What changed in this filing

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Item 1. Financial Statements

2024-10-31 compared with 2024-08-06 · 113 added, 110 removed, 827 unchanged (21% of the section changed)

3 unchanged sentences

(In thousands, except per share amounts)

September 30,

2024 December 31,

3 unchanged sentences

Accounts receivable, net and contract assets 285,743 234,210

Inventories, net 159,312 127,601

131,412 127,601

Prepaid expenses and other current assets 43,515 48,613

22 unchanged sentences

300,000 shares authorized;

126,535 and 126,770 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

127,183 and 126,770 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 61,886 2,409

8 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

13 unchanged sentences

6,474 4,786 16,499 10,957

Contingent liability fair value measurement gain

— 13,200 — 13,200

Interest expense ( 4,524 ) ( 4,505 ) ( 13,555 ) ( 13,542 )

Net income before income taxes 117,743 93,156 213,771 145,394

Income before income tax expense

165,147 101,760 378,918 247,154

Income tax expense 28,136 19,923 71,839 50,948

10 unchanged sentences

(In thousands)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

1 unchanged sentence

Other comprehensive income

Unrealized (loss) gain on marketable securities, net

Unrealized gain (loss) on marketable securities, net

1,735 ( 49 ) 1,272 706

Foreign currency translation adjustment 2 — ( 5 ) 24

Unrealized gain (loss) on derivative instruments, net

Unrealized gain on foreign currency — 2 — 1

Unrealized (loss) gain on derivative instruments, net

( 6,919 ) 3,426 1,772 2,001

Realized gain on derivative instruments, net ( 493 ) ( 46 ) ( 1,011 ) ( 46 )

Realized loss (gain) on derivative instruments, net

311 ( 537 ) ( 700 ) ( 583 )

Comprehensive income $ 132,140 $ 84,679 $ 309,418 $ 198,355

3 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating activities

9 unchanged sentences

Loss on disposal of equipment 1,678 517

Contingent liability fair value measurement adjustment

Recognition of deferred revenue — ( 2,579 )

3 unchanged sentences

Accounts receivable, net and other contract assets ( 51,533 ) 13,546

Inventories, net

( 59,655 ) ( 28,353 )

13 unchanged sentences

27,554 ( 158,067 )

Net increase (decrease) in cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

35,948 39,532

9 unchanged sentences

(in thousands)

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Common Stock Additional

4 unchanged sentences

Shares Amount

BALANCE AS OF MARCH 31, 2024 127,186 $ 127 $ 11,794 $ ( 1,486 ) $ 167,373 $ 177,808

BALANCE AS OF JUNE 30, 2024 126,535 $ 127 $ 30,747 $ ( 2,068 ) $ 260,618 $ 289,424

Share-based compensation expense — — 12,578 — — 12,578

Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock units, net and shares issued under the ESPP plan

415 1 9,481 — — 9,482

Repurchase of common stock

Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock units, net

648 — 18,561 — — 18,561

2 unchanged sentences

Net income — — — — 137,011 137,011

BALANCE AS OF JUNE 30, 2024 126,535 $ 127 $ 30,747 $ ( 2,068 ) $ 260,618 $ 289,424

Six Months Ended June 30, 2024

BALANCE AS OF SEPTEMBER 30, 2024 127,183 $ 127 $ 61,886 $ ( 6,939 ) $ 397,629 $ 452,703

Nine Months Ended September 30, 2024

Common Stock Additional

12 unchanged sentences

Net income — — — — 307,079 307,079

BALANCE AS OF JUNE 30, 2024 126,535 $ 127 $ 30,747 $ ( 2,068 ) $ 260,618 $ 289,424

Three Months Ended June 30, 2023

BALANCE AS OF SEPTEMBER 30, 2024 127,183 $ 127 $ 61,886 $ ( 6,939 ) $ 397,629 $ 452,703

Three Months Ended September 30, 2023

Common Stock Additional

Capital Accumulated

Comprehensive Income (Loss)

