What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-07-28 compared with 2022-04-28 · 108 added, 55 removed, 194 unchanged (46% of the section changed)

15 unchanged sentences

Global Presence

We have built a direct sales organization in the United States, Australia, Canada, New Zealand, and some countries in Europe to call on health care professionals, such as endocrinologists, physicians and diabetes educators, who can educate and influence patient adoption of continuous glucose monitoring.

We have built a direct sales organization in the North America, Asia Pacific, Europe and the Middle East to call on health care professionals, such as endocrinologists, physicians and diabetes educators, who can educate and influence patient adoption of continuous glucose monitoring.

To complement our direct sales efforts, we have entered into distribution arrangements in the United States, and certain countries in Africa, Asia, Europe, Latin America, and the Middle East, as well as Australia, Canada, and New Zealand that allow distributors to sell our products.

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Eventually, we may apply our technological expertise to products beyond glucose monitoring.

Impact of the COVID-19 Pandemic

During 2020, 2021, and 2022, we have been subject to challenging social and economic conditions created as a result of the novel strain of coronavirus, SARS-CoV-2, or COVID-19.

Impact of the Ongoing COVID-19 Pandemic

During 2020, 2021, and 2022, we have been subject to challenging social and economic conditions created as a result of the novel strain of coronavirus, SARS-CoV-2 and its variants, or COVID-19.

These conditions continue to create various financial impacts to our operations by necessitating precautions for our personnel to operate safely both in person as well as remotely.

Costs incurred include items like incremental payroll costs, consulting support, IT infrastructure and facilities-related costs.

As the result of the COVID-19 pandemic, we made Dexcom CGM systems available for use in hospital settings and other healthcare facilities to assist frontline workers.

The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our customers and our sales cycles, employee or industry events, and effect on our vendors, all of which are uncertain and cannot be predicted.

The COVID-19 pandemic and its adverse effects have become more prevalent in the locations where we, our customers, suppliers or third-party business partners conduct business and as a result, we have experienced moderate disruptions in our global operations.

As the result of the COVID-19 pandemic, and in coordination with an FDA communication of enforcement discretion, we made Dexcom CGM systems available for use in hospital settings and other healthcare facilities.

The extent of the impact of the ongoing COVID-19 pandemic on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our customers and our sales cycles, employee or industry events, and effect on our vendors, all of which are uncertain and cannot be predicted.

The ongoing COVID-19 pandemic and its adverse effects have become more prevalent in the locations where we, our customers, suppliers or third-party business partners conduct business and as a result, we have experienced moderate disruptions in our global operations.

We have experienced and may experience constrained supply or curtailed customer demand, including due to customer loss of private health insurance coverage for our products, that could materially adversely impact our business, results of operations and overall financial performance in future periods.

We currently utilize third parties to, among other things, manufacture components and materials for our devices, and to provide services such as sterilization services and we purchase these materials and services from numerous suppliers worldwide.

The COVID-19 pandemic has and may continue to have an adverse impact on our manufacturing and distribution capabilities.

Disruptions relating to the COVID-19 pandemic, including shelter-in-place orders in the U.S.

The ongoing COVID-19 pandemic has and may continue to have an adverse impact on our manufacturing and distribution capabilities.

Disruptions relating to the ongoing COVID-19 pandemic, including shelter-in-place orders in the U.S.

and other countries, could prevent employees, suppliers, distributors, and others from accessing manufacturing facilities and from transporting our products or the components required to manufacture our products.

For example, we have experienced some supply chain disruption due to the global restrictions resulting from the COVID-19 pandemic in the manufacturing of our next-generation CGM product.

Further, worldwide supply chain disruption relating to the COVID-19 pandemic has resulted in product shortages that has and may continue to impact our ability to manufacture our devices.

As of the filing date of this Form 10-Q, the extent to which COVID-19 may impact our financial condition or results of operations or guidance is uncertain.

The effect of the COVID-19 pandemic will not be fully reflected in our results of operations and overall financial performance until future periods.

See “Risk Factors” in Part II, Item 1A of this Quarterly Report for further discussion of the possible impact of the COVID-19 pandemic on our business.

For example, we have experienced some supply chain disruption due to the global restrictions resulting from the ongoing COVID-19 pandemic in the manufacturing of our next-generation CGM product.

