v3.26.1
Derivative Instruments and Hedging
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Derivative Instruments and Hedging
The Company uses derivative instruments to manage risks related to foreign currencies and interest rates. The Company does not hold or issue derivatives for trading or speculative purposes.

Interest Rate Risk

In March 2026, in connection with the Company’s issuance of $2.5 billion aggregate principal amount of Senior Notes, the Company entered into interest rate swap agreements with an aggregate notional amount of approximately $1.7 billion. These interest rate swaps effectively convert the fixed interest rates on the $850 million principal amount of the 4.65% senior notes due March 2031 (“2031 Notes”) and $800 million of the principal amount of the 5.25% senior notes due March 2036 (“2036 Notes”) to floating interest rates based on the benchmark interest rate (Secured Overnight Financing Rate (“SOFR”)). Under the terms of the swaps, the Company receives fixed-rate interest payments from the swap counterparties and makes floating-rate interest payments based on SOFR plus a fixed spread.

Foreign Exchange Risk

The Company has a portion of its business denominated and transacted in foreign currencies, which subjects the Company to foreign exchange risk, and it uses derivative instruments to manage financial exposures that occur in the normal course of business.

The Company may elect to designate certain derivatives to partially offset its business exposure to foreign exchange risk. However, the Company may choose not to hedge certain exposures for a variety of reasons including instances where the cost of hedging is determined to outweigh the potential benefit of mitigating the exposure. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign exchange rates.
To protect revenue from fluctuations in foreign currency exchange rates, the Company may enter into forward contracts, option contracts, or other instruments, and may designate these instruments as cash flow hedges. The Company initiated a foreign exchange cash flow hedging program to minimize the effects of foreign currency fluctuations on future revenue. The Company generally hedges portions of its forecasted foreign currency exposure associated with revenue, typically for up to 18 months.

The Company may also enter into derivative instruments that are not designated as accounting hedges to offset a portion of the foreign currency exchange gains and losses generated by the remeasurement of certain assets and liabilities denominated in non-functional currencies.

Fair Value of Derivative Instruments

The following table summarizes the effect of derivative instruments on the Company’s unaudited condensed consolidated balance sheets (in millions):

Derivative Assets(1)(2)
Location
December 31,
2025		March 31,
2026
Derivatives designated as hedging instruments:
Foreign exchange contracts (current) Prepaids and other current assets$4 $60 
Derivatives not designated as hedging instruments:
Foreign exchange contracts (current)Prepaids and other current assets$16 $37 

Derivative Liabilities(1)(2)
Location
December 31,
2025		March 31,
2026
Derivatives designated as hedging instruments:
Foreign exchange contracts (current)
Accrued expenses, accounts payable, and other current liabilities
$61 $18 
Derivatives not designated as hedging instruments:
Foreign exchange contracts (current)Accrued expenses, accounts payable, and other current liabilities$7 $25 

(1)Derivative assets and derivatives liabilities are measured using Level 2 inputs.
(2)Noncurrent derivative assets and liabilities were immaterial.

To limit credit risk, the Company generally enters into master netting arrangements with the respective counterparties to the Company’s derivative contracts, under which the Company is allowed to settle transactions with a single net amount payable by one party to the other. As of March 31, 2026, the potential effect of these rights of offset associated with the Company’s derivative contracts would be a reduction to both derivative assets and liabilities of $42 million, resulting in net derivative assets of $62 million and immaterial net derivative liabilities.

Effect of Derivative Instruments Designated as Hedging Instruments on AOCI

The following table presents the impact of derivative instruments designated as cash flow hedges on AOCI, net of tax (in millions):

Gain (Loss) Recognized in Other Comprehensive Income (Loss)
Three Months Ended March 31,
20252026
Derivatives designated as cash flow hedges:
Foreign exchange contracts
$(61)$58 

Realized losses on derivative instruments designated as hedging instruments reclassified from AOCI to revenue in the unaudited condensed consolidated statements of operations were immaterial and $15 million for the three months ended March 31, 2025 and 2026.

As of December 31, 2025 and March 31, 2026, cumulative unrealized gains (losses) recorded in AOCI, net of tax, related to derivative instruments designated as hedging instruments were $(59) million and $14 million, respectively.
Derivative Instruments Not Designated as Hedging Instruments

Realized gain (loss) on derivative instruments not designated as hedging instruments on the unaudited condensed consolidated statements of operations was $5 million and $(14) million for the three months ended March 31, 2025 and 2026, respectively. Unrealized gain (loss) on derivative instruments not designated as hedging instruments on the unaudited condensed consolidated statements of operations was immaterial for the three months ended March 31, 2025 and 2026.

The total notional amount of outstanding derivatives not designated as hedging instruments was $2.7 billion and $3.2 billion as of December 31, 2025 and March 31, 2026, respectively.

Cash Flow Hedges

The total notional amount of outstanding foreign currency derivatives designated as cash flow hedges was $3.1 billion and $3.3 billion as of December 31, 2025 and March 31, 2026, respectively.

As of March 31, 2026, approximately $7 million of deferred net losses on both outstanding and matured derivatives in AOCI were expected to be reclassified to revenue during the next 12 months concurrent with the underlying hedged transactions which will be recorded in revenue. Actual amounts ultimately reclassified to revenue are dependent on the exchange rates in effect when derivative contracts currently outstanding mature.

Fair Value Hedges

The Company has designated its interest rate swaps as fair value hedges for accounting purposes, and these fair value hedges meet the shortcut method requirements under GAAP. Accordingly, the gains and losses related to changes in the fair value of the interest rate swaps completely offset the changes in the fair value of the hedged portion of the underlying Senior Notes that are attributable to changes in market interest rates. The net interest settlements on the interest rate swaps, along with the offsetting fair value adjustments on the swaps and the hedged debt, are recognized as interest expense and presented within other income (expense), net, in the Company’s unaudited condensed consolidated statements of operations. For the three months ended March 31, 2026, the recognized fair value gains and losses on the Company’s interest rate swaps were immaterial.