Comprehensive (Loss) Income

Retained Earnings

1 unchanged sentence

Shares Amount

BALANCE AS OF MARCH 31, 2023 131,662 $ 132 $ — $ 24 $ 65,694 $ 65,850

BALANCE AS OF JUNE 30, 2023 131,856 $ 132 $ 12,068 $ ( 1,615 ) $ 140,448 $ 151,033

Share-based compensation expense — — 9,367 — — 9,367

Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock units, net and shares issued under the ESPP plan

Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock units, net

225 — 4,102 — — 4,102

Other comprehensive loss — — — ( 1,639 ) — ( 1,639 )

Other comprehensive income

— — — 2,842 — 2,842

Net income — — — — 81,837 81,837

BALANCE AS OF JUNE 30, 2023 131,856 $ 132 $ 12,068 $ ( 1,615 ) $ 140,448 $ 151,033

Six Months Ended June 30, 2023

BALANCE AS OF SEPTEMBER 30, 2023 132,081 $ 132 $ 25,537 $ 1,227 $ 222,285 $ 249,181

Nine Months Ended September 30, 2023

Common Stock Additional

Capital Accumulated

Comprehensive Loss Retained Earnings (Accumulated Deficit)

Comprehensive (Loss) Income

Retained Earnings (Accumulated Deficit)

Stockholders’

3 unchanged sentences

Issuance of common stock for the conversion of the 2024 Convertible Notes 289 — ( 126 ) — — ( 126 )

289 — ( 126 ) — — ( 126 )

Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock and performance stock units, net and shares issued under the ESPP plan 803 1 5,498 — — 5,499

578 1 1,397 — — 1,398

Repurchase of common stock ( 4,165 ) ( 4 ) ( 34,159 ) ( 117,138 ) ( 151,301 )

Other comprehensive loss — — — ( 693 ) — ( 693 )

Other comprehensive income

— — — 2,149 — 2,149

Net income — — — — 196,206 196,206

BALANCE AS OF JUNE 30, 2023 131,856 $ 132 $ 12,068 $ ( 1,615 ) $ 140,448 $ 151,033

BALANCE AS OF SEPTEMBER 30, 2023 132,081 $ 132 $ 25,537 $ 1,227 $ 222,285 $ 249,181

See accompanying notes to condensed consolidated financial statements.

27 unchanged sentences

We currently earn royalties from sales of eight commercial products including sales of one commercial product from each of the Takeda, Janssen and argenx collaborations and five commercial products from the Roche collaboration.

We have commercialized auto-injector products with several pharmaceutical companies including Teva Pharmaceutical Industries, Ltd.

We have commercialized auto-injector products with Teva Pharmaceutical Industries, Ltd.

(“Teva”) and Otter Pharmaceuticals, LLC (“Otter”).

24 unchanged sentences

Cash equivalents consist of highly liquid investments, readily convertible to cash, which mature within 90 days or less from the date of purchase.

As of June 30, 2024, our cash and cash equivalents consisted of money market funds, bank certificate of deposits, U.S.

treasury securities and demand deposits at commercial banks.

As of September 30, 2024, our cash and cash equivalents consisted of money market funds, bank certificate of deposits and demand deposits at commercial banks.

Marketable securities are investments with original maturities of more than 90 days from the date of purchase that are specifically identified to fund current operations.

24 unchanged sentences

We believe the risk of accounts being uncollectible is minimal;

therefore, no significant allowances for doubtful accounts were established as of June 30, 2024 and December 31, 2023.

therefore, no significant allowances for doubtful accounts were established as of September 30, 2024 and December 31, 2023.

Inventories are stated at lower of cost or net realizable value.

37 unchanged sentences

No portion of our foreign currency forward contracts were excluded from the assessment of hedge effectiveness.

As of June 30, 2024, all hedges were determined to be highly effective.

As of September 30, 2024, all hedges were determined to be highly effective.

The assets or liabilities associated with our hedging contracts are recorded at fair market value in prepaid expense and other current assets, accrued expenses, or other long-term liabilities, respectively, in our condensed consolidated balance sheets.

4 unchanged sentences

We do not use derivatives for speculative or trading purposes.

As of June 30, 2024, amounts expected to be recognized as a net gain out of AOCI into our condensed consolidated statements of income during the next 12 months are not material.

As of September 30, 2024, amounts expected to be recognized as a net gain out of AOCI into our condensed consolidated statements of income during the next 12 months are not material.

