DEBT

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

DEBT

DEBT

Term Facility Agreement

In April 2018, the Company entered into a variable rate Term Facility Agreement for a committed facility to be used towards the Company’s and its subsidiaries’ respective operating expenses and capital expenditures. As of December 31, 2020, the amount drawn on the Term Facility Agreement was $79 million. In February 2021, the Company paid all outstanding amounts related to the Term Facility Agreement.

The carrying value of debt outstanding under the Term Facility Agreement was as follows (in millions):

	December 31, 2020		September 30, 2021
Long-term debt	$	79	$	—
Less: Unamortized debt issuance costs	(4)		—
Note payable, less unamortized debt issuance costs	75		—
Less: Current portion	(28)		—
Total note payable, less current portion	$	47	$	—

ABL Facility

In May 2021, the Company, through various of its subsidiaries, entered into a senior secured asset based revolving credit facility (“ABL Facility”) with a syndicate of banks that may be used for general corporate purposes. The ABL Facility is secured by certain current assets of the Company and provides for a $750 million committed secured revolving credit facility. Availability under the ABL Facility is based on the lesser of the borrowing base and the committed $750 million cap and is reduced by borrowings and the issuance of letters of credit.

As of September 30, 2021, the Company had no borrowings under the ABL Facility and $63 million of letters of credit outstanding, resulting in availability under the ABL Facility of $550 million after giving effect to the borrowing base and the outstanding letters of credit.

2021 Convertible Notes

In July 2021, the Company issued the 2021 Convertible Notes. The 2021 Convertible Notes accrue interest quarterly at a rate of (i) zero percent (0%) from the date of issuance to, and including, June 30, 2022 and (ii) five percent (5%) after June 30, 2022. The 2021 Convertible Notes are convertible into shares of the Company’s equity under various circumstances, including upon an Initial Public Offering and a Change of Control of the Company (as such terms are defined in the 2021 Convertible Notes Purchase Agreement). Upon an Initial Public Offering, the 2021 Convertible Notes automatically convert into shares of the Company’s common stock at a conversion price equal to the lesser of: (i) $71.03, subject to appropriate adjustment in the event of any stock dividend, stock split, stock combination, recapitalization or any other similar transaction, and (ii) the product of (x) the Initial Public Offering price per share multiplied by (y) the applicable discount rate determined by reference to the time of conversion (0.85 until December 31, 2021). See Note 14 “Subsequent Events” for updates concerning the Company’s November 2021 IPO.

The Company has made an irrevocable election to account for the 2021 Convertible Notes under the Fair Value Option (“FVO”) (refer to Note 2 "Summary of Significant Accounting Policies"), whereby the 2021 Convertible Notes are initially recognized as a liability measured at issue-date estimated fair value and subsequently re-measured at estimated fair value on a recurring basis at each reporting date. The issue-date estimated fair value of the 2021 Convertible Notes was $3,049 million, resulting in a $549 million loss on issuance of the 2021 Convertible Notes, partially offset by a $91 million gain on the decrease in fair value of the 2021 Convertible Notes as of September 30, 2021. None of the change in fair value is attributable to a change in the instrument-specific credit risk.

The change in fair value of the 2021 Convertible Notes as of September 30, 2021 was as follows (in millions):

	2021 Convertible Notes
Proceeds received upon issuance	$	2,500
Loss on issuance	549
Issue-date estimated fair value	3,049
Gain on change in fair value	(91)
Fair value as of September 30, 2021	$	2,958

The change in fair value is recognized in “Loss on convertible notes, net” in the Condensed Consolidated Statement of Operations. The Company made no cash interest payments on the 2021 Convertible Notes during the three and nine months

ended September 30, 2021. The following table presents the difference between the fair value and the unpaid principal balance of the 2021 Convertible Notes as of September 30, 2021 (in millions):

	September 30, 2021
	Fair value (carrying amount)		Unpaid principal balance		Loss on excess of fair value over unpaid principal
2021 Convertible Notes	$	2,958	$	2,500	$	458

The fair value of the 2021 Convertible Notes is estimated using a scenario analysis of conversion dates based on probabilities of events triggering conversion of the 2021 Convertible Notes, including a Monte Carlo simulation capturing future price scenarios for shares of the Company’s common stock, and a discounted cash flow analysis applied to the contractual payments in the scenario that the 2021 Convertible Notes are held to maturity. This estimate incorporates significant inputs that are not observable in the market and thus is considered a Level 3 fair value measurement. Changes in the assumptions of the unobservable inputs may materially affect the estimated fair value of the 2021 Convertible Notes.

Selected inputs into the Monte Carlo simulation as of the issuance date (July 23, 2021) and September 30, 2021 were as follows:

	July 23, 2021			September 30, 2021
	Range		Weighted-Average	Range		Weighted-Average
	Low	High		Low	High
Conversion discount	15%	30%	18%	15%	30%	16%
Volatility	55.0%	55.0%	55.0%	52.5%	52.5%	52.5%
Dividend yield	—%	—%	—%	—%	—%	—%
Risk-free rate	0.1%	0.3%	0.1%	—%	0.3%	—%
Expected term (in years)	0.4	5.0	1.0	0.3	4.8	0.6