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Long-Term Debt | 9 Months Ended
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Sep. 30, 2024
Debt Disclosure [Abstract] |
Long-Term Debt | Note 6. Long-Term Debt The following table sets forth the net carrying amount of the Company’s long-term debt (in thousands):
Debt Instrument |  | Maturity Date |  | September 30, 2024 |  | December 31, 2023
2030 Senior Notes |  | August 15, 2030 |  | $ | 400,000 |  |  | $ | 400,000 |
Term Loan under Credit Agreement (1) |  | February 14, 2028 |  | 375,000 |  |  | 390,000 |
Revolving Credit Facility under Credit Agreement (2) |  | February 14, 2028 |  | — |  |  | — |
2025 Convertible Notes |  | March 1, 2025 |  | 161,326 |  |  | 161,326 |
2026 Convertible Notes |  | March 15, 2026 |  | 609,065 |  |  | 609,065 |
Total principal amount |  |  |  | 1,545,391 |  |  | 1,560,391 |
Less: unamortized debt discount and issuance costs on long-term debt |  |  |  | (12,191) |  |  | (14,909) |
Less: current portion of long-term debt, net (3) |  |  |  | (181,143) |  |  | (20,000) |
Net carrying amount of long-term debt |  |  |  | $ | 1,352,057 |  |  | $ | 1,525,482 |
(1)The Company has $350.0 million available for drawdown under the Term Loan as of September 30, 2024. (2)The Company has $225.0 million available for borrowing under the Revolving Credit Facility as of September 30, 2024. (3)The current portion of long-term debt, net as of September 30, 2024 relates to $161.1 million net carrying amount from the 2025 Convertible Notes, and $20.0 million of expected principal payments due on the Term Loan. The Term Loan requires quarterly principal payments of 1.25% of the $400.0 million principal amount drawn, with balance due at maturity. The following table sets forth the future minimum principal payments for long-term debt as of September 30, 2024 (in thousands):
| 2025 Convertible Notes |  | 2026 Convertible Notes |  | Term Loan |  | 2030 Senior Notes |  | Total
2024 remaining | $ | — |  |  | $ | — |  |  | $ | 5,000 |  |  | $ | — |  |  | $ | 5,000 |
2025 | 161,326 |  |  | — |  |  | 20,000 |  |  | — |  |  | 181,326 |
2026 | — |  |  | 609,065 |  |  | 20,000 |  |  | — |  |  | 629,065 |
2027 | — |  |  | — |  |  | 20,000 |  |  | — |  |  | 20,000 |
2028 onwards | — |  |  | — |  |  | 310,000 |  |  | 400,000 |  |  | 710,000 |
Total principal amount | $ | 161,326 |  |  | $ | 609,065 |  |  | $ | 375,000 |  |  | $ | 400,000 |  |  | $ | 1,545,391 |
2030 Senior Notes I n August 2023, the Company issued $400.0 million aggregate principal amount of the 2030 Senior Notes in a private offering. The 2030 Senior Notes are guaranteed by the Company’s domestic subsidiaries and are subject to certain covenants and redemption provisions outlined in the indenture governing the 2030 Senior Notes (the “Senior Notes Indenture”). As of September 30, 2024, the carrying value of the outstanding 2030 Senior Notes, net of unamortized debt discount and issuance costs, was $392.9 million, and the Company was in compliance with all covenants under the Senior Notes Indenture. The effective interest rate on the 2030 Senior Notes was 8.9% as of September 30, 2024. Credit Agreement In February 2023, the Company entered into a credit agreement with certain lenders, providing for a $200.0 million revolving credit facility (the “Revolving Credit Facility”) and a $400.0 million term loan (the “Term Loan”). In the second quarter of 2023, the Company drew down the initial $400.0 million Term Loan to repurchase a portion of the 2025 Convertible Notes. The credit facilities were subsequently amended in 2023 and 2024 to increase the Revolving Credit Facility to $225.0 million and the Term Loan to $750.0 million (collectively, as amended, the “Credit Agreement”). The proceeds from the Revolving Credit Facility can be used for working capital and general corporate purposes, while the remaining $350.0 million tranches of the Term Loan can be used to repurchase a portion of the Company’s convertible notes and for working capital and general corporate purposes. The credit facilities are guaranteed by certain material domestic subsidiaries of the Company, and secured by substantially all of the personal property of the Company and such subsidiary guarantors. If on any date that is within 91 days prior to the final scheduled maturity date of any series of the Convertible Notes (defined below), such series of Convertible Notes is in an aggregate principal amount outstanding that exceeds an amount equal to 50% of last twelve months EBITDA, calculated as set forth in the Credit Agreement, the maturity date of both the Revolving Credit Facility and Term Loan shall automatically be modified to be such date. As of September 30, 2024, $350.0 million of the Term Loan remains available for draw until May 2025. The Company will continue to pay a quarterly ticking fee of up to 0.500% per annum on the daily unused amount of the Term Loan commitments until the earlier of the funding or the end of the availability period. Any drawdown under the Credit Agreement would be subject to compliance with the restrictive covenants in the Senior Notes Indenture. Borrowings under the Credit Agreement will bear interest, at the Company’s option, at either: (a) the fluctuating rate per annum equal to the greatest of (i) the prime rate then in effect, (ii) the federal funds rate then in effect, plus 0.5% per annum, and (iii) an adjusted term Secured Overnight Financing Rate (“SOFR”) determined on the basis of a