Business Combinations

11 unchanged sentences

Intangible assets acquired in a business combination that are used for IPR&D activities are considered indefinite lived until the completion or abandonment of the associated research and development efforts.

Upon reaching the end of the relevant research and development project (i.e., upon commercialization), the IPR&D

asset is amortized over its estimated useful life.

Upon reaching the end of the relevant research and development project (i.e., upon commercialization), the IPR&D asset is amortized over its estimated useful life.

If the relevant research and development project is abandoned, the IPR&D asset is expensed in the period of abandonment.

32 unchanged sentences

Partners may terminate the agreement prior to expiration for any reason in its entirety or on a target-by-target basis generally upon 90 days prior written notice to us.

Upon any such termination, the license granted to partners (in total or with respect to the terminated target, as applicable) will terminate provided;

Upon any such termination, the license granted to

partners (in total or with respect to the terminated target, as applicable) will terminate provided;

however, that in the event of expiration of the agreement (as opposed to a termination), the on-going licenses granted may become perpetual, non-exclusive and fully paid.

56 unchanged sentences

When allocation is needed, we perform an allocation of the upfront amount based on relative SSP of licenses for individual targets.

We determine license SSP using an income-based valuation approach utilizing risk-adjusted discounted cash flow projections of the estimated return a licensor would receive.

We determine license SSP using an income-based valuation approach utilizing risk-adjusted discounted cash flow projections of the estimated return a licensor would receive where applicable or an alternative valuation method such as indicative value from historical transactions.

When amounts subject to uncertainties, such as milestones and royalties, are included in the transaction price, we attribute them to the specific individual target licenses which generate such milestone or royalty amounts.

16 unchanged sentences

Our payment terms for development contracts may include an upfront payment equal to a percentage of the total contract value with the remaining portion to be billed upon completion and transfer of the individual deliverables or satisfaction of the individual performance obligations.

We record a contract liability for cash received in advance of performance, which is presented within deferred revenue and deferred revenue, long-term in our condensed consolidated balance sheets and recognized as revenue in our condensed consolidated statements of income when the associated performance obligations have been satisfied.

We record a contract liability for cash received in advance of performance, which is presented as deferred revenue within accrued expense and other long-term liabilities in our condensed consolidated balance sheets and recognized as revenue in our condensed consolidated statements of income when the associated performance obligations have been satisfied.

License fees and milestones received in exchange for the grant of a license to our functional intellectual property, such as patented technology and know-how in connection with a partnered development arrangement, are generally recognized at inception of the arrangement, or over the development period depending on the facts and circumstances, as the license is generally not distinct from the non-licensed goods or services to be provided under the contract.

7 unchanged sentences

We concluded we are the principal in the sales to wholesalers because we control access to services rendered by both vendors and direct their activities.

We have no significant obligations to wholesalers to generate pull-through sales.

We have no obligations to wholesalers to generate pull-through sales.

Revenue is recognized when control has transferred to the customer, which is typically upon delivery, at the net selling price, which reflects the variable consideration for which reserves and sales allowances are established for estimated returns, wholesale distribution fees, prompt payment discounts, government rebates and chargebacks, plan rebate arrangements and patient discount and support programs.

11 unchanged sentences

We concluded the benefits received in exchange for these fees are not distinct from our sales of our products, and accordingly we apply these amounts to reduce revenues.

Wholesalers also have rights to return unsold product nearing or past the expiration date.

Wholesalers also have rights to return unsold product

nearing or past the expiration date.

Because of the shelf life of our products and our lengthy return period, there may be a significant period of time between when the product is shipped and when we issue credits on returned product.

44 unchanged sentences

We measure deferred tax assets and liabilities using enacted tax rates for the year in which the differences are expected to reverse.

Significant judgment is required by management to determine our provision for income taxes, our deferred tax assets and liabilities, and any associated valuation allowances recorded against our net deferred tax assets, which are based on complex and evolving tax regulations.

Deferred tax assets (“DTA”) and other tax benefits are recorded when they are more likely than not to be realized.

On a quarterly basis, we assess the need for valuation allowance on our DTAs, weighing all positive and negative evidence, to assess if it is more-likely-than-not that some or all of our DTAs will be realized.

