As of June 30, 2023 and December 31, 2022, other noncurrent assets included equity securities accounted for under the equity method with a carrying amount of $4.7 million and $4.4 million, respectively. No impairments to the carrying amount of the Company’s non-marketable equity securities were recognized in the three and six months ended June 30, 2023 and 2022.

In the fourth quarter of 2022, the Company initiated a foreign exchange hedging strategy to hedge local currency expenses and reduce variability associated with anticipated cash flows. The Company’s derivative financial instruments consist of foreign currency forward contracts. The maturities of these instruments are generally less than twelve months. Fair values for derivative financial instruments are based on prices computed using third-party valuation models and are classified as Level 2 in accordance with the three-level hierarchy of fair value measurements. All the significant inputs to the third-party valuation models are observable in active markets. Inputs include current market-based parameters such as forward rates, yield curves and credit default swap pricing. For additional information related to the three-level hierarchy of fair value measurements, see Note 6—Fair Value.

The notional and fair values of all derivative financial instruments were as follows (in thousands):


	June 30, 2023		December 31, 2022
Derivative instruments in cash flow hedges (foreign exchange contracts):
Assets
Other current assets	$	759	$	—
Liabilities
Accrued liabilities		—		94
Total fair value	$	759	$	94
Total notional value	$	50,880	$	52,197
Undesignated derivative instruments (foreign exchange contracts):
Assets
Other current assets	$	464	$	—
Liabilities
Accrued liabilities		—		41
Total fair value	$	464	$	41
Total notional value	$	7,149	$	7,402

All of the Company’s derivative financial instruments are eligible for netting arrangements that allow the Company and its counterparty to net settle amounts owed to each other. Derivative assets and liabilities that can be net settled under these arrangements have been presented in the Company's Condensed Consolidated Balance Sheets on a net basis.

The gross amounts of the Company’s foreign currency forward contracts and the net amounts recorded in the Company’s Condensed Consolidated Balance Sheets were as follows (in thousands):


	June 30, 2023			December 31, 2022
Gross amount of recognized assets	$	1,320		$	—
Gross amount of recognized liabilities		(97	)		(135	)
Net amount presented in the Condensed Consolidated Balance Sheets	$	1,223		$	(135	)

The Company designates certain foreign currency forward contracts as hedging instruments pursuant to Accounting Standards Codification (“ASC”) No. 815—Derivatives and Hedging. The effective portion of the gain or loss on the derivatives are reported as a component of AOCI in stockholders’ equity and reclassified into earnings on the Condensed Consolidated Statements of Operations in the period upon which the hedged transactions are settled. For information on the unrealized gain or loss on the derivatives included in and reclassified out of the AOCI into Condensed Consolidated Statements of Operations, refer to Note 4—Composition of Certain Financial Statement Captions.

The following table summarizes the gains recognized upon settlement of the hedged transactions in the Condensed Consolidated Statement of Operations for three and six months ended June 30, 2023 (in thousands):


	Three Months Ended June 30,		Six Months Ended June 30,
	2023
Research and development	$	403	$	414
Selling, general and administrative		59		63
Total	$	462	$	477

For derivatives that are not designated as hedge instruments, they are measured and reported at fair value as a derivative asset or liability in the Condensed Consolidated Balance Sheets with their corresponding change in the fair value recognized as gains or losses in other income (expense), net, in the Condensed Consolidated Statements of Operations. For the three and six months ended June 30, 2023, gains on the undesignated derivatives were $0.5 million and $0.7 million, respectively.