Item 2. Management’s Discussion and Analysis
ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Who We Are
We are a medical device company primarily focused on the design, development and commercialization of continuous glucose monitoring, or CGM, systems for the management of diabetes by patients, caregivers, and clinicians around the world.
We received approval from the Food and Drug Administration, or FDA, and commercialized our first product in 2006. We launched our latest generation system, the Dexcom G6 ® integrated Continuous Glucose Monitoring System, or G6, in 2018 and more recently received marketing clearance from the FDA on the Dexcom G7 ® in December 2022.
Unless the context requires otherwise, the terms “we,” “us,” “our,” the “company,” or “Dexcom” refer to DexCom, Inc. and its subsidiaries.
Global Presence
We have built a direct sales organization in North America and certain international markets 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 North America and several international markets that allow distributors to sell our products.
Future Developments
Product Development: We plan to develop future generations of technologies that are focused on improved performance and convenience and that will enable intelligent insulin administration. Over the longer term, we plan to continue to develop and improve networked platforms with open architecture, connectivity and transmitters capable of communicating with other devices. We also intend to expand our efforts to accumulate CGM patient data and metrics and apply predictive modeling and machine learning to generate interactive CGM insights that can inform patient behavior.
Partnerships: We also continue to pursue and support development partnerships with insulin pump companies and companies or institutions developing insulin delivery systems, including automated insulin delivery systems.
New Opportunities: We are also exploring how to extend our offerings to other opportunities, including for people with Type 2 diabetes that are non-insulin using, people with pre-diabetes, people who are obese, people who are pregnant, and people in the hospital setting. Eventually, we may apply our technological expertise to products beyond glucose monitoring.
Critical Accounting Estimates
The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which we have prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements as well as the reported revenue and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We believe that the estimates, assumptions and judgments involved in the accounting policies described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 have the greatest potential impact on our financial statements, so we consider them to be our critical accounting policies and estimates. There were no material changes to our critical accounting estimates during the six months ended June 30, 2023.
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Overview of Financial Results
The most important financial indicators that we use to assess our business are revenue, gross profit, operating income, net income, and operating cash flow.
Key Highlights for the Three Months Ended June 30, 2023 include the following:
Revenue Gross Profit Operating Income Net Income Operating
Cash Flow
$871.3 million $546.4 million $128.1 million $115.9 million $190.3 million
up 25% from the same period 2022
up 22% from the same period 2022
up 66% from the same period 2022
up 128% from the same period 2022
up 10% from the same period 2022
We ended the second quarter of 2023 with cash, cash equivalents and short-term marketable securities totaling $3.64 billion.
Business Trends
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.
• 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.
• Growing research and interest in the use of CGM technology outside of the ambulatory care setting, including use by hospital systems.
• Continued product innovation and competition from other CGM device makers.
• Our ability to scale efficiently with our Malaysia manufacturing facility.
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Results of Operations
Financial Overview
Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022
Three Months Ended June 30, 2023 - 2022
(In millions, except per share amounts) 2023 % of Revenue (1)
2022 % of Revenue (1)
$ Change % Change
Revenue $ 871.3 100 % $ 696.2 100 % $ 175.1 25 %
Cost of sales 324.9 37 % 246.7 35 % 78.2 32 %
Gross profit 546.4 62.7 % 449.5 64.6 % 96.9 22 %
Operating expenses:
Research and development 119.3 14 % 121.7 17 % (2.4) (2) %
Amortization of intangible assets 1.7 — % 1.9 — % (0.2) (11) %
Selling, general and administrative 297.3 34 % 248.9 36 % 48.4 19 %
Total operating expenses 418.3 48 % 372.5 54 % 45.8 12 %
Operating income 128.1 15 % 77.0 11 % 51.1 66 %
Interest expense (5.9) (1) % (4.7) (1) % (1.2) 26 %
Interest and other income, net 37.1 4 % 3.0 — % 34.1 **
Income before income taxes 159.3 18 % 75.3 11 % 84.0 **
Income tax expense (benefit) 43.4 5 % 24.4 4 % 19.0 78 %
Net income $ 115.9 13 % $ 50.9 7 % $ 65.0 128 %
Basic net income per share $ 0.30 ** $ 0.13 ** $ 0.17 **
Diluted net income per share $ 0.28 ** $ 0.12 ** $ 0.16 **
(1) The sum of the individual percentages may not equal the total due to rounding.