We recorded a provision for income taxes of $ 24.5 million and $ 43.7 million using an effective tax rate of 20.5 % and 19.1 % for the three and six months ended June 30, 2024.

The difference between our effective tax rate and the U.S.

federal statutory rate of 21% is primarily due to state income taxes, research and development credit generations, tax benefits on the Foreign Derived Intangible Income Deduction (“FDII”) (net of reserves), tax detriments on 162(m) and other share-based compensation.

We recorded a provision for income tax of $ 28.1 million and $ 71.8 million with an effective tax rate of 17.1 % and 19.0 % for the three and nine months ended September 30, 2024, respectively.

The difference between our effective tax rates and the U.S.

federal statutory rate of 21% is primarily due to a decrease from a share-based compensation windfall tax benefit, Foreign Derived Intangible Income (“FDII”) deduction, and research and development credit generation, partially offset by state income tax and Section 162(m) disallowance.

Segment Information

8 unchanged sentences

Improvements to Reportable Segment Disclosures.

The new standard is intended to improve annual and interim reportable segment disclosure requirements regardless of number of reporting units, primarily through enhanced disclosures of significant expenses.

The new guidance is intended to improve annual and interim reportable segment disclosure requirements regardless of number of reporting units, primarily through enhanced disclosures of significant expenses.

The amendment requires public entities to disclose significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit and loss.

Annual periods beginning after December 15, 2023 (our 2024 Form 10-K), and interim periods within fiscal years beginning after December 15, 2024 (our Q1 2025 Form 10-Q) - Early adoption is permitted, including adoption in an interim period

Retrospective We are currently evaluating the impact of the standard on our consolidated financial statements and related disclosures.

Retrospective We do not expect the standard to have a material effect on our consolidated financial statements, but will result in expanded segment disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

4 unchanged sentences

Available-for-sale marketable securities consisted of the following (in thousands):

June 30, 2024

September 30, 2024

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

12 unchanged sentences

Total marketable securities, available-for-sale $ 217,475 $ 201 $ ( 46 ) $ 217,630

As of June 30, 2024, 41 available-for-sale marketable securities with a fair market value of $ 315.5 million were in a gross unrealized loss position of $ 0.3 million.

Based on our review of these marketable securities, we believe none of the unrealized loss is as a result of a credit loss as of June 30, 2024 because we do not intend to sell these securities and it is not more-likely-than-not that we will be required to sell these securities before the recovery of their amortized cost basis.

As of September 30, 2024, eight available-for-sale marketable securities with a fair market value of $ 74.0 million were in a gross unrealized loss position of $ 0.1 million.

Based on our review of these marketable securities, we believe none of the unrealized loss is as a result of a credit loss as of September 30, 2024 because we do not intend to sell these securities and it is not more-likely-than-not that we will be required to sell these securities before the recovery of their amortized cost basis.

The estimated fair value of our contractual maturities of available-for-sale debt securities were as follows (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Due within one year $ 301,345 $ 197,633

2 unchanged sentences

The following table summarizes, by major security type, our cash equivalents and available-for-sale marketable securities measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Level 1 Level 2 Total Estimated Fair Value

9 unchanged sentences

Commercial paper — — — — 15,826 15,826

Derivative instruments

Currency hedging contracts (1)

— 1,389 1,389 — — —

Total assets $ 447,804 $ 98,897 $ 546,701 $ 216,429 $ 25,343 $ 241,772

4 unchanged sentences

Carrying amounts of the financial assets and liabilities are equal to the fair value.

As of June 30, 2024, the derivative assets and liabilities recorded within prepaid expenses and other current assets, prepaid expense and other assets and other long-term liabilities in our condensed consolidated balance sheets were $ 1.2 million , $ 0.2 million and $ 0.7 million , respectively.

We had no available for sale securities that were classified within Level 3 as of June 30, 2024 and December 31, 2023.

As of September 30, 2024, the derivative liabilities recorded within accrued expenses and other long-term liabilities in our condensed consolidated balance sheets were $ 1.9 million and $ 6.0 million , respectively.

We had no available-for-sale securities that were classified within Level 3 as of September 30, 2024 and December 31, 2023.

