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Financial Instruments | 3 Months Ended
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Apr. 30, 2023
Investments, Debt and Equity Securities [Abstract] |
Financial Instruments | Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: Level 1-Valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2-Valuations based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3-Valuations based on unobservable inputs reflecting the Company’s assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. Cash equivalents are carried at cost, which approximates fair value and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. Marketable securities are carried at fair value and are classified within Level 1 because they are valued using quoted market prices. Specific to marketable fixed income securities, the Company did not record any gross unrealized gains and losses as fair value approximates amortized cost. The Company did not record any credit losses during the thirteen weeks ended April 30, 2023. Further, as of April 30, 2023, the Company did not record an allowance for credit losses related to its fixed income securities. Equity investments in public companies that have readily determinable fair values are carried at fair value and are classified within Level 1 because they are valued using quoted market prices. Equity warrants are classified within Level 3 of the fair value hierarchy as they are valued based on observable and unobservable inputs reflecting the Company’s assumptions, consistent with reasonably available assumptions made by other market participants. The Company utilized certain valuation techniques such as the Black-Scholes option-pricing model and the Monte Carlo simulation model to determine the fair value of equity warrants. The application of these models requires the use of a number of complex assumptions based on unobservable inputs, including the expected term, expected equity volatility, discounts for lack of marketability, cash flow projections, and probability with respect to vesting requirements. The following table includes a summary of financial instruments measured at fair value as of April 30, 2023 (in thousands):
|  | Level 1 |  | Level 2 |  | Level 3 |  |  |
Cash |  | $ | 225,837 |  |  | $ | — |  |  | $ | — |  |  |  |
Money market funds |  | 163,040 |  |  | — |  |  | — |  |  |  |
Commercial paper |  | 19,808 |  |  | — |  |  | — |  |  |  |
Cash and cash equivalents |  | 408,685 |  |  | — |  |  | — |  |  |  |
U.S. Treasury securities |  | 394,461 |  |  | — |  |  | — |  |  |  |
Equity investments |  | 26 |  |  | — |  |  | — |  |  |  |
Marketable securities |  | 394,487 |  |  | — |  |  | — |  |  |  |
Equity warrants |  | — |  |  | — |  |  | 22,688 |  |  |  |
Total financial instruments |  | $ | 803,172 |  |  | $ | — |  |  | $ | 22,688 |  |  |  |
The following table includes a summary of financial instruments measured at fair value as of January 29, 2023 (in thousands):
|  | Level 1 |  | Level 2 |  | Level 3
Cash |  | $ | 300,441 |  |  | $ | — |  |  | $ | — |
Money market funds |  | 30,000 |  |  | — |  |  | — |
Cash and cash equivalents |  | 330,441 |  |  | — |  |  | — |
U.S. Treasury securities |  | 346,926 |  |  | — |  |  | — |
Equity investments |  | 18 |  |  | — |  |  | — |
Marketable securities |  | 346,944 |  |  | — |  |  | — |
Equity warrants |  | — |  | — |  | 31,622 |
Total financial instruments |  | $ | 677,385 |  |  | $ | — |  |  | $ | 31,622 |
The following table summarizes the change in fair value for financial instruments using unobservable Level 3 inputs (in thousands):
| 13 Weeks Ended
| April 30, 2023 |  | May 1, 2022
Beginning balance | $ | 31,622 |  |  | $ | — |
Change in fair value of equity warrants | (8,934) |  |  | — |
Ending balance | $ | 22,688 |  |  | $ | — |
As of April 30, 2023 and January 29, 2023, the deferred credit subject to vesting requirements recognized within other long-term liabilities in exchange for the equity warrants was $45.0 million, respectively. The following table presents quantitative information about Level 3 significant unobservable inputs used in the fair value measurement of the equity warrants as of April 30, 2023 (in thousands):
|  |  |  |  |  |  | Range |  |
| Fair Value |  | Valuation Techniques |  | Unobservable Input |  | Min |  | Max |  | Weighted Average
Equity warrants | $22,688 |  | Black-Scholes and Monte Carlo |  | Probability of vesting |  | 30% |  | 99% |  | 87%
| Equity volatility |  | 35% |  | 80% |  | 76%

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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