Note 3. Marketable Securities and Fair Value Measurements

Marketable Securities

We held no marketable securities as of January 31, 2015. The following is a summary of our marketable securities as of January 31, 2016 (in thousands).

	January 31, 2016
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gain		Loss			Fair Value
Corporate debt securities	$	5,560	$	—	$	(1	)	$	5,559
Asset-backed securities		1,821		—		(1	)		1,820
	$	7,381	$	—	$	(2	)	$	7,379

We do not intend to sell the investments that are in an unrealized loss position, and it is unlikely that we will be required to sell the investments before recovery of their amortized cost basis, which may be maturity. None of our marketable securities had been in an unrealized loss position for greater than 12 months as of January 31, 2016. Based on our evaluation of available evidence we concluded that the gross unrealized losses on our marketable securities as of January 31, 2016, are temporary in nature.

The amortized cost and estimated fair value of our marketable securities as of January 31, 2016 are shown below by contractual maturity (in thousands).

	January 31, 2016
	Amortized		Estimated
	Cost		Fair Value
Less than one year	$	5,560	$	5,559
Due in one to five years		1,821		1,820
	$	7,381	$	7,379

During the year ended January 31, 2016, we sold marketable securities for a total proceeds of $78.4 million. Net realized gains and losses from sales of our marketable securities for the year ended January 31, 2016 were not significant.

Fair Value Measurements

We define fair value as the exchange price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We measure our financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

Level 1—Observable inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs are quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices which are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.

Level 3—Unobservable inputs which are supported by little or no market activity and which are significant to the fair value of the assets or liabilities. These inputs are based on our own assumptions used to measure assets and liabilities at fair value and require significant management judgment or estimation.

We measure our marketable securities, restricted cash and redeemable convertible preferred stock warrant liability at fair value on a recurring basis. We classify our marketable securities and restricted cash within Level 1 or Level 2 because they are valued using either quoted market prices for identical assets or inputs other than quoted prices which are directly or indirectly observable in the market, including readily-available pricing sources for the identical underlying security which may not be actively traded. We classify our redeemable convertible preferred stock warrants within Level 3 because they are valued using valuation techniques using certain inputs which are unobservable in the market.

The following tables set forth the fair value of our financial assets and liabilities measured at fair value on a recurring basis as of January 31, 2016 and 2015, using the above input categories (in thousands):

	January 31, 2016
	Level 1		Level 2		Level 3		Fair Value
Assets
Marketable securities:
Corporate debt securities	$	—	$	5,559	$	—	$	5,559
Asset-backed securities		—		1,820		—		1,820
Restricted cash:
Certificates of deposit		—		26,968		—		26,968
Money market funds		984		—		—		984
Total assets measured at fair value	$	984	$	34,347	$	—	$	35,331

	January 31, 2015
	Level 1		Level 2		Level 3		Fair Value
Assets
Restricted cash:
Certificates of deposit	$	—	$	3,367	$	—	$	3,367
Total assets measured at fair value	$	—	$	3,367	$	—	$	3,367

Fair Value of Redeemable Convertible Preferred Stock Warrant Liability

Prior to our IPO, we determined the fair value of the redeemable convertible preferred stock warrants by first deriving the business enterprise value (BEV) of the Company using valuation methods, including combinations of methods, as deemed appropriate under the circumstances applicable at the valuation date. Once we determined an estimated BEV, we utilized the option pricing method (OPM) to allocate the BEV to the various classes of the Company’s equity, including the Company’s preferred stock. Once the per share value of preferred stock was determined, we used this concluded per share value as the fair value of the shares input within the Black-Scholes option pricing model that was utilized to determine the fair value of the redeemable convertible preferred stock warrants. In addition to the fair value of the shares input, the Black-Scholes option pricing model includes assumptions related to the exercise price, expected volatility, expected term, risk-free interest rate, and the expected dividend yield. The estimated expected volatility was based on the volatility of common stock of a group of comparable, publicly-traded companies. The estimated expected term was based on the estimated time to liquidity event. The risk-free interest rate was based on the U.S. Treasury yield for a term consistent with the estimated expected term. The significant unobservable inputs used in the fair value measurement of the redeemable convertible preferred stock warrant liability are the fair value of the underlying stock at the valuation date, the expected volatility, and the estimated term of the warrants. Generally, increases (decreases) in the fair value of the underlying stock, expected volatility and expected term would result in a directionally similar impact to the fair value measurement.

The following table provides a roll-forward of the fair value of the redeemable convertible preferred stock warrants categorized as Level 3 (in thousands):

Balance at January 31, 2013	$	2,869
Remeasurement		8,477
Exercise of redeemable convertible preferred stock warrants		(10,000	)
Balance at January 31, 2014		1,346
Remeasurement		(126	)
Exercise of redeemable convertible preferred stock warrants		(1,220	)
Balance at January 31, 2015	$	—

There was no redeemable preferred stock warrants activity during the year ended January 31, 2016.