Our disaggregated revenues were as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

9 unchanged sentences

Revenues under collaborative agreements

Upfront license and target nomination fees 27,000 — 27,000 —

Event-based development and regulatory milestones and other fees

4 unchanged sentences

Total revenues $ 290,084 $ 216,033 $ 717,316 $ 599,214

During the three months ended June 30, 2024, we recognized revenue related to licenses granted to partners in prior periods in the amount of $ 150.4 million.

During the three months ended September 30, 2024, we recognized revenue related to licenses granted to partners in prior periods in the amount of $ 173.1 million.

This amount represents royalties earned in the current period in addition to $ 18.0 million of variable consideration in the contracts where uncertainties were resolved and the development milestones are expected to be achieved or were achieved.

We also recognized revenue of $ 0.5 million during the three months ended June 30, 2024 that had been included in accrued expense and other long-term liabilities in our condensed consolidated balance sheets as of December 31, 2023.

During the six months ended June 30, 2024, we recognized revenue related to licenses granted to partners in prior periods in the amount of $ 285.0 million.

Revenue recognized during the three months ended September 30, 2024 that had been included in accrued expense and other long-term liabilities in our condensed consolidated balance sheets as of December 31, 2023 was not material.

During the nine months ended September 30, 2024, we recognized revenue related to licenses granted to partners in prior periods in the amount of $ 458.1 million.

This amount represents royalties earned in the current period in addition to $ 57.5 million of variable consideration in the contracts where uncertainties were resolved and the development milestones are expected to be achieved or were achieved.

We also recognized revenue of $ 0.6 million during the six months ended June 30, 2024 that had been included in accrued expense and other long-term liabilities in our condensed consolidated balance sheets as of December 31, 2023.

Accounts receivable, other contract assets and deferred revenues (contract liabilities) from contracts with customers, including partners, consisted of the following (in thousands):

June 30, 2024 December 31, 2023

We also recognized revenue of $ 0.6 million during the nine months ended September 30, 2024 that had been included in accrued expense and other long-term liabilities in our condensed consolidated balance sheets as of December 31, 2023.

Accounts receivable, net, other contract assets and deferred revenues (contract liabilities) from contracts with customers, including partners, consisted of the following (in thousands):

September 30, 2024 December 31, 2023

Accounts receivable, net $ 273,062 $ 233,254

1 unchanged sentence

Deferred revenues 9,126 4,048

As of June 30, 2024, the amounts included in the transaction price of our contracts with customers, including collaboration partners, and allocated to goods and services not yet provided were $ 89.2 million, of which $ 84.3 million relates to unfulfilled product purchase orders and $ 4.9 million has been collected and is reported as accrued expense and other long-term liabilities in our condensed consolidated balance sheets.

As of September 30, 2024, the amounts included in the transaction price of our contracts with customers, including collaboration partners, and allocated to goods and services not yet provided were $ 88.3 million, of which $ 79.2 million relates to unfulfilled product purchase orders and $ 9.1 million has been collected and is reported as accrued expense and other long-term liabilities in our condensed consolidated balance sheets.

The unfulfilled product purchase orders are estimated to be delivered by the end of 2025.

Of the total deferred revenues of $ 9.1 million, $ 0.8 million is expected to be used by our customers within the next 12 months.

We recognized contract assets of $ 4.1 million as of June 30, 2024, which related to development milestones deemed probable of receipt for intellectual property licenses granted to partners in prior periods and for goods or services when control has transferred to the customer, and corresponding revenue is recognized on an over time basis but is not yet billable to the customer in accordance with the terms of the contract.

We recognized contract assets of $ 12.7 million as of September 30, 2024, which related to development milestones deemed probable of receipt for intellectual property licenses granted to partners in prior periods and for goods or services when control has transferred to the customer, and corresponding revenue is recognized on an over time basis but is not yet billable to the customer in accordance with the terms of the contract.

