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Fair Value Measurements

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

10. Fair Value Measurements

Assets and liabilities measured at fair value are classified into the following categories:

•

Level 1: Quoted market prices in active markets for identical assets or liabilities.

•

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

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Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs from inactive markets.

We classify our cash equivalents and marketable securities within Level 1 or Level 2 because we use quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value. There were no transfers between levels during the periods presented.

The following tables set forth our financial assets as of June 30, 2020 and December 31, 2019 that are measured at fair value on a recurring basis during the period:

	June 30, 2020
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Total Estimated Fair Value
	(in thousands)
Cash	$	1,189,011	$	—	$	—		$	1,189,011
Level 1 securities:
U.S. government securities		1,263,863		1,735		(46	)		1,265,552
U.S. government agency securities		339,231		111		(63	)		339,279
Level 2 securities:
Corporate debt securities		22,407		14		—			22,421
Commercial paper		8,389		—		—			8,389
Certificates of deposit		4,917		—		—			4,917
Total	$	2,827,818	$	1,860	$	(109	)	$	2,829,569

	December 31, 2019
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Total Estimated Fair Value
	(in thousands)
Cash	$	416,099	$	—	$	—		$	416,099
Level 1 securities:
U.S. government securities		1,305,145		604		(49	)		1,305,700
U.S. government agency securities		269,278		48		(32	)		269,294
Level 2 securities:
Corporate debt securities		28,420		13		(4	)		28,429
Commercial paper		84,498		—		—			84,498
Certificates of deposit		8,785		—		—			8,785
Total	$	2,112,225	$	665	$	(85	)	$	2,112,805

Gross unrealized losses are not material as of June 30, 2020 and December 31, 2019, respectively. As of June 30, 2020, we considered any decreases in fair value on our marketable securities to be driven by factors other than credit risk, including market risk. All of our marketable securities have contractual maturities of less than one year.

For certain non-marketable debt investments we have elected the fair value option where changes in fair value are recorded in other income (expense), net. Unrealized gains and losses related to these debt investments were not material for the period ended June 30, 2020. As of June 30, 2020 the fair value of the debt investments was recorded within other assets and was not material.

We carry the Convertible Notes at face value less the unamortized discount and issuance costs on our consolidated balance sheets and present that fair value for disclosure purposes only. As of June 30, 2020, the fair value of the 2025 Notes and the 2026 Notes was $1.3 billion and $1.6 billion, respectively. The estimated fair value of the Convertible Notes, which are classified as Level 2 financial instruments, was determined based on the estimated or actual bid prices of the Convertible Notes in an over-the-counter market on the last business day of the period.

- 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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