Fair Value Measurements, Cash Equivalents and Marketable Securities

6 Months Ended

Jun. 30, 2023

Fair Value Measurements, Cash Equivalents and Marketable Securities

4. Fair value measurements, cash equivalents and marketable securities

Financial instruments carried at fair value include cash and cash equivalents, restricted cash and marketable securities. The carrying amount of accounts receivable approximates fair value due to their relatively short maturities.

For assets and liabilities measured at fair value, fair value is the price to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. When determining fair value, we consider the principal or most advantageous market in which it would transact, and assumptions that market participants would use when pricing asset or liabilities.

The accounting standard for fair value establishes a fair value hierarchy based on three levels of inputs, the first two of which are considered observable and the last unobservable. The standard requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The three levels of inputs that may be used to measure fair value are as follows:

•

Level 1 – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

•

Level 2 – Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

•

Level 3 – Inputs are unobservable that are significant to the fair value of the asset or liability and are developed based on the best information available in the circumstances, which might include our data.

The following tables summarize the estimated fair value of our cash equivalents, marketable securities and debt.


	As of June 30, 2023
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Financial assets:
Money market funds	$	42,591	$	—	$	—	$	42,591
U.S. treasury securities		52,305		—		—		52,305
Corporate securities		—		170,585		—		170,585
Total financial assets	$	94,896	$	170,585	$	—	$	265,481


	As of December 31, 2022
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Financial assets:
Money market funds	$	68,129	$	—	$	—	$	68,129
U.S. treasury securities		72,577		—		—		72,577
Corporate securities		—		139,364		—		139,364
Total financial assets	$	140,706	$	139,364	$	—	$	280,070

4. Fair value measurements, cash equivalents and marketable securities (continued)

The following tables summarize the estimated fair value of our cash equivalents and marketable securities.


	As of June 30, 2023
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Cash equivalents:
Money market funds	$	42,591		—		—		$	42,591
Marketable securities:
U.S. treasury securities	$	52,410		—		(105	)	$	52,305
Corporate securities	$	171,068		—		(483	)	$	170,585


	As of December 31, 2022
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Cash equivalents:
Money market funds	$	68,194		—		(65	)	$	68,129
Marketable securities:
U.S. treasury securities	$	73,208		—		(631	)	$	72,577
Corporate securities	$	139,932		—		(568	)	$	139,364

In September 2021, we issued $345.0 million aggregate principal amount of 0.25% convertible senior notes due 2026 (the “Notes”). The estimated fair value of the notes was approximately $272.1 million as of June 30, 2023. The Notes were categorized as Level 2 instruments as the estimated fair value was determined based on estimated or actual bids and offers of the Notes in an inactive market on the last business day of the period.

- 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 + Details