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Debt
 9 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract]  
Debt Debt
Convertible Senior Notes

The Company has three convertible senior notes ("2025 Notes", "2027 Notes" and "2029 Notes") outstanding with a par value totaling $3,565.0 million (collectively, the "Notes") that are senior unsecured obligations of the Company and bear interest payable semi-annually in arrears. The following table summarizes further details of the Notes:

Notes
Issuance Date
Maturity Date
Principal Amount (in thousands)
Coupon Interest Rate
Effective Interest Rate
2025 NotesMay 21, 2018May 1, 2025$1,150,000 0.125 %0.350 %
2027 NotesAugust 16, 2019September 1, 2027$1,150,000 0.375 %0.539 %
2029 NotesAugust 18, 2023February 15, 2029$1,265,000 1.125 %1.388 %

Conversion rights of the Notes

At their option, holders may exercise the conversion right of the respective Notes at the following specified times and rates to receive the principal amount in cash and receive any amount in excess of the principal amount in cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election.

Prior to the close of business on the business day immediately preceding the conversion date, as noted in the table below, under the following circumstances:

•during any calendar quarter commencing after the calendar quarter ended June 30, 2018 for the 2025 Notes, December 31, 2019 for the 2027 Notes and December 31, 2023 for the 2029 Notes (and only during such calendar quarter), if the last reported sale price of the Company's common stock for at least 20 trading days (whether or not consecutive) during the 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 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 respective Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company's common stock and the conversion rate on each such trading day; or

•upon the occurrence of specified corporate events.

On or after the respective conversion date, as noted in the table below, holders may convert all or any portion of their respective Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date.

If the Company undergoes a fundamental change at any time prior to the maturity date, holders of the Notes will have the right, at their option, to require the Company to repurchase for cash all or any portion of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
The conversion rights of the Notes are as follows:

NotesConversion Date
Conversion Rate (1)
Conversion Price per Share (1)
2025 NotesJanuary 1, 202510.5150$95.10 
2027 NotesMay 1, 20278.6073$116.18 
2029 NotesOctober 15, 20287.9170$126.31 

(1) The conversion rate for the Notes is established as a number of shares of the Company's commons stock per $1,000 principal amount of the Notes, that is equivalent to the conversion price per share, subject to adjustments in certain events. Upon the occurrence of certain corporate events the Company will increase the conversion rate for a holder that elects to convert its Notes.

Components and fair value of the Notes

The Notes consisted of the following components as of September 30, 2023 and December 31, 2022 (in thousands):

2025 Notes
2027 Notes
2029 Notes
Total
As of September 30, 2023
Principal$1,150,000 $1,150,000 $1,265,000 $3,565,000 
Less: issuance costs, net of amortization(4,106)(7,300)(17,252)(28,658)
Net carrying amount$1,145,894 $1,142,700 $1,247,748 $3,536,342 
Estimated fair value (1)
$1,363,394 $1,203,395 $1,281,622 $3,848,411 
As of December 31, 2022
Principal$1,150,000 $1,150,000 $— $2,300,000 
Less: issuance costs, net of amortization(6,035)(8,707)— (14,742)
Net carrying amount$1,143,965 $1,141,293 $— $2,285,258 
Estimated fair value (1)
$1,209,076 $1,111,038 $— $2,320,114 

(1) The fair values were determined based on the quoted prices of the Notes in an inactive market on the last trading day of the reporting period and have been classified as Level 2 within the fair value hierarchy.

Note Hedge and Warrants

To minimize the impact of potential dilution upon conversion of the Notes, the Company entered into convertible note hedge transactions with respect to its common stock in each respective issuance month. The note hedge transactions cover an approximate number of shares of the Company’s common stock at a strike price that corresponds to the conversion prices for the Notes, also subject to adjustment, and are exercisable upon conversion of the Notes. The note hedge transactions expire upon the respective maturity dates of the Notes. The Company determined that the note hedges meet the definition of a derivative and are classified in stockholders’ equity, as the note hedges are indexed to the Company's common stock, and the Company, at its election, may receive cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock. The Company recorded the purchase of the hedges as a decrease to additional paid-in capital. The Company does not recognize subsequent changes in fair value of the note hedges in its interim condensed consolidated financial statements.