** Not meaningful
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Revenue
We expect that the revenue we generate from the sales of our products will fluctuate from quarter to quarter. We typically experience seasonality, with lower sales in the first quarter of each year compared to the immediately preceding fourth quarter. This seasonal sales pattern relates to U.S. annual insurance deductible resets and unfunded flexible spending accounts.
Cost of sales
Cost of sales includes direct labor and materials costs related to each product sold or produced, including assembly, test labor and scrap, as well as factory overhead supporting our manufacturing operations. Factory overhead includes facilities, material procurement and control, manufacturing engineering, quality assurance, supervision and management. These costs are primarily salary, fringe benefits, share-based compensation, facility expense, supplies and purchased services. All of our manufacturing costs are included in cost of sales. In addition, amortization of certain licensing related intangibles are also included in cost of sales.
Research and development
Our research and development expenses primarily consist of engineering and research expenses related to our continuous glucose monitoring technology, clinical trials, regulatory expenses, quality assurance programs, materials and products for clinical trials. Research and development expenses are primarily related to employee compensation, including salary, fringe benefits, share-based compensation, and temporary employee expenses. We also incur significant expenses to operate our clinical trials including budgeted clinical site compensation and reimbursement, study monitoring and oversight expenses, clinical trial product and associated travel expenses. Our research and development expenses also include fees for design services, contractors and development materials.
Amortization of intangible assets
Our amortization expense primarily relates to acquired technology and intellectual property and other acquired intangible assets.
Selling, general and administrative
Our selling, general and administrative expenses primarily consist of salary, fringe benefits and share-based compensation for our executive, financial, sales, marketing, information technology and administrative functions. Other significant expenses include commissions, marketing and advertising, IT software license costs, insurance, professional fees for our outside legal counsel and independent auditors, litigation expenses, patent application expenses and consulting expenses.
Interest expense
Interest expense is comprised primarily of costs related to our senior convertible notes.
Income from equity investments
Income from equity investments is comprised of realized gains from the sale of an equity investment.
Interest and other income, net
Interest and other income, net consists primarily of interest income on our cash, cash equivalents and short-term marketable securities portfolio and foreign currency transaction gains and losses due to the effects of foreign currency fluctuations.
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Three Months Ended June 30, 2023 Compared to
Three Months Ended June 30, 2022
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 and product strategy.
Disposable sensor and other revenue comprised approximately 89% of total revenue and Reusable Hardware revenue comprised approximately 11% of total revenue for the three months ended June 30, 2023. 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.
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 percentage in the second quarter of 2023 compared to the second quarter of 2022 was primarily driven by price, product, and channel mix changes, amortization of an intangible asset, and impact of foreign currencies on revenue.
Research and development expense Research and development expense decreased primarily due to $7.8 million of lower third party and consulting fees, most notably related to software development for new products and significant enhancements and $4.0 million in lower costs related to set-up and validation costs for new CGM equipment, partially offset by $6.5 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 $22.4 million in compensation-related costs most notably due to higher headcount, $13.5 million in legal expense primarily related to a patent infringement lawsuit, and $10.3 million in advertising and marketing costs as a result of an increase in worldwide marketing campaigns.
Interest and other income, net Interest and other income, net, increased primarily due to $33.7 million in interest income on our cash, cash equivalents, and marketable securities portfolio. The increase in interest income was related to a significant increase in market interest rates, as well as an increase in the average invested balances compared to the same period in 2022.
Income tax expense (benefit) Our estimated annual effective tax rate from normal, recurring operations decreased from 30.9% to 28.5% during the three months ended June 30, 2023 primarily due to impacts of foreign operations. There were no significant discrete items recognized during the three months ended June 30, 2023.
The income tax expense recorded for the three months ended June 30, 2022 was primarily attributable to income tax expense from normal, recurring operations.
