# DEXCOM INC (DXCM) FY 2023 MD&A

Verbatim Item 7 Management's Discussion and Analysis from DEXCOM INC's 10-K for fiscal year 2023.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1093557/000109355724000021/dxcm-20231231.htm
Accession: 0001093557-24-000021
Filing date: 2024-02-08
Report date: 2023-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high

Company profile: /company/DXCM/
All MD&A years: /company/DXCM/mda/
Next year: /company/DXCM/mda/fy2024/ (FY 2024)

ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This document, including the following Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements that are not purely historical regarding Dexcom’s or its management’s intentions, beliefs, expectations and strategies for the future. These forward-looking statements fall within the meaning of the federal securities laws that relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “intend,” “potential” or “continue” or the negative of these terms or other comparable terminology. Forward-looking statements are made as of the date of this report, deal with future events, are subject to various risks and uncertainties, and actual results could differ materially from those anticipated in those forward looking statements. The risks and uncertainties that could cause actual results to differ materially are more fully described under “Risk Factors” in Part I, Item 1A of this Annual Report, elsewhere in this Annual Report, and in our other reports filed with the SEC. We assume no obligation to update any of the forward-looking statements after the date of this report or to conform these forward-looking statements to actual results. You should read the following discussion and analysis together with our consolidated financial statements and related notes in Part II, Item 8 of this Annual Report.

Overview

[[GREPCENT_TABLE]]
[["","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 systems, the Dexcom G6\u00ae integrated Continuous Glucose Monitoring System, or G6, in 2018 and more recently received marketing clearance from the FDA on the Dexcom G7\u00ae, or G7, in December 2022.Unless the context requires otherwise, the terms \u201cwe,\u201d \u201cus,\u201d \u201cour,\u201d the \u201ccompany,\u201d or \u201cDexcom\u201d refer to DexCom, Inc. and its subsidiaries."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","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."]]
[[/GREPCENT_TABLE]]

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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.

While our significant accounting policies are described in Note 1 “Organization and Significant Accounting Policies” to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K, we believe that the following accounting estimates are most critical to a full understanding and evaluation of our reported financial results. Members of our senior management have discussed the development and selection of these critical accounting estimates and their disclosure in this Annual Report on Form 10-K with the Audit Committee of our Board of Directors.

Pharmacy Rebates

We estimate provisions for pharmacy rebates based on contractual arrangements, estimates of products sold subject to rebate, known events or trends and channel inventory data. Estimates associated with rebates on products sold through our distributors under pharmacy benefits are the most significant component of our variable consideration estimates and most at risk for material adjustment because of the time delay between the recording of the provision and its ultimate settlement, an interval that generally ranges from 30 to 90 days, but can last up to one year. Due to this time lag, in any given period, our adjustments to reflect actual amounts can incorporate changes of estimates related to prior periods.

Historically, adjustments to these estimates to reflect actual results or updated expectations, have not been material to our overall business and generally have been less than 1% of revenue. An increase or decrease of 1% in our estimate of products sold subject to rebate during 2023, holding all other assumptions constant, would increase or decrease revenue by approximately $22.9 million.

For more information, see Revenue Recognition in Note 1 “Organization and Significant Accounting Policies” to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

Excess and Obsolete Inventory

We assess the value of our inventory on a quarterly basis and write down those inventories based on quality control testing data, obsolescence, or in excess of our forecasted demand to the lower of their cost or net realizable value. Our estimates of forecasted demand are based upon our analysis and assumptions including, but not limited to, expected product lifecycles, product development plans and historical usage by product. If actual market conditions are less favorable than our forecasts, or actual demand from our customers is lower than our estimates, we may be required to record additional inventory write-downs. If actual market conditions are more favorable than anticipated, inventory previously written down may be sold, resulting in lower cost of sales and higher income from operations than expected in that period.

Income Taxes

We estimate our income taxes based on the various jurisdictions where we conduct business. Significant judgment is required in determining our worldwide income tax provision. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations and the potential for future adjustment of our uncertain tax positions by the Internal Revenue Service or other taxing jurisdictions. While we believe we have appropriate support for the positions taken on our tax returns, we regularly assess the potential outcomes of examinations by tax authorities in determining the adequacy of our provision for income taxes. We continually assess the likelihood and amount of potential adjustments and adjust the income tax provision, income taxes payable, and deferred taxes in the period in which the facts that give rise to a revision become known.

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We use the asset and liability approach to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities as described in Note 1 “Organization and Significant Accounting Policies” to the consolidated financial statements in Part II, Item 8 of this Annual Report. Significant judgment is required to evaluate the need for a valuation allowance against deferred tax assets. A valuation allowance is established when it is more likely than not that some or all of the deferred tax assets will not be realized. Realization of deferred tax assets is dependent upon future earnings in applicable tax jurisdictions. We maintain a valuation allowance on our California research and development tax credits and certain foreign intangible assets, as it is more likely than not that those deferred tax assets will not be realized.

