Fair Value Measurements

12 Months Ended

Dec. 31, 2019

Note 8—Fair Value Measurements

The Company has characterized its investments in marketable securities, based on the priority of the inputs used to value the investments, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), and lowest priority to unobservable inputs (Level 3). If the inputs used to measure the investments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the investment. Investments recorded in the accompanying Consolidated Balance Sheets are categorized based on the inputs to valuation techniques as follows:

Level 1—These are investments where values are based on unadjusted quoted prices for identical assets in an active market that the Company has the ability to access.

Level 2—These are investments where values are based on quoted market prices in markets that are not active or model derived valuations in which all significant inputs are observable in active markets.

Level 3—These are financial instruments where values are derived from techniques in which one or more significant inputs are unobservable.

The following are the major categories of assets measured at fair value on a recurring basis as of the dates indicated (in thousands):



	As of December 31, 2019
	Level 1		Level 2		Level 3		Total
Asset
Cash equivalents:
Commercial paper	$	—	$	5,794	$	—	$	5,794
Certificate of deposit	—		2,959		—		2,959
Money market funds	228,859		—		—		228,859
	228,859		8,753		—		237,612
Short-term investments:
Commercial paper	—		29,320		—		29,320
Certificate of deposit	—		26,132		—		26,132
Corporate bonds	—		114,202		—		114,202
U.S. Government and agency securities	204,305		—		—		204,305
	204,305		169,654		—		373,959
Funds receivable and seller accounts:
Money market funds	18,168		—		—		18,168
	18,168		—		—		18,168
Long-term investments:
Certificate of deposit	—		4,729		—		4,729
Corporate bonds	—		38,563		—		38,563
U.S. Government and agency securities	46,051		—		—		46,051
	46,051		43,292		—		89,343
	$	497,383	$	221,699	$	—	$	719,082



	As of December 31, 2018
	Level 1		Level 2		Level 3		Total
Asset
Cash equivalents:
Commercial paper	$	—	$	7,775	$	—	$	7,775
Money market funds	244,856		—		—		244,856
	244,856		7,775		—		252,631
Short-term investments:
Commercial paper	—		147,860		—		147,860
Corporate bonds	—		46,801		—		46,801
U.S. Government and agency securities	62,641		—		—		62,641
	62,641		194,661		—		257,302
Funds receivable and seller accounts:
Money market funds	9,229		—		—		9,229
	9,229		—		—		9,229
	$	316,726	$	202,436	$	—	$	519,162

Level 1 instruments include investments in debt securities including money market funds and U.S. Government and agency securities, which are valued based on inputs including quotes from broker-dealers or recently executed transactions in the same or similar securities.

Level 2 instruments include investments in debt securities, including fixed-income funds consisting of investments in commercial paper, corporate bonds, and certificates of deposit, which are valued based on quoted market prices in markets that are not active or model derived valuations in which all significant inputs are observable in active markets.

The Company did not have any Level 3 instruments as of December 31, 2019 and December 31, 2018.

See “Note 9—Marketable Securities” for additional information on the Company’s marketable securities measured at fair value.

Disclosure of Fair Values

The Company’s financial instruments that are not remeasured at fair value include the 2018 Notes and the 2019 Notes (see “Note 13—Debt”). The Company estimates the fair value of the 2018 Notes and 2019 Notes through consideration of quoted market prices of similar instruments, classified as Level 2 as described above. The estimated fair value of the 2018 Notes was $310.3 million and $279.1 million as of December 31, 2019 and December 31, 2018, respectively. The estimated fair value of the 2019 Notes was $522.2 million as of December 31, 2019.

The carrying value of other financial instruments, including cash, accounts receivable, accounts payable, funds receivable and seller accounts, and funds payable and amounts due to sellers approximate fair value due to the immediate or short-term maturity associated with these instruments.

- 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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