Investment Securities and Fair Value Measurements

6 Months Ended

Jun. 30, 2021

Investment Securities and Fair Value Measurements

Investment Securities

Investment securities classified as available-for-sale consisted of the following as of June 30, 2021 and December 31, 2020 (in thousands):


	June 30, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Corporate bonds	$	49,442	$	4	$	(7)	$	49,439
Agency securities	11,842		13		(7)		11,848

Treasury securities	53,225		18		(11)		53,232
Total available-for-sale investment securities	$	114,509	$	35	$	(25)	$	114,519


	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Agency securities	$	17,104	$	29	$	(1)	$	17,132


Treasury securities	17,847		47		—		17,894
Total available-for-sale investment securities	$	34,951	$	76	$	(1)	$	35,026

For available-for-sale debt securities in an unrealized loss position, we first assess whether we intend to sell, or whether it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of these criteria is met, the security’s amortized cost basis is written down to fair value through income. For securities in an unrealized loss position that do not meet these criteria, we evaluate whether the decline in fair value has resulted from credit loss or other factors. If this assessment indicates a credit loss exists, the credit-related portion of the loss is recorded as an allowance for losses on the security. No allowance for credit losses for available-for-sale investment securities was recorded as of June 30, 2021 or December 31, 2020.

As of June 30, 2021 and December 31, 2020, the contractual maturities of our investments did not exceed 36 months. The fair values of available-for-sale investment securities, by remaining contractual maturity, are as follows (in thousands):


	June 30, 2021				December 31, 2020
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	102,950	$	102,978	$	28,197	$	28,256
Due after one year through three years	11,559		11,541		6,754		6,770
Total available-for-sale investment securities	$	114,509	$	114,519	$	34,951	$	35,026

During the six months ended June 30, 2021 and 2020, we had sales and maturities (which include calls) of investment securities, as follows (in thousands):


	Six Months Ended June 30, 2021
	Gross Realized Gains		Gross Realized Losses		Gross Proceeds from Sales		Gross Proceeds from Maturities

Agency securities	$	—	$	—	$	—	$	5,250

Treasury securities	6		—		42,198		21,500
Total	$	6	$	—	$	42,198	$	26,750


	Six Months Ended June 30, 2020
	Gross Realized Gains		Gross Realized Losses		Gross Proceeds from Sales		Gross Proceeds from Maturities
Corporate bonds	$	5	$	—	$	4,006	$	4,000
Agency securities	24		—		7,878		1,250

Treasury securities	4		—		2,058		2,500
Total	$	33	$	—	$	13,942	$	7,750

Interest income, net of the amortization and accretion of the premium and discount, was $0.1 million for the three months ended June 30, 2021 and 2020, and $0.1 million for the six months ended June 30, 2021 and $0.2 million for the six months ended June 30, 2020.

Fair Value Measurements

Recurring Fair Value Measurements

Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following tables summarize our financial assets measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 by level within the fair value hierarchy (in thousands):


	June 30, 2021
	Level 1		Level 2		Level 3		Total Fair Value
Cash equivalents:
Money market funds	$	5,030	$	—	$	—	$	5,030
Treasury securities	9,500		—		—		9,500
Commercial paper	—		3,000		—		3,000
Available-for-sale investment securities:
Corporate bonds	—		49,439		—		49,439
Agency securities	—		11,848		—		11,848

Treasury securities	53,232		—		—		53,232
Total	$	67,762	$	64,287	$	—	$	132,049


	December 31, 2020
	Level 1		Level 2		Level 3		Total Fair Value
Cash equivalents:
Money market funds	$	4,749	$	—	$	—	$	4,749
Treasury securities	97,433		—		—		97,433
Available-for-sale investment securities:

Agency securities	—		17,132		—		17,132

Treasury securities	17,894		—		—		17,894
Total	$	120,076	$	17,132	$	—	$	137,208

The carrying amounts of restricted cash, accounts receivable, accounts payable and accrued liabilities approximate fair value because of the short maturity of these items.

There were no changes to our valuation techniques used to measure financial asset and financial liability fair values on a recurring basis during the six months ended June 30, 2021. The valuation techniques for the financial assets in the tables above are as follows:

Cash Equivalents

As of June 30, 2021 and December 31, 2020, cash equivalents include cash invested in money market funds, commercial paper, and treasury securities with a maturity of three months or less. Fair value is based on market prices for identical assets.

Available-for-Sale Investment Securities

Fair value for our Level 1 investment securities is based on market prices for identical assets. Our Level 2 securities were priced by a pricing vendor. The pricing vendor utilizes the most recent observable market information in pricing these securities or, if specific prices are not available for these securities, other observable inputs like market transactions involving comparable securities are used.

Non-Recurring Fair Value Measurements

Certain assets, including goodwill, intangible assets and our note receivable with SecureDocs, Inc., are also subject to measurement at fair value on a non-recurring basis using Level 3 measurement, but only when they are deemed to be impaired. For the six months ended June 30, 2021 and 2020, no impairments were identified on those assets required to be measured at fair value on a non-recurring basis.