Dexcom DXCM · USD

9. Business Segment and Geographic InformationWe manage our business on a global consolidated basis within one operating and one reportable segment, which is consistent with how our chief operating decision maker (CODM) reviews our business, makes investment and resource allocation decisions, and assesses operating performance. The majority of our revenue is generated in the United States. Our reportable segment derives revenues from the sale of disposable sensors and our Reusable Hardware. Effective September 14, 2025 through December 31, 2025, our President and Chief Operating Officer, assumed the role of interim principal executive officer and CODM. This did not result in a change to our segments.The measures of segment profit or loss that are most consistent with U.S. GAAP used by the CODM to assess performance and allocate resources are operating income and net income. Our CODM also reviews total assets, as reported on our consolidated balance sheets, and purchases of property and equipment, as reported on our consolidated statements of cash flows.Our CODM uses operating income and net income to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the Company, monitor budget versus actual results, acquire companies, or invest in other companies.The following table sets forth our segment information for revenue, measures of segment profit or loss, and significant expenses:Twelve Months EndedDecember 31,(In millions)202520242023Revenue$4,662.0 $4,033.0 $3,622.3 Less:Cost of sales (1)1,860.1 1,594.8 1,333.4 Payroll related expenses885.0 767.1 726.9 Stock-based compensation expense148.7 156.0 136.2 Marketing expense310.3 298.7 264.6 Travel related expenses64.4 64.8 55.3 Supply expenses and clinical trials61.6 64.5 46.5 Consulting & professional fees139.0 227.8 222.2 Equipment, office & facility expenses92.2 83.8 84.7 IT software and data144.3 130.6 106.6 Depreciation and amortization39.5 39.9 41.9 Other segment items (2)5.1 5.0 6.3 Operating income911.8 600.0 597.7 Other income, net176.6 109.0 112.7 Income tax expense252.1 132.8 168.9 Net income$836.3 $576.2 $541.5 (1) Includes amounts stated in other significant expense captions.(2) Other segment items are primarily composed of impairment of assets and bad debt expense.Twelve Months EndedDecember 31,(In millions)202520242023Other segment disclosuresDepreciation and amortization (1)$251.8 $217.7 $186.0 Expenditures for long-lived assets$363.5 $358.

5. Leases and Other CommitmentsLeasesWe have leases for certain machinery and facilities, including office, manufacturing and warehouse space facilities under various domestic and international operating and finance lease arrangements. We also have land leases in Penang, Malaysia that expire through 2082 and in Athenry, Ireland that expire in 3023 for the build-out of our international manufacturing facilities. Our leases, excluding our land leases in Malaysia and Ireland, have remaining lease terms of up to fifteen years. Some of the leases include one or more options to extend the leases for up to five years per option. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.The following table sets forth the maturities of our operating and finance lease liabilities as of December 31, 2025:(In millions)Operating Leases(1)Finance Leases2026$25.9 $9.7 202721.4 7.8 202816.5 5.8 20299.9 5.5 20309.0 5.7 Thereafter28.9 48.9 Total future lease cost111.6 83.4 Less: Imputed interest (16.6)(22.9)Present value of future payments95.0 60.5 Less: Current portion(21.6)(6.7)Long-term portion$73.4 $53.8 (1) Total future lease cost excludes $9.3 million of legally binding minimum lease payments for leases signed but not yet commenced.Certain lease agreements require us to return designated areas of leased space to its original condition upon termination of the lease agreement, for which we record an asset retirement obligation and a corresponding capital asset in an amount equal to the estimated fair value of the obligation. In subsequent periods, the asset retirement obligation is accreted for the change in its present value and the capitalized asset is depreciated, both over the term of the associated lease agreement. Asset retirement obligations of $20.6 million and $17.0 million as of December 31, 2025 and 2024, respectively, are included in other long-term liabilities in our consolidated balance sheets.The components of lease expense were as follows:Twelve Months Ended December 31,(In millions) 202520242023Finance lease cost:Amortization of finance leases$8.3 $7.2 $6.5 Interest on lease liabilities3.3 3.4 3.2 Operating lease cost21.5 22.4 22.9 Short-term lease cost5.1 3.8 2.4 Variable lease cost8.4 9.0 8.3 Total lease cost$46.6 $45.8 $43.