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Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022
Six Months Ended June 30, 2023 - 2022
(In millions, except per share amounts) 2023 % of Revenue (1)
2022 % of Revenue (1)
$ Change % Change
Revenue $ 1,612.8 100 % $ 1,325.0 100 % $ 287.8 22 %
Cost of sales 603.8 37 % 477.4 36 % 126.4 26 %
Gross profit 1,009.0 62.6 % 847.6 64.0 % 161.4 19 %
Operating expenses:
Research and development 238.3 15 % 257.6 19 % (19.3) (7) %
Amortization of intangible assets 3.5 — % 3.9 — % (0.4) (10) %
Selling, general and administrative 591.9 37 % 467.8 35 % 124.1 27 %
Total operating expenses 833.7 52 % 729.3 55 % 104.4 14 %
Operating income 175.3 11 % 118.3 9 % 57.0 48 %
Interest expense (10.5) (1) % (9.3) (1) % (1.2) 13 %
Income from equity investments — — % 0.2 — % (0.2) (100) %
Interest and other income, net 59.0 4 % 2.2 — % 56.8 **
Income before income taxes 223.8 14 % 111.4 8 % 112.4 **
Income tax expense (benefit) 59.3 4 % (36.8) (3) % 96.1 **
Net income $ 164.5 10 % $ 148.2 11 % $ 16.3 11 %
Basic net income per share $ 0.43 ** $ 0.38 ** $ 0.05 13 %
Diluted net income per share $ 0.40 ** $ 0.36 ** $ 0.04 11 %
(1) The sum of the individual percentages may not equal the total due to rounding.
** Not meaningful
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Six Months Ended June 30, 2023 Compared to
Six Months Ended June 30, 2022
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 and product strategy.
Disposable sensor and other revenue comprised approximately 89% of total revenue and Reusable Hardware revenue comprised approximately 11% of total revenue for the six months ended June 30, 2023. 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.
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 percentage in 2023 compared to 2022 was primarily driven by price, product, and channel mix changes, amortization of an intangible asset, and impact of foreign currencies on revenue.
Research and development expense Research and development expense decreased primarily due to $16.0 million of lower third party and consulting fees most notably related to software development for new products and significant enhancements and $12.5 million in lower costs related to set-up and validation costs for new CGM equipment, partially offset by $13.2 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 $41.7 million in compensation-related costs most notably due to higher headcount, $30.4 million in legal expense primarily related to a patent infringement lawsuit, and $32.0 million in advertising and marketing costs due to an increase in worldwide marketing campaigns.
Interest and other income, net Interest and other income, net, increased primarily due to $55.0 million in interest income on our cash, cash equivalents, and marketable securities portfolio. The increase in interest income was related to a significant increase in market interest rates, as well as an increase in the average invested balances compared to the same period in 2022.
Income tax expense (benefit) The income tax expense recorded for the six months ended June 30, 2023 is primarily attributable to income tax expense from normal, recurring operations, partially offset by excess tax benefits recognized for share-based compensation for employees (net of disallowed executive compensation), and generation of research and development tax credits.
The income tax benefit 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.
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Liquidity and Capital Resources
Overview, Capital Resources, and Capital Requirements
Our principal sources of liquidity are our existing cash, cash equivalents and marketable securities, cash generated from operations, proceeds from our senior convertible notes issuances, and access to our Credit Facility. Our primary uses of cash have been for research and development programs, selling and marketing activities, capital expenditures, acquisitions of businesses, and debt service costs.
We expect that cash provided by our operations may fluctuate in future periods as a result of a number of factors, including fluctuations in our operating results, working capital requirements and capital deployment decisions. We have historically invested our cash primarily in U.S. dollar-denominated, investment grade, highly liquid obligations of U.S. government agencies, commercial paper, corporate debt, and money market funds. Certain of these investments are subject to general credit, liquidity and other market risks. The general condition of the financial markets and the economy may increase those risks and may affect the value and liquidity of investments and restrict our ability to access the capital markets.