Further, worldwide supply chain disruption relating to the ongoing COVID-19 pandemic has resulted in product shortages that has and may continue to impact our ability to manufacture our devices.

As of the filing date of this Form 10-Q, the extent to which the ongoing COVID-19 pandemic may impact our financial condition or results of operations or guidance is uncertain.

The effect of the ongoing COVID-19 pandemic will not be fully reflected in our results of operations and overall financial performance until future periods.

See “Risk Factors” in Part II, Item 1A of this Quarterly Report for further discussion of the possible impact of the ongoing COVID-19 pandemic on our business.

Critical Accounting Estimates

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The critical accounting estimates that are most critical to a full understanding and evaluation of our reported financial results are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

There were no material changes to our critical accounting estimates during the three months ended March 31, 2022.

There were no material changes to our critical accounting estimates during the six months ended June 30, 2022.

Overview of Financial Results

The most important financial indicators that we use to assess our business are revenue growth, gross profit, operating income, net income, and cash flow from operations.

Key Highlights for the Three Months Ended March 31, 2022 include the following:

Key Highlights for the Three Months Ended June 30, 2022 include the following:

Revenue Gross Profit Operating Income Net Income Operating Cash Flow

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down 24% from the same period 2021

up 72% from the same period 2021

down 35% from the same period 2021

up 181% from the same period 2021

We ended the first quarter of 2022 with cash, cash equivalents and short-term marketable securities totaling $2.69 billion.

We ended the second quarter of 2022 with cash, cash equivalents and short-term marketable securities totaling $2.75 billion.

Business Trends

In addition to the general impacts of COVID-19 on our company as described in the Overview, looking ahead we expect our business could be affected by the following:

In addition to the general impacts of the ongoing COVID-19 pandemic on our company as described in the Overview, looking ahead we expect our business could be affected by the following:

• Increase in the worldwide incidence of people diagnosed with diabetes and costs related to the management and treatment of diabetes.

• Changes in medical reimbursement policies and programs.

• Growing demand for digital health technologies by both healthcare providers and consumers to reduce costs, empower consumers to make better-informed decisions about their own health and provide new options for facilitating prevention, early diagnosis of life-threatening diseases, and management of chronic conditions outside of traditional health care settings.

• Growing demand for digital health technologies by both healthcare providers and consumers to reduce costs.

• An expected interest in empowering consumers to make better-informed decisions about their own health and new potential options for facilitating prevention, early diagnosis of life-threatening diseases, and management of chronic conditions outside of traditional health care settings.

• Continued product innovation and competition from other CGM device makers.

• Our ability to scale efficiently with the construction of our production facility in Malaysia.

• Our ability to successfully develop, obtain regulatory approval of and commercialize the products within our pipeline, in particular, our next generation G7 CGM system.

• Our ability to successfully develop, obtain regulatory marketing authorization of and commercialize the products within our pipeline, in particular, our next generation G7 CGM system.

Results of Operations

Financial Overview

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

Three Months Ended March 31, 2022 - 2021

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Three Months Ended June 30, 2022 - 2021

(In millions, except per share amounts) 2022 % of Revenue (1)

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Research and development 121.7 17 % 129.1 22 % (7.4) (6) %

Amortization of intangible assets 1.9 — % 0.5 — % 1.4 **

Selling, general and administrative 248.9 36 % 186.5 31 % 62.4 33 %

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Income from equity investments — — % — — % — **

Interest and other income (expense), net (0.8) — % 0.1 — % (0.9) *

Interest and other income, net 3.0 — % 0.9 — % 2.1 **

Income before income taxes 75.3 11 % 97.1 16 % (21.8) (22) %

Income tax benefit (61.2) (10) % (15.2) (3) % (46.0) *

Income tax expense (benefit) 24.4 4 % 18.7 3 % 5.7 30 %

Net income $ 50.9 7 % $ 78.4 13 % $ (27.5) (35) %

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* We adjusted our 2021 amounts to reflect the simplified convertible instruments accounting guidance, which we adopted on a full retrospective basis.

All periods presented have also been adjusted to reflect the four-for-one stock split.

Refer to Note 1, “Organization and Significant Accounting Policies,” for further information.

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Income from equity investments is comprised of of realized gains from the sale of an equity investment.

