Cash and Cash Equivalents, Investments and Fair Value Measurements

9 Months Ended

Sep. 30, 2023

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents, Investments and Fair Value Measurements

The following tables show our cash and cash equivalents, and investments’ fair value level classification, adjusted cost, unrealized gain, unrealized loss and fair value as of September 30, 2023 and December 31, 2022 (in thousands except for fair value levels):


	September 30, 2023
	Fair Value Level	Adjusted Cost		Unrealized Gain		Unrealized Loss		Fair Value
Cash and cash equivalents:
Cash		$	42,015	$	—	$	—	$	42,015

Money market funds	Level 1	52,404		—		—		52,404

Total cash and cash equivalents		$	94,419	$	—	$	—	$	94,419
Short-term investments:

Corporate debt securities	Level 2	$	58,911	$	—	$	(258)	$	58,653

Agency bonds	Level 2	108,919		—		(731)		108,188
Total short-term investments		$	167,830	$	—	$	(989)	$	166,841
Long-term investments:
Corporate debt securities	Level 2	$	220,649	$	8	$	(2,598)	$	218,059
U.S. treasury securities	Level 1	98,462		—		(1,248)		97,214
Agency bonds	Level 2	98,642		—		(1,374)		97,268
Total long-term investments		$	417,753	$	8	$	(5,220)	$	412,541


	December 31, 2022
	Fair Value Level	Adjusted Cost		Unrealized Gain		Unrealized Loss		Fair Value
Cash and cash equivalents:
Cash		$	33,532	$	—	$	—	$	33,532
Money market funds	Level 1	440,145		—		—		440,145

Total cash and cash equivalents		$	473,677	$	—	$	—	$	473,677
Short-term investments:
Commercial paper	Level 2	$	11,744	$	—	$	(29)	$	11,715
Corporate debt securities	Level 2	491,459		—		(4,130)		487,329
U.S. treasury securities	Level 1	85,271		—		(342)		84,929

Total short-term investments		$	588,474	$	—	$	(4,501)	$	583,973
Long-term investments:
Corporate debt securities	Level 2	$	125,735	$	158	$	(909)	$	124,984
U.S. treasury securities	Level 1	30,633		122		—		30,755
Agency bonds	Level 2	60,635		—		(141)		60,494
Total long-term investments		$	217,003	$	280	$	(1,050)	$	216,233

As of September 30, 2023, we determined that the unrealized losses on our investments were not driven by credit related factors. During the three and nine months ended September 30, 2023 and 2022, we did not recognize any losses on our investments due to credit related factors. During the three and nine months ended September 30, 2023 and 2022, our realized gains and losses on investments were not significant.

The following table shows our cash equivalents and investments' adjusted cost and fair value by contractual maturity as of September 30, 2023 (in thousands):


	Adjusted Cost		Fair Value
Due within one year	$	167,830	$	166,841
Due after one year through three years	417,753		412,541
Investments not due at a single maturity date	52,404		52,404
Total	$	637,987	$	631,786

Investments not due at a single maturity date in the preceding table consisted of money market funds.

Strategic Investments

In May 2023, we entered into a $15.0 million commitment to invest in Sound Ventures AI Fund, L.P. (Sound Ventures), a limited partnership that invests in artificial intelligence companies, for an approximate 6% ownership. We accounted for our investment under the equity method of accounting. During the nine months ended September 30, 2023, we funded $11.8 million of our investment commitment. As part of the conditions for entering into the investment, we are contractually required to provide additional investment commitments. As of September 30, 2023, we have unfunded investment commitments of $3.2 million, which can be issued at any time within five years of the commencement of the partnership, which occurred in February 2023.

In July 2022, we completed an investment of $6.0 million in Knack Technologies, Inc. (Knack), a privately held U.S. based peer-to-peer tutoring platform for higher education institutions. We do not have the ability to exercise significant influence over Knack's operating and financial policies and have elected to account for our investment at cost as it does not have a readily determinable fair value. We did not record any impairment charges during the three and nine months ended September 30, 2023, as there were no significant identified events or changes in circumstances that would be considered an indicator for impairment. There were no observable price changes in orderly transactions for the identical or similar investments of the same issuer during the three and nine months ended September 30, 2023.

Financial Instruments Not Recorded at Fair Value on a Recurring Basis

We report our financial instruments at fair value with the exception of the notes (defined below). The estimated fair value of the notes was determined based on the trading price of the notes as of the last day of trading for the period. We consider the fair value of the notes to be a Level 2 measurement due to the limited trading activity. The estimated fair value of the 2026 notes as of September 30, 2023 and December 31, 2022 was $191.3 million and $385.0 million, respectively. The estimated fair value of the 2025 notes as of September 30, 2023 and December 31, 2022 was $324.1 million and $640.5 million, respectively. For further information on the notes, refer to Note 5, “Convertible Senior Notes.”