Certain Balance Sheet Items

Accounts receivable, net and contract assets consisted of the following (in thousands):

September 30,

2024 December 31,

9 unchanged sentences

$ 285,743 $ 234,210

Inventories, net consisted of the following (in thousands):

Inventories consisted of the following (in thousands):

September 30,

2024 December 31,

2 unchanged sentences

Finished goods 143,518 69,930

Total inventories, net

Total inventories

188,983 127,601

Less long-term portion (1)

Total inventories, net current

Total inventories, current

$ 131,412 $ 127,601

(1) Long-term portion of inventories, net represents inventory expected to remain on hand beyond one year and therefore is included in prepaid expenses and other assets in the condensed consolidated balance sheets.

(1) Long-term portion of inventories represents inventory expected to remain on hand beyond one year and therefore is included in prepaid expenses and other assets in the condensed consolidated balance sheets.

Prepaid expenses and other assets consisted of the following (in thousands):

September 30,

2024 December 31,

1 unchanged sentence

Other prepaid expenses 18,476 12,902

Other assets (1)

Long-term inventories

16,564 16,677

5 unchanged sentences

$ 43,515 $ 48,613

(1) Excludes long-term inventories, net discussed in the table above.

Prepaid manufacturing expenses include raw materials, slot reservation fees and other amounts paid to contract manufacturing organizations.

1 unchanged sentence

Property and equipment, net consisted of the following (in thousands):

September 30,

2024 December 31,

9 unchanged sentences

$ 74,490 $ 74,944

Depreciation and amortization expense was approximately $ 2.6 million and $ 2.8 million, inclusive of ROU asset amortization of $ 1.4 million and $ 1.4 million for the three months ended June 30, 2024 and 2023, respectively.

Depreciation and amortization expense was approximately $ 5.0 million and $ 5.4 million, inclusive of ROU asset amortization of $ 2.9 million and $ 2.8 million for the six months ended June 30, 2024 and 2023, respectively.

Depreciation and amortization expense was approximately $ 2.6 million and $ 2.7 million, inclusive of ROU asset amortization of $ 1.4 million and $ 1.4 million for the three months ended September 30, 2024 and 2023, respectively.

Depreciation and amortization expense was approximately $ 7.6 million and $ 8.2 million, inclusive of ROU asset amortization of $ 4.3 million and $ 4.2 million for the nine months ended September 30, 2024 and 2023, respectively.

Accrued expenses consisted of the following (in thousands):

September 30,

2024 December 31,

1 unchanged sentence

Accrued outsourced manufacturing expenses 11,179 12,361

Income taxes payable 29,265 963

Taxes payable

Product returns and sales allowance 44,718 41,932

6 unchanged sentences

$ 96,417 $ 100,678

Expense associated with the accretion of the lease liabilities was approximately $ 0.6 million and $ 0.6 million for the three months ended June 30, 2024 and 2023, respectively and $ 1.2 million and $ 1.3 million for the six months ended June 30, 2024 and 2023, respectively.

Total lease expense for the three months ended June 30, 2024 and 2023 was $ 2.0 million and $ 2.0 million, respectively, and $ 4.0 million and $ 4.1 million for the six months ended June 30, 2024 and 2023, respectively.

Cash paid for amounts related to leases for the three months ended June 30, 2024 and 2023 was $ 1.7 million and $ 1.7 million, respectively, and $ 3.5 million and $ 3.4 million for the six months ended June 30, 2024 and 2023, respectively.

Expense associated with the accretion of the lease liabilities was approximately $ 0.5 million and $ 0.6 million for the three months ended September 30, 2024 and 2023, respectively and $ 1.7 million and $ 1.9 million for the nine months ended September 30, 2024 and 2023, respectively.

Total lease expense for the three months ended September 30, 2024 and 2023 was $ 2.0 million and $ 2.0 million, respectively, and $ 6.0 million and $ 6.1 million for the nine months ended September 30, 2024 and 2023, respectively.

Cash paid for amounts related to leases for the three months ended September 30, 2024 and 2023 was $ 1.6 million and $ 1.6 million, respectively, and $ 5.1 million and $ 5.0 million for the nine months ended September 30, 2024 and 2023, respectively.

Goodwill and Intangible Assets

1 unchanged sentence

Balance as of December 31, 2023

Balance as of June 30, 2024

Balance as of September 30, 2024

Intangible Assets

Our acquired intangible assets are amortized using the straight-line method over their estimated useful lives of seven to ten years .

