UNITED STATES

SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON, D.C. 20549 

FORM 10-Q 

(Mark One) 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the quarterly period ended June 30, 2024

OR 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the transition period from _______________ to _______________. 

COMMISSION FILE NUMBER: 000-19271 

  IDEXX LABORATORIES, INC. 

(Exact name of registrant as specified in its charter) 

Delaware			01-0393723
(State or other jurisdiction of incorporation  or organization)			(IRS Employer Identification No.)
One IDEXX Drive	Westbrook	Maine	04092
(Address of principal executive offices)			(ZIP Code)

207-556-0300

(Registrant’s telephone number, including area code)

Securities Registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.10 par value per share	IDXX	NASDAQ Global Select Market

    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

    Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No  ¨

    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. The number of shares outstanding of the registrant’s Common Stock, $0.10 par value per share, was 82,305,898 on August 1, 2024.

GLOSSARY OF TERMS AND SELECTED ABBREVIATIONS

    In order to aid the reader, we have included certain terms and abbreviations used throughout this Quarterly Report on Form 10-Q below:

Term / Abbreviation	Definition
AOCI	Accumulated other comprehensive income or loss
ASU	Accounting Standards Update
CAG	Companion Animal Group, a reporting segment that provides veterinarians diagnostic products and services and information management solutions that enhance the health and well-being of pets.
Credit Facility	Our $1.25 billion five-year unsecured credit facility under an amended and restated credit agreement; consisting of i) $1 billion revolving credit facility, also referred to as line of credit, and ii) $250 million three-year term loan.
FASB	U.S. Financial Accounting Standards Board
LPD	Livestock, Poultry and Dairy, a reporting segment that provides diagnostic products and services for livestock and poultry health and to ensure the quality and safety of milk and improve producer efficiency.
OPTI Medical	OPTI Medical Systems, Inc., a wholly owned subsidiary of IDEXX Laboratories Inc., located in Roswell, Georgia. This business provides point-of-care and laboratory diagnostics (including electrolyte and blood gas analyzers and related consumable products) for the human medical diagnostics sector. The Roswell facility also manufactures electrolytes slides (instrument consumables) to run Catalyst One®, Catalyst Dx®, and blood gas analyzers and consumables for the veterinary sector; also referred to as OPTI. OPTI Medical is reported in our Other operating segment.
Organic revenue growth	A non-GAAP financial measure and represents the percentage change in revenue, as compared to the same period for the prior year, net of the effect of changes in foreign currency exchange rates, certain business acquisitions and divestitures. Organic revenue growth should be considered in addition to, and not as a replacement for or as a superior measure to, revenue growth reported in accordance with U.S. GAAP, and may not be comparable to similarly titled measures reported by other companies.
Reported revenue growth	Represents the percentage change in revenue reported in accordance with U.S. GAAP, as compared to the same period during the prior year.
SaaS	Software-as-a-service
SEC	U.S. Securities and Exchange Commission
Senior Note Agreements	Note purchase agreements for the private placement of senior notes, referred to as senior notes or long-term debt.
SOFR	The secured overnight financing rate as administered by the Federal Reserve Board of New York (or a successor administrator of the secured overnight financing rate).
U.S. GAAP	Accounting principles generally accepted in the United States of America
Water	Water, a reporting segment that provides water microbiology testing products.

IDEXX LABORATORIES, INC. 

Quarterly Report on Form 10-Q 

Table of Contents 

Item No.		Page
	PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	3
	Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2024 and 2023	4
	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2024 and 2023	5
	Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, 2024 and 2023	6
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023	7
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	52
	PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 5.	Other Information	55
Item 6.	Exhibits	56
Signatures		58

PART I— FINANCIAL INFORMATION 

Item 1.  Financial Statements  

IDEXX LABORATORIES, INC. AND SUBSIDIARIES 

CONDENSED CONSOLIDATED BALANCE SHEETS 

(in thousands, except per share amounts)

(Unaudited)

	June 30, 2024		December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents	$	401,590	$	453,932
Accounts receivable, net	533,606		457,445
Inventories	379,958		380,282
Other current assets	213,458		203,595
Total current assets	1,528,612		1,495,254
Long-Term Assets:
Property and equipment, net	708,178		702,177
Operating lease right-of-use assets	119,526		115,499
Goodwill	408,023		365,961
Intangible assets, net	110,810		84,500
Other long-term assets	539,718		496,534
Total long-term assets	1,886,255		1,764,671
TOTAL ASSETS	$	3,414,867	$	3,259,925
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	117,468	$	110,643
Accrued liabilities	541,124		478,712
Credit facility	250,000		250,000
Current portion of long-term debt	170,112		74,997
Current portion of deferred revenue	37,998		37,195
Total current liabilities	1,116,702		951,547
Long-Term Liabilities:
Deferred income tax liabilities	10,023		7,235
Long-term debt, net of current portion	524,743		622,883
Long-term deferred revenue, net of current portion	26,785		28,533
Long-term operating lease liabilities, net of current portion	102,965		99,671
Other long-term liabilities	53,396		65,526
Total long-term liabilities	717,912		823,848
Total liabilities	1,834,614		1,775,395
Commitments, Contingencies and Guarantees (Note 16)
Stockholders’ Equity:
Common stock, $0.10 par value: Authorized: 120,000 shares; Issued: 107,686 shares in 2024 and 107,506 shares in 2023; Outstanding: 82,477 shares in 2024 and 83,032 shares in 2023	10,769		10,751
Additional paid-in capital	1,625,451		1,569,565
Deferred stock units: Outstanding: 60 units in 2024 and 59 units in 2023	5,885		5,530
Retained earnings	4,883,448		4,444,571
Accumulated other comprehensive loss	(85,181)		(71,206)
Treasury stock, at cost: 25,209 shares in 2024 and 24,474 shares in 2023	(4,860,119)		(4,474,681)
Total stockholders’ equity	1,580,253		1,484,530
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,414,867	$	3,259,925
The accompanying notes are an integral part of these condensed consolidated financial statements.

