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Investments and Fair Value of Financial Instruments | 3 Months Ended
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Mar. 31, 2024
Fair Value Disclosures [Abstract] |
Investments and Fair Value of Financial Instruments | 3. Investments and Fair Value of Financial Instruments Marketable and Non-Marketable Investments The Company’s marketable and non-marketable investments have been classified and accounted for as available-for-sale. The Company’s marketable and non-marketable investments as of March 31, 2024 and December 31, 2023 were as follows (in thousands):
|  | March 31, 2024
|  |  |  | Securities with net gains or losses in accumulated other comprehensive income (loss) |  |  |  |
|  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Allowance for Credit Loss |  | Fair Value
Marketable investments: |  |  |  |  |  |  |  |  |  |
Commercial paper |  | $ | 31,449 |  |  | $ | 7 |  |  | $ | (11) |  |  | $ | — |  |  | $ | 31,445 |
Certificate of Deposit |  | 4,632 |  |  | 4 |  |  | — |  |  | — |  |  | 4,636 |
U.S. treasury |  | 13,210 |  |  | — |  |  | (142) |  |  | $ | — |  |  | 13,068 |
U.S. states and municipalities |  | 900 |  |  | — |  |  | (9) |  |  | — |  |  | 891 |
Corporate bonds |  | 40,542 |  |  | 19 |  |  | (241) |  |  | — |  |  | 40,320 |
Total |  | 90,733 |  |  | 30 |  |  | (403) |  |  | — |  |  | 90,360 |
Non-marketable investments: |  |  |  |  |  |  |  |  |  |
Non-marketable debt securities |  | 10,000 |  |  | — |  |  | — |  |  | — |  |  | 10,000 |
Total |  | 10,000 |  |  | — |  |  | — |  |  | — |  |  | 10,000 |
Total |  | $ | 100,733 |  |  | $ | 30 |  |  | $ | (403) |  |  | $ | — |  |  | $ | 100,360 |
|  | December 31, 2023
|  |  |  | Securities with net gains or losses in accumulated other comprehensive income (loss) |  |  |  |
|  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Allowance for Credit Loss |  | Fair Value
Marketable investments: |  |  |  |  |  |  |  |  |  |
Commercial paper |  | $ | 39,727 |  |  | $ | 32 |  |  | $ | (3) |  |  | $ | — |  |  | $ | 39,756 |
Certificate of Deposit |  | 6,392 |  |  | 9 |  |  | — |  |  | — |  |  | 6,401 |
U.S. treasury |  | 10,226 |  |  | — |  |  | (160) |  |  | — |  |  | 10,066 |
U.S. states and municipalities |  | 2,950 |  |  | — |  |  | (35) |  |  | — |  |  | 2,915 |
Corporate bonds |  | 62,964 |  |  | 29 |  |  | (430) |  |  | — |  |  | 62,563 |
Total |  | $ | 122,259 |  |  | $ | 70 |  |  | $ | (628) |  |  | $ | — |  |  | $ | 121,701 |
As of March 31, 2024, the total amortized cost basis of the Company’s available-for-sale debt securities, excluding non-marketable debt securities, is an unrealized loss position of $0.4 million, which was primarily attributable to rising interest rates since purchase. The Company reviewed its available-for-sale securities in an unrealized loss position and concluded that the decline in fair value was not related to credit losses and is recoverable. During the three months ended March 31, 2024, no allowance for credit losses was recorded and instead the unrealized losses are reported as a component of accumulated other comprehensive loss. The following tables present the gross unrealized losses and the fair value for those marketable investments that were in an unrealized loss position for less than and more twelve months as of March 31, 2024 and December 31, 2023 (in thousands):
|  | March 31, 2024
|  | Less than 12 months |  | More than 12 months |  | Total
|  | Fair Value |  | Gross Unrealized Losses |  | Fair Value |  | Gross Unrealized Losses |  | Fair Value |  | Gross Unrealized Losses
Marketable investments: |  |  |  |  |  |  |  |  |  |  |  |
Commercial paper |  | $ | 20,041 |  |  | $ | (11) |  |  | $ | — |  |  | $ | — |  |  | $ | 20,041 |  |  | $ | (11) |
U.S. treasury |  | 5,666 |  |  | (80) |  |  | 4,436 |  |  | (62) |  |  | 10,102 |  |  | (142) |