4. DebtSenior Convertible NotesAs of December 31, 2025, the if-converted value of our unsecured senior convertible notes due 2028, or 2028 Notes, did not exceed their outstanding principal amount. As of December 31, 2024, the if-converted value of our 2028 Notes and our unsecured senior convertible notes due 2025, or 2025 Notes, did not exceed their outstanding principal amount.The carrying amounts of our senior convertible notes were as follows:December 31,(In millions)20252024Principal amount:2025 Notes$— $1,207.5 2028 Notes1,250.0 1,250.0 Total principal amount1,250.0 2,457.5 Unamortized debt issuance costs(9.1)(16.1)Carrying amount of senior convertible notes$1,240.9 $2,441.4 The following table summarizes the components of interest expense and the effective interest rates for our senior convertible notes:Twelve Months EndedDecember 31,(In millions)202520242023Cash interest expense:Contractual coupon interest (1)$7.3 $7.7 $9.1 Non-cash interest expense:Amortization of debt issuance costs7.0 7.2 7.3 Total interest expense recognized on senior notes$14.3 $14.9 $16.4 Effective interest rate:2025 Notes0.5 %0.5 %0.5 %2028 Notes0.7 %0.7 %0.7 %(1) Interest on the 2025 Notes began accruing upon issuance and was payable semi-annually on May 15 and November 15 of each year until the 2025 Notes matured in November 2025. Interest on the 2028 Notes, began accruing upon issuance and is payable semi-annually on May 15 and November 15 of each year.Fair Value of Senior Convertible NotesThe fair value, based on trading prices (Level 1 inputs), of our senior convertible notes were as follows:Fair Value Measurements Using Level 1(In millions)December 31, 2025December 31, 20242025 Notes$— $1,163.7 2028 Notes1,152.1 1,122.3 Total fair value of outstanding senior convertible notes$1,152.1 $2,286.0 Convertible Debt SummaryThe following table summarizes key details of the 2025 Notes and 2028 Notes:Senior Convertible NotesOffering Completion DateMaturity DateStated Interest RateAggregate Principal AmountIssuedNet Proceeds(1)Initial Conversion Rate(2)(per $1,000 principal amount)Conversion Price(per share)Settlement Methods(3)2025 Notes(4)May 2020November 15, 20250.25%$1.21 billion$1.19 billion6.6620 shares $150.11Cash and/or shares2028 NotesMay 2023May 15, 20280.375%$1.25 billion$1.23 billion6.1571 shares$162.

