Fair Value Measurements

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

3. Fair Value Measurements

Fair value accounting is applied for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). As of March 31, 2022 and December 31, 2021, the carrying amount of accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities approximated their estimated fair value due to their relatively short maturities. Management believes the terms of its long-term debt reflect current market conditions for an instrument with similar terms and maturity, therefore the carrying value of the Company’s debt approximated its fair value.

Assets and liabilities recorded at fair value on a recurring basis in the unaudited condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

Level 1: Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2: Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

Level 3: Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

The Company’s money market funds are classified as Level 1 because they are valued using quoted market prices. The Company’s debt securities consist of available-for-sale securities and are classified as Level 2 because their value is based on valuations using significant inputs derived from or corroborated by observable market data. There were no assets or liabilities classified as Level 3 as of March 31, 2022 and December 31, 2021.

There were no transfers into or out of Level 3 of the fair value hierarchy during the periods presented.

The following tables present the fair value hierarchy for assets and liabilities measured at fair value (in thousands):

	March 31, 2022
	Level 1		Level 2		Level 3		Total
Financial assets:
Money market funds	$	40,483	$	—	$	—	$	40,483
Corporate debt securities		—		33,264		—		33,264
Commercial paper		—		10,904		—		10,904
U.S. government bonds		—		41,987		—		41,987
Total	$	40,483	$	86,155	$	—	$	126,638

	December 31, 2021
	Level 1		Level 2		Level 3		Total
Financial assets:
Money market funds	$	13,520	$	—	$	—	$	13,520
Corporate debt securities		—		41,511		—		41,511
U.S. government bonds		—		42,345		—		42,345
Total	$	13,520	$	83,856	$	—	$	97,376

There were no financial liabilities as of March 31, 2022 and December 31, 2021.

The following tables summarize the estimated value of the Company’s cash equivalents and debt securities and the gross unrealized holding gains and losses (in thousands):

	March 31, 2022
	Amortized cost		Unrealized gain		Unrealized loss			Estimated Fair Value
Cash equivalents:
Money market funds	$	40,483	$	—	$	—		$	40,483
Total cash equivalents	$	40,483	$	—	$	—		$	40,483
Debt securities:
Corporate debt securities	$	33,461	$	—	$	(197	)	$	33,264
Commercial paper		10,904		—		—			10,904
U.S. government bonds		42,312		—		(325	)		41,987
Total debt securities	$	86,677	$	—	$	(522	)	$	86,155
Classified as:
Cash equivalents								$	40,483
Short-term debt securities									86,155
								$	126,638

	December 31, 2021
	Amortized cost		Unrealized gain		Unrealized loss			Estimated Fair Value
Cash equivalents:
Money market funds	$	13,520	$	—	$	—		$	13,520
Total cash equivalents	$	13,520	$	—	$	—		$	13,520
Debt securities:
Corporate debt securities	$	41,576	$	—	$	(65	)	$	41,511
U.S. government bonds		42,429		—		(84	)		42,345
Total debt securities	$	84,005	$	—	$	(149	)	$	83,856
Classified as:
Cash equivalents								$	13,520
Short-term debt securities									66,594
Long-term debt securities									17,262
								$	97,376

The Company periodically reviews the available-for-sale securities for other-than-temporary impairment loss. The Company considers factors such as the duration, severity and the reason for the decline in value, the potential recovery period and its intent to sell. For debt securities, it also considers whether (i) it is more likely than not that the Company will be required to sell the debt securities before recovery of their amortized cost basis, and (ii) the amortized cost basis cannot be recovered as a result of credit losses. During the three months ended March 31, 2022, the Company did not recognize any other-than-temporary impairment losses. All debt securities with unrealized losses have been in a loss position for less than 12 months.