The following table shows the cost, accumulated amortization and weighted average useful life in years for our acquired intangible assets as of June 30, 2024 (in thousands).

The following table shows the cost, accumulated amortization and weighted average useful life in years for our acquired intangible assets as of September 30, 2024 (in thousands).

Weighted Average Useful Life (in years)

27 unchanged sentences

and (5) at any time from, and including, February 15, 2028 until the close of business on the second scheduled trading day immediately before the maturity date.

As of June 30, 2024, the 2028 Convertible Notes were not convertible.

As of September 30, 2024, the 2028 Convertible Notes were not convertible.

Upon conversion, we will pay cash for the settlement of principal, and for the premium, if applicable, we will pay cash, deliver shares of common stock or a combination of cash and shares of common stock, at our election.

1 unchanged sentence

The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued or unpaid interest.

As of June 30, 2024, we were in compliance with all covenants and there was no material adverse change in our business, operations or financial condition.

As of September 30, 2024, we were in compliance with all covenants and there was no material adverse change in our business, operations or financial condition.

Capped Call Transactions

2 unchanged sentences

The cap price of the Capped Call Transactions is initially $ 75.4075 per share of common stock, representing a premium of 75 % above the last reported sale price of $ 43.09 per share of common stock on August 15, 2022, and is subject to certain adjustments under the terms of the Capped Call Transactions.

As of June 30, 2024, no capped calls had been exercised.

As of September 30, 2024, no capped calls had been exercised.

Pursuant to their terms, the capped calls qualify for classification within stockholders’ equity in our condensed consolidated balance sheets, and their fair value is not remeasured and adjusted as long as they continue to qualify for stockholders’ equity classification.

16 unchanged sentences

and (5) at any time from, and including, September 1, 2026 until the close of business on the scheduled trading day immediately before the maturity date.

As of June 30, 2024, the 2027 Convertible Notes were not convertible.

As of September 30, 2024, the 2027 Convertible Notes were not convertible.

Upon conversion, we will pay cash for the settlement of principal and for the premium, if applicable, we will pay cash, deliver shares of common stock or a combination of cash and shares of common stock, at our election.

1 unchanged sentence

The conversion rate is subject to adjustment.

As of June 30, 2024, we were in compliance with all covenants and there was no material adverse change in our business, operations or financial condition.

As of September 30, 2024, we were in compliance with all covenants and there was no material adverse change in our business, operations or financial condition.

1.25 % Convertible Notes due 2024

12 unchanged sentences

The carrying amount and fair value of our Convertible Notes were as follows (in thousands).

September 30,

2024 December 31,

20 unchanged sentences

The following table summarizes the components of interest expense and the effective interest rates for each of our Convertible Notes (in thousands).

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

28 unchanged sentences

The commitment fees range from 0.15 % to 0.35 % per annum based on our consolidated net leverage ratio.

As of June 30, 2024, the Revolving Credit Facility was undrawn.

As of September 30, 2024, the Revolving Credit Facility was undrawn.

We incurred a total of $ 3.6 million in third-party costs related to the 2022 Credit Agreement which are recorded as debt issuance cost within prepaid expenses and other assets in our condensed consolidated balance sheets.

As of June 30, 2024, the unamortized debt issuance cost related to the revolving credit facility was $ 1.9 million.

As of September 30, 2024, the unamortized debt issuance cost related to the revolving credit facility was $ 1.7 million.

Share-based Compensation

The following table summarized share-based compensation expense included in our condensed consolidated statements of income related to share-based awards (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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Share-based compensation expense by type of share-based award was as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

2 unchanged sentences

Total share-based compensation expense $ 12,578 $ 9,367 $ 31,923 $ 26,956

We granted stock options to purchase approximately 0.1 million and 0.4 million shares of common stock during the three months ended June 30, 2024 and 2023, respectively and 0.6 million and 1.6 million during the six months ended June 30, 2024 and 2023, respectively.

We granted stock options to purchase approximately 0.6 million and 1.8 million shares of common stock during the nine months ended September 30, 2024 and 2023, respectively.

The exercise price of stock options granted is equal to the closing price of the common stock on the date of grant.

