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Derivative Instruments and Hedging Activities
3 Months Ended
Mar. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities Derivative Instruments and Hedging Activities
During the three months ended March 31, 2023, the Company began using foreign currency forward contracts (the “Contracts”) to manage the Company’s exposure related to certain foreign currency denominated monetary assets (the “Hedging Program”) and to minimize the related impact of foreign currency fluctuations on the Company’s earnings. The hedged monetary assets primarily consist of certain euro-denominated cash and accounts receivable balances. The Contracts mitigate the Company’s foreign currency exposure when the Contracts are settled at their maturity by generally offsetting the gains and losses generated by the re-measurement of the underlying monetary assets.
The Contracts are entered into at the end of each month and have a duration of approximately one month at inception. Due to the short duration of these Contracts, their fair value is deemed immaterial. As the Contracts are considered derivative instruments that are not designated and do not qualify as hedging instruments, any gains and losses resulting from changes in their fair value are recorded to interest income and other income (expense), net on the Company’s unaudited condensed consolidated statements of operations. The Company does not use its Hedging Program for speculative or trading purposes.
The Contract outstanding as of March 31, 2023 was entered into by the Company on the last business day of the period. Given the relatively short duration such contracts are outstanding in relation to changes in potential market rates, the change in the fair value was deemed immaterial.
As of March 31, 2023, the total local currency amount of the outstanding Contract was €9.1 million, and its total notional value was $9.7 million. For the three months ended March 31, 2023, any gains and losses resulting from changes in fair value of the Company’s Contracts were deemed immaterial.