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Fair Value Measurements | 9 Months Ended
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Jun. 30, 2022
Fair Value Disclosures [Abstract] |
Fair Value Measurements | 8. Fair Value Measurements Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. GAAP prescribes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value: • Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; • Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or • Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Time deposits and corporate notes/bonds are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The principal market in which we execute our foreign currency derivatives is the institutional market in an over-the-counter environment with a relatively high level of price transparency. The market participants usually are large financial institutions. Our foreign currency derivatives’ valuation inputs are based on quoted prices and quoted pricing intervals from public data sources and do not involve management judgment. These contracts are typically classified within Level 2 of the fair value hierarchy. Our significant financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2022 and September 30, 2021 were as follows:
(in thousands) |  | June 30, 2022 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents(1) |  | $ | 124,879 |  |  | $ | — |  |  | $ | — |  |  | $ | 124,879 |
Convertible note |  |  | — |  |  |  | — |  |  |  | 2,000 |  |  |  | 2,000 |
Forward contracts |  |  | — |  |  |  | 2,392 |  |  |  | — |  |  |  | 2,392 |
|  | $ | 124,879 |  |  | $ | 2,392 |  |  | $ | 2,000 |  |  | $ | 129,271 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Forward contracts |  |  | — |  |  |  | 1,572 |  |  |  | — |  |  |  | 1,572 |
|  | $ | — |  |  | $ | 1,572 |  |  | $ | — |  |  | $ | 1,572 |
(in thousands) |  | September 30, 2021 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents(1) |  | $ | 114,375 |  |  | $ | — |  |  | $ | — |  |  | $ | 114,375 |
Convertible note |  |  | — |  |  |  | — |  |  |  | 2,000 |  |  |  | 2,000 |
Equity securities |  |  | — |  |  |  | — |  |  |  | 77,540 |  |  |  | 77,540 |
Forward contracts |  |  | — |  |  |  | 5,363 |  |  |  | — |  |  |  | 5,363 |
|  | $ | 114,375 |  |  | $ | 5,363 |  |  | $ | 79,540 |  |  | $ | 199,278 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Forward contracts |  |  | — |  |  |  | 3,318 |  |  |  | — |  |  |  | 3,318 |
|  | $ | — |  |  | $ | 3,318 |  |  | $ | — |  |  | $ | 3,318 |
(1) Money market funds and time deposits. Level 3 Investments Convertible Note In the fourth quarter of 2021, we invested $2.0 million into a non-marketable convertible note. This debt security is classified as available-for-sale and is included in other assets on the Consolidated Balance Sheet. There were no changes in the fair value of this level 3 investment in the three and nine months ended June 30, 2022. Non-Marketable Equity Investments The carrying value of our non-marketable equity investments is recorded in other assets on the Consolidated Balance Sheets and totaled $1.0 million for the period ended June 30, 2022 and $2.2 million for the period ended September 30, 2021. During the three months ended June 30, 2022, PTC sold a non-marketable equity investment for $4.2 million, which had been held at a cost of $1.2 million. The $3.0 million gain recognized on the sale is included in Other income (expense), net for the three and nine months ended June 30, 2022. Equity Securities As of June 30, 2022, PTC held no remaining shares in Matterport, Inc., a publicly traded company, as we sold all previously held shares during the three months ended March 31, 2022. The shares sold included those held as of September 30, 2021, as well as additional shares which PTC earned during the second quarter of FY22 based on contingent earn-outs achieved in January. Shares related to the original investment were restricted from sale until January 2022 (six months after Matterport became a public company). At expiration of this lock-out, we sold all shares held from the original investment for $39.1 million at an average price of $9.1 per share. In February 2022, we sold an additional $3.6 million shares at an average share price of $7.6 per share. Due to the decline in the price per share during the first six months of fiscal 2022, we recognized a loss of $34.8 million in Other income (expense), net on the Consolidated Statements of Operations. No additional gains or losses have been recognized in the three months ended June 30, 2022 and the aggregate realized gain from the original investment of $8.7 million was $34.0 million. The following table provides a summary of changes in the fair value of our Level 3 investment in the Matterport, Inc. shares from October 1, 2021 to June 30, 2022:
(in thousands) |  | June 30, 2022 |
|  | Fair Values |
Balance, October 1, 2021 |  | $ | 77,540 |
Realized loss |  |  | (38,468 | )
Sale of investment |  |  | (39,072 | )
Balance, June 30, 2022 |  | $ | — |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
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