6 unchanged sentences

The assumptions used in the Black-Scholes Model were as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

12 unchanged sentences

Share purchases are funded through payroll deduction of at least 1 % and up to 15 % of an employee’s compensation for each payroll period, and no employee may purchase shares under the ESPP that exceeds $ 25,000 worth of our common stock for a calendar year.

As of June 30, 2024, 2,579,790 shares were available for future purchase.

As of September 30, 2024, 2,579,790 shares were available for future purchase.

The offering period is generally for a six-month period and the first offering period commenced on June 16, 2021.

Offering periods shall commence on or about the sixteenth day of June and December of each year and end on or about the fifteenth day of the next December and June, respectively, occurring thereafter.

During the six months ended June 30, 2024, 24,432 shares were issued pursuant to the ESPP.

During the nine months ended September 30, 2024, 24,432 shares were issued pursuant to the ESPP.

Total unrecognized estimated compensation cost by type of award and the weighted-average remaining requisite service period over which such expense is expected to be recognized was as follows (in thousands, unless otherwise noted):

June 30, 2024

September 30, 2024

Expense Remaining

6 unchanged sentences

Stockholders’ Equity

During the six months ended June 30, 2024 and 2023, we issued an aggregate of 475,828 and 240,223 shares of common stock, respectively, in connection with the exercises of stock options at a weighted average exercise price of $ 23.90 and $ 17.66 per share, respectively, for net proceeds of approximately $ 11.4 million and $ 4.2 million, respectively.

For the six months ended June 30, 2024 and 2023, we issued 331,693 and 318,181 shares of common stock, respectively, upon vesting of certain RSUs and PSUs for which the RSU and PSU holders surrendered 88,825 and 70,733 RSUs and PSUs, respectively, to pay for minimum withholding taxes totaling approximately $ 6.5 million and $ 7.0 million, respectively.

Stock options and unvested restricted units totaling approximately 8.0 million and 7.8 million shares of our common stock were outstanding as of June 30, 2024 and December 31, 2023, respectively.

During the nine months ended September 30, 2024 and 2023, we issued an aggregate of 1,107,442 and 455,702 shares of common stock, respectively, in connection with the exercises of stock options at a weighted average exercise price of $ 27.03 and $ 18.10 per share, respectively, for net proceeds of approximately $ 29.9 million and $ 8.2 million, respectively.

For the nine months ended September 30, 2024 and 2023, we issued 347,502 and 328,115 shares of common stock, respectively, upon vesting of certain RSUs and PSUs for which the RSU and PSU holders surrendered 88,825 and 70,733 RSUs and PSUs, respectively.

Stock options and unvested restricted units totaling approximately 7.4 million and 7.8 million shares of our common stock were outstanding as of September 30, 2024 and December 31, 2023, respectively.

Share Repurchases

In December 2021, the Board of Directors authorized a second capital return program to repurchase up to $ 750.0 million of outstanding stock over a three-year period.

We accelerated the initiation of our planned 2024 share repurchases and in November 2023, we entered into an Accelerated Share Repurchase (“ASR”) agreement with Bank of America, N.A.

to accelerate the remaining $ 250.0 million of share repurchases remaining under the approved capital return program.

Pursuant to the agreement, at the inception of the ASR, we paid $ 250.0 million to Bank of America, N.A.

and took initial delivery of 5.5 million shares.

In June 2024, we finalized the transaction at an average price per share of $ 38.35 and received an additional 1.1 million shares.

Our December 2021 share repurchase program was completed in June 2024 with a total of 19.1 million shares repurchased over the three-year period at an average price per share of $ 39.31 .

In December 2021, the Board of Directors authorized a second capital return program to repurchase up to $ 750.0 million of outstanding stock over a three-year period which we completed in June 2024.

A total of 19.1 million shares were repurchased over the three-year period at an average price per share of $ 39.31 .

All shares repurchased under our capital return programs have been retired and have resumed their status of authorized and unissued shares.

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A reconciliation of the numerators and the denominators of the basic and diluted earnings per share computations is as follows (in thousands, except per share amounts):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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Shares which have been excluded from the calculation of diluted earnings per common share because their effect was anti-dilutive include the following (shares in millions):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

9 unchanged sentences

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 1. Financial Statements