Our future capital requirements will depend on many factors, including but not limited to:
The evolution of the international expansion of our business and the revenue generated by sales of our approved products and other future products; Our ability to efficiently scale our operations to meet demand for our current and any future products; The success of our research and development efforts;
The expenses we incur in manufacturing, developing, selling and marketing our products; The costs, timing and risks of delays of additional regulatory approvals; The costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
The quality levels of our products and services; The emergence of competing or complementary technological developments; The terms and timing of any collaborative, licensing and other arrangements that we may establish; and
The third-party reimbursement of our products for our customers; The rate of progress and cost of our clinical trials and other development activities; The acquisition of businesses, products and technologies and our ability to integrate and manage any acquired businesses, products and technologies.
We expect that existing cash and short-term investments and cash flows from our future operations will generally be sufficient to fund our ongoing core business. As current borrowing sources become due, we may be required to access the capital markets for additional funding. As we assess inorganic growth strategies, we may need to supplement our internally generated cash flow with outside sources. In the event that we are required to access the debt market, we believe that we will be able to secure reasonable borrowing rates. As part of our liquidity strategy, we will continue to monitor our current level of earnings and cash flow generation as well as our ability to access the market in light of those earning levels.
A substantial portion of our operations are located in the United States, and the majority of our sales since inception have been made in U.S. dollars. We will be exposed to additional foreign currency exchange risk related to our international operations as we expand our manufacturing internationally and as our business continues to increase in international markets. See “Foreign Currency Exchange Risk” in Part II, Item 7A of our Annual Report for more information.
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Main Sources of Liquidity
Cash, cash equivalents and short-term marketable securities
Our cash, cash equivalents and short-term marketable securities totaled $3.64 billion as of June 30, 2023. None of those funds were restricted and $3.47 billion (approximately 95%) of those funds were located in the United States.
Cash flow from Operations
For the six months ended June 30, 2023, we had positive cash flows of $345.7 million from operating activities. We anticipate that we will continue to generate positive cash flows from operations for the foreseeable future.
Senior Convertible Notes
We received net proceeds of $836.6 million in November 2018 from the 2023 Notes offering, net proceeds of $1.19 billion in May 2020 from the 2025 Notes offering, and net proceeds of $1.23 billion from the 2028 Notes offering. We used $100.0 million of the net proceeds from the offering of the 2023 Notes to repurchase a portion of our common stock in 2018. We used $282.6 million of the net proceeds from the offering of the 2025 Notes to repurchase a portion of our senior convertible notes due in 2022. We used $289.9 million of the net proceeds from the offering of the 2028 Notes to purchase capped call transactions and repurchase shares of our common stock in May 2023. We intend to use the remainder of the net proceeds from the 2023 Notes, 2025 Notes, and 2028 Notes offerings for general corporate purposes and capital expenditures, including working capital needs. We may also use the net proceeds to expand our current business through in-licensing or acquisitions of, or investments in, other businesses, products or technologies; however, we do not have any significant commitments with respect to any such acquisitions or investments at this time.
In connection with the 2023 Notes and 2028 Notes offerings, we purchased the 2023 Note Hedge and 2028 Capped Calls, respectively. See Note 5 “Debt” to the consolidated financial statements in Part I, Item 1 of this Quarterly Report for conversion activity related to the 2023 Notes and shares received as the result of exercising a portion of the 2023 Note Hedge as well as for more information about our senior convertible notes, the 2023 Note Hedge, the 2023 Warrants, and the 2028 Capped Calls.
Revolving Credit Agreement
As of June 30, 2023, 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. We currently believe that the Credit Facility will be available to us should we choose to borrow under it. Revolving loans will be available for general corporate purposes, including working capital and capital expenditures. See Note 5 “Debt” to the consolidated financial statements in Part I, Item 1 of this Quarterly Report for more details on the Revolving Credit Agreement.
Short-term Liquidity Requirements
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 June 30, 2023, we had a working capital ratio of 2.42 and a quick ratio of 2.12, 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 facilities and/or equipment in Malaysia and Ireland 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.
