Derivative and Hedging Instruments |
3 Months Ended |
|---|---|
Mar. 31, 2026 | |
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
| Derivative and Hedging Instruments | Note 2 – Derivative and Hedging Instruments We enter into derivative instruments, consisting of foreign exchange contracts, to mitigate forecasted transactions denominated in currencies other than the functional currency and the foreign currency exchange risk of our assets and liabilities. We do not use derivatives for trading or speculative purposes. We have master netting arrangements with certain counterparties to our foreign exchange contracts, which are designed to reduce credit risk by permitting net settlement of transactions with the same counterparty. We present derivative assets and derivative liabilities on a gross basis on our condensed consolidated balance sheets. We have also entered into certain convertible note arrangements that provide us with the right to convert the outstanding principal into equity interests of the counterparty upon the occurrence of defined contractual events. These arrangements contain embedded derivatives, which are bifurcated and accounted for separately at fair value, with changes in fair value recognized in earnings. All derivative instruments are recorded at fair value and classified within Level 2 or Level 3 of the fair value hierarchy, and the accounting treatment for derivative gains and losses depends on whether the derivative is designated as a hedging instrument and the nature of the underlying exposure. As of December 31, 2025 and March 31, 2026 and for the three months ended March 31, 2026, the fair values of our outstanding derivative instruments, as well as any related realized or unrealized gains, losses, and amounts recorded in or reclassified from AOCI, were immaterial to our condensed consolidated statements of operations. Cash Flow Hedges We designate certain foreign exchange contracts as cash flow hedges to protect forecasted revenue, typically hedging exposures for up to 12 months, with total notional amounts of $378 million and $865 million as of December 31, 2025 and March 31, 2026, respectively. Gains and losses on these derivatives that are included in the assessment of hedge effectiveness are initially deferred in accumulated other comprehensive income (loss) (“AOCI”) and subsequently reclassified into earnings in the same line item within the condensed consolidated statements of operations when the hedged transaction affects earnings. We do not exclude any components in the assessment of hedge effectiveness for forward contracts. If it becomes probable that a forecasted transaction will not occur, hedge accounting is discontinued, and the associated derivatives are accounted for as undesignated instruments, with amounts previously recorded in AOCI reclassified into other income (expense), net in the period of discontinuation. Cash flows associated with cash flow hedges are classified within operating activities in our condensed consolidated statements of cash flows. Derivatives Not Designated as Hedging Instruments We utilize foreign exchange contracts not designated as hedging instruments to mitigate foreign currency exchange risk of our assets and liabilities, with total notional amounts of $1.6 billion and $1.7 billion as of December 31, 2025 and March 31, 2026, respectively. Gains and losses on these derivatives are recognized in other income (expense), net in the condensed consolidated statements of operations, and the related cash flows are classified within investing activities in the condensed consolidated statements of cash flows.
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