v3.26.1
Derivative Instruments
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments Derivative Instruments
Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates and interest rates. These hedging contracts reduce, but do not entirely eliminate, the impact of adverse foreign exchange rate and interest rate movements. We do not use any of our derivative instruments for trading purposes.

We use foreign currency exchange contracts to reduce the volatility of cash flows related to forecasted revenues, expenses, assets and liabilities, including intercompany balances denominated in foreign currencies. These contracts are generally one month to one year in duration but with maturities up to 24 months. The objective of the foreign exchange contracts is to ensure that ultimately the U.S. dollar-equivalent cash flows are not adversely affected by changes in the applicable U.S. dollar/foreign currency exchange rate. We evaluate the effectiveness of our foreign exchange contracts designated as cash flow hedges on a quarterly basis.

We use interest rate swaps to manage interest rate risk on our fixed rate notes issued in November 2025 and maturing in 2035. These interest rate swaps had the economic effect of modifying the fixed interest obligations associated with $400 million of these notes so that the interest payable on these senior notes effectively became variable based on Secured Overnight Financing Rate (“SOFR”) plus a spread. The duration of these interest rate contracts is for three years and five years expiring in November 2028 and 2030 respectively.

In 2024, we entered into derivative instruments to hedge the variability of forecasted interest payments on anticipated debt issuance using forward-starting interest rate swaps. These interest rate swaps effectively fixed the benchmark interest rate and had the economic effect of hedging the variability of forecasted interest payments for up to ten years on an anticipated debt issuance. Similar to other cash flow hedges, we recorded changes in the fair value of these interest rate swaps in AOCI until the anticipated debt issuance. In November 2025, we issued $1.0 billion of senior notes, which consisted of notes maturing in 2029 and 2035. As a result, we terminated the interest rate swaps and the immaterial gain associated with the termination will be amortized to interest expense over the term of our notes due in November 2035.

Cash Flow Hedges

For derivative instruments that are designated as cash flow hedges, the derivative’s gain or loss is initially reported as a component of AOCI and subsequently reclassified into earnings in the same period the forecasted hedged transaction affects earnings. Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable that the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Unrealized gains and losses in AOCI associated with such derivative instruments are immediately reclassified into earnings. As of June 30, 2026, we have estimated that $7 million of net derivative losses related to our foreign exchange cash flow hedges and $6 million of net derivative gains related to our interest rate cash flow hedges included in AOCI will be reclassified into earnings within the next 12 months. We classify cash flows related to our cash flow hedges as operating activities on our condensed consolidated statement of cash flows.

Fair Value Hedges

We have designated the interest rate swaps used to manage interest rate risk on our fixed rate notes issued in November 2025 and maturing in 2035 as qualifying hedging instruments and are accounting for them as fair value hedges. These transactions are designated as fair value hedges for financial accounting purposes because they protect us against changes in the fair value of certain of our fixed rate borrowings due to benchmark interest rate movements. Changes in the fair values of these interest rate swap agreements are recognized in other assets or other liabilities with a corresponding increase or decrease in long-term debt. Each quarter, the net amount between the interest we expect to pay based on SOFR plus a spread to the counterparty and the interest we expect to receive from the counterparty per the fixed rate of these senior notes is recognized as “Interest expense.”
Non-Designated Hedges

Our derivatives not designated as hedging instruments consist of foreign currency forward contracts that we primarily use to hedge monetary assets or liabilities, including intercompany balances and equity investments denominated in non-functional currencies. The gains and losses on our derivatives not designated as hedging instruments are recognized in “Interest income and other, net,” which are offset by the foreign currency gains and losses on the related assets and liabilities that are also recognized in “Interest income and other, net.” We classify cash flows related to our non-designated hedging instruments in the same line item as the cash flows of the related assets or liabilities, which is generally within operating activities on our condensed consolidated statement of cash flows. Cash flows related to the settlement of non-designated hedging instruments related to equity investments are classified within investing activities on our condensed consolidated statement of cash flows.

Fair Value of Derivative Contracts

The following table presents the fair values of our outstanding derivative instruments as of the dates indicated (in millions):
Balance Sheet LocationJune 30,
2026		December 31,
2025
Derivative Assets:
Foreign exchange contracts designated as cash flow hedgesOther current assets$28 $8 
Foreign exchange contracts not designated as hedging instrumentsOther current assets22 9 
Foreign exchange contracts designated as cash flow hedgesOther assets14 12 
Warrants and other
Other assets3 10 
Total derivative assets$67 $39 
Derivative Liabilities:
Foreign exchange contracts designated as cash flow hedgesOther current liabilities$5 $5 
Foreign exchange contracts not designated as hedging instrumentsOther current liabilities18 5 
Interest rate contracts designated as fair value hedges
Other liabilities
8 2 
Total derivative liabilities$31 $12 
Total fair value of derivative instruments$36 $27 

Under the master netting agreements with the respective counterparties to our derivative contracts, subject to applicable requirements, we are allowed to net settle transactions of the same type with a single net amount payable by one party to the other. However, we have elected to present the derivative assets and derivative liabilities on a gross basis on our condensed consolidated balance sheet. As of June 30, 2026, the potential effect of rights of set-off associated with the foreign exchange contracts would be an offset to both assets and liabilities by $21 million, resulting in net derivative assets of $43 million and immaterial net derivative liabilities. As of June 30, 2026, there was no potential effect of rights of set-off associated with the interest rate contracts as there were no asset positions.
Effect of Derivative Contracts on Accumulated Other Comprehensive Income

The following tables present the activity of derivative instruments designated as cash flow hedges gross of tax as of June 30, 2026 and December 31, 2025, and the impact of these derivative contracts on AOCI as of the dates indicated (in millions): 
December 31, 2025Amount of Gain Recognized in Other Comprehensive Income
Less: Amount of Gain (Loss) Reclassified From AOCI to Earnings
June 30, 2026
Foreign exchange contracts designated as cash flow hedges$(44)$25 $(14)$(5)
Interest rate contracts designated as cash flow hedges37 — 3 34 
Total
$(7)$25 $(11)$29 
December 31, 2024
Amount of Loss Recognized in Other Comprehensive Income
Less: Amount of Gain Reclassified From AOCI to EarningsJune 30, 2025
Foreign exchange contracts designated as cash flow hedges$25 $(105)$2 $(82)
Interest rate contracts designated as cash flow hedges50 (3)4 43 
Total
$75 $(108)$6 $(39)

Effect of Derivative Contracts on Condensed Consolidated Statement of Income

The following table summarizes the total loss recognized on our condensed consolidated statement of income from our foreign exchange derivative contracts by location for the periods indicated (in millions):
Three Months Ended
June 30,		Six Months Ended
June 30,
2026202520262025
Gain (loss) from foreign exchange contracts designated as cash flow hedges recognized in net revenues
$(1)$(6)$(14)$2 
Loss from foreign exchange contracts not designated as hedging instruments recognized in interest income and other, net(3)(6)(4)(5)
Total loss recognized from foreign exchange derivative contracts in the condensed consolidated statement of income$(4)$(12)$(18)$(3)

The following table summarizes the total gain recognized on our condensed consolidated statement of income from our interest rate derivative contracts by location for the periods indicated (in millions): 
Three Months Ended
June 30,		Six Months Ended
June 30,
2026202520262025
Gain from interest rate contracts designated as cash flow hedges recognized in interest expense
$1 $2 $3 $4 
Loss from interest rate contracts designated as fair value hedges recognized in interest expense(4)— (6)— 
Gain from hedged items attributable to hedged risk recognized in interest and other, net4 — 6 — 
Total gain recognized from interest rate derivative contracts in the condensed consolidated statement of income
$1 $2 $3 $4 
The following table summarizes the total gain (loss) recognized on our condensed consolidated statement of income due to changes in the fair value of the warrants for the periods indicated (in millions):
Three Months Ended
June 30,		Six Months Ended
June 30,
2026202520262025
Gain (loss) attributable to changes in the fair value of warrants recognized in gain (loss) on equity investments and warrants, net$2 $— $(7)$— 

Notional Amounts of Derivative Contracts

Derivative transactions are measured in terms of the notional amount, but this amount is not recognized on our condensed consolidated balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the instruments. The notional amount is generally not exchanged but is used only as the basis on which the value of foreign exchange payments under these contracts is determined. The following table presents the notional amounts of our outstanding derivatives as of the dates indicated (in millions):
June 30,
2026		December 31,
2025
Foreign exchange contracts designated as cash flow hedges$1,550 $1,677 
Foreign exchange contracts not designated as hedging instruments2,231 1,914 
Interest rate contracts designated as fair value hedges400 400 
Total$4,181 $3,991 

Credit Risk

Our derivatives expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the arrangement. We seek to mitigate such risk by limiting our counterparties to, and by spreading the risk across, major financial institutions. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored on an ongoing basis.