Interest and other income (expense), net

Interest and other income (expense), net consists primarily of interest income on our marketable debt securities portfolio and foreign currency transaction gains and losses due to the effects of foreign currency fluctuations.

Three Months Ended March 31, 2022 Compared to

Three Months Ended March 31, 2021

Interest and other income, net

Interest and other income, net consists primarily of interest income on our marketable debt securities portfolio and foreign currency transaction gains and losses due to the effects of foreign currency fluctuations.

Three Months Ended June 30, 2022 Compared to

Three Months Ended June 30, 2021

Revenue The revenue increase was primarily due to increased sales volume of our disposable sensors due to the continued growth of our worldwide customer base, partially offset by mix shift and price associated with the evolution of our channel strategy.

Disposable sensor and other revenue comprised approximately 86% of total revenue and Reusable Hardware revenue comprised approximately 14% of total revenue for the three months ended March 31, 2022.

Disposable sensor and other revenue comprised approximately 84% of total revenue and Reusable Hardware revenue comprised approximately 16% of total revenue for the three months ended March 31, 2021.

Cost of Sales Cost of sales and gross profit increased primarily due to an increase in sales volume.

The decrease in gross profit margin in the first quarter of 2022 compared to the first quarter of 2021 was primarily driven by price and channel mix changes and increases in excess and obsolescence reserves related to the phase out of older generation CGMs.

Research and Development Expense Research and development expense increased primarily due to $11.4 million in additional salaries, bonuses, share-based compensation, and payroll-related costs primarily due to higher headcount, $4.7 million in additional costs related to set-up and validation costs for new CGM equipment, and $4.5 million in additional depreciation expense for equipment in service relating to new products prior to regulatory approval.

Disposable sensor and other revenue comprised approximately 86% of total revenue and Reusable Hardware revenue comprised approximately 14% of total revenue for the three months ended June 30, 2022.

Disposable sensor and other revenue comprised approximately 83% of total revenue and Reusable Hardware revenue comprised approximately 17% of total revenue for the three months ended June 30, 2021.

Cost of Sales & Gross Profit Cost of sales and gross profit increased primarily due to an increase in sales volume.

The decrease in gross profit margin in the second quarter of 2022 compared to the second quarter of 2021 was primarily driven by price and channel mix changes.

Research and Development Expense Research and development expense decreased primarily due to $10.3 million in lower third party and consulting fees related to software development for new products and significant enhancements and $6.0 million in lower losses from disposal of assets related to the automation of our production capabilities, partially offset by $4.6 million in compensation-related costs primarily due to higher headcount.

We continue to believe that focused investments in research and development are critical to our future growth and competitive position in the marketplace, and to the development of new and updated products and services that are central to our core business strategy.

Selling, General and Administrative Expense Selling, general and administrative expense increased primarily due to $9.8 million in additional salaries, bonuses, share-based compensation, and payroll-related costs primarily due to higher headcount, $4.3 million in additional advertising and marketing costs due to an increase in worldwide marketing campaigns, $3.6 million in additional travel and entertainment expenses, $2.7 million in additional legal expense related to litigation, and $1.5 million in additional amortization expense related to acquired intangibles.

Income Tax Benefit The income tax benefit for the three months ended March 31, 2022 is primarily attributable to excess tax benefits recognized for employees share-based compensation for employees and the Verily Milestone payment recorded discretely during the quarter, offsetting income tax expense from normal, recurring operations at an estimated annual effective rate of 30.2%.

The income tax benefit we recorded for the three months ended March 31, 2021 is primarily attributable to excess tax benefits recognized for employee share-based compensation offset by income tax expense from normal, recurring operations.

Selling, General and Administrative Expense Selling, general and administrative expense increased primarily due to $19.1 million in advertising and marketing costs due to an increase in worldwide marketing campaigns, $12.9 million in compensation-related costs primarily due to higher headcount, $6.1 million in depreciation expense primarily due to higher property and equipment balances and accelerated depreciation related to business transition activities, $5.9 million in legal expense related to litigation, $5.5 million in consulting fees, and $4.1 million in travel and entertainment expenses.

Income Tax Expense (Benefit) Our estimated annual effective tax rate from normal, recurring operations increased from 30.2% to 31.4% during the three months ended June 30, 2022 primarily due to impacts of foreign operations.