7. Income TaxesIncome (loss) before income taxes subject to taxes in the following jurisdictions is as follows:Twelve Months EndedDecember 31,(In millions)202520242023United States$961.4 $659.8 $732.4 Outside of the United States127.0 49.2 (22.0)Total$1,088.4 $709.0 $710.4 Significant components of the provision for income taxes are as follows:Twelve Months EndedDecember 31,(In millions)202520242023Current:Federal$37.1 $157.4 $149.1 State7.1 16.5 18.1 Foreign25.7 2.7 56.7 Total current income taxes69.9 176.6 223.9 Deferred:Federal169.7 (55.2)(93.7)State16.0 (2.0)14.6 Foreign(3.5)13.4 24.1 Total deferred income taxes182.2 (43.8)(55.0)Total$252.1 $132.8 $168.9 Income taxes paid are as follows:Twelve Months EndedDecember 31,(In millions)2025Federal$68.0 State10.6 Foreign15.8 Total$94.4 Significant loss and tax credit carryforwards and years of expiration are as follows:December 31,Year of Expiration(In millions)20252024Net operating loss:Federal$3.8 $12.1 2028California162.0 162.0 2037Other states5.1 5.8 2028Tax credits:FederalForeign tax credits1.2 0.1 2032California R&D credits134.6 124.9 IndefiniteCalifornia AMT Credits$0.5 $0.5 IndefiniteUtilization of net operating losses and credit carryforwards is subject to an annual limitation due to ownership change limitations provided by Section 382 and 383 of the Internal Revenue Code of 1986, as amended, and similar state provisions. An ownership change limitation occurred in February 2009 resulting in an immaterial amount of U.S. research and development tax credits that will expire unused, and therefore, are not reflected in the credit carryforwards above or in the related deferred tax assets in the table below.Significant components of our deferred tax assets and liabilities as of December 31, 2025 and 2024 are shown below. Significant judgment is required to evaluate the need for a valuation allowance against deferred tax assets. We review all available positive and negative evidence, including projections of pre-tax book income, earnings history, reliability of forecasting, and reversal of temporary differences. 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.December 31,(In millions)20252024Deferred tax assets:Net operating loss carryforwards$12.6 $14.4 Capitalized research and development expenses103.6 265.

Our Board of Directors, or the Board, is responsible for exercising oversight of management’s identification and management of, and planning for, risks from cybersecurity threats. While the full Board has overall responsibility for risk oversight, the Board has delegated oversight responsibility related to risks from cybersecurity threats to the Board’s Technology Committee. The Technology Committee reports to the Board as necessary with respect to its activities, including making such reports and recommendations to the Board and its other committees as necessary and appropriate and consistent with its purpose, described below.The Technology Committee, comprised of independent Board members, is responsible for reviewing cybersecurity, privacy, data protection and other major technology risk exposures of the Company, the steps management has taken to monitor and control such exposures, and the Company’s compliance with applicable cybersecurity and data privacy laws and industry standards. These reviews are provided at least annually. The Technology Committee receives management updates and reports, primarily through the Company’s Cybersecurity and Privacy Committee, a multidisciplinary team responsible for the overall governance, decision-making, risk management, awareness and compliance for cybersecurity and privacy activities across the Company.The Cybersecurity and Privacy Committee is co-chaired by our Information Security Officer (ISO), Product Security Officer (PSO), and Chief Privacy Officer (CPO), and its members include executive officers of the Company, including our Chief Technology Officer, Chief Financial Officer, Chief Information Officer, and Chief Legal Officer, as well as representatives from the finance, internal audit, quality, regulatory, and legal teams. Management’s role in assessing and managing the material risks from cybersecurity threats is accomplished primarily through the committee.Members of the Cybersecurity and Privacy Committee have broad ranges of expertise and experience in information technology and security.

6. ContingenciesLitigationWe are subject to various claims, complaints and legal actions that arise from time to time in the normal course of business, including commercial insurance, product liability, intellectual property and employment related matters. In addition, from time to time we may bring claims or initiate lawsuits against various third parties with respect to matters arising out of the ordinary course of our business, including commercial and employment related matters.Due to uncertainty surrounding the securities class action litigation, the derivative actions, and the G6 and G7 Class Action Litigation we are unable to reasonably estimate the ultimate outcome of any of the litigation matters at this time. We intend to defend against these claims vigorously in all of these actions.We do not believe we are party to any other currently pending legal proceedings, the outcome of which could have a material adverse effect on our business, financial condition, or results of operations. There can be no assurance that existing or future legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on our business, financial condition, or results of operations.