3

IDEXX LABORATORIES, INC. AND SUBSIDIARIES 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME 

(in thousands, except per share amounts)

(Unaudited)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2024		2023		2024		2023
Revenue:
Product revenue	$	577,272	$	540,680	$	1,120,321	$	1,046,622
Service revenue	426,306		402,950		847,352		797,203
Total revenue	1,003,578		943,630		1,967,673		1,843,825
Cost of Revenue:
Cost of product revenue	180,642		179,999		357,412		353,609
Cost of service revenue	203,777		190,781		398,032		374,395
Total cost of revenue	384,419		370,780		755,444		728,004
Gross profit	619,159		572,850		1,212,229		1,115,821
Expenses:
Sales and marketing	142,665		140,532		292,118		288,336
General and administrative	157,243		89,669		249,267		159,770
Research and development	55,450		46,505		108,085		91,172
Income from operations	263,801		296,144		562,759		576,543
Interest expense	(8,099)		(10,542)		(16,010)		(23,669)
Interest income	3,354		327		7,786		743
Income before provision for income taxes	259,056		285,929		554,535		553,617
Provision for income taxes	55,758		61,693		115,658		115,327
Net income	$	203,298	$	224,236	$	438,877	$	438,290
Earnings per Share:
Basic	$	2.46	$	2.70	$	5.30	$	5.28
Diluted	$	2.44	$	2.67	$	5.24	$	5.22
Weighted Average Shares Outstanding:
Basic	82,630		83,086		82,863		83,039
Diluted	83,393		83,983		83,684		83,980
The accompanying notes are an integral part of these condensed consolidated financial statements.

4

IDEXX LABORATORIES, INC. AND SUBSIDIARIES 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 

(in thousands)

(Unaudited)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$	203,298	$	224,236	$	438,877	$	438,290
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(7,885)		1,752		(27,658)		6,010
Reclassification adjustment for defined benefit plans included in net income, net of tax of $10 and $29 in 2024 and $34 and $54 in 2023	53		178		147		297
Unrealized gain (loss) on Euro-denominated notes, net of tax expense (benefit) of $224 and $729 in 2024 and $(110) and $(575) in 2023	718		(353)		2,336		(1,843)
Unrealized gain on investments, net of tax expense (benefit) of $0 and $0 in 2024 and $0 and $2 in 2023	—		1		1		7
Reclassification adjustment on investments included in net income, net of tax of $0 and $51 in 2024 and $0 and $0 in 2023	—		—		163		—
Unrealized gain (loss) on derivative instruments:
Unrealized gain (loss) on foreign currency exchange contracts, net of tax expense (benefit) of $844 and $3,096 in 2024 and $46 and $20 in 2023	2,298		(131)		8,146		(340)
Unrealized gain (loss) on cross currency swaps, net of tax expense (benefit) of $417 and $1,055 in 2024 and $(553) and $(940) in 2023	1,335		(1,776)		3,384		(3,016)
Unrealized gain on interest rate swap, net of tax expense (benefit) of $214 and $870 in 2024 and $1,107 and $1,093 in 2023	684		3,550		2,790		3,505
Reclassification adjustments for (gain) loss included in net income, net of tax (expense) benefit of $(713) and $(1,183) in 2024 and $(127) and $(244) in 2023	(1,987)		(271)		(3,284)		(489)
Unrealized gain (loss) on derivative instruments	2,330		1,372		11,036		(340)
Other comprehensive (loss) income, net of tax	(4,784)		2,950		(13,975)		4,131
Comprehensive income	$	198,514	$	227,186	$	424,902	$	442,421
The accompanying notes are an integral part of these condensed consolidated financial statements.

5

IDEXX LABORATORIES, INC.  AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except per share amounts) 

(Unaudited)  

	Common Stock
	Number of Shares	$0.10 Par Value		Additional Paid-in Capital		Deferred Stock		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Treasury Stock		Total Stockholders’ Equity
Balance December 31, 2023	107,506	$	10,751	$	1,569,565	$	5,530	$	4,444,571	$	(71,206)	$	(4,474,681)	$	1,484,530
Net income	—	—		—		—		235,579		—		—		235,579
Other comprehensive loss, net	—	—		—		—		—		(9,191)		—		(9,191)
Repurchases of common stock, net	—	—		—		—		—		—		(177,192)		(177,192)
Common stock issued under stock plans, including excess tax benefit	161	16		20,792		(28)		—		—		—		20,780
Share-based compensation cost	—	—		14,392		8		—		—		—		14,400
Balance March 31, 2024	107,667	$	10,767	$	1,604,749	$	5,510	$	4,680,150	$	(80,397)	$	(4,651,873)	$	1,568,906
Net income	—	—		—		—		203,298		—		—		203,298
Other comprehensive loss, net	—	—		—		—		—		(4,784)		—		(4,784)
Repurchases of common stock, net	—	—		—		—		—		—		(208,246)		(208,246)
Common stock issued under stock plans, including excess tax benefit	19	2		5,358		—		—		—		—		5,360
Deferred stock activity	—	—		(375)		375		—		—		—		—
Share-based compensation cost	—	—		15,719		—		—		—		—		15,719
Balance June 30, 2024	107,686	$	10,769	$	1,625,451	$	5,885	$	4,883,448	$	(85,181)	$	(4,860,119)	$	1,580,253

	Common Stock
	Number of Shares	$0.10 Par Value		Additional Paid-in Capital		Deferred Stock		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Treasury Stock		Total Stockholders’ Equity
Balance December 31, 2022	107,193	$	10,719	$	1,463,215	$	5,182	$	3,599,529	$	(77,796)	$	(4,392,112)	$	608,737
Net income	—	—		—		—		214,054		—		—		214,054
Other comprehensive income, net	—	—		—		—		—		1,181		—		1,181
Repurchases of common stock, net	—	—		—		—		—		—		(9,554)		(9,554)
Common stock issued under stock plans, including excess tax benefit	128	13		12,765		(25)		—		—		—		12,753
Share-based compensation cost	—	—		13,923		7		—		—		—		13,930
Balance March 31, 2023	107,321	$	10,732	$	1,489,903	$	5,164	$	3,813,583	$	(76,615)	$	(4,401,666)	$	841,101
Net income	—	—		—		—		224,236		—		—		224,236
Other comprehensive income, net	—	—		—		—		—		2,950		—		2,950
Repurchases of common stock, net	—	—		—		—		—		—		(77)		(77)
Common stock issued under stock plans, including excess tax benefit	57	6		10,283		—		—		—		—		10,289
Deferred stock activity	—	—		(345)		345		—		—		—		—
Share-based compensation cost	—	—		15,356		6		—		—		—		15,362
Balance June 30, 2023	107,378	$	10,738	$	1,515,197	$	5,515	$	4,037,819	$	(73,665)	$	(4,401,743)	$	1,093,861
The accompanying notes are an integral part of these condensed consolidated financial statements.