There were no significant discrete items recognized for the three months ended June 30, 2022.

The income tax expense recorded for the three months ended June 30, 2021 is primarily attributable to excess tax benefits recognized for employee share-based compensation and a one-time tax benefit related to the revaluation of our U.K.

net operating loss deferred tax asset resulting from the increase in the U.K.

corporate rate from 19% to 25%, effective April 2023, offset by income tax expense from normal, recurring operations.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Six Months Ended June 30, 2022 - 2021

(In millions, except per share amounts) 2022 % of Revenue (1)

2021 % of Revenue (1)

$ Change % Change

(As Adjusted)*

Revenue $ 1,325.0 100 % $ 1,100.1 100 % $ 224.9 20 %

Cost of sales 477.4 36 % 339.1 31 % 138.3 41 %

Gross profit 847.6 64.0 % 761.0 69.2 % 86.6 11 %

Operating expenses:

Research and development 257.6 19 % 238.5 22 % 19.1 8 %

Amortization of intangible assets 3.9 — % 1.0 — % 2.9 **

Selling, general and administrative 467.8 35 % 374.6 34 % 93.2 25 %

Total operating expenses 729.3 55 % 614.1 56 % 115.2 19 %

Operating income 118.3 9 % 146.9 13 % (28.6) (19) %

Interest expense (9.3) (1) % (9.5) (1) % 0.2 (2) %

Income from equity investments 0.2 — % — — % 0.2 **

Interest and other income, net 2.2 — % 1.0 — % 1.2 **

Income before income taxes 111.4 8 % 138.4 13 % (27.0) (20) %

Income tax expense (benefit) (36.8) (3) % 3.5 — % (40.3) **

Net income $ 148.2 11 % $ 134.9 12 % $ 13.3 10 %

Basic net income per share $ 0.38 ** $ 0.35 ** $ 0.03 9 %

Diluted net income per share $ 0.36 ** $ 0.33 ** $ 0.03 9 %

(1) The sum of the individual percentages may not equal the total due to rounding.

* We adjusted our 2021 amounts to reflect the simplified convertible instruments accounting guidance, which we adopted on a full retrospective basis.

All periods presented have also been adjusted to reflect the four-for-one stock split.

Refer to Note 1, “Organization and Significant Accounting Policies,” for further information.

** Not meaningful

Six Months Ended June 30, 2022 Compared to

Six Months Ended June 30, 2021

Revenue The revenue increase was primarily driven by increased sales volume of our disposable sensors due to the continued growth of our worldwide customer base, partially offset by mix shift and price associated with the evolution of our channel strategy.

Disposable sensor and other revenue comprised approximately 86% of total revenue and Reusable Hardware revenue comprised approximately 14% of total revenue for the six months ended June 30, 2022.

Disposable sensor and other revenue comprised approximately 84% of total revenue and Reusable Hardware revenue comprised approximately 16% of total revenue for the six months ended June 30, 2021.

Cost of Sales & Gross Profit Cost of sales and gross profit increased primarily due to an increase in sales volume.

The decrease in gross profit margin in 2022 compared to 2021 was primarily driven by price and channel mix changes and increases in excess and obsolescence reserves related to the phase out of older generation CGMs.

Research and Development Expense Research and development expense increased primarily due to $16.0 million in compensation-related costs primarily due to higher headcount, $5.0 million in costs related to set-up and validation costs for new CGM equipment, and $4.5 million in depreciation expense for equipment in service relating to new products prior to regulatory approval, partially offset by $7.3 million in lower third party and consulting fees primarily related to software development for new products and significant enhancements and $5.2 million in lower losses from disposal of assets related to the automation of our production facilities.

Selling, General and Administrative Expense Selling, general and administrative expense increased primarily due to $23.4 million in advertising and marketing costs due to an increase in worldwide marketing campaigns, $22.7 million in compensation-related costs primarily due to higher headcount, $8.6 million in legal expense related to litigation, $8.0 million in depreciation expense primarily due to higher property and equipment balances and accelerated depreciation related to business transition activities, and $7.7 million in travel and entertainment expenses.

