Debt

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Debt

Note 7. Debt

The following tables summarize outstanding debt as of March 31, 2024, and December 31, 2023.

	Principal		Unaccreted Discount		Debt Issuance Costs		Carrying Value
Convertible senior notes, due 2026	$	217,000	$	—	$	(2,903)	$	214,097
Convertible senior notes, due 2028	333,334		(111,191)		(4,149)		217,994
Other notes	150		(9)		—		141
Balance as of March 31, 2024	$	550,484	$	(111,200)	$	(7,052)	$	432,232

	Principal		Unaccreted Discount		Debt Issuance Costs		Carrying Value
Convertible senior notes, due 2026	$	225,000	$	—	$	(3,311)	$	221,689
Convertible senior notes, due 2028	333,334		(115,353)		(4,312)		213,669
Advance funding arrangement	94		—		—		94
Other notes	300		(13)		—		287
Balance as of December 31, 2023	$	558,728	$	(115,366)	$	(7,623)	$	435,739

Convertible Senior Notes

Interest expense recognized related to the 0.75% Convertible Senior Notes due 2026 (the “2026 Notes”) was approximately $0.7 million and $1.4 million for the three months ended March 31, 2024 and 2023, respectively, and includes contractual interest expense and amortization of debt issuance costs. The effective interest rate for the 2026 Notes is 1.3%.

Interest expense recognized related to the 6.75% Convertible Senior Notes due 2028 (the “2028 Notes”) was approximately $9.9 million and zero for the three months ended March 31, 2024 and 2023, respectively. Interest expense includes $5.6 million contractual interest expense and $4.3 million amortization of debt issuance costs and discount for the three months ended March 31, 2024. The effective interest rate for the 2028 Notes is 17.9%.

For the three months ended March 31, 2024, we capitalized $0.1 million of interest expense on the 2028 Notes related to ongoing internally developed software projects.

In February 2024, we repurchased $8.0 million aggregate principal amount of our 2026 Notes. We paid $3.0 million, or 37.5% of par value, plus accrued interest. We recognized a $4.9 million gain on extinguishment of debt, calculated as the difference between the reacquisition price and the net carrying amount of the portion of the 2026 Notes that was extinguished.

Advance Funding Arrangement

For certain home warranty contracts, we participated in financing arrangements with third-party financers that provided us with the contract premium upfront, less a financing fee. Third-party financers collect installment payments from the warranty contract customer which satisfy our repayment obligation over a portion of the contract term. We remain obligated to repay the third-party financer if a customer cancels its warranty contract prior to full repayment of the advance funding amount we received. As part of the arrangement, we paid financing fees, which were collected by the third-party financers upfront and were initially recognized as a debt discount. Financing fees were amortized as interest expense under the effective interest method. The implied interest rate varied per contract and was generally approximately 14% of total funding received. As of March 31, 2024, our obligation was completely satisfied with the third-party financers, we had no outstanding balance.