6

IDEXX LABORATORIES, INC.  AND SUBSIDIARIES 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	For the Six Months Ended June 30,
	2024		2023
Cash Flows from Operating Activities:
Net income	$	438,877	$	438,290
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	62,097		56,186
Impairment charge	250		—
Provision for credit losses	3,743		3,857
Deferred income taxes	(22,021)		(12,932)
Share-based compensation expense	30,119		29,292
Other	967		(157)
Changes in assets and liabilities:
Accounts receivable	(82,981)		(61,158)
Inventories	(6,213)		(38,906)
Other assets and liabilities	18,783		(24,236)
Accounts payable	3,802		(4,155)
Deferred revenue	(526)		(1,855)
Net cash provided by operating activities	446,897		384,226
Cash Flows from Investing Activities:
Purchases of property and equipment	(63,578)		(66,981)
Acquisitions of a business	(77,000)		—
Proceeds from net investment hedges	727		—
Net cash used by investing activities	(139,851)		(66,981)
Cash Flows from Financing Activities:
Repayments under credit facility, net	—		(315,000)
Payments of acquisition-related holdbacks	—		(1,780)
Repurchases of common stock, net	(370,285)		—
Proceeds from exercises of stock options and employee stock purchase plans	26,241		23,086
Shares withheld for statutory tax withholding payments on restricted stock	(10,268)		(9,676)
Other	—		6,256
Net cash used by financing activities	(354,312)		(297,114)
Net effect of changes in exchange rates on cash	(5,076)		161
Net (decrease) increase in cash and cash equivalents	(52,342)		20,292
Cash and cash equivalents at beginning of period	453,932		112,546
Cash and cash equivalents at end of period	$	401,590	$	132,838
Supplemental Cash Flow Information:
Cash paid for income taxes	$	90,918	$	97,127
Unpaid property and equipment, reflected in accounts payable and accrued liabilities	$	8,322	$	15,448
The accompanying notes are an integral part of these condensed consolidated financial statements.

7

IDEXX LABORATORIES, INC. AND SUBSIDIARIES 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

(Unaudited)

NOTE 1. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION 

The accompanying unaudited condensed consolidated financial statements of IDEXX Laboratories, Inc. and its subsidiaries have been prepared in accordance with U.S. GAAP for interim financial information and with the requirements of Regulation S-X, Rule 10-01 for financial statements required to be filed as a part of this Quarterly Report on Form 10-Q. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “IDEXX,” the “Company,” “we,” “our,” or “us” refer to IDEXX Laboratories, Inc. and its subsidiaries.

The accompanying unaudited condensed consolidated financial statements include the accounts of IDEXX Laboratories, Inc. and our wholly-owned and majority-owned subsidiaries. We do not have any variable interest entities for which we are the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of our management, all adjustments necessary for a fair statement of our financial position and results of operations. All such adjustments are of a recurring nature. The condensed consolidated balance sheet data as of December 31, 2023, was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The results of operations for the three and six months ended June 30, 2024, are not necessarily indicative of the results to be expected for the full year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, (the “2023 Annual Report”).

The preparation of our condensed consolidated financial statements requires us to make estimates, judgments, and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues, and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis we evaluate our estimates, judgments, and methodologies. We base our estimates on historical experience and on various other assumptions that we believe are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities, and equity, and the amount of revenues and expenses.

NOTE 2. ACCOUNTING POLICIES

Significant Accounting Policies

The significant accounting policies used in preparation of these unaudited condensed consolidated financial statements as of and for the three and six months ended June 30, 2024, are consistent with those discussed in “Note 2. Summary of Significant Accounting Policies” to the consolidated financial statements in our 2023 Annual Report, and as updated below.

New Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments will require disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within segment profit and loss. The amendments are effective for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements. The implementation of ASU 2023-07 is not expected to have a material impact on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of income tax rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for annual periods beginning after December 15, 2024, with early adoption permitted, and may be applied either prospectively or retrospectively. We are currently evaluating ASU 2023-09 to determine its impact on our consolidated financial statements.

8

NOTE 3.      REVENUE

Revenues by Product and Service Categories and by Principal Geographic Areas

We present disaggregated revenue for our CAG segment based on major product and service categories. Our Water and LPD segments are comprised of a single major product category.

The following table presents revenue by major product and service categories:

(in thousands)	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2024		2023		2024		2023
CAG segment revenue:
CAG Diagnostics recurring revenue:	$	808,454	$	762,476	$	1,588,598	$	1,489,378
IDEXX VetLab consumables	325,348		303,735		642,277		594,849
Rapid assay products	103,290		97,340		189,605		179,372
Reference laboratory diagnostic and consulting services	347,373		330,106		691,711		653,286
CAG Diagnostics services and accessories	32,443		31,295		65,005		61,871
CAG Diagnostics capital - instruments	35,292		34,054		69,384		67,198
Veterinary software, services and diagnostic imaging systems:	78,552		70,122		153,601		137,355
Recurring revenue	63,117		53,725		122,817		105,432
Systems and hardware	15,435		16,397		30,784		31,923
CAG segment revenue	922,298		866,652		1,811,583		1,693,931
Water segment revenue	46,726		43,029		89,797		81,912
LPD segment revenue	30,306		29,911		58,511		59,119
Other segment revenue	4,248		4,038		7,782		8,863
Total revenue	$	1,003,578	$	943,630	$	1,967,673	$	1,843,825