Income Tax Expense (Benefit) The income tax benefit we recorded for the six months ended June 30, 2022 is primarily attributable to income tax expense from normal, recurring operations offset by excess tax benefits recognized for share-based compensation for employees (net of disallowed executive compensation) and the Verily milestone payment, and generation of research and development tax credits.

The income tax expense we recorded for the six months ended June 30, 2021 is primarily attributable to normal, recurring operations partially offset by excess tax benefits recognized for employee share-based compensation (net of disallowed executive compensation) and a one-time tax benefit related to the revaluation of our U.K.

net operating loss deferred tax asset resulting from the increase in the U.K.

corporate rate from 19% to 25%, effective April 2023.

Liquidity and Capital Resources

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Cash, cash equivalents and short-term marketable securities

Our cash, cash equivalents and short-term marketable securities totaled $2.69 billion as of March 31, 2022.

Our cash, cash equivalents and short-term marketable securities totaled $2.75 billion as of June 30, 2022.

None of those funds were restricted and approximately 96% of those funds were located in the United States.

Cash flow from Operations

For the three months ended March 31, 2022, we had positive cash inflows of $71.0 million from operating activities.

For the six months ended June 30, 2022, we had positive cash inflows of $243.8 million from operating activities.

We anticipate that we will continue to generate positive cash inflows for the foreseeable future.

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Revolving Credit Agreement

As of March 31, 2022, we had no outstanding borrowings, $7.3 million in outstanding letters of credit, and a total available balance of $192.7 million under the Amended Credit Agreement.

As of June 30, 2022, we had no outstanding borrowings, $7.3 million in outstanding letters of credit, and a total available balance of $192.7 million under the Amended Credit Agreement.

We monitor counterparty risk associated with the institutional lenders that are providing the Credit Facility.

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Our short-term liquidity requirements primarily consist of regular operating costs, interest payments related to our senior convertible notes, capital expenditures for the development of our manufacturing facilities and office spaces, and short-term material cash requirements as described below.

As of March 31, 2022, we had a working capital ratio of 5.27 and a quick ratio of 4.54, which indicates that our current assets are more than enough to cover our short-term liabilities.

As of June 30, 2022, we had a working capital ratio of 4.72 and a quick ratio of 4.11, which indicates that our current assets are more than enough to cover our short-term liabilities.

We expect to have significant capital expenditures for the next year to drive our strategic initiative of building out our manufacturing facility and equipment in Malaysia and the capacity scale-up in Mesa, Arizona.

We believe that our cash, cash equivalents, and marketable securities balances, projected cash contributions from our commercial operations, and borrowings under our Credit Facility will be sufficient to meet our anticipated seasonal working capital needs, all capital expenditure requirements, material cash requirements as described below, and other liquidity requirements associated with our operations for at least the next 12 months.

On July 26, 2022, a duly authorized committee of our Board of Directors authorized a share repurchase program of up to $700 million of our outstanding common stock, with a repurchase period ending no later than June 30, 2023.

See Note 10 “Subsequent Events” to the consolidated financial statements in Part I, Item 1 of this Quarterly Report for more details.

Long-term Liquidity Requirements

Our long-term liquidity requirements primarily consist of interest and principal payments related to our senior convertible notes, capital expenditures for the development of our manufacturing facilities and office spaces, and long-term material cash requirements as described below.

As of March 31, 2022, we had a debt-to-assets ratio of 0.39, which indicates that our total assets are more than enough to cover our short-term and long-term debts.

As of June 30, 2022, we had a debt-to-assets ratio of 0.38, which indicates that our total assets are more than enough to cover our short-term and long-term debts.

As demand grows for our products, we will continue to expand global operations to meet demand through investments in manufacturing and operations.

We expect to meet our long-term liquidity requirements from our main sources of liquidity as described above to support our future operations, capital expenditures, acquisitions, and other liquidity requirements associated with our operations beyond the next 12 months.

As of March 31, 2022, we have outstanding senior convertible notes that will mature in December 2023 for the 2023 Notes and November 2025 for the 2025 Notes.

As of June 30, 2022, we have outstanding senior convertible notes that will mature in December 2023 for the 2023 Notes and November 2025 for the 2025 Notes.

However, the outstanding principal of our senior convertible notes could be converted into cash and/or shares of our common stock prior to maturity once certain conditions are met.