U.S. states and municipalities |  | — |  |  | — |  |  | 891 |  |  | (9) |  |  | 891 |  |  | (9) |
Corporate bonds |  | 2,998 |  |  | (3) |  |  | 13,421 |  |  | (238) |  |  | 16,419 |  |  | (241) |
Total |  | $ | 28,705 |  |  | $ | (94) |  |  | $ | 18,748 |  |  | $ | (309) |  |  | $ | 47,453 |  |  | $ | (403) |
|  | December 31, 2023
|  | Less than 12 months |  | More than 12 months |  | Total
|  | Fair Value |  | Gross Unrealized Losses |  | Fair Value |  | Gross Unrealized Losses |  | Fair Value |  | Gross Unrealized Losses
Marketable investments: |  |  |  |  |  |  |  |  |  |  |  |
Commercial paper |  | $ | 16,241 |  |  | $ | (3) |  |  | $ | — |  |  | $ | — |  |  | $ | 16,241 |  |  | $ | (3) |
U.S. treasury |  | 5,677 |  |  | (54) |  |  | 4,389 |  |  | (106) |  |  | 10,066 |  |  | (160) |
U.S. states and municipalities |  | — |  |  | — |  |  | 2,915 |  |  | (35) |  |  | 2,915 |  |  | (35) |
Corporate bonds |  | 15,945 |  |  | (2) |  |  | 30,912 |  |  | (428) |  |  | 46,857 |  |  | (430) |
Total |  | $ | 37,863 |  |  | $ | (59) |  |  | $ | 38,216 |  |  | $ | (569) |  |  | $ | 76,079 |  |  | $ | (628) |
The contractual maturities of the Company’s marketable investments as of March 31, 2024 (in thousands):
|  | March 31, 2024 |  |
Marketable investments: |  | Amortized Cost |  | Fair Value |  |
Due in one year |  | $ | 87,922 |  |  | $ | 87,601 |  |  |
Due in one to five years |  | 2,811 |  |  | 2,759 |  |  |
Total |  | $ | 90,733 |  |  | $ | 90,360 |  |  |
Non-Marketable Investments During the three months ended March 31, 2024, the Company completed a strategic investment in a privately held company. Under the terms of the investment, the Company paid $10.0 million in exchange for shares of Series B preferred stock which represented an immaterial investment in the investment in outstanding equity securities of the privately held company. The Company determined that the investment did not meet the criteria to be accounted for as an equity method investment under ASC 323. The investment was accounted for as an available-for-sale debt security in accordance with ASC 320 as the preferred stock contains a contingent redemption feature at the Company’s option. The investment is included in other non-current assets on the condensed consolidated balance sheet and changes in fair value are recorded in total other comprehensive (loss) income, net of tax. There were no unrealized gains or losses recorded in connection with the Company’s non-marketable debt securities during the three months ended March 31, 2024. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company classifies its cash equivalents and marketable investments within Level 1 and Level 2, as it uses quoted market prices or alternative pricing sources and models utilizing market observable inputs. The Company classifies its non-marketable investments in preferred stock in privately held companies within Level 3, as they do not have a readily determinable fair value. The Company determined the fair value of its Level 1 financial instruments, which are traded in active markets, using quoted market prices for identical instruments. Marketable investments classified within Level 2 of the fair value hierarchy are valued based on other observable inputs, including broker or dealer quotations or alternative pricing sources. When quoted prices in active markets for identical assets or liabilities are not available, the Company relies on non-binding quotes from its investment managers, which are based on proprietary valuation models of independent pricing services. These models generally use inputs such as observable market data, quoted market prices for similar instruments, historical pricing trends of a security as relative to its peers. To validate the fair value determination