The following table presents revenue by principal geographic area, based on customers’ domiciles:

(in thousands)	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2024		2023		2024		2023
United States	$	660,146	$	621,607	$	1,291,155	$	1,212,020
Europe, the Middle East and Africa	200,689		178,666		400,520		354,674
Asia Pacific Region	80,435		80,906		156,739		159,266
Canada	40,992		41,635		77,703		77,597
Latin America & Caribbean	21,316		20,816		41,556		40,268
Total revenue	$	1,003,578	$	943,630	$	1,967,673	$	1,843,825

Contracts with Multiple Performance Obligations

We enter into arrangements with multiple performance obligations where customers purchase a combination of IDEXX products and services. Determining whether products and services are considered distinct performance obligations that should be accounted for separately requires significant judgment. We determine the transaction price for a contract based on the total consideration we expect to receive in exchange for the transferred goods or services. To the extent the transaction price includes variable consideration, such as volume rebates or expected price adjustments, we apply judgment in constraining the estimated variable consideration due to factors that may cause reversal of revenue recognized. We evaluate constraints based on our historical and projected experience with similar customer arrangements.

We allocate revenue to each performance obligation in proportion to the relative standalone selling prices, and recognize revenue when transfer of the related goods or services has occurred for each obligation. We utilize the observable standalone selling price when available, which represents the price charged for the promised product or service when sold separately. When standalone selling prices for our products or services are not directly observable, we determine the standalone selling prices using relevant information available and apply suitable estimation methods including, but not limited to, the cost

9

plus a margin approach. We recognize revenue as each performance obligation is satisfied, either at a point in time or over time, as described in the revenue categories above. We do not disclose information about remaining performance obligations that are part of arrangements with an original expected duration of one year or less.

The following customer arrangements represent our most significant customer contracts that contain multiple performance obligations:

    Customer Commitment Arrangements. We offer customers incentives upon entering into multi-year arrangements to purchase annual minimum amounts of products and services.

Free or Discounted Instruments and Systems. Many of our customer commitment arrangements, such as our IDEXX 360 program, provide customers with free or discounted instruments or systems upon entering into multi-year arrangements to purchase annual minimum amounts of products and services. We allocate total consideration, including future committed purchases and expected price adjustments, based on relative standalone selling prices to identified performance obligations and recognize instrument revenue and cost at the time of installation and customer acceptance in advance of billing the customer, which is also when the customer obtains control of the instrument based on legal title transfer. Our right to future consideration related to instrument revenue is recorded as a contract asset within other current and long-term assets. The contract asset is transferred to accounts receivable when customers are billed for products and services over the term of the arrangement. We have determined that these arrangements do not include a significant financing component.

On December 31, 2023, our contract assets were $223.1 million, of which approximately $14.2 million and $28.7 million was reclassified to accounts receivable when customers were billed for related products and services during the three and six months ended June 30, 2024, respectively. Furthermore, as a result of new placements under commitment arrangements, net of subsequent amounts reclassified to accounts receivable and allowances established for credit losses, our contract assets were $238.9 million as of June 30, 2024. We monitor customer purchases over the term of their arrangement to assess the realizability of our contract assets and review estimates of variable consideration. Impairments and revenue adjustments that relate to performance obligations satisfied in prior periods, including cumulative catch-up adjustments to revenue arising from contract modifications, during the three and six months ended June 30, 2024, were not material.

Up-Front Consideration Paid to Customers. We provide customers with incentives in the form of IDEXX Points upon entering into multi-year arrangements to purchase annual minimum amounts of future products and/or services. If a customer breaches their agreement, they are required to refund all or a portion of the up-front consideration, or make other repayments, remedial actions, or both. Up-front incentives to customers (previously referred to as “customer acquisition costs”) in the form of IDEXX Points or, from time to time, cash, are not made in exchange for distinct goods or services and are capitalized as consideration paid to customers within other current and long-term assets, which are subsequently recognized as a reduction to revenue over the term of the customer arrangement. If these up-front incentives are subsequently utilized to purchase instruments, we allocate total consideration, including future committed purchases less up-front incentives and estimates of expected price adjustments, based on relative standalone selling prices, to identified performance obligations, and recognize instrument revenue and cost at the time of installation and customer acceptance. To the extent invoiced instrument revenue exceeds recognized instrument revenue, we record deferred revenue as a contract liability, which is subsequently recognized upon the purchase of products and services over the term of the contract. We have determined these arrangements do not include a significant financing component.

On December 31, 2023, our capitalized consideration paid to customers was $168.9 million, of which approximately $13.8 million and $28.2 million was recognized as a reduction of revenue during the three and six months ended June 30, 2024, respectively. Furthermore, as a result of new payments to customers, net of subsequent recognition, our capitalized consideration paid to customers was $191.6 million as of June 30, 2024. We monitor customer purchases over the term of their arrangement to assess the realizability of our capitalized consideration paid to customers and review estimates of variable consideration. Impairments and revenue adjustments that relate to performance obligations satisfied in prior periods, including cumulative catch-up adjustments to revenue arising from contract modifications, during the three and six months ended June 30, 2024, were not material.

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Rebate Arrangements. Our rebate arrangements provide customers the opportunity to earn future rebates based on the volume of products and/or services they purchase over the term of the arrangement. Rebate incentives are typically offered in multi-year arrangements that include customer commitments to purchase annual minimum amounts of products and services, or, to a lesser extent, are sometimes offered without future purchase commitments. We account for the customer’s right to earn rebates on future purchases as a separate performance obligation and determine the standalone selling price based on an estimate of rebates the customer will earn over the term of the arrangement. Total consideration allocated to identified performance obligations is limited to goods and services that the customer is presently obligated to purchase and does not include estimates of future purchases that are optional. We allocate total consideration to identified performance obligations, including the customer’s right to earn rebates on future purchases, which is deferred and subsequently recognized upon the purchase of products and/or services.

