Fair Value Measurements

12 Months Ended

Dec. 31, 2020

We measure certain financial assets and liabilities at fair value. Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:

•Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

•Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or 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 asset or liability.

We consider an active market to be one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis, and consider an inactive market to be one in which

there are infrequent or few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers.

The following table presents our financial assets measured and recorded at fair value on a recurring basis using the above input categories:


	As of December 31, 2020
	Level 1		Level 2		Level 3		Total
	(in thousands)
Description:
Assets:
Money market funds	$	152,570	$	—	$	—	$	152,570
U.S. Government agencies	83,587		—		—		83,587
Commercial paper	—		34,766		—		34,766
Corporate bonds	—		24,192		—		24,192
Agency bonds	—		3,999		—		3,999
Asset-backed securities	—		2,419		—		2,419
Foreign currency forward contracts designated as cash flow hedges	—		432		—		432
Total assets	$	236,157	$	65,808	$	—	$	301,965


	As of December 31, 2019
	Level 1		Level 2		Level 3		Total
	(in thousands)
Description:
Assets:
Money market funds	$	106,781	$	—	$	—	$	106,781
Corporate bonds	—		60,878		—		60,878
U.S. Government agencies	36,979		—		—		36,979
Commercial paper	—		19,966		—		19,966
Agency bonds	—		12,242		—		12,242
Asset-backed securities	—		8,980		—		8,980
Total assets	$	143,760	$	102,066	$	—	$	245,826

As of December 31, 2020, the fair value of our 1.25% and 2.25% convertible senior notes due 2023 and 2025, respectively, as further described in Note 11, Debt, was $501.8 million and $373.3 million, respectively, based upon quoted market prices. We consider the fair value of the notes to be a Level 2 measurement due to limited trading activity of the notes. We had no financial liabilities measured and recorded at fair value on a recurring basis as of December 31, 2020 and 2019.