We recognize and measure benefits for uncertain tax positions using a two-step approach as described in Note 1 “Organization and Significant Accounting Policies” to the consolidated financial statements in Part II, Item 8 of this Annual Report. Significant judgment is required to evaluate uncertain tax positions and is based upon a number of factors, including changes in facts or circumstances, changes in tax law, correspondence with tax authorities during the course of audits and effective settlement of audit issues. Changes in the recognition or measurement of uncertain tax positions could result in material increases or decreases in our income tax expense in the period in which we make the change, which could have a material impact on our effective tax rate and operating results.

Loss Contingencies

We are subject to certain legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. We review the status of each significant matter quarterly and assess our potential financial exposure. Significant judgment is required in the determination of whether a potential loss is probable, reasonably possible, or remote as well as in the determination of whether a potential exposure is reasonably estimable. We base our judgments on the best information available at the time. As additional information becomes available, we reassess the potential liability related to our pending claims and litigation and may revise our estimates. Any revision of our estimates of potential liability could have a material impact on our financial position and operating results.

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[[GREPCENT_TABLE]]
[["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 fiscal 2023 include the following:"],["Revenue","","","Gross Profit","","","Operating Income","","","Net Income","","","Operating Cash Flow"],["$3.62 billion","","","$2.29 billion","","","$597.7 million","","","$541.5 million","","","$748.5 million"],["up 24% from 2022","","","up 22% from 2022","","","up 53% from 2022","","","up 59% from 2022","","","up 12% from 2022"]]
[[/GREPCENT_TABLE]]

We ended fiscal 2023 with cash, cash equivalents and short-term marketable securities totaling $2.72 billion.

Results of Operations

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Financial Overview

For discussion related to the results of operations and changes in financial condition for fiscal 2022 compared to fiscal 2021 refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our 2022 Annual Report on Form 10-K, which was filed with the SEC on February 9, 2023.

[[GREPCENT_TABLE]]
[["Twelve Months Ended December 31, 2023 Compared to Twelve Months Ended December 31, 2022"],["","Twelve Months Ended December 31,","","2023 - 2022"],["(In millions, except per share amounts)","2023","","% of Revenue (1)","","2022","","% of Revenue (1)","","$ Change","","% Change"],["Revenue","$","3,622.3","","","100","%","","$","2,909.8","","","100","%","","$","712.5","","","24","%"],["Cost of sales","1,333.4","","","37","%","","1,026.7","","","35","%","","306.7","","","30","%"],["Gross profit","2,288.9","","","63.2","%","","1,883.1","","","64.7","%","","405.8","","","22","%"],["Operating expenses:"],["Research and development","505.8","","","14","%","","484.2","","","17","%","","21.6","","","4","%"],["Selling, general and administrative","1,185.4","","","33","%","","1,007.7","","","35","%","","177.7","","","18","%"],["Total operating expenses","1,691.2","","","47","%","","1,491.9","","","51","%","","199.3","","","13","%"],["Operating income","597.7","","","17","%","","391.2","","","13","%","","206.5","","","53","%"],["Other income (expense), net","112.7","","","3","%","","(0.4)","","","\u2014","%","","113.1","","","**"],["Income before income taxes","710.4","","","20","%","","390.8","","","13","%","","319.6","","","82","%"],["Income tax expense (benefit)","168.9","","","5","%","","49.6","","","2","%","","119.3","","","**"],["Net income","$","541.5","","","15","%","","$","341.2","","","12","%","","$","200.3","","","59","%"],["Basic net income per share","$","1.40","","","**","","$","0.88","","","**","","$","0.52","","","59","%"],["Diluted net income per share","$","1.30","","","**","","$","0.82","","","**","","$","0.48","","","59","%"],["(1) The sum of the individual percentages may not equal the total due to rounding."],["** Not meaningful"]]
[[/GREPCENT_TABLE]]
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 sensing technology, clinical trials, regulatory expenses, quality assurance programs, employee compensation, and business process outsourcers.

Amortization of intangible assets

Our amortization expense primarily relates to acquired technology and intellectual property and other acquired intangible assets.

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Selling, general and administrative

Our selling, general and administrative expenses primarily consist of employee 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.

Income from equity investments

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

Other income (expense), net

Other income (expense), net consists primarily of interest and dividend income on our cash, cash equivalents and short-term marketable securities portfolio, foreign currency transaction gains and losses due to the effects of foreign currency fluctuations, and interest expense related to our senior convertible notes.