Separately, the Company entered into warrant transactions, whereby the Company sold warrants to acquire, subject to anti-dilution adjustments, shares of the Company’s common stock at a predetermined strike price per share. The convertible note hedge and warrant transactions will generally have the effect of increasing the conversion price of the each of the Notes to the respective strike price related to the warrant transactions. The Company determined that the warrants meet the definition of a derivative and are classified in stockholders’ equity, as the warrants are indexed to the Company's common stock, and the Company, at its election, may pay or deliver to holders cash or shares of the Company's common stock. The Company recorded the proceeds from the issuance of the warrants as an increase to additional paid-in capital. The Company does not recognize
subsequent changes in fair value of the warrants in its interim condensed consolidated financial statements. The below table summarizes the main terms impacting the note hedges and warrants (in thousands, except per share data):

2025 Notes2027 Notes2029 Notes
Note hedge transaction cost$261,740 $312,225 $236,555 
Shares covered by note hedge transaction
12,093 9,898 10,015 
Shares related to warrant transaction12,093 9,898 10,015 
Strike price per share related to warrant transaction$149.18 $178.74 $180.44 
Aggregate proceeds from sale of warrants$119,945 $185,150 $90,195 

Revolving Credit Facility

In May 2018, the Company entered into a $500.0 million five-year, revolving credit agreement (the “2018 Credit Agreement”). Borrowings under the 2018 Credit Agreement bore interest, at the Company's option, at a base rate plus a spread of 0.00% to 0.25% or an adjusted LIBOR rate plus a spread of 0.875% to 1.25%, in each case with such spread being determined based on the Company's consolidated leverage ratio specified in the 2018 Credit Agreement. Regardless of what amounts, if any, outstanding under the 2018 Credit Agreement, the Company was also obligated to pay an ongoing commitment fee on undrawn amounts at a rate of 0.075% to 0.15%, with such rate being based on the Company's consolidated leverage ratio specified in the 2018 Credit Agreement.

In November 2022, the Company entered into a $500.0 million five-year, revolving credit agreement (the “2022 Credit Agreement”). The 2022 Credit Agreement replaces the 2018 Credit Agreement. Borrowings under the 2022 Credit Agreement may be used to finance working capital needs and for general corporate purposes. The 2022 Credit Agreement provides for an initial $500.0 million in revolving loans. Under specified circumstances, the facility can be increased to up to $1.0 billion in aggregate principal amount. The 2022 Credit Agreement expires in November 2027, and any amounts outstanding thereunder will become due and payable, subject to up to two one-year extensions at the Company's request and with the consent of the lenders party thereto.

Borrowings under the 2022 Credit Agreement bear interest, at the Company's option, and subject to a credit spread adjustment, at a term benchmark rate plus a spread of 0.75% to 1.125%, a reference rate plus a spread of 0.75% to 1.125%, or a base rate plus a spread of 0.00% to 0.125%, in each case with such spread being determined based on the Company's consolidated leverage ratio specified in the 2022 Credit Agreement. Regardless of what amounts, if any, are outstanding under the 2022 Credit Agreement, the Company is also obligated to pay an ongoing commitment fee on undrawn amounts at a rate of 0.07% to 0.125%, with such rate being based on the Company's consolidated leverage ratio specified in the 2022 Credit Agreement.

The 2022 Credit Agreement contains customary representations and warranties, affirmative and negative covenants and events of default. The negative covenants include restrictions on subsidiary indebtedness, liens and fundamental changes. These covenants are subject to a number of important exceptions and qualifications. The principal financial covenant requires a maximum consolidated leverage ratio. As of September 30, 2023, the Company was in compliance with all covenants. There were no outstanding borrowings under the 2022 Credit Agreement as of September 30, 2023.
Interest Expense

The Notes bear interest at fixed rates that are payable semi-annually in arrears on their respective interest payments dates each year. Interest expense, together with ongoing commitment fees under the terms of the Company's credit agreements, included in the interim condensed consolidated statements of income for the three and nine months ended September 30, 2023 and 2022 was as follows (in thousands):

For the Three Months
Ended September 30,		For the Nine Months
Ended September 30,
2023202220232022
Amortization of debt issuance costs$1,528 $1,170 $3,861 $3,507 
Coupon interest payable on 2025 Notes359 360 1,077 1,078 
Coupon interest payable on 2027 Notes1,078 1,078 3,234 3,234 
Coupon interest payable on 2029 Notes1,660 — 1,660 — 
Interest payable and commitment fees under the credit agreements
486 261 1,254 804 
Capitalization of interest expense(124)(84)(261)(211)
Total interest expense$4,987 $2,785 $10,825 $8,412