See Note 5 “Debt” to

the consolidated financial statements in Part I, Item 1 of this Quarterly Report for information on conversion rights prior to maturity.

See Note 5 “Debt” to the consolidated financial statements in Part I, Item 1 of this Quarterly Report for information on conversion rights prior to maturity.

Material Cash Requirements

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See “Contractual Obligations” below in Part I, Item 2 of this Quarterly Report for more information.

As of January 1, 2022, for U.S.

tax purposes, research and development expenses are required to be capitalized and amortized rather than immediately deducted.

As a result, our annual cash tax payments to the United States Treasury may increase in the current year.

Further, we may use cash to repurchase Dexcom shares or for strategic initiatives that strengthen our foundation for long-term growth.

We issued senior convertible notes in November 2018 and May 2020.

The obligations presented above include both principal and interest for these notes.

Although these notes mature in 2023 and 2025, they may be converted into cash and shares of our common stock prior to maturity if certain conditions are met.

Any conversion prior to maturity can result in repayment of the principal amounts sooner than the scheduled repayment as indicated in the table.

As of March 31, 2022, we had outstanding letters of credit of $7.3 million for which we cannot forecast with certainty the amount and timing of repayments.

Although these notes mature in December 2023 and November 2025, they may be converted into cash and shares of our common stock prior to maturity if certain conditions are met.

Any conversion prior to maturity can result in repayment of the principal amounts sooner than the scheduled repayment..

As of June 30, 2022, we had outstanding letters of credit of $7.3 million for which we cannot forecast with certainty the amount and timing of repayments.

See Note 5 “Debt” to the consolidated financial statements in Part I, Item 1 of this Quarterly Report for further discussion of the terms of our senior convertible notes.

We are party to various leasing arrangements, primarily for office, manufacturing and warehouse space that expire at various times through December 2030, excluding any renewal options.

We also have a land lease in Penang, Malaysia for the build-out of our international manufacturing facility lease that expires in 2080.

We also have land leases in Penang, Malaysia for the build-out of our international manufacturing facility lease that expire through 2082.

We anticipate incurring significant expenditures related to the build-out of the Malaysia manufacturing facility and equipment in the next two years.

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See Note 5 “Debt” to the consolidated financial statements in Part I, Item 1 of this Quarterly Report for more information about the terms of the Credit Agreement, our senior convertible notes, the 2023 Note Hedge, and the 2023 Warrants.

As of March 31, 2022, we had $2.69 billion in cash, cash equivalents and short-term marketable securities, which is a decrease of $43.0 million compared to $2.73 billion as of December 31, 2021.

The primary cash flows during the three months ended March 31, 2022 and March 31, 2021 are described below.

As of June 30, 2022, we had $2.75 billion in cash, cash equivalents and short-term marketable securities, which is an increase of $23.6 million compared to $2.73 billion as of December 31, 2021.

The primary cash flows during the six months ended June 30, 2022 and June 30, 2021 are described below.

See the consolidated financial statements in Part I, Item 1 of this Quarterly Report for complete consolidated statements of cash flows for these periods.

Three Months Ended

March 31, 2022 March 31, 2021

Six Months Ended

June 30, 2022 June 30, 2021

Operating Cash Flows + $148.2 million of net income and $141.3 million of net non-cash adjustments, partially offset by $45.7 million of net changes in working capital balances

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Investing Cash Flows - $358.1 million net purchases of marketable securities

- $12.0 million net purchases of marketable securities

+ $456.4 million net proceeds from marketable securities

- $193.1 million capital expenditures

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We presented our contractual obligations as of December 31, 2021 in Note 6, “Leases And Other Commitments,” in our Annual Report on Form 10-K for the twelve months then ended.

There were no significant changes to our lease obligations.

As of March 31, 2022, we had approximately $503.6 million of open purchase orders and contractual obligations in the ordinary course of business, the majority of which are due within one year.

There were no significant changes to our lease obligations during the six months ended June 30, 2022.

As of June 30, 2022, we had approximately $461.2 million of open purchase orders and contractual obligations in the ordinary course of business, the majority of which are due within one year.

See Note 5 “Debt” to the consolidated financial statements in Part I, Item 1 of this Quarterly Report for conversion activity related to our senior convertible notes.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis