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Debt | 6 Months Ended
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Jun. 30, 2020
Debt Disclosure [Abstract] |
Debt | Debt Convertible Senior Notes In May 2020, the Company issued $575.0 million aggregate principal amount of the Notes in a private offering to qualified institutional buyers pursuant to Rule 144A promulgated under the Securities Act, including t he initial purchasers' exercise in full of their option to purchase an additional $75.0 million aggregate principal amount of the Notes. The total net proceeds from the issuance of the Notes, after deducting initial purchaser discounts and debt issuance costs, were $562.5 million. The Notes are senior unsecured obligations of the Company and will mature on May 15, 2025, unless earlier redeemed, repurchased, or converted, and are governed by the terms of the Indenture dated May 15, 2020 (the Indenture). Interest is payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2020, at a rate of 0.75% per year. The Notes are convertible at an initial conversion rate of 26.7187 shares of the Company's Class A common stock per $1,000 principal amount of the Notes, which is equivalent to an initial conversion price of approximately $37.43 per share, subject to adjustment upon the occurrence of specified events. The Notes may be converted at any time on or after February 15, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date. Holders of the Notes may convert all or any portion of their Notes at their option at any time prior to the close of business on the business day immediately preceding February 15, 2025 only under the following circumstances: •during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and only during such calendar quarter), if the last reported sale price of the Company's Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; •during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company's Class A common stock and the conversion rate on each such trading day; •if the Company calls such Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or •upon the occurrence of specified corporate events. In addition, if the Notes are converted prior to the maturity date following certain specified corporate events or because the Company issues a notice of redemption, the Company will increase the conversion rate for such Notes converted in connection with such a corporate event or during the related redemption period, as the case may be, in certain circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company's Class A common stock, or a combination of cash and shares of the Company's Class A common stock, at the Company's election. It is the Company’s current intent to settle the principal amount of Notes with cash. The Company may not redeem the Notes prior to May 20, 2023. The Company may redeem for cash all or any portion of the Notes, at its option, on or after May 20, 2023, if the last reported sale price of the Company’s 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 day period (including the last trading day of such period) ending on, and including, the trading day preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Notes. If the Company undergoes a fundamental change (as defined in the Indenture), holders of the Notes may require the Company to repurchase for cash all or any portion of their notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In accounting for the issuance of the Notes, the Company separated the Notes into liability and equity components. The carrying amount of the liability component was calculated by using an effective interest rate of 10.0%, which was determined by measuring the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option and recorded in additional paid-in capital was $205.3 million and was determined by deducting the fair value of the liability component from the par value of the Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount represents a debt discount that is amortized to interest expense using the effective interest rate method over the contractual term of the Notes. In accounting for the issuance costs related to the Notes, the Company allocated the total amount incurred to the liability and equity components based on the proportion of the proceeds allocated to the debt and equity components. Issuance costs attributable to the liability component were $8.0 million (presented as a reduction to the carrying amount of debt) and are being amortized to interest expense over the contractual term of the Notes. The issuance costs attributable to the equity component were $4.5 million and are netted against the equity component in additional paid-in capital. The net carrying amount of the liability component of the Notes was as follows:
| June 30, 2020
| (in thousands)
Principal | $ | 575,000 |
Unamortized debt discount | (201,193) |
Unamortized debt issuance costs | (7,858) |
Carrying amount of the liability component, net | $ | 365,949 |
The net carrying amount of the equity component of the Notes was as follows:
| June 30, 2020
| (in thousands)
Proceeds allocated to the conversion option (debt discount) | $ | 205,290 |
Less: allocated issuance costs | (4,478) |
Carrying amount of the equity component, net | $ | 200,812 |
As of June 30, 2020, the if-converted value of the Notes did not exceed the outstanding principal amount, and the remaining life of the Notes was approximately 59 months. The following table sets forth total interest expense recognized related to the Notes:
| Three Months Ended June 30, |  |  |  | Six Months Ended June 30, |  |
| 2020 |  | 2019 |  | 2020 |  | 2019
| (in thousands) |  |  |  |  |  |
Coupon interest expense | $ | 551 |  |  | $ | — |  |  | $ | 551 |  |  | $ | — |
Amortization of debt discount | $ | 4,097 |  |  | $ | — |  |  | $ | 4,097 |  |  | $ | — |
Amortization of debt issuance costs | $ | 206 |  |  | $ | — |  |  | $ | 206 |  |  | $ | — |
Total | $ | 4,854 |  |  | $ | — |  |  | $ | 4,854 |  |  | $ | — |
Capped Call Transactions In connection with the offering of the Notes, the Company entered into privately-negotiated capped call transactions with certain financial institution counterparties (the Capped C alls). The Capped Calls each have an initial strike price of approximately $37.43 per share of the Company's Class A common stock, subject to certain adjustments, which corresponds to the initial conversion price of the Notes. The Capped Calls each have an initial cap price of approximately $57.58 per share, subject to certain adjustments. The Capped Calls initially cover, subject to anti-dilution adjustments, approximately 15.4 million shares of the Company's Class A common stock. The Capped Calls are intended to generally offset potential dilution to the Company's Class A common stock upon conversion of the Notes and/or offset the potential cash payments that the Company could be required to make in excess of the principal amount upon any conversion, subject to the cap price. The Capped Calls are subject to either adjustment or termination upon the occurrence of certain specified events affecting the Company, including a merger event, a tender offer, and a nationalization, insolvency, or delisting involving the Company. The Capped Calls expire in incremental components on each trading date between March 18, 2025 and May 13, 2025. The Capped Calls are recorded in stockholders' equity and are not accounted for as derivatives. The premium paid for the purchase of the Capped Calls of $67.3 million was recorded as a reduction to additional paid-in capital on the condensed consolidated balance sheets.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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