Financial Instruments and Fair Value

3 Months Ended

Mar. 31, 2023

Financial Instruments and Fair Value [Abstract]

Available-for-sale Securities

The following tables summarize our available-for-sale securities (in millions):


	March 31, 2023
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
U.S. government and agency securities	$	209.3	$	—	$	(2.3)	$	207.0
Corporate debt securities	184.3		—		(2.4)		181.9
Commercial paper	165.2		—		(0.1)		165.1
Certificates of deposit and term deposits	5.4		—		—		5.4
Municipal bonds	5.1		—		(0.1)		5.0
Total available-for-sale securities	$	569.3	$	—	$	(4.9)	$	564.4


	December 31, 2022
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
U.S. government and agency securities	$	198.0	$	—	$	(4.4)	$	193.6
Corporate debt securities	293.0		—		(4.1)		288.9
Commercial paper	26.5		—		(0.1)		26.4
Certificates of deposit and term deposits	34.2		—		—		34.2
Municipal bonds	5.1		—		(0.1)		5.0
Total available-for-sale securities	$	556.8	$	—	$	(8.7)	$	548.1

The following tables show the gross unrealized losses and the related fair values of our available-for-sale securities that have been in a continuous unrealized loss position (in millions):


	March 31, 2023
	Less Than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. government and agency securities	$	13.9	$	(0.1)	$	148.8	$	(2.2)	$	162.7	$	(2.3)
Corporate debt securities	13.4		(0.1)		161.6		(2.3)		175.0		(2.4)
Commercial paper	165.0		(0.1)		—		—		165.0		(0.1)
Municipal bonds	5.0		(0.1)		—		—		5.0		(0.1)
Total available-for-sale securities	$	197.3	$	(0.4)	$	310.4	$	(4.5)	$	507.7	$	(4.9)


	December 31, 2022
	Less Than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. government and agency securities	$	3.9	$	(0.1)	$	189.8	$	(4.3)	$	193.7	$	(4.4)
Corporate debt securities	90.5		(0.8)		190.0		(3.3)		280.5		(4.1)
Commercial paper	26.4		(0.1)		—		—		26.4		(0.1)
Municipal bonds	5.0		(0.1)		—		—		5.0		(0.1)
Total available-for-sale securities	$	125.8	$	(1.1)	$	379.8	$	(7.6)	$	505.6	$	(8.7)

The contractual maturities of our investments were (in millions):


	March 31, 2023		December 31, 2022
Due within one year	$	548.8	$	502.6
Due within one to three years	15.6		45.5
Total	$	564.4	$	548.1

Available-for-sale securities are reported at fair value, with unrealized gains and losses and the related tax impact included as a separate component of equity (deficit) and in comprehensive income. We do not intend to sell any of the securities in an unrealized loss position and it is not more likely than not that we would be required to sell these securities before recovery of their amortized cost basis, which may be at maturity.

Realized gains and losses on available-for-sale securities were insignificant in the periods presented.

Marketable Equity Securities

Our marketable equity securities were $26.1 million and $25.5 million as of March 31, 2023 and December 31, 2022. The changes in fair value of our marketable equity securities are recorded in other expense—net on the condensed consolidated statements of income. We recognized a $0.6 million gain and $6.2 million loss during the three months ended March 31, 2023 and 2022, respectively.

Fair Value of Financial Instruments

Fair Value Accounting—We apply the following fair value hierarchy for disclosure of the inputs used to measure fair value. This hierarchy prioritizes the inputs into three broad levels:

Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.

Level 3—Unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. The inputs require significant management judgment or estimation.

We measure the fair value of money market funds, certain U.S. government and agency securities and marketable equity securities using quoted prices in active markets for identical assets. The fair value of all other financial instruments was based on quoted prices for similar assets in active markets, or model-driven valuations using significant inputs derived from or corroborated by observable market data.

We classify investments within Level 1 if quoted prices are available in active markets for identical securities.

We classify items within Level 2 if the investments are valued using model-driven valuations using observable inputs such as quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. Investments are held by custodians who obtain investment prices from a third-party pricing provider that incorporates standard inputs in various asset price models.

Assets Measured at Fair Value on a Recurring Basis

The following tables present the fair value of our financial assets measured at fair value on a recurring basis (in millions):


	March 31, 2023								December 31, 2022
	Aggregate Fair Value		Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Remaining Inputs		Significant Other Unobservable Remaining Inputs		Aggregate Fair Value		Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Remaining Inputs		Significant Other Unobservable Remaining Inputs
			(Level 1)		(Level 2)		(Level 3)				(Level 1)		(Level 2)		(Level 3)
Assets:
U.S. government and agency securities	$	396.1	$	351.8	$	44.3	$	—	$	268.6	$	259.3	$	9.3	$	—
Corporate debt securities	181.9		—		181.9		—		288.9		—		288.9		—
Commercial paper	320.8		—		320.8		—		115.8		—		115.8		—
Certificates of deposit and term deposits	45.3		—		45.3		—		50.4		—		50.4		—
Money market funds	447.4		447.4		—		—		593.9		593.9		—		—
Municipal bonds	5.0		—		5.0		—		5.0		—		5.0		—
Marketable equity securities	26.1		26.1		—		—		25.5		25.5		—		—
Total	$	1,422.6	$	825.3	$	597.3	$	—	$	1,348.1	$	878.7	$	469.4	$	—

Reported as:
Cash equivalents	$	832.1							$	774.5
Marketable equity securities	26.1								25.5
Short-term investments	548.8								502.6
Long-term investments	15.6								45.5
Total	$	1,422.6							$	1,348.1

There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the three months ended March 31, 2023 and year ended December 31, 2022.