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v3.25.1

INDEBTEDNESS | 3 Months Ended
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Mar. 31, 2025
Debt Disclosure [Abstract] |
INDEBTEDNESS | INDEBTEDNESS A) Notes The 2025 Convertible Notes, 2026 Convertible Notes, and 2027 Convertible Notes (each, as defined below, and collectively, the “Convertible Notes”), together with the Senior Notes (as defined below), are collectively referred to as the “Notes.” The following table summarizes the Company's Notes as of March 31, 2025 (in thousands):
| Principal Outstanding |  | Unamortized Debt Issuance Costs |  | Net Carrying Value
2026 Senior Notes | $ | 1,000,000 |  |  | $ | (3,292) |  |  | $ | 996,708 |
2031 Senior Notes | 1,000,000 |  |  | (8,684) |  |  | 991,316 |
2032 Senior Notes | 2,000,000 |  |  | (24,314) |  |  | 1,975,686 |
2026 Convertible Notes | 575,000 |  |  | (1,856) |  |  | 573,144 |
2027 Convertible Notes | 575,000 |  |  | (3,469) |  |  | 571,531 |
Total | $ | 5,150,000 |  |  | $ | (41,615) |  |  | $ | 5,108,385 |
The following table summarizes the Company's Notes as of December 31, 2024 (in thousands):
| Principal Outstanding |  |  |  | Unamortized Debt Issuance Costs |  | Net Carrying Value
2026 Senior Notes | $ | 1,000,000 |  |  |  |  | $ | (3,983) |  |  | $ | 996,017 |
2031 Senior Notes | 1,000,000 |  |  |  |  | (9,029) |  |  | 990,971 |
2032 Senior Notes | 2,000,000 |  |  |  |  | (24,974) |  |  | 1,975,026 |
2025 Convertible Notes (i) | 1,000,000 |  |  |  |  | (503) |  |  | 999,497 |
2026 Convertible Notes | 575,000 |  |  |  |  | (2,277) |  |  | 572,723 |
2027 Convertible Notes | 575,000 |  |  |  |  | (3,798) |  |  | 571,202 |
Total | $ | 6,150,000 |  |  |  |  | $ | (44,564) |  |  | $ | 6,105,436 |
(i) Net carrying value disclosed as current portion of long-term debt within total current liabilities on the condensed consolidated balance sheet. The Company recognized interest expense on the Notes as follows (in thousands):
| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Contractual interest expense | $ | 48,380 |  |  | $ | 16,130 |  |  |  |  |
Amortization of debt issuance costs | 2,949 |  |  | 2,562 |  |  |  |  |
Total | $ | 51,329 |  |  | $ | 18,692 |  |  |  |  |
Convertible Notes due in 2026 and 2027 On November 13, 2020, the Company issued $1.2 billion in aggregate principal amount of convertible senior notes comprised of $575.0 million in aggregate principal amount of convertible senior notes due 2026 ("2026 Convertible Notes") and $575.0 million in aggregate principal amount of convertible senior notes due 2027 ("2027 Convertible Notes"). The 2026 Convertible Notes mature on May 1, 2026, unless earlier converted or repurchased, and bear a zero rate of interest. The 2027 Convertible Notes mature on November 1, 2027, unless earlier converted or repurchased, and bear interest at a rate of 0.25% payable semi-annually on May 1 and November 1 of each year. The circumstances to allow the holders to convert their 2026 Convertible Notes and 2027 Convertible Notes were not met during the three months ended March 31, 2025. As of March 31, 2025, no principal had converted and the if-converted value did not exceed the outstanding principal amount on either the 2026 Convertible Notes or 2027 Convertible Notes. Convertible Notes due in 2025 On March 5, 2020, the Company issued $1.0 billion in aggregate principal amount of convertible senior notes ("2025 Convertible Notes"). As of the maturity date on March 1, 2025, certain holders of the 2025 Convertible Notes had converted an immaterial aggregate principal amount of their 2025 Convertible Notes, which were settled through the issuance of an immaterial amount of shares of the Company's Class A common stock. The Company paid a total of $1.0 billion in cash to settle the remaining unconverted principal balance, and interest, as of March 1, 2025. B) Revolving Credit Facility & Other In May 2020, the Company entered into a revolving credit agreement (as amended, the “Credit Agreement”) with certain lenders, which provides for a $775.0 million senior unsecured revolving credit facility maturing on June 9, 2028. The Credit Agreement contains a financial covenant requiring the Company to maintain a minimum liquidity amount (consisting of the sum of Unrestricted Cash and Cash Equivalents plus Marketable Securities, each as defined in the Credit Agreement, plus undrawn available commitments under the Credit Agreement) of at least $250.0 million, tested on the last day of each fiscal quarter. The Company is obligated to pay customary fees for a credit facility of this size and type including a commitment