On December 31, 2023, our deferred revenue related to rebate and up-front consideration arrangements was $32.9 million, of which approximately $2.8 million and $5.8 million was recognized when customers purchased eligible products and services during the three and six months ended June 30, 2024, respectively. Furthermore, as a result of new customer purchases under rebate and up-front consideration arrangements, net of subsequent recognition, our deferred revenue was $30.4 million as of June 30, 2024, of which approximately 18%, 30%, 23%, 16%, and 13% are expected to be recognized during the remainder of 2024, the full years 2025, 2026, 2027, and thereafter, respectively.

For our customer commitment arrangements, we estimate future revenues related to multi-year arrangements to be approximately $4.1 billion, of which approximately 14%, 26%, 23%, 18%, and 19% are expected to be recognized during the remainder of 2024, the full years 2025, 2026, 2027, and thereafter, respectively. These future revenues relate to performance obligations not yet satisfied, for which customers have committed to future purchases, net of the expected revenue reductions from consideration paid to customers and expected price adjustments, and as a result, are lower than stated contractual commitments by our customers.

Instrument Rental Arrangements. Revenues from instrument rental and reagent rental arrangements are recognized either as operating leases on a ratable basis over the term of the arrangement or as sales-type leases at the time of installation and customer acceptance. Customers typically pay for the right to use instruments under rental arrangements in equal monthly amounts over the term of the rental arrangement. For some arrangements, customers are provided with the right to purchase the instrument at the end of the lease term. Our reagent rental arrangements provide customers the right to use our instruments upon entering into multi-year arrangements to purchase annual minimum amounts of consumables. These types of arrangements include an embedded lease for the right to use our instrument, and we determine the amount of lease revenue allocated to the instrument based on relative standalone selling prices. Lease revenues are presented in product revenue on our consolidated income statement. Lease revenue was approximately $3.3 million and $7.2 million for the three and six months ended June 30, 2024, respectively, compared to $5.5 million and $10.0 million for the three and six months ended June 30, 2023, respectively, including both operating leases and sales-type leases.

Sales-type Reagent Rental Arrangements. Our reagent rental arrangements that effectively transfer control of instruments to our customers are classified as sales-type leases, and we recognize instrument revenue and cost in advance of billing the customer, at the time of installation and customer acceptance. Our right to future consideration related to instrument revenue is recorded as a lease receivable within other current and long-term assets, and is transferred to accounts receivable when customers are billed for products and services over the term of the arrangement. On December 31, 2023, our lease receivable assets were $23.1 million, of which approximately $1.4 million and $3.0 million was reclassified to accounts receivable when customers were billed for related products and services during the three and six months ended June 30, 2024, respectively. Furthermore, as a result of new placements under sales-type reagent rental arrangements, net of subsequent amounts reclassified to accounts receivable, and allowances established for credit losses, our lease receivable assets were $20.4 million as of June 30, 2024. The impacts of discounting and unearned income as of June 30, 2024, were not material. Profit and loss recognized at the commencement date and interest income during the three and six months ended June 30, 2024, were not material. We monitor customer purchases over the term of their arrangement to assess the realizability of our lease receivable assets. Impairments during the three and six months ended June 30, 2024, were not material.

Operating-type Reagent Rental Arrangements. Our reagent rental arrangements that do not effectively transfer control of instruments to our customers are classified as operating leases and we recognize instrument revenue and costs ratably over the term of the arrangement. The cost of the instrument is

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capitalized within property and equipment. During the three and six months ended June 30, 2024, we transferred instruments of $3.2 million and $6.6 million, respectively, compared to $4.8 million and $8.6 million during the three and six months ended June 30, 2023, respectively, from inventory to property and equipment.

We estimate future revenue to be recognized related to our reagent rental arrangements of approximately $64.0 million, of which approximately 13%, 24%, 21%, 17%, and 25% are expected to be recognized during the remainder of 2024, and the full years 2025, 2026, 2027, and thereafter, respectively. These future revenues relate to performance obligations not yet satisfied for which customers have committed to future purchases, net of expected price adjustments, and as a result, may be lower than stated contractual commitments by our customers.

Deferred Extended Warranties and Post-Contract Support Revenue

On December 31, 2023, our deferred revenue related to extended warranties and post-contract support was $26.0 million, of which approximately $1.6 million and $17.5 million was recognized during the three and six months ended June 30, 2024, respectively. Furthermore, as a result of new arrangements, our deferred revenue related to extended warranties and post-contract support was $25.7 million at June 30, 2024. We do not disclose information about remaining performance obligations that are part of contracts with an original expected duration of one year or less, and do not adjust for the effect of the financing components when the period between customer payment and revenue recognition is one year or less. Deferred revenue related to extended warranties and post-contract support with an original duration of more than one year was $9.1 million at June 30, 2024, of which approximately 22%, 37%, 23%, 10%, and 8% are expected to be recognized during the remainder of 2024, and the full years 2025, 2026, 2027, and thereafter, respectively. We have determined these arrangements do not include a significant financing component.

Costs to Obtain a Contract

On December 31, 2023, our deferred commission costs, included within other current and long-term assets, were $19.7 million, of which approximately $1.6 million and $3.4 million of commission expense was recognized during the three and six months ended June 30, 2024, respectively. Furthermore, as a result of commissions related to new extended warranties and SaaS subscriptions, net of subsequent recognition, our deferred commission costs were $19.6 million at June 30, 2024. Impairments of deferred commission costs during the three and six months ended June 30, 2024, respectively, were not material.

NOTE 4. ACQUISITIONS, ASSET PURCHASES AND INVESTMENTS

We believe that our acquisitions of businesses and other assets enhance our existing businesses by either expanding our geographic range, customer base, or existing product and service lines.

Business Combinations

On February 1, 2024, we acquired the assets of a privately-owned software and data platform business based in the U.S. that extends our practice management system cloud-native workflow and delivers strategic data solutions to our customers and their clients, for approximately $81.1 million, including an estimated contingent payment of $4.4 million. We estimate the fair values and the lives of the assets and liabilities acquired are as follows: completed technology of $17.1 million, with a life of 6 years; customer relationship intangibles of $12.5 million, with a life of 10 years; a non-compete agreement of $4.7 million, with a life of 5 years; and a trademark of $0.7 million, with a life of 10 years. We also recognized goodwill of $45.8 million, which represents synergies with our software business, and $0.3 million of net tangible assets, including accounts receivable. Goodwill related to this acquisition is expected to be deductible for tax purposes. Pro forma information has not been presented for this acquisition because such information is not material to the financial statements. The results of operations have been included in our CAG segment since the acquisition date. The purchase price allocation is subject to revision related to the settlement of working capital adjustments and tax-related matters. The acquisition expenses were not significant.