one-month interest period, plus 1.0%, in each case, plus a margin of between 0.75% and 2.0%; and (b) an adjusted term SOFR rate (based on one, three or six month interest periods), plus a margin of between 1.75% and 3.0%. The applicable margin in each case is determined based on the Company’s total net leverage ratio and varies between tranches of Term Loans. Interest is payable quarterly in arrears with respect to borrowings bearing interest at the alternate base rate or on the last day of an interest period, but at least every three months, with respect to borrowings bearing interest at the term SOFR rate. As of September 30, 2024, the carrying value of the 2028 Term Loan, net of unamortized debt discount and issuance costs, was $372.5 million. As of September 30, 2024, the Company incurred $9.2 million of debt issuance costs in connection with the Credit Agreement, of which $7.0 million was capitalized in the Condensed Consolidated Balance Sheets and amortized primarily using the effective interest rate over the term of the Credit Agreement, while the remaining amount was expensed in the period incurred. As of September 30, 2024, the effective interest rate on the Term Loan was 8.1%. As of September 30, 2024, the Company was in compliance with all covenants under the Credit Agreement. Convertible Notes In March 2020, the Company issued $1.0 billion of the 2025 Convertible Notes, and in September 2020, it issued $650.0 million of the 2026 Convertible Notes. The Convertible Notes are senior, unsecured obligations that do not bear regular interest and the principal amount of the Convertible Notes does not accrete. As of September 30, 2024, the carrying values of the 2025 and 2026 Convertible Notes, net of unamortized debt issuance costs, were $161.1 million and $606.6 million, respectively, and the Company was in compliance with all covenants under the Convertible Notes Indenture. Other Terms of the Convertible Notes
|  | 2025 Convertible Notes |  | 2026 Convertible Notes
$1,000 principal amount initially convertible into number of the Company’s Class A Common Stock, par value $0.0001 |  | 2.7745 shares |  | 2.3583 shares
Equivalent initial approximate conversion price per share |  | $ | 360.43 |  |  | $ | 424.03 |
During the three and nine months ended September 30, 2024, the conditions allowing holders of the 2025 Convertible Notes and 2026 Convertible Notes to convert were not met. The Convertible Notes of either series may be convertible thereafter if one or more of the conversion conditions specified in the applicable Convertible Notes Indenture is satisfied during future measurement periods. Partial Repurchase of 2025 and 2026 Convertible Notes In May 2023, the Company used the entire proceeds from the drawdown of the $400.0 million Term Loan and $27.3 million of other available cash to repurchase $460.7 million principal amount of the 2025 Convertible Notes, resulting in a gain on early debt extinguishment of $31.1 million, net of related unamortized debt issuance costs. In August 2023, the Company used a portion of the net proceeds from the offering of the 2030 Senior Notes to repurchase $125.3 million and $40.9 million principal of the 2025 Convertible Notes and 2026 Convertible Notes, respectively, by paying an aggregate amount of $153.6 million in cash, resulting in a gain on early debt extinguishment of $11.8 million, net of related unamortized debt issuance costs. In December 2023, the Company used a portion of the remaining net proceeds from the offering of the 2030 Senior Notes to repurchase $252.7 million principal of the 2025 Convertible Notes by paying $241.3 million in cash, resulting in a gain of early debt extinguishment in the amount of $10.5 million, net of related unamortized debt issuance costs. Capped Calls In connection with the offering of the 2026 Convertible Notes, the Company entered into privately-negotiated capped call transactions with certain counterparties (the “Capped Calls”). The initial strike price of the 2026 Convertible Notes corresponds to the initial conversion price of the 2026 Convertible Notes. The Capped Calls are generally intended to reduce or offset the potential dilution to the Class A Common Stock upon any conversion of the 2026 Convertible Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. The following table below sets forth key terms and costs incurred for the outstanding Capped Calls:
|  |  |  | 2026 Convertible Notes
Initial approximate strike price per share, subject to certain adjustments |  |  |  | $ | 424.03 |
Initial cap price per share, subject to certain adjustments |  |  |  | $ | 556.10 |
Net cost incurred (in millions) |  |  |  | $ | 41.8 |
Class A Common Stock covered, subject to anti-dilution adjustments (in millions) |  |  |  | 1.5
Settlement commencement date |  |  |  | 2/13/2025
Settlement expiration date |  |  |  | 3/13/2025
The following table sets forth the interest expense recognized related to long-term debt (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Contractual interest expense | $ | 14,839 |  |  | $ | 10,869 |  |  | $ | 44,515 |  |  | $ | 14,155 |
Amortization of debt discount and issuance costs | 1,098 |  |  | 1,067 |  |  | 3,112 |  |  | 3,465 |
Total interest expense related to long-term debt | $ | 15,937 |  |  | $ | 11,936 |  |  | $ | 47,627 |  |  | $ | 17,620 |

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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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