Financial Instruments

6 Months Ended

Jun. 30, 2023

Fair Value Measurements

The following table presents the Company’s financial assets measured at fair value on a recurring basis, as well as the amortized cost basis and gross unrealized gains and losses of those assets as of June 30, 2023 (in thousands):


									Balance Sheet Classification
	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable Securities
Level 1:
Cash	$	221,813	$	—	$	—	$	221,813	$	221,813	$	—
Money market mutual funds	12,847		—		—		12,847		12,847		—
U.S. treasury securities	145,485		10		(133)		145,362		2,492		142,870
Subtotal	380,145		10		(133)		380,022		237,152		142,870
Level 2:
Commercial paper	29,795		—		—		29,795		—		29,795
Certificates of deposit	12,694		—		—		12,694		1,511		11,183
Corporate notes and obligations	29,141		2		(81)		29,062		—		29,062
Asset-backed securities	12,402		10		(35)		12,377		—		12,377
U.S. agency securities	33,327		1		(50)		33,278		—		33,278
Subtotal	117,359		13		(166)		117,206		1,511		115,695
Total cash, cash equivalents, and marketable securities	$	497,504	$	23	$	(299)	$	497,228	$	238,663	$	258,565

As of December 31, 2022, the Company’s financial assets consisted of the following (in thousands):


									Balance Sheet Classification
	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable Securities
Level 1:
Cash	$	166,341	$	—	$	—	$	166,341	$	166,341	$	—
Money market mutual funds	49,545		—		—		49,545		49,545		—
U.S. treasury securities	204,580		9		(180)		204,409		2,995		201,414
Subtotal	420,466		9		(180)		420,295		218,881		201,414
Level 2:
Commercial paper	41,348		—		—		41,348		—		41,348
Certificates of deposit	6,116		—		—		6,116		—		6,116
Corporate notes and obligations	63,912		10		(202)		63,720		1,519		62,201
Asset-backed securities	15,150		17		(29)		15,138		—		15,138
U.S. agency securities	23,736		5		(3)		23,738		6,980		16,758
Subtotal	150,262		32		(234)		150,060		8,499		141,561
Total cash, cash equivalents, and marketable securities	$	570,728	$	41	$	(414)	$	570,355	$	227,380	$	342,975

The Company’s money market mutual funds and treasury securities are measured at fair value using quoted prices in active markets for identical assets and are classified within Level 1 in the fair value hierarchy. The fair values of the Company’s Level 2 commercial paper and certificates of deposit are determined using quoted prices in markets that are not active or using model-driven valuations employing significant inputs derived from observable market data. The fair values of the Company’s Level 2 corporate notes and obligations, asset-backed securities, and U.S. agency securities are determined using an evaluated price based on a compilation of reported market information, such as benchmark yield curves, credit spreads and estimated default rates.

The carrying amounts of the Company’s remaining financial instruments not discussed in the above table, including accounts receivable, accounts payable, and accrued expenses, approximate fair value because of their short-term maturities, except for the Company’s senior unsecured notes which are valued on a quarterly basis for disclosure purposes only based on quoted prices for the notes in less active markets and categorized accordingly as Level 2 in the fair value hierarchy. The aggregate fair value of the Notes as of June 30, 2023 was estimated to be approximately $463.4 million.

Equity Securities

The Company’s investments in equity securities consist primarily of money market mutual funds. During the three and six months ended June 30, 2023, the Company recorded no material unrealized gains or losses in connection with its money market mutual funds held as of June 30, 2023. The Company had no investments in money market mutual funds during the three and six months ended June 30, 2022.

Available-for-sale Debt Securities

The following table summarizes the fair value of the Company’s available-for-sale debt securities by contractual maturity as of June 30, 2023 (in thousands):


Due within 1 year	$	250,266
Due after 1 year through 5 years	12,302
Total available-for-sale debt securities	$	262,568

Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations.

The following table summarizes the available-for-sale debt securities which have been in a continuous unrealized loss position for less than 12 months as of June 30, 2023 (in thousands):


	Fair Value		Gross Unrealized Losses
Asset-backed securities	$	8,008	$	(35)
Corporate notes and obligations	25,359		(81)
U.S. treasury securities	97,245		(133)
U.S. agency securities	28,797		(50)
Total available-for-sale debt securities	$	159,409	$	(299)

The following table summarizes the available-for-sale debt securities which have been in a continuous unrealized loss position for less than 12 months as of December 31, 2022 (in thousands):


	Fair Value		Gross Unrealized Losses
Asset-backed securities	$	6,598	$	(29)
Corporate notes and obligations	55,136		(202)
U.S. treasury securities	149,128		(180)
U.S. agency securities	7,517		(3)
Total available-for-sale debt securities	$	218,379	$	(414)

The Company had no available-for-sale debt securities in a continuous unrealized loss position for more than 12 months as of June 30, 2023 or December 31, 2022.

The Company did not recognize any credit losses for its available-for-sale debt securities during the three and six months ended June 30, 2023. The Company held no investments in available-for-sale debt securities during the three and six months ended June 30, 2022. The Company had no ending allowance balances for credit losses as of June 30, 2023 or December 31, 2022.

During the three and six months ended June 30, 2023, the Company did not have any sales of its available-for-sale debt securities.

- 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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