Financial Instruments

3 Months Ended

Mar. 31, 2024

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 March 31, 2024 (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	$	226,200	$	—	$	—	$	226,200	$	226,200	$	—
Money market mutual funds	18,100		—		—		18,100		18,100		—
U.S. treasury securities	143,368		1		(26)		143,343		7,982		135,361
Subtotal	387,668		1		(26)		387,643		252,282		135,361
Level 2:
Commercial paper	36,829		1		—		36,830		5,495		31,335
Certificates of deposit	3,243		—		—		3,243		—		3,243
Corporate notes and obligations	76,847		3		(40)		76,810		24,723		52,087
Asset-backed securities	8,461		1		(7)		8,455		—		8,455

Subtotal	125,380		5		(47)		125,338		30,218		95,120
Total cash, cash equivalents, and marketable securities	$	513,048	$	6	$	(73)	$	512,981	$	282,500	$	230,481

As of December 31, 2023, 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	$	237,104	$	—	$	—	$	237,104	$	237,104	$	—
Money market mutual funds	23,762		—		—		23,762		23,762		—
U.S. treasury securities	138,893		38		(8)		138,923		—		138,923
Subtotal	399,759		38		(8)		399,789		260,866		138,923
Level 2:
Commercial paper	25,899		—		—		25,899		6,495		19,404
Certificates of deposit	7,768		—		—		7,768		3,010		4,758
Corporate notes and obligations	71,545		12		(21)		71,536		12,672		58,864
Asset-backed securities	7,319		7		(10)		7,316		—		7,316
U.S. agency securities	7,814		—		(5)		7,809		—		7,809
Subtotal	120,345		19		(36)		120,328		22,177		98,151
Total cash, cash equivalents, and marketable securities	$	520,104	$	57	$	(44)	$	520,117	$	283,043	$	237,074

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 and accounts payable, 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 was estimated to be approximately $486.1 million as of March 31, 2024 and approximately $478.5 million as of December 31, 2023.

Equity Securities

The Company’s investments in equity securities consist primarily of money market mutual funds. During the three months ended March 31, 2024 and 2023, the Company recorded no material unrealized gains or losses in connection with its money market mutual funds held as of March 31, 2024.

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 March 31, 2024 (in thousands):


Due within 1 year	$	265,286
Due after 1 year through 5 years	3,395
Total available-for-sale debt securities	$	268,681

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 and those that have been in a continuous unrealized loss position for more than 12 months as of March 31, 2024 (in thousands):


	Less Than 12 Months				12 Months or Greater				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Asset-backed securities	$	3,363	$	(3)	$	692	$	(4)	$	4,055	$	(7)
Corporate notes and obligations	56,943		(40)		—		—		56,943		(40)
U.S. treasury securities	106,634		(26)		—		—		106,634		(26)

Total available-for-sale debt securities	$	166,940	$	(69)	$	692	$	(4)	$	167,632	$	(73)


	Less Than 12 Months				12 Months or Greater				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Asset-backed securities	$	3,211	$	(6)	$	1,027	$	(4)	$	4,238	$	(10)
Corporate notes and obligations	40,527		(21)		—		—		40,527		(21)
U.S. treasury securities	7,397		(8)		—		—		7,397		(8)
U.S. agency securities	7,809		(5)		—		—		7,809		(5)
Total available-for-sale debt securities	$	58,944	$	(40)	$	1,027	$	(4)	$	59,971	$	(44)

The Company did not recognize any credit losses for its available-for-sale debt securities during the three months ended March 31, 2024 and 2023. The Company had no ending allowance balances for credit losses as of March 31, 2024 or December 31, 2023.

During the three months ended March 31, 2024 and 2023, the Company had no 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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