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Fair Value Measurements

6 Months Ended

Jun. 30, 2023

The Company defines fair value as the exchange price that would be received from the 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 liabilities.

The Company’s financial instruments that are carried at fair value consist of Level I and Level II assets as of June 30, 2023 and December 31, 2022. The following tables summarize the Company’s cash and available-for-sale marketable securities’ amortized cost, gross unrealized gains, gross unrealized losses,

and fair value by significant investment category reported as cash and cash equivalents or marketable securities as of June 30, 2023 and December 31, 2022:


(In thousands) June 30, 2023	Amortized Cost		Unrealized Gain		Unrealized Loss		Fair Value		Cash and Cash Equivalents		Marketable Securities
Cash	$	40,679	$	—	$	—	$	40,679	$	40,679	$	—
Level I
Money market funds	88,721		—		—		88,721		88,721		—
Treasury bills	214,666		28		(29)		214,665		24,706		189,959
U.S. government securities	58,411		—		(575)		57,836		—		57,836
Total Level I	361,798		28		(604)		361,222		113,427		247,795
Level II
Commercial paper	40,075		—		—		40,075		—		40,075
Corporate bonds	10,919		6		(41)		10,884		—		10,884
Commercial deposits	15,197		—		—		15,197		—		15,197
Asset-backed securities	29,790		—		(182)		29,608		—		29,608
Foreign government and agency securities	2,099		—		(1)		2,098		—		2,098
U.S. agency securities	16,945		—		(41)		16,904		—		16,904
Total Level II	115,025		6		(265)		114,766		—		114,766
Total	$	517,502	$	34	$	(869)	$	516,667	$	154,106	$	362,561


(In thousands) December 31, 2022	Amortized Cost		Unrealized Gain		Unrealized Loss		Fair Value		Cash and Cash Equivalents		Marketable Securities
Cash	$	27,528	$	—	$	—	$	27,528	$	27,528	$	—
Level I
Money market funds	85,302		—		—		85,302		85,302		—
Treasury bills	172,500		13		(131)		172,382		5,096		167,286
U.S. government securities	106,167		—		(2,025)		104,142		—		104,142
Total Level I	363,969		13		(2,156)		361,826		90,398		271,428
Level II
Commercial paper	120,360		—		—		120,360		8,038		112,322
Corporate bonds	85,639		3		(639)		85,003		3,420		81,583
Commercial deposits	28,945		—		—		28,945		—		28,945
Asset-backed securities	33,261		31		(306)		32,986		—		32,986
Foreign government and agency securities (1)	8,176		—		(10)		8,166		—		8,166
U.S. agency securities (1)	21,785		38		(23)		21,800		—		21,800
Total Level II	298,166		72		(978)		297,260		11,458		285,802
Total	$	689,663	$	85	$	(3,134)	$	686,614	$	129,384	$	557,230

(1) Prior period has been reclassified to conform to the current period presentation as of June 30, 2023.

Unrealized Investment Losses

The following tables summarize, for all debt securities classified as available for sale in an unrealized loss position as of June 30, 2023 and December 31, 2022, the aggregate fair value and gross unrealized loss by the length of time those securities have been continuously in an unrealized loss position.


(In thousands)	Less Than 12 Months				12 Months or Longer				Total
Duration of unrealized losses June 30, 2023	Fair Value		Unrealized loss		Fair Value		Unrealized loss		Fair Value		Unrealized loss

Commercial paper	$	999	$	—	$	—	$	—	$	999	$	—
Treasury bills	51,964		(29)		—		—		51,964		(29)
U.S. government securities	13,352		(86)		44,483		(489)		57,835		(575)
Corporate bonds	6,780		(39)		316		(2)		7,096		(41)
Asset-backed securities	21,398		(109)		8,134		(73)		29,532		(182)

Foreign government and agency securities	2,098		(1)		—		—		2,098		(1)
U.S. agency securities	16,904		(41)		—		—		16,904		(41)
Total	$	113,495	$	(305)	$	52,933	$	(564)	$	166,428	$	(869)


(In thousands)	Less Than 12 Months				12 Months or Longer				Total
Duration of unrealized losses December 31, 2022	Fair Value		Unrealized loss		Fair Value		Unrealized loss		Fair Value		Unrealized loss
Treasury bills	$	132,995	$	(131)	$	—	$	—	$	132,995	$	(131)
U.S. government securities	21,214		(63)		82,927		(1,963)		104,141		(2,026)
Corporate bonds	18,274		(120)		58,235		(519)		76,509		(639)
Asset-backed securities	23,515		(285)		1,707		(20)		25,222		(305)
Foreign government and agency securities (1)	5,576		(8)		2,591		(2)		8,167		(10)
U.S. agency securities (1)	9,478		(23)		—		—		9,478		(23)
Total	$	211,052	$	(630)	$	145,460	$	(2,504)	$	356,512	$	(3,134)

(1) Prior period has been reclassified to conform to the current period presentation as of June 30, 2023.

For available-for-sale marketable debt securities with unrealized loss positions, the Company does not intend to sell these securities, nor does it anticipate that it will need to or be required to sell the securities. As of June 30, 2023 and December 31, 2022, the decline in fair value of these securities was due to increases in interest rates and not due to credit-related factors. As of June 30, 2023 and 2022, the Company considered any decreases in market value to be temporary in nature and did not consider any of the Company’s marketable securities to be impaired. The Company did not record any impairment charges with respect to its marketable securities during each of the three and six months ended June 30, 2023 and 2022.

In March 2023, the Company sold $138.2 million of available-for-sale marketable securities to enable the repurchase of a portion of the Company’s outstanding 0.25% convertible senior notes due 2026, which are referred to as the Notes. For additional information regarding the Notes, refer to “Note 7—Debt.”

- 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.

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