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NOTE 5. SHARE-BASED COMPENSATION 

The fair value of options, restricted stock units, deferred stock units, performance-based restricted stock units, and employee stock purchase rights awarded during the three and six months ended June 30, 2024, totaled $4.6 million and $70.2 million, respectively, as compared to $3.3 million and $60.6 million for the three and six months ended June 30, 2023, respectively. The total unrecognized compensation expense, net of estimated forfeitures, for unvested share-based compensation awards outstanding as of June 30, 2024, was $95.6 million, which will be recognized over a weighted average period of approximately 1.7 years. During the three and six months ended June 30, 2024, we recognized share-based compensation expenses of $15.7 million and $30.1 million, respectively, as compared to $15.4 million and $29.3 million for the three and six months ended June 30, 2023, respectively.

During the first quarter of 2024, we granted approximately $11.5 million of performance-based restricted stock units that are contingent upon our performance against pre-established financial performance metrics over a period beginning on January 1, 2024, and ending on December 31, 2026. Earned shares will vest on the later of the third anniversary of the grant date or the date of certification of our performance under the terms of the performance-based restricted stock units grant.

We determine the assumptions used in the valuation of option awards as of the date of grant. Differences in the expected stock price volatility, expected term, or risk-free interest rate may necessitate distinct valuation assumptions at each grant date. As such, we may use different assumptions for options granted throughout the year. Option awards are granted with an exercise price equal to or greater than the closing market price of our common stock at the date of grant. We have never paid any cash dividends on our common stock, and we have no intention to pay such a dividend at this time; therefore, we assume that no dividends will be paid over the expected terms of option awards.

The weighted averages of the valuation assumptions used to determine the fair value of each option award on the date of grant and the weighted average estimated fair values were as follows:

	For the Six Months Ended June 30,
	2024			2023
Expected stock price volatility	32		%	32		%
Expected term, in years	7.0			6.7
Risk-free interest rate	4.3		%	3.7		%
Weighted average fair value of options granted	$	239.64		$	201.37

NOTE 6. CREDIT LOSSES

We are exposed to credit losses primarily through our sales of products and services to our customers. We maintain allowances for credit losses for potentially uncollectible receivables. We base our estimates on a detailed analysis of specific customer situations and a percentage of our accounts receivable by aging category. Additionally, our estimates are developed based on historical credit loss experience, estimates of recoveries, current economic conditions, and future expectations.

Additional allowances may be required if either the financial condition of our customers were to deteriorate, or a strengthening U.S. dollar impacts the ability of foreign customers to make payments to us on their U.S. dollar-denominated purchases. We monitor our ongoing credit exposure through active review of counterparty balances against contract terms and due dates. Our activities include timely account reconciliations, dispute resolution, and payment confirmations. We may employ collection agencies and legal counsel to pursue recovery of defaulted receivables.

Account balances are charged off against the allowance when we believe it is probable the receivable will not be recovered. We may require collateralized asset support or a prepayment to mitigate credit risk. We do not have any off-balance sheet credit exposure related to our customers.

Accounts Receivable

The allowance for credit losses associated with accounts receivable was $12.3 million and $9.5 million as of June 30, 2024, and December 31, 2023, respectively. The amount of accounts receivable reflected on the balance sheet is net of this reserve. Based on an aging analysis, as of June 30, 2024, approximately 80% of our accounts receivable had not yet reached the invoice due date, and approximately 20% was considered past due, of which approximately 2.5% was greater than 60 days past

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due. As of December 31, 2023, approximately 83% of our accounts receivable had not yet reached the invoice due date, and approximately 17% was considered past due, of which approximately 1.7% was greater than 60 days past due.

Contract Assets and Lease Receivables

The allowance for credit losses associated with contract assets and lease receivables was $6.7 million and $6.4 million as of June 30, 2024, and December 31, 2023, respectively. The assets reflected on the balance sheet are net of these reserves. Historically, we have experienced low credit loss rates on our customer commitment programs and lease receivables. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.

NOTE 7. INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out) or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The components of inventories were as follows:

(in thousands)	June 30, 2024		December 31, 2023
Raw materials	$	104,087	$	106,392
Work-in-process	32,042		28,989
Finished goods	243,829		244,901
Inventories	$	379,958	$	380,282

NOTE 8. LEASES

Maturities of operating lease liabilities were as follows:

(in thousands)	June 30, 2024
2024 (remainder of year)	$	11,583
2025	26,307
2026	24,357
2027	19,580
2028	13,896
Thereafter	49,178
Total lease payments	144,901
Less imputed interest	(21,881)
Total	$	123,020

Total minimum future lease payments for leases that have not commenced as of June 30, 2024, are not material.

Supplemental cash flow information for leases was as follows:

(in thousands)	For the Six Months Ended June 30,
	2024		2023
Cash paid for amounts included in the measurement of operating lease liabilities	$	13,700	$	14,136
Right-of-use assets obtained in exchange for operating lease obligations, net of early lease terminations (1)	$	17,137	$	7,717

(1) Additions for the six months ended June 30, 2024, include $1.0 million of right-of-use assets obtained in connection with a business acquisition in the first quarter of 2024.

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NOTE 9. OTHER CURRENT AND LONG-TERM ASSETS

Other Current Assets

Other current assets consisted of the following:

(in thousands)	June 30, 2024		December 31, 2023
Contract assets, net (1)	$	58,714	$	55,111
Consideration paid to customers (2)	59,626		54,081
Prepaid expenses	46,453		48,370
Taxes receivable	15,988		16,972
Other assets	32,677		29,061
Other current assets	$	213,458	$	203,595

(1) Contract assets, net, are net of allowances for credit losses. Refer to "Note 6. Credit Losses."

