Fair Value Measurements

9 Months Ended

Sep. 30, 2023

Financial Assets

The following tables provide the financial assets measured at fair value on a recurring basis:


	Amortized Cost or Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses Less Than 12 Months		Gross Unrealized Losses More Than 12 Months		Fair Value Hierarchy as of September 30, 2023						Aggregate Fair Value
									Level 1		Level 2		Level 3
Financial Assets:	(In thousands)
Cash and cash equivalents:
Money market funds	$	418,098	$	—	$	—	$	—	$	418,098	$	—	$	—	$	418,098

Commercial paper	23,311		—		—		—		—		23,311		—		23,311
Total included in cash and cash equivalents	441,409		—		—		—		418,098		23,311		—		441,409
Marketable securities:
Debt securities:
U.S. Treasury securities	528,950		20		(1,060)		(3,999)		523,911		—		—		523,911
Non-U.S. government securities	115,923		—		—		(2,897)		113,026		—		—		113,026
Corporate debt securities and commercial paper	2,577,183		134		(9,810)		(31,002)		16,690		2,519,815		—		2,536,505
Total debt securities	3,222,056		154		(10,870)		(37,898)		653,627		2,519,815		—		3,173,442
Equity securities	6,050		—		—		—		6,050		—		—		6,050
Total marketable securities	3,228,106		154		(10,870)		(37,898)		659,677		2,519,815		—		3,179,492
Total financial assets	$	3,669,515	$	154	$	(10,870)	$	(37,898)	$	1,077,775	$	2,543,126	$	—	$	3,620,901


	Amortized Cost or Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses Less Than 12 Months		Gross Unrealized Losses More Than 12 Months			Fair Value Hierarchy as of December 31, 2022						Aggregate Fair Value
									Level 1	Level 2		Level 3
Financial Assets:	(In thousands)
Cash and cash equivalents:
Money market funds	$	46,610	$	—	$	—	$	—		$	46,610	$	—	$	—	$	46,610
Reverse repurchase agreements	200,000		—		—		—			—		200,000		—		200,000
Commercial paper	2,249		—		—		—					2,249				2,249
Total included in cash and cash equivalents	248,859		—		—		—			46,610		202,249		—		248,859
Marketable securities:
U.S. Treasury securities	481,463		—		(1,269)		(11,347)			468,847		—		—		468,847
Non-U.S. government securities	149,901		—		(33)		(6,304)			143,564		—		—		143,564
Corporate debt securities and commercial paper	2,973,844		307		(12,202)		(71,043)			5,000		2,885,906		—		2,890,906
Total marketable securities	3,605,208		307		(13,504)		(88,694)			617,411		2,885,906		—		3,503,317
Total financial assets	$	3,854,067	$	307	$	(13,504)	$	(88,694)		$	664,021	$	3,088,155	$	—	$	3,752,176

Debt Securities

The aggregate fair value of the corporate debt securities with unrealized losses was $2.3 billion as of September 30, 2023, of which $1.2 billion were in an unrealized loss position for more than 12 months and $1.1 billion were in an unrealized loss position for less than 12 months. The aggregate fair value of corporate debt securities with unrealized losses was $2.7 billion as of December 31, 2022, of which $2.0 billion were in an unrealized loss position for more than 12 months and $620.5 million were in an unrealized loss position for less than 12 months. Unrealized losses related to other investments as of September 30, 2023 and December 31, 2022 were not significant.

The Company’s primary objective when investing excess cash is preservation of capital, hence the Company’s debt securities primarily consist of U.S. Treasury Securities, non-U.S government securities, high credit quality corporate debt securities and commercial paper. Because the Company views its debt securities as available to support current operations, it has classified all available for sale securities as short-term. As of September 30, 2023, and December 31, 2022, for all debt securities that were in unrealized loss positions, the Company has determined that (i) it does not have the intent to sell any of these investments, and (ii) it is not more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis. In addition, as of September 30, 2023 and December 31, 2022, the Company anticipates that it will recover the entire amortized cost basis of such debt securities before maturity.

Interest earned on debt securities was $19.3 million and $53.2 million in the three and nine months ended September 30, 2023, respectively, and $16.3 million and $47.5 million in the three and nine months ended September 30, 2022, respectively. The interest is recorded as other income (expenses), net, in the accompanying condensed consolidated statements of operations.

The following table summarizes the contractual maturities of debt securities:


	As of September 30,				As of December 31,
	2023				2022
	Amortized Cost		Aggregate Fair Value		Amortized Cost		Aggregate Fair Value
Financial Assets:	(In thousands)
Less than one year	$	1,740,368	$	1,710,876	$	1,943,836	$	1,909,218
One to three years	1,481,688		1,462,566		1,661,372		1,594,099
Total	$	3,222,056	$	3,173,442	$	3,605,208	$	3,503,317

Equity Securities

The equity securities consist of shares of a publicly traded company that were received as consideration in a divestiture transaction described further in Note 5.

Strategic Investments

As of September 30, 2023 and December 31, 2022, the Company held strategic investments with a carrying value of $30.7 million and $76.9 million, respectively, recorded as other long-term assets in the accompanying condensed consolidated balance sheets. The carrying value of these securities is determined under the measurement alternative on a non-recurring basis and adjusted for observable changes in fair value or impairment. In the nine months ended September 30, 2023, the Company remeasured to fair value one of its strategic investments acquired in 2021 due to an assessed impairment. The fair value measurement of the strategic investment is classified as Level 2 in the fair value hierarchy and the primary input used in the fair value measurement was the publicly available stock price of the issuer’s unrestricted security of the same class. The impairment loss of $46.2 million is recorded in other expenses, net, in the accompanying condensed consolidated statement of operations for the nine months ended September 30, 2023. There were no other impairments or adjustments recorded in the three and nine months ended September 30, 2023 and 2022 related to these securities.

Financial Liabilities

The Company’s financial liabilities that are measured at fair value on a recurring basis consist of foreign currency derivative liabilities and are classified as Level 2 financial instruments in the fair value hierarchy. As of September 30, 2023 and December 31, 2022, the aggregate fair value of these liabilities and the associated unrealized losses were not significant.

The Company’s financial liabilities that are not measured at fair value on a recurring basis are its Senior Notes due 2029 (“2029 Notes”) and its Senior Notes due 2031 (“2031 Notes”). As of September 30, 2023, the fair value of the 2029 Notes and 2031 Notes were $419.0 million and $407.5 million, respectively. As of December 31, 2022, the fair value of the 2029 Notes and 2031 Notes were $410.9 million and $399.4 million, respectively.

- 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.

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