2. Fair Value MeasurementsAssets and Liabilities Measured at Fair Value on a Recurring BasisWe estimate the fair values of our Level 1 financial instruments, which are in active markets, using unadjusted quoted market prices for identical instruments.We obtain the fair values of our Level 2 financial instruments, which are not in active markets, from a primary professional pricing source that uses quoted market prices for identical or comparable instruments, rather than direct observations of quoted prices in active markets. Fair values obtained from this professional pricing source can also be based on pricing models whereby all significant observable inputs, including maturity dates, issue dates, settlement dates, benchmark yields, reported trades, broker-dealer quotes, issue spreads, benchmark securities, bids, offers or other market related data, are observable or can be derived from, or corroborated by, observable market data for substantially the full term of the asset.We estimate the fair values of our Level 3 financial instruments based on unobservable inputs and other estimation techniques due to the absence of quoted market prices and inherent lack of liquidity.The following table summarizes financial assets that we measured at fair value on a recurring basis as of December 31, 2025, classified in accordance with the fair value hierarchy:Fair Value Measurements Using(In millions)Level 1Level 2Level 3TotalCash equivalents$392.8 $— $— $392.8 Debt securities, available-for-sale:U.S. government agencies (1)— 357.3 — 357.3 Commercial paper— 123.4 — 123.4 Corporate debt— 600.3 — 600.3 Total debt securities, available-for-sale— 1,081.0 — 1,081.0 Other long-term assets:Convertible notes receivable— — 10.5 10.5 Other assets (2)20.0 — — 20.0 Total assets measured at fair value on a recurring basis$412.8 $1,081.0 $10.5 $1,504.3 (1)Includes debt obligations issued by U.S. government-sponsored enterprises or U.S. government agencies.(2)Includes assets which are primarily held pursuant to a deferred compensation plan for senior management, which consist mainly of mutual funds.The following table summarizes financial assets that we measured at fair value on a recurring basis as of December 31, 2024, classified in accordance with the fair value hierarchy:Fair Value Measurements Using(In millions)Level 1Level 2Level 3TotalCash equivalents$134.2 $— $— $134.2 Debt securities, available-for-sale:U.S. government agencies (1)— 1,150.1 — 1,150.1 Commercial paper— 312.

3. Balance Sheet Details and Other Financial InformationShort-Term Marketable SecuritiesShort-term marketable securities, consisting of available-for-sale debt securities, were as follows:December 31, 2025(In millions)AmortizedCostGrossUnrealizedGainsGrossUnrealizedLossesEstimatedMarketValueDebt securities, available-for-sale:U.S. government agencies (1)$356.6 $0.7 $— $357.3 Commercial paper123.4 — — 123.4 Corporate debt599.4 0.9 — 600.3 Total debt securities, available-for-sale$1,079.4 $1.6 $— $1,081.0 (1) Includes debt obligations issued by U.S. government-sponsored enterprises or U.S. government agencies.December 31, 2024(In millions)AmortizedCostGrossUnrealizedGainsGrossUnrealizedLossesEstimatedMarketValueDebt securities, available-for-sale:U.S. government agencies (1)$1,149.4 $1.3 $(0.6)$1,150.1 Commercial paper312.2 — (0.1)312.1 Corporate debt511.1 0.4 (0.4)511.1 Total debt securities, available-for-sale$1,972.7 $1.7 $(1.1)$1,973.3 (1) Includes debt obligations issued by U.S. government-sponsored enterprises or U.S. government agencies.As of December 31, 2025, the estimated market value of our short-term debt securities with contractual maturities up to 12 months was $1.08 billion. As of December 31, 2024, the estimated market values of our short-term debt securities with contractual maturities up to 12 months and up to 18 months were $1.73 billion and $247.7 million, respectively. Gross realized gains and losses on sales of our short-term debt securities for the twelve months ended December 31, 2025, 2024 and 2023 were not significant.We periodically review our portfolio of debt securities to determine if any investment is impaired due to credit loss or other potential valuation concerns. For debt securities where the fair value of the investment is less than the amortized cost basis, we have assessed at the individual security level for various quantitative factors including, but not limited to, the nature of the investments, changes in credit ratings, interest rate fluctuations, industry analyst reports, and the severity of impairment. Unrealized losses on available-for-sale debt securities at December 31, 2025 were primarily due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities. Accordingly, we have not recorded an allowance for credit losses.