78

[[GREPCENT_TABLE]]
[["","Twelve Months Ended December 31, 2023 Compared to Twelve Months Ended December 31, 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 90% of total revenue and Reusable Hardware revenue comprised approximately 10% of total revenue for the twelve months ended December 31, 2023. Disposable sensor and other revenue comprised approximately 87% of total revenue and Reusable Hardware revenue comprised approximately 13% of total revenue for the twelve months ended December 31, 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 in 2023 compared to 2022 was primarily driven by the increase of the amortization of an intangible asset and price, product, and channel mix changes."],["Research and development expense","","Research and development expense increased primarily due to $33.7 million in compensation-related costs most notably due to higher headcount, partially offset by $15.9 million of lower third party and consulting fees primarily related to software development for new products and significant enhancements. 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 $88.8 million in compensation-related costs most notably due to higher headcount, $37.8 million in legal expense primarily related to a patent infringement lawsuit, and $36.6 million in advertising and marketing costs associated with global product launches."],["Other income (expense), net","","Other income (expense), net, increased primarily due to $111.2 million in interest and dividend income on our cash, cash equivalents, and marketable securities portfolio. The increase in interest income was related to a change in market interest rates, as well as an increase in the average invested balances during 2023 compared to 2022."],["Income tax expense (benefit)","","We recorded income tax expense on pre-tax book income for the twelve months ended December 31, 2023 and December 31, 2022. The income tax expense we recorded for 2023 is primarily attributable to income tax expense from normal, recurring operations as well as income taxes related to an intra-entity transfer of certain intellectual property partially 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 2022 is primarily attributable to income tax expense from normal, recurring operations partially offset by excess tax benefits recognized for employee share-based compensation (net of disallowed executive compensation) and the Verily milestone."]]
[[/GREPCENT_TABLE]]

79

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:

[[GREPCENT_TABLE]]
[["","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."]]
[[/GREPCENT_TABLE]]

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.

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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 this Annual Report on Form 10-K for more information.

Main Sources of Liquidity

Cash, cash equivalents and short-term marketable securities

Our cash, cash equivalents and short-term marketable securities totaled $2.72 billion as of December 31, 2023. None of those funds were restricted and $2.54 billion (approximately 93%) of those funds were located in the United States.

Cash flow from Operations

For the twelve months ended December 31, 2023, we had positive cash flows of $748.5 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 $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 $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 2025 Notes offering and 2028 Notes offering 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 2028 Notes offering we purchased the 2028 Capped Calls. See Note 5 “Debt” to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for more information about our senior convertible notes and the 2028 Capped Calls.

Revolving Credit Agreement

As of December 31, 2023, we had no outstanding borrowings, $7.4 million in outstanding letters of credit, and a total available balance of $192.6 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 II, Item 8 of this Annual Report on Form 10-K 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 December 31, 2023, we had a working capital ratio of 2.84 and a quick ratio of 2.38, 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 scale-up capacity in Mesa, Arizona and drive our strategic initiatives of building out our manufacturing facilities and/or equipment in Malaysia and Ireland.

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 to repurchase Dexcom shares or for other strategic initiatives that strengthen our foundation for long-term growth.

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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 December 31, 2023, 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 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 December 31, 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 II, Item 8 of this Annual 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, and research and development activities. See Purchase Commitments in Note 6 “Leases and Other Commitments” to the consolidated financial statements in Part II, Item 8 of this Annual Report for more information.

We issued our outstanding senior convertible notes in May 2020 and May 2023. These obligations include both principal and interest for these notes. Although these notes mature in 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. See Note 5 “Debt” to the consolidated financial statements in Part II, Item 8 of this Annual 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 our 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 Leases in Note 6 “Leases and Other Commitments” to the consolidated financial statements in Part II, Item 8 of this Annual Report for more information about our leases.

See Note 5 “Debt” to the consolidated financial statements in Part II, Item 8 of this Annual Report for more information about the terms of the Credit Agreement, our senior convertible notes, 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 II, Item 8 of this Annual Report for complete consolidated statements of cash flows for these periods.

As of December 31, 2023, we had $2.72 billion in cash, cash equivalents and short-term marketable securities, which is an increase of $267.9 million compared to $2.46 billion as of December 31, 2022.

The primary cash flows during the twelve months ended December 31, 2023 and 2022 are described below. See the consolidated financial statements in Part II, Item 8 of this Annual Report for complete consolidated statements of cash flows for these periods.

83

[[GREPCENT_TABLE]]
[["","","","Twelve Months Ended"],["","","","December 31, 2023","","","December 31, 2022"],["Operating Cash Flows","","+","$541.5 million of net income and $203.8 million of net non-cash adjustments, and a net increase of $3.2 million in changes of working capital balances","","+","$341.2 million of net income and $301.6 million of net non-cash adjustments, and a net increase of $26.7 million in changes of 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","","-","$253.0 million in net purchases of marketable securities","","-","$364.8 million in capital expenditures"],["-","$236.6 million in capital expenditures","-","$138.5 million in net purchases of marketable securities"],["-","$19.5 million in purchases of equity investments","-","$14.5 million in purchases of equity investments"],["Financing Cash Flows","","+","$1.23 billion in proceeds from issuance of senior convertible notes, net of issuance costs","","+","$22.5 million in proceeds from issuance of common stock under our employee stock plans"],["+","$26.6 million in proceeds from issuance of common stock under our employee stock plans","-","$557.7 million in purchases of treasury stock"],["-","$787.3 million in payments for conversions of senior convertible notes","-","$15.6 million in payments for financing leases"],["-","$688.7 million in purchases of treasury stock"],["-","$101.3 million in purchases of capped call transactions"]]
[[/GREPCENT_TABLE]]

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 II, Item 8 of this Annual Report.