Debt

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Debt

Debt

Warehouse Credit Facilities—To provide capital for the mortgage loans that it originates, our mortgage segment utilizes warehouse credit facilities that are classified as current liabilities in our consolidated balance sheets. Borrowings under each warehouse credit facility are secured by the related mortgage loan and rights and income associated with the loan. The following table summarizes borrowings under these facilities as of the periods presented:

	September 30, 2023						December 31, 2022
Lender	Borrowing Capacity		Outstanding Borrowings		Weighted-Average Interest Rate on Outstanding Borrowings		Borrowing Capacity		Outstanding Borrowings		Weighted-Average Interest Rate on Outstanding Borrowings
City National Bank	$	75,000	$	13,355	7.25	%	$	75,000	$	27,288	5.89	%
Comerica Bank	N/A		N/A		N/A		75,000		26,526		6.36	%
Origin Bank	75,000		15,238		7.18	%	75,000		23,739		5.98	%
M&T Bank	50,000		9,644		7.47	%	50,000		19,126		6.45	%
Prosperity Bank	100,000		50,912		7.19	%	100,000		35,856		6.18	%
Republic Bank & Trust Company	75,000		23,101		7.25	%	75,000		26,636		5.81	%
Wells Fargo Bank, N.A.	100,000		20,070		7.32	%	100,000		31,338		6.41	%
Total	$	475,000	$	132,320			$	550,000	$	190,509

Convertible Senior Notes—We have issued convertible senior notes with the following characteristics:

Issuance	Maturity Date	Stated Cash Interest Rate		Effective Interest Rate		First Interest Payment Date	Semi-Annual Interest Payment Dates	Conversion Rate
2025 notes	October 15, 2025	—	%	0.42	%	—	—	13.7920
2027 notes	April 1, 2027	0.50	%	0.90	%	October 1, 2021	April 1; October 1	10.6920

We issued our 2025 notes on October 20, 2020, with an aggregate principal amount of $661,250. In the three months ended September 30, 2023, we repurchased and retired approximately $36,201 in aggregate principal amount of our 2025 notes at a price of $29,382 using available cash. In connection with these repurchases, we recorded a gain on extinguishment of debt of $6,495 for the three months ended September 30, 2023. In the nine months ended September 30, 2023, we repurchased and retired approximately $284,223 in aggregate principal amount of our 2025 notes at a price of $212,402 using available cash. In connection with these repurchases, we recorded a gain on extinguishment of debt of $68,848 for the nine months ended September 30, 2023.

We issued our 2027 notes on March 25, 2021 and April 5, 2021, with an aggregate principal amount of $575,000.

The components of our convertible senior notes were as follows:

	September 30, 2023
Issuance	Aggregate Principal Amount		Unamortized Debt Issuance Costs		Net Carrying Amount
2023 notes(1)	$	—	$	—	$	—
2025 notes	234,505		1,994		232,511
2027 notes	575,000		7,846		567,154

(1) The 2023 notes were fully repaid in cash on July 15, 2023.

	December 31, 2022
Issuance	Aggregate Principal Amount		Unamortized Debt Issuance Costs		Net Carrying Amount
2023 notes	$	23,512	$	81	$	23,431
2025 notes	518,728		6,045		512,683
2027 notes	575,000		9,526		565,474

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
2023 notes
Contractual interest expense	$	17	$	103	$	223	$	309
Amortization of debt issuance costs	5		38		81		113
Total interest expense	$	22	$	141	$	304	$	422
2025 notes
Contractual interest expense	—		—		—		—
Amortization of debt issuance costs	590		690		4,052		2,070
Total interest expense	$	590	$	690	$	4,052	$	2,070
2027 notes
Contractual interest expense	719		719		2,156		2,156
Amortization of debt issuance costs	560		560		1,680		1,680
Total interest expense	$	1,279	$	1,279	$	3,836	$	3,836
Total
Contractual interest expense	736		822		2,379		2,465
Amortization of debt issuance costs	1,155		1,288		5,813		3,863
Total interest expense	$	1,891	$	2,110	$	8,192	$	6,328

Conversion of Our Convertible Senior Notes

Prior to the free conversion date, a holder of each tranche of our convertible senior notes may convert its notes in multiples of $1,000 principal amount only if one or more of the conditions described below is satisfied. On or after the free conversion date, a holder may convert its notes in such multiples without any conditions. The free conversion date is July 15, 2025 for our 2025 notes and January 1, 2027 for our 2027 notes.

The conditions are:

•during any calendar quarter (and only during such calendar quarter), if the last reported sale price of our 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 applicable 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 applicable notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the applicable conversion rate on each such trading day;

•if we call any or all of the applicable notes for redemption, at any time prior to the close of business on the scheduled trading day prior to the redemption date; or

•upon the occurrence of specified corporate events.

We intend to settle any future conversions of our convertible senior notes by paying or delivering, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election. We apply the if-converted method to calculate diluted earnings per share when applicable. Under the if-converted method, the denominator of the diluted earnings per share calculation is adjusted to reflect the full number of common shares issuable upon conversion, while the numerator is adjusted to add back interest expense for the period.

Classification of Our Convertible Senior Notes2027 Capped Calls—In 2021, and in connection with the pricing of our 2027 notes, we entered into capped call transactions with certain counterparties (the “2027 capped calls”). The 2027 capped calls have initial strike prices of $93.53 per share and initial cap prices of $138.56 per share, in each case subject to certain adjustments. Conditions that cause adjustments to the initial strike price and initial cap price of the 2027 capped calls are similar to the conditions that result in corresponding adjustments to the conversion rate for our 2027 notes. The 2027 capped calls cover, subject to anti-dilution adjustments, 6,147,900 shares of our common stock and are generally intended to reduce or offset the potential dilution to our common stock upon any conversion of the 2027 notes, with such reduction or offset, as the case may be, subject to a cap based on the cap price. The 2027 capped calls are separate transactions, and not part of the terms of our 2027 notes. As these instruments meet certain accounting criteria, the 2027 capped calls are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of $62,647 incurred in connection with the 2027 capped calls was recorded as a reduction to additional paid-in capital.