provided by its investment managers, the Company reviews the pricing movement in the context of overall market trends and trading information from its investment managers. In addition, the Company assesses the inputs and methods used in determining the fair value in order to determine the classification of securities in the fair value hierarchy. Non-marketable investments classified within Level 3 of the fair value hierarchy are valued based on unobservable inputs that are supported by little or no market activity. Current financial information of private companies may not be available and consequently the Company estimates the fair value using inputs that are based on the best available information at the measurement date, which may include the most recent financial information, financial projections, and financing transactions available for the investee and other quantitative and qualitative factors. Additionally, based on the timing, volume, and other characteristics of the available information, the Company may supplement this information by using one or more valuation techniques, including market and income approaches. The Company did not hold any non-marketable investments classified as Level 3 as of December 31, 2023. The Company did not hold any Level 3 marketable investments as of March 31, 2024 or December 31, 2023. During the three months ended March 31, 2024 and 2023, the Company did not have any transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy. Additionally, the Company did not have any financial assets and liabilities measured at fair value on a non-recurring basis as of March 31, 2024 or December 31, 2023. The following tables set forth the Company’s financial assets and liabilities measured at fair value by level within the fair value hierarchy as of March 31, 2024 and December 31, 2023 (in thousands):
|  | As of March 31, 2024
|  | Level 1 |  | Level 2 |  | Level 3 |  | Fair Value
Financial Assets |  |  |  |  |  |  |  |
Cash equivalents: |  |  |  |  |  |  |  |
Commercial paper |  | $ | — |  |  | $ | 30,555 |  |  | $ | — |  |  | $ | 30,555 |
Certificate of deposit |  | — |  |  | 4,901 |  |  | — |  |  | 4,901 |
Money market funds |  | 57,278 |  |  | — |  |  | — |  |  | 57,278 |
U.S. treasury |  | 53,672 |  |  | — |  |  | — |  |  | 53,672 |
Marketable investments: |  |  |  |  |  |  |  |
Commercial paper |  | — |  |  | 31,445 |  |  | — |  |  | 31,445 |
Certificate of deposit |  | — |  |  | 4,636 |  |  | — |  |  | 4,636 |
U.S. treasury |  | 13,068 |  |  | — |  |  | — |  |  | 13,068 |
U.S. states and municipalities |  | — |  |  | 891 |  |  | — |  |  | 891 |
Corporate bonds |  | — |  |  | 40,320 |  |  | — |  |  | 40,320 |
Non-marketable investments: |  |  |  |  |  |  |  |
Non-marketable investments |  | — |  |  | — |  |  | 10,000 |  |  | 10,000 |
Total |  | $ | 124,018 |  |  | $ | 112,748 |  |  | $ | 10,000 |  |  | $ | 246,766 |
|  | As of December 31, 2023
|  | Level 1 |  | Level 2 |  | Level 3 |  | Fair Value
Financial Assets |  |  |  |  |  |  |  |
Cash equivalents: |  |  |  |  |  |  |  |
Money market funds |  | $ | 86,991 |  |  | $ | — |  |  | $ | — |  |  | $ | 86,991 |
Marketable investments: |  |  |  |  |  |  |  |
Commercial paper |  | — |  |  | 39,756 |  |  | — |  |  | 39,756 |
Certificate of Deposit |  | — |  |  | 6,401 |  |  | — |  |  | 6,401 |
U.S. treasury |  | 10,066 |  |  | — |  |  | — |  |  | 10,066 |
U.S. states and municipalities |  | — |  |  | 2,915 |  |  | — |  |  | 2,915 |
Corporate bonds |  | — |  |  | 62,563 |  |  | — |  |  | 62,563 |
Total |  | $ | 97,057 |  |  | $ | 111,635 |  |  | $ | — |  |  | $ | 208,692 |

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- 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 Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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