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Fair Value Measurements
 12 Months Ended
Dec. 31, 2018
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Fair Value Measurements
Prior to its IPO, the Company measured its redeemable convertible preferred stock warrant liability at fair value on a recurring basis. The Company recorded $6.1 million, $0.1 million, and $0.1 million related to the revaluation of its redeemable convertible preferred stock warrant liability, which is included in other expense, net in the Company’s consolidated statements of operations for the years ended December 31, 2018, 2017, and 2016, respectively. Upon the closing of the IPO in October 2018, the redeemable convertible preferred stock warrant converted to a common stock warrant. As such, the Company reclassified its redeemable convertible preferred stock warrant liability to additional paid in capital.
The Company defines fair value as the exchange price that would be received from sale of 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. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance describes three levels of inputs that may be used to measure fair value:
•
Level I—Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets;
•
Level II—Observable inputs other than Level I prices, such as unadjusted quoted prices for similar assets or liabilities in active markets, unadjusted quoted prices for identical or similar assets or liabilities 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; and
•
Level III—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. These inputs are based on the Company’s own assumptions used to measure assets and liabilities at fair value and require significant management judgment or estimation.
The categorization of a financial instrument within the fair value hierarchy is based upon the lowest level of input that is significant to its fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the assets or liability.
The Company’s financial instruments that are carried at fair value consist of Level I assets as of December 31, 2018 and Level III liabilities as of December 31, 2017. The Company’s redeemable convertible preferred stock warrant liability was classified within Level III because the warrants were valued using a Black-Scholes valuation model, for which some inputs are unobservable in the market. The valuation methodology and underlying assumptions are discussed further in Note 8.
The following tables set forth the fair value of the Company’s financial assets and liabilities measured at fair value on a recurring basis based on the three-tier fair value hierarchy (in thousands):
 
December 31, 2018
 
Level I
 
Level II
 
Level III
 
Total
Financial Assets:
 
 
 
 
 
 
 
Cash Equivalents
 
 
 
 
 
 
 
Money market funds
$
117,138

 
$
—

 
$
—

 
$
117,138

Total financial assets
$
117,138

 
$
—

 
$
—

 
$
117,138

 
December 31, 2017
 
Level I
 
Level II
 
Level III
 
Total
Financial Liabilities:
 
 
 
 
 
 
 
Redeemable convertible preferred stock warrant liability
$
—

 
$
—

 
$
1,104

 
$
1,104

Total financial liabilities
$
—

 
$
—

 
$
1,104

 
$
1,104


The following table sets forth a summary of the changes in the fair value of the redeemable convertible preferred stock warrant liability (in thousands):
Fair value at January 1, 2016
$
1,016

Change in fair value
114

Fair value at December 31, 2016
1,130

Change in fair value
118

Reclassification to redeemable convertible preferred stock due to warrant exercise
(144
)
Fair value at December 31, 2017
1,104

Change in fair value
6,056

Conversion to common stock warrant in connection with the initial public offering
(7,160
)
Fair value at December 31, 2018
$
—