We may use cash for strategic initiatives that strengthen our foundation for long-term growth. On July 26, 2022, a duly authorized committee of our Board of Directors authorized a share repurchase program of up to $700.0 million of our outstanding common stock, with a repurchase period ending no later than June 30, 2023. The Share Repurchase Program and the remaining authorization of approximately $142.3 million expired on June 30, 2023. See Note 8 “Stockholders’ Equity” to the consolidated financial statements in Part I, Item 1 of this Quarterly Report for more details.
As of June 30, 2023, we have outstanding senior convertible notes that will mature in December 2023.
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During the second quarter of 2023, holders of $532.2 million in aggregate principal amount of the 2023 Notes exercised their conversion option. We elected to settle these conversions through a combination of cash for the principal amount and common stock for any amount due in excess of the principal amount. The conversions will settle in the third quarter of 2023.
From July 1, 2023 through July 26, 2023, holders of $7.8 million in aggregate principal amount of the 2023 Notes exercised their conversion option. We may elect to settle the remaining principal amount outstanding of the 2023 Notes with cash and/or shares of our common stock prior to maturity once certain conditions are met.
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 June 30, 2023, we had a debt-to-assets ratio of 0.47, 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 June 30, 2023, we have outstanding senior convertible notes that will mature in November 2025 and May 2028. 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.
Material Cash Requirements
From time to time in the ordinary course of business, we enter into a variety of purchase arrangements including but not limited to, purchase arrangements related to capital expenditures, components used in manufacturing for the United States and Malaysia, and research and development activities. See “Contractual Obligations” below in Part I, Item 2 of this Quarterly Report for more information.
We issued senior convertible notes in November 2018, May 2020, and May 2023. These obligations include both principal and interest for these notes. Although these notes mature in December 2023, November 2025, and May 2028, respectively, they may be converted into cash and/or 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, 2023, 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 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 over the next year and the build-out of the Ireland manufacturing facility and equipment over the next five years. See Note 6 “Leases and Other Commitments” to the consolidated financial statements in Part II, Item 8 of our Annual Report for more information about our leases.
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, the 2023 Warrants, and the 2028 Capped Calls.
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Cash Flows
The following table sets forth a summary of our cash flows for the periods indicated. See the consolidated financial statements in Part I, Item 1 of this Quarterly Report for complete consolidated statements of cash flows for these periods.
As of June 30, 2023, we had $3.64 billion in cash, cash equivalents and short-term marketable securities, which is an increase of $1.18 billion compared to $2.46 billion as of December 31, 2022.
The primary cash flows during the six months ended June 30, 2023 and June 30, 2022 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.
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Six Months Ended
June 30, 2023 June 30, 2022
Operating Cash Flows + $164.5 million of net income, $82.9 million of net non-cash adjustments, and a net increase of $98.3 million in changes of working capital balances
+ $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
Net non-cash adjustments were primarily related to share-based compensation and depreciation and amortization.
Net non-cash adjustments were primarily related to share-based compensation and depreciation and amortization.
Investing Cash Flows - $592.9 million in net purchases of marketable securities
- $358.1 million in net purchases of marketable securities
- $133.7 million in capital expenditures
- $193.1 million in capital expenditures
- $16.0 million in purchases of equity investments
Financing Cash Flows + $1.23 billion in proceeds from issuance of senior convertible notes, net of issuance costs
+ $10.1 million in proceeds from issuance of common stock under our employee stock plans
+ $12.3 million in proceeds from issuance of common stock under our employee stock plans
- $7.7 million in payments for financing leases
- $188.7 million in purchases of treasury stock
- $101.3 million in purchases of capped call transactions
Contractual Obligations
We presented our contractual obligations as of December 31, 2022 in Note 6 “Leases and Other Commitments” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. There were no significant changes to our lease obligations during the six months ended June 30, 2023. As of June 30, 2023, we had approximately $295.9 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.
Recent Accounting Guidance
For a description of recently issued accounting pronouncements and the potential impact on our consolidated financial statements, if any, see Note 1 “Organization and Significant Accounting Policies” to the consolidated financial statements in Part I, Item 1 of this Quarterly Report.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There were no material changes to our quantitative and qualitative disclosures about market risk during the six months ended June 30, 2023. See Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for a detailed discussion of our market risks.
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