(2) Refer to “Note 3. Revenue. Up-Front Consideration Paid to Customers” for more information regarding consideration paid to customers.

Other Long-Term Assets

Other long-term assets consisted of the following:

(in thousands)	June 30, 2024		December 31, 2023
Contract assets, net (1)	$	180,169	$	167,963
Consideration paid to customers (2)	131,935		114,850
Deferred income taxes	126,057		107,364
Equity investments	30,000		30,250
Investments in long-term product supply arrangements	23,792		25,943
Other assets	47,765		50,164
Other long-term assets	$	539,718	$	496,534

(1) Contract assets, net, are net of allowances for credit losses. Refer to "Note 6. Credit Losses."

(2) Refer to “Note 3. Revenue. Up-Front Consideration Paid to Customers” for more information regarding consideration paid to customers.

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NOTE 10. ACCOUNTS PAYABLE, ACCRUED LIABILITIES AND OTHER LONG-TERM LIABILITIES

Accounts Payable - Supplier Financing Program

We have an agreement with a third party to provide a supplier finance program, which facilitates participating suppliers’ ability to finance payment obligations from us with a designated third-party financial institution. Participating suppliers may, at their sole discretion, make offers to finance one or more of our payment obligations prior to their scheduled due dates at a discounted price. Our obligations to our suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to finance amounts under these arrangements. The terms of payments are consistent with the terms of our trade payables. Activity related to the obligations is presented within operating activities on the unaudited consolidated statements of cash flows. The changes in our outstanding payment obligations under this arrangement, which are included in accounts payable on the unaudited condensed consolidated balance sheets, were as follows:

(in thousands)	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2024		2023		2024		2023
Payment obligations outstanding at the beginning of the period	$	10,400	$	7,536	$	9,057	$	10,171
Payment obligation additions during the period	10,256		12,343		23,324		25,374
Payment obligations settled during the period	(11,909)		(14,484)		(23,634)		(30,150)
Payment obligations outstanding at the end of the period	$	8,747	$	5,395	$	8,747	$	5,395

Accrued Liabilities

Accrued liabilities consisted of the following:

(in thousands)	June 30, 2024		December 31, 2023
Accrued taxes	$	146,373	$	86,553
Accrued expenses	166,919		113,596
Accrued employee compensation and related expenses	124,018		174,375
Accrued customer incentives and refund obligations	83,759		84,386
Current lease liabilities	20,055		19,802
Accrued liabilities	$	541,124	$	478,712

Other Long-Term Liabilities

Other long-term liabilities consisted of the following:

(in thousands)	June 30, 2024		December 31, 2023
Accrued taxes	$	28,686	$	39,642
Other accrued long-term expenses	24,710		25,884
Other long-term liabilities	$	53,396	$	65,526

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NOTE 11. DEBT

Credit Facility

At June 30, 2024, we had $250.0 million in outstanding borrowings under our Credit Facility, all of which is the $250.0 million Term Loan, with a weighted average effective interest rate of 6.3%, excluding any impact of our interest rate swap. At December 31, 2023, we had $250.0 million outstanding under our Credit Facility, all of which was the $250.0 million Term Loan, with a weighted average effective interest rate of 6.0%. At June 30, 2024, we had remaining borrowing availability of $998.5 million under our $1.25 billion Credit Facility. The funds available under the Credit Facility reflect a further reduction due to the issuance of letters of credit, which were primarily issued in connection with our workers’ compensation insurance policy, for $1.5 million.

The applicable interest rate for the Credit Facility is calculated at a per annum rate equal to either (at our option) (i) a prime rate plus a margin ranging from 0.0% to 0.375% based on our consolidated leverage ratio, (ii) an adjusted term SOFR rate, plus 0.10%, plus a margin ranging from 0.875% to 1.375% based on our consolidated leverage ratio, or (iii) an adjusted daily simple SOFR rate, plus 0.10%, plus a margin ranging from 0.875% to 1.375% based on our consolidated leverage ratio. In March 2023, we entered into an interest rate swap contract to manage the economic effect of $250.0 million of variable interest borrowings under our Credit Facility. Refer to “Note 19. Hedging Instruments” for a discussion of our derivative instruments and hedging activity.

The Credit Facility contains affirmative, negative, and financial covenants customary for financings of this type. The negative covenants include restrictions on liens, indebtedness of subsidiaries of the Company, fundamental changes, investments, transactions with affiliates, and certain restrictive agreements. The sole financial covenant is a consolidated leverage ratio test that requires our ratio of debt to earnings before interest, taxes, depreciation, amortization, and share-based compensation, which is defined as the consolidated leverage ratio under the terms of the Credit Facility, not to exceed 3.5-to-1. As of June 30, 2024, we were in compliance with the covenants of the Credit Facility.

Senior Notes

The following describes all of our currently outstanding unsecured senior notes issued and sold in private placements (collectively, the “Senior Notes”) as of June 30, 2024:

(Principal Amount in thousands)
Issue Date	Due Date	Series	Principal Amount		Coupon Rate		Senior Note Agreement
12/11/2013	12/11/2025	2025 Series B Notes	$	75,000	4.04	%	NY Life 2013 Note Agreement
9/4/2014	9/4/2026	2026 Senior Notes	$	75,000	3.72	%	NY Life 2014 Note Agreement
7/21/2014	7/21/2024	2024 Series B Notes	$	75,000	3.76	%	Prudential 2015 Amended Agreement
6/18/2015	6/18/2025	2025 Series C Notes	€	88,857	1.785	%	Prudential 2015 Amended Agreement
2/12/2015	2/12/2027	2027 Series B Notes	$	75,000	3.72	%	MetLife 2014 Note Agreement
3/14/2019	3/14/2029	2029 Series C Notes	$	100,000	4.19	%	MetLife 2014 Note Agreement
4/2/2020	4/2/2030	MetLife 2030 Series D Notes	$	125,000	2.50	%	MetLife 2014 Note Agreement
4/14/2020	4/14/2030	Prudential 2030 Series D Notes	$	75,000	2.50	%	Prudential 2015 Amended Agreement

The Senior Note Agreements contain affirmative, negative, and financial covenants customary for agreements of this type. The negative covenants include restrictions on liens, indebtedness of our subsidiaries, priority indebtedness, fundamental changes, investments, transactions with affiliates, certain restrictive agreements, and violations of laws and regulations. The sole financial covenant is a consolidated leverage ratio test that requires our ratio of debt to earnings before interest, taxes, depreciation, amortization, and share-based compensation, as defined in the Senior Note Agreements, not to exceed 3.5-to-1. As of June 30, 2024, we were in compliance with the covenants of the Senior Note Agreements.

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NOTE 12. REPURCHASES OF COMMON STOCK

We primarily acquire shares of our common stock by repurchases in the open market. We also acquire shares that are surrendered by employees in payment for the minimum required statutory withholding taxes due on the vesting of restricted stock units and the settlement of deferred stock units, otherwise referred to herein as employee surrenders. We issue shares of treasury stock upon the vesting of certain restricted stock units and upon the exercise of certain stock options. The number of shares of treasury stock issued during the three and six months ended June 30, 2024, and 2023, was not material.

The Inflation Reduction Act of 2022 imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022, and is included in the cost of treasury stock acquired in open market repurchases.

The following is a summary of our open market common stock repurchases, reported on a trade date basis, and shares acquired through employee surrenders:

(in thousands, except per share amounts)	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2024		2023		2024		2023
Shares repurchased in the open market	415		—		718		—
Shares acquired through employee surrenders for statutory tax withholding	—		—		18		19
Total shares repurchased	415		—		736		19
Cost of shares repurchased in the open market	$	208,169	$	—	$	375,271	$	—
Cost of shares for employee surrenders	79		79		10,268		9,676
Total cost of shares	$	208,248	$	79	$	385,539	$	9,676
Average cost per share - open market repurchases	$	501.44	$	—	$	522.32	$	—
Average cost per share - employee surrenders	$	496.95	$	469.84	$	560.01	$	503.35
Average cost per share - total	$	501.44	$	469.84	$	523.26	$	503.35

NOTE 13. INCOME TAXES 

Our effective income tax rate was 21.5% for the three months ended June 30, 2024, compared to 21.6% for the three months ended June 30, 2023, and 20.9% for the six months ended June 30, 2024, compared to 20.8% for the six months ended June 30, 2023. The decrease in our effective tax rate for the three months ended June 30, 2024, compared to the same period during the prior year, was primarily due to comparative tax rate benefits related to research and development tax credits and geographical income mix, partially offset by lower tax benefits related to share-based compensation. The increase in our effective tax rate for the six months ended June 30, 2024, compared to the same period during the prior year, was primarily driven by geographical income mix, partially offset by tax rate benefits related to research and development tax credits.

The effective tax rate for the three months ended June 30, 2024 was slightly higher than the U.S. federal statutory tax rate of 21% due to U.S. state taxes offset by tax benefits from share-based compensation. The effective tax rate for the six months ended June 30, 2024 was slightly lower than the U.S. federal statutory tax rate of 21% due to tax benefits from share-based compensation offset by U.S. state taxes.

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NOTE 14. ACCUMULATED OTHER COMPREHENSIVE INCOME

The changes in Accumulated Other Comprehensive Income (“AOCI”), net of tax, consisted of the following:

	For the Six Months Ended June 30, 2024
			Unrealized Gain (Loss) on Cash Flow Hedges, Net of Tax				Unrealized Gain (Loss) on Net Investment Hedges, Net of Tax
(in thousands)	Unrealized (Loss) Gain on Investments, Net of Tax		Foreign Currency Exchange Contracts		Interest Rate Swap		Euro-Denominated Notes		Cross Currency Swaps		Defined Benefit Plans, Net of Tax		Cumulative Translation Adjustment		Total
Balance as of December 31, 2023	$	(164)	$	(2,397)	$	1,106	$	2,346	$	1,428	$	(3,559)	$	(69,966)	$	(71,206)
Other comprehensive income (loss) before reclassifications	1		8,146		2,790		2,336		3,384		—		(27,658)		(11,001)
Reclassified from accumulated other comprehensive income	163		(1,808)		(1,476)		—		—		147		—		(2,974)
Balance as of June 30, 2024	$	—	$	3,941	$	2,420	$	4,682	$	4,812	$	(3,412)	$	(97,624)	$	(85,181)

	For the Six Months Ended June 30, 2023
			Unrealized Gain (Loss) on Cash Flow Hedges, Net of Tax				Unrealized Gain (Loss) on Net Investment Hedges, Net of Tax
(in thousands)	Unrealized Loss on Investments, Net of Tax		Foreign Currency Exchange Contracts		Interest Rate Swap		Euro-Denominated Notes		Cross Currency Swaps		Defined Benefit Plans, Net of Tax		Cumulative Translation Adjustment		Total
Balance as of December 31, 2022	$	(172)	$	839	$	—	$	4,947	$	7,057	$	(2,776)	$	(87,691)	$	(77,796)
Other comprehensive income (loss) before reclassifications	7		(340)		3,505		(1,843)		(3,016)		—		6,010		4,323
Reclassified from accumulated other comprehensive income	—		(273)		(216)		—		—		297		—		(192)
Balance as of June 30, 2023	$	(165)	$	226	$	3,289	$	3,104	$	4,041	$	(2,479)	$	(81,681)	$	(73,665)

19

The following table presents components and amounts reclassified out of AOCI to net income:

(in thousands)	Affected Line Item in the Statements of Income	Amounts Reclassified from AOCI For the Three Months Ended June 30,				Amounts Reclassified from AOCI For the Six Months Ended June 30,
		2024		2023		2024		2023
Foreign currency exchange contracts	Cost of revenue	$	1,721	$	115	$	2,531	$	450
	Tax expense	(480)		(60)		(723)		(177)
	Gain, net of tax	$	1,241	$	55	$	1,808	$	273
Interest rate swap contracts	Interest expense	$	979	$	283	$	1,936	$	283
	Tax expense	(233)		(67)		(460)		(67)