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Convertible Senior Notes and Capped Call Transactions
 9 Months Ended
Sep. 30, 2025
Debt Disclosure [Abstract]  
Convertible Senior Notes and Capped Call Transactions CONVERTIBLE SENIOR NOTES AND CAPPED CALL TRANSACTIONS
2025 Notes

The Company issued the 2025 Notes in an aggregate principal amount of $253,000 pursuant to an Indenture dated May 11, 2020 (the “2025 Indenture”). The net proceeds to the Company after issuance costs were approximately $245,158. The Company used $29,348 of the net proceeds from the offering to pay the cost of the capped call transactions described below.

The 2025 Notes were settled prior to or on their maturity date of August 15, 2025 in accordance with the terms of the 2025 Indenture. During the nine months ended September 30, 2025, the Company received and settled conversion notices from holders of $251,439. The unconverted principal of the 2025 Notes and the accrued interest due at maturity were settled in cash.

2029 Notes

The Company issued the 2029 Notes pursuant to an Indenture dated September 10, 2024 (the “2029 Indenture”). The offering totaled $460,000 aggregate principal amount. The net proceeds to the Company after issuance costs were approximately $449,649. The Company used $55,522 of the net proceeds from the offering to pay the cost of the capped call transactions described below.

The 2029 Notes will mature on September 15, 2029, unless earlier converted, redeemed or repurchased. Interest will be payable semi-annually in arrears on March 15 and September 15 of each year, beginning on March 15, 2025, at a rate of 1.00% per year.

The initial conversion rate for the 2029 Notes is 14.7419 shares of the Company’s common stock for each $1,000 principal amount of the 2029 Notes, which is equivalent to an initial conversion price of approximately $67.83 per share. The conversion
rate is subject to adjustment in specified events. The 2029 Notes are convertible into shares of the Company’s common stock, at the option of holder, prior to the close of business on the business day immediately preceding March 15, 2029, under certain conditions.

In addition, on or after March 15, 2029, a holder may convert all or any portion of its 2029 Notes at any time. Upon conversion, the Company may elect to repay the 2029 Notes in cash, shares of common stock, or a combination of both. As of September 30, 2025, the 2029 Notes were classified as long-term in the Company's condensed consolidated balance sheets.

Effective September 20, 2027, the Company may redeem the 2029 Notes for cash, at its option, subject to the terms and conditions provided in the 2029 Indenture.

The net carrying amount of the Notes were as follows (in thousands):
September 30, 2025December 31, 2024
(unaudited)
2025 Notes2029 NotesTotal2025 Notes2029 NotesTotal
Principal$— $460,000 $460,000 $251,494 $460,000 $711,494 
Unamortized issuance costs— (8,246)(8,246)(965)(9,757)(10,722)
Net carrying amount$— $451,754 $451,754 $250,529 $450,243 $700,772 

The effective interest rate for the three and nine months ended September 30, 2025 was 1.86% and 1.46% for the 2025 and 2029 Notes, respectively. The interest expense recognized related to the Notes for the three and nine months ended September 30, 2025 and 2024 were as follows (in thousands):

Three Months Ended September 30,
20252024
2025 Notes2029 NotesTotal2025 Notes2029 NotesTotal
(unaudited)
Contractual interest expense$385 $1,150 $1,535 $791 $256 $1,047 
Amortization of debt issuance costs190 507 697 386 110 496 
Total$575 $1,657 $2,232 $1,177 $366 $1,543 

Nine Months Ended September 30,
20252024
2025 Notes2029 NotesTotal2025 Notes2029 NotesTotal
(unaudited)
Contractual interest expense$1,957 $3,450 $5,407 $2,372 $256 $2,628 
Amortization of debt issuance costs960 1,511 2,471 1,154 110 1,264 
Total$2,917 $4,961 $7,878 $3,526 $366 $3,892 

As of September 30, 2025 and December 31, 2024, the total estimated fair value of the 2029 Notes was approximately $497,008 and $431,851, respectively. The fair values were determined based on the closing trading price per $100 of the 2029 Notes as of the last day of trading for the period. The fair value of the 2029 Notes is primarily affected by the trading price of the Company's common stock and market interest rates. The fair value of the 2029 Notes is considered Level 2 within the fair value hierarchy and was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data.

Capped Call Transactions

In May 2020 and September 2024, in connection with the pricing of the 2025 and 2029 Notes, respectively, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”). The Capped Call Transactions are generally expected to reduce the potential dilution to the Company’s common stock upon any conversion of the Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes, as the case
may be, with such reduction and/or offset subject to a cap initially equal to $47.24 and $104.36, for the 2025 and 2029 Notes, respectively.

The Capped Call Transactions are considered a freestanding instrument in accordance with ASC No. 480, "Distinguishing Liabilities from Equity", as they were entered into separately and apart from the Notes and since the conversion or redemption of the Notes does not automatically result in the exercise of the Capped Call Transactions. As the Capped Call Transactions are considered indexed to the Company's stock and are considered equity classified, they are recorded in stockholders’ equity in the condensed consolidated balance sheets and are not accounted for as derivatives. The cost of the Capped Call Transactions for the 2025 and 2029 Notes were approximately $29,348 and $55,522, respectively, and were recorded as a reduction to additional paid-in capital.
In connection with the maturity of the 2025 Notes, the capped call transactions entered into in May 2020 were exercised and net share settled. The Company received and subsequently retired 2,604,434 shares of its common stock