Fair Value Measurements

3 Months Ended

Mar. 31, 2023

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.

•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.

The following tables set forth our financial assets that are measured at fair value on a recurring basis, excluding publicly traded equity securities, as of March 31, 2023 and December 31, 2022:


	March 31, 2023
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Total Estimated Fair Value
	(in thousands)
Cash	$	1,447,925	$	—	$	—	$	1,447,925
Level 1 securities:
U.S. government securities	1,688,325		3,860		(5,149)		1,687,036
U.S. government agency securities	266,944		299		(104)		267,139
Level 2 securities:
Corporate debt securities	246,814		309		(789)		246,334
Commercial paper	203,080		—		(6)		203,074
Certificates of deposit	150,446		—		—		150,446
Total	$	4,003,534	$	4,468	$	(6,048)	$	4,001,954


	December 31, 2022
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Total Estimated Fair Value
	(in thousands)
Cash	$	1,325,946	$	—	$	—	$	1,325,946
Level 1 securities:
U.S. government securities	1,630,224		109		(9,484)		1,620,849
U.S. government agency securities	175,269		19		(188)		175,100
Level 2 securities:
Corporate debt securities	309,942		32		(1,462)		308,512
Commercial paper	290,589		—		—		290,589
Certificates of deposit	157,965		—		(1)		157,964
Total	$	3,889,935	$	160	$	(11,135)	$	3,878,960

We hold investments in publicly traded companies with an aggregate carrying value of $101.5 million and $91.5 million as of March 31, 2023 and December 31, 2022, respectively, primarily recorded as marketable securities. We classify these publicly traded equity securities within Level 1 because we use quoted market prices to determine their fair value. Gains and losses recognized during the periods presented, which are included within other income (expense), net on our consolidated statements of operations, were as follows:


	Three Months Ended March 31,
	2023		2022
	(in thousands)
Gains (losses) recognized on publicly traded equity securities sold during the period, net	$	137	$	—
Unrealized gains (losses) on publicly traded equity securities still held at the reporting date, net	10,594		(92,140)
Gains (losses) on publicly traded equity securities, net	$	10,731	$	(92,140)

Gross unrealized losses on marketable debt securities were not material for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, we considered any decreases in fair value on our marketable debt securities to be driven by factors other than credit risk, including market risk. As of March 31, 2023, $795.9 million of our total $2.4 billion in marketable debt securities have contractual maturities between one and five years. All other marketable debt securities have contractual maturities less than one year.

We carry the Convertible Notes at face value less the unamortized debt issuance costs on our consolidated balance sheets and present the fair value for disclosure purposes only. As of March 31, 2023, the fair value of the 2025 Notes, the 2026 Notes, the 2027 Notes, and the 2028 Notes was $268.0 million, $768.6 million, $839.1 million, and $1.1 billion, respectively. As of December 31, 2022, the fair value of the 2025 Notes, the 2026 Notes, the 2027 Notes, and the 2028 Notes was $257.0 million, $711.9 million, $796.2 million, and $1.0 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.

+ References + Details