. The Credit Agreement has a maturity date of April 26, 2028. Under the terms of the Credit Agreement, the Company can elect for revolving loans to be either Base Rate Loans or SOFR Loans. Base Rate Loans incur interest at the highest of (a) the Prime Rate plus 1.75%, (b) the Federal Funds Rate plus 2.25%, and (c) the secured overnight financing rate (“SOFR”) for a tenor of one month plus 2.85%. SOFR Loans incur interest at SOFR for a tenor comparable to the applicable interest period plus 2.85%. The Company is charged a commitment fee of 0.325% for committed but unused amounts. For the three and six months ended June 30, 2025 the Company recognized interest expense of $0.5 million and $1.2 million, respectively, in relation to the revolving line of credit. In November 2025, the Company repaid in full the SOFR Loans balance outstanding, and no amount remains outstanding as of June 30, 2026. The Company had letters of credit outstanding and committed under the letter of credit subfacility of $28.0 million as of June 30, 2026. As of June 30, 2026, the Company had $72.0 million in available borrowings under the Credit Agreement. The Credit Agreement contains customary representations and warranties, certain financial and nonfinancial covenants, and certain limitations on liens and indebtedness. The financial covenants include a requirement to maintain minimum liquidity of $50 million, plus 50% of any principal amounts funded under the incremental facility. Additionally, the Company is required to meet certain revenue targets. As of June 30, 2026, the Company was in compliance with all financial covenants. In July 2026, the Company entered into amended and restated terms for the Credit Agreement which increase the aggregate amount available under the letter of credit subfacility to $50 million. Convertible NotesAt various dates from October 2024 through February 2025, the Company executed convertible note agreements with certain lenders for an aggregate principal amount and net proceeds of $50.0 million. The notes had an annual interest rate of 8% in the first year, 9% in the second year, 11% in the third year, 13% in the fourth year and 15% in the fifth year, compounded annually. Interest began accruing on the date that the respective lender’s funds were received. The terms of the convertible notes included certain conversion and other features, including automatic conversion upon the occurrence of an initial public offering (“IPO”) at a 30% discount to the IPO price. The Company evaluated the features of the convertible notes and concluded that multiple features met all the embedded derivative criteria in ASC 815, Derivatives and Hedging, and therefore, should be bifurcated from the notes and accounted for on a bundled basis as a single compound embedded derivative feature. The embedded derivative feature was recorded at the fair value on the respective dates of issuance. The fair value of the embedded derivative feature is remeasured each reporting period and the change in the fair value is recorded in other income (expense). The contractual interest expense amounted to $1.0 million and $2.0 million for the three and six months ended June 30, 2025, respectively. The amortization of the discount related to the issuance date fair value of the embedded derivative feature amounted to $1.7 million and $3.3 million for the three and six months ended June 30, 2025, respectively., and was recorded as part of interest expense in the consolidated statements of operations under the effective interest rate method. The effective interest rate on the convertible notes was 17.3% for the three and six months ended June 30, 2025. On September 15, 2025, immediately prior to the closing of the Company’s IPO, $53.3 million in principal and accrued contractual interest on the convertible notes automatically converted into 1,655,908 shares of the Company’s Class A common stock based on a 30% discount to the IPO price.
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