fee of 0.10% to 0.20% per annum on the undrawn portion of the revolving loan commitments available under the Credit Agreement. As of March 31, 2025, no funds have been drawn and no letters of credit have been issued under the Credit Agreement. The Company incurred immaterial unused commitment fees during the three months ended March 31, 2025 and March 31, 2024. As of March 31, 2025, the Company was in compliance with all financial covenants under the Credit Agreement. Loans under the Credit Agreement bear interest at the Company's option of (i) an annual rate based on the forward-looking term rate based on the Secured Overnight Financing Rate ("Term SOFR") or (ii) a base rate. Loans based on Term SOFR shall bear interest at a rate equal to Term SOFR plus a margin of between 1.25% and 1.75%, depending on the Company's total net leverage ratio. Loans based on the base rate shall bear interest at a rate based on the highest of the prime rate, the federal funds rate plus 0.50%, and Term SOFR with a tenor of one-month plus 1.00%, in each case, plus a margin ranging from 0.25% to 0.75%, depending on the Company's total net leverage ratio. The Credit Agreement also contains customary affirmative and negative covenants typical for a financing of this type that, among other things, restricts the Company and certain of its subsidiaries’ ability to incur additional indebtedness, create liens, merge or consolidate or make certain dispositions, pay dividends and make distributions, enter into restrictive agreements, enter into agreements with affiliates, and make certain investments and acquisitions. The Company also has uncommitted and unsecured lines of credit with certain third-party banks for short-term liquidity needs, subject to availability of funds, through Square Financial Services. There were no outstanding balances as of March 31, 2025 and December 31, 2024. C) Warehouse Funding Facilities The Company has financing arrangements with financial institutions in Australia, New Zealand, the United States, and the United Kingdom (collectively, the “Warehouse Facilities”) in connection with the BNPL platform. The Warehouse Facilities have been arranged utilizing wholly-owned and consolidated entities (collectively, the "Warehouse Special Purpose Entities ("Warehouse SPEs")) formed for the sole purpose of financing the origination of consumer receivables to partly fund the Company's BNPL platform. Borrowings under the Warehouse Facilities are secured against the respective consumer receivables. While the Warehouse SPEs are included in our condensed consolidated financial statements, they are separate legal entities that maintain legal ownership of the receivables they hold. The assets of the Warehouse SPEs are not available to satisfy our claims or those of our creditors. These Warehouse Facilities have maturity dates through September 2027. As of March 31, 2025, the aggregate amount of the Warehouse Facilities, using the respective exchange rates at period-end, was $1.4 billion on a revolving basis, of which $619.0 million was drawn and $827.3 million remained available. All Warehouse Facilities contain portfolio parameters based on performance of the underlying consumer receivables, which each respective region has satisfied as of March 31, 2025. None of the Warehouse Facilities contain corporate financial covenants. All Warehouse Facilities are on a variable rate basis which aligns closely to the weighted-average life of the consumer receivables they finance. Borrowings under these facilities bear interest at (i) a base rate aligned to either the local risk free rate, such as Term SOFR and the Sterling Overnight Index Average or similar, and (ii) a margin which is set for the term of the availability period. The interest expense incurred on the Company's Warehouse Facilities is included within general and administrative as part of the Company's operating expenses. Interest expense on the Company's Warehouse Facilities was $14.9 million and $19.7 million for the three months ended March 31, 2025 and March 31, 2024, respectively. In addition, each Warehouse Facility requires payment of immaterial commitment fees. The table below summarizes the future scheduled principal payments of amounts drawn on the Company's Warehouse Facilities (in thousands):
| March 31, 2025
2026 | $ | 290,989 |
2027 | 328,010 |
Total | $ | 618,999 |

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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://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481544/470-10-50-6 Reference 2: 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