CONVERTIBLE NOTES

3 Months Ended

Mar. 31, 2025

Convertible note obligations included in the condensed consolidated balance sheet consisted of the following as of March 31, 2025:


							Fair Value (1)
(In thousands)	Principal Amount		Unamortized Debt Discount and Issuance Costs		Net Carrying Amount		Amount		Leveling
2031 Convertible Notes - 1.750%	$	620,709	$	(12,982)	$	607,727	$	533,400	2
2030 Convertible Notes - 2.000%	572,993		(3,469)		569,524		538,092		2
2028 Convertible Notes - 0.375%	589,380		(4,567)		584,813		516,444		2
2027 Convertible Notes - 0.375%	563,822		(3,312)		560,510		520,182		2

Convertible note obligations included in the condensed consolidated balance sheet consisted of the following as of December 31, 2024:


							Fair Value (1)
(In thousands)	Principal Amount		Unamortized Debt Discount and Issuance Costs		Net Carrying Amount		Amount		Leveling
2031 Convertible Notes - 1.750%	$	620,709	$	(13,511)	$	607,198	$	581,648	2
2030 Convertible Notes - 2.000%	572,993		(3,642)		569,351		592,756		2
2028 Convertible Notes - 0.375%	589,380		(4,952)		584,428		512,761		2
2027 Convertible Notes - 0.375%	563,822		(3,732)		560,090		523,932		2
2025 Convertible Notes - 1.000% (2)	249,172		(19)		249,153		246,705		2

______________

(1)The fair values are based on observable market prices for this debt, which is traded in less active markets and therefore is classified as a Level 2 fair value measurement.

(2)The Company’s convertible notes due in 2025 (the “2025 Notes”) matured on January 15, 2025 and were included in convertible notes, net, current portion on the condensed consolidated balance sheet as of December 31, 2024. As discussed in further detail below, the 2025 Notes were settled in cash upon maturity in January 2025.

Issuances and Settlements

Upon maturity of the 2025 Notes on January 15, 2025, the Company made a cash payment of $250.4 million in settlement of the total principal of the 2025 Notes and accrued interest that was previously outstanding as of December 31, 2024.

In April 2024, the Company entered into a privately negotiated exchange and purchase agreement with certain holders of the Company’s convertible notes due in 2028 (“2028 Notes”). The Company issued $620.7 million aggregate principal amount of 1.75% Convertible Notes due in 2031 (the “2031 Notes” and, collectively with the 2025 Notes, 2027 Notes, 2028 Notes, and 2030 Notes, the “Notes”) in exchange for $359.7 million of aggregate principal of 2028 Notes, and $266.8 million of cash after deducting underwriting discounts. The extinguishment resulted in a gain on settlement of convertible notes of $10.3 million, which was recorded in interest expense in the condensed consolidated statement of operations in the second quarter of 2024. The gain represents the difference between (i) the fair value of the consideration transferred and (ii) the carrying value of the debt at the time of exchange.

The net proceeds from the issuance of the 2031 Notes were approximately $259.8 million, after deducting commissions and offering expenses payable by the Company.

The 2031 Notes will mature on April 15, 2031 and bear interest at a rate of 1.75% per year, payable semi-annually in arrears on October 15 and April 15 of each year, beginning on October 15, 2024. The Company has the ability to repurchase the 2031 Notes after April 17, 2029 upon the occurrence of certain events and during certain periods, as set forth in the Indenture filed at the time of the offering.

Summary of Conversion Features

Until the six-months immediately preceding the maturity date of the applicable series of the Company’s convertible notes, each series of Notes is convertible only upon the occurrence of certain events and during certain periods, as set forth in the Indentures filed at the time of the original offerings. On or after the date that is six-months immediately preceding the maturity date of the applicable series of Notes until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may elect to convert such Notes at any time, and if elected, the conversion would occur on the maturity date. The Notes will be convertible into cash, shares of the Company’s common stock (plus, if applicable, cash in lieu of any fractional share), or a combination of cash and shares of the Company’s common stock, at the Company’s election. If the Notes are not converted prior to the maturity date, the principal amount will be settled in cash upon maturity.

It is the Company’s intent to settle all conversions through combination settlement. The initial conversion rate is 8.96, 8.21, 12.37, and 10.06 shares of common stock per $1,000 principal amount for the 2027 Notes, 2028 Notes, 2030 Notes, and 2031 Notes, respectively, which is equivalent to an initial conversion price of approximately $111.66, $121.84, $80.83, and $99.36 per share of the Company’s common stock for the 2027 Notes, 2028 Notes, 2030 Notes, and 2031 Notes, respectively. The 2027 Notes, 2028 Notes, 2030 Notes, and 2031 Notes are potentially convertible into up to 5.0 million, 4.8 million, 7.1 million, and 6.2 million shares, respectively. The conversion rate is subject to adjustment upon the occurrence of certain specified events as set forth in the Indentures filed at the time of the original offerings but will not be adjusted for accrued and unpaid interest. In addition, holders of the Notes who convert their Notes in connection with a “make-whole fundamental change” (as defined in the Indentures), will, under certain circumstances, be entitled to an increase in the conversion rate.

If the Company undergoes a “fundamental change” (as defined in the Indentures), holders of the Notes may require the Company to repurchase for cash all or part of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest.

Based on the closing price of the Company’s common stock of $43.29 on March 31, 2025, the if-converted values on the Notes do not exceed the principal amount.

The Notes do not contain any financial or operating covenants or any restrictions on the payment of dividends, the issuance of other indebtedness, or the issuance or repurchase of securities by the Company.

Ranking of Convertible Notes

The Notes are the Company’s senior unsecured obligations and (i) rank senior in right of payment to all of its future indebtedness that is expressly subordinated in right of payment to the Notes; (ii) rank equal in right of payment to each outstanding series thereof and to all of the Company’s future liabilities that are not so subordinated, unsecured indebtedness; (iii) are effectively junior to all of the Company’s existing and future secured indebtedness and other secured obligations, to the extent of the value of the assets securing that indebtedness and other secured obligations; and (iv) are structurally subordinated to all indebtedness and other liabilities of the Company’s subsidiaries.

Issuance Costs

Issuance costs are amortized to interest expense over the term of the Notes. The following table summarizes the original issuance costs at the time of issuance for each set of Notes:


(In thousands)
2031 Convertible Notes	$	6,780
2030 Convertible Notes	4,938
2028 Convertible Notes	24,453
2027 Convertible Notes	14,285
2025 Convertible Notes	17,646

Interest Expense

Interest expense on the Notes includes the following:


	Three Months Ended March 31,
(In thousands)	2025		2024
Debt issuance costs amortization	$	1,159	$	1,315
Debt discount amortization	367		25
Coupon interest expense	6,752		4,906
Total interest expense on convertible notes	$	8,278	$	6,246

The following table summarizes the effective interest rates of the Notes:


	Three Months Ended March 31,
	2025		2024
2031 Convertible Notes	2.09	%	—	%
2030 Convertible Notes	2.12	%	2.12	%
2028 Convertible Notes	0.64	%	0.64	%
2027 Convertible Notes	0.67	%	0.67	%
2025 Convertible Notes	1.05	%	1.18	%

The remaining period over which the unamortized debt discount will be recognized as non-cash interest expense is 1.96, 2.92, 4.92, and 6.04 years for the 2027 Notes, 2028 Notes, 2030 Notes, and 2031 Notes, respectively.