Fair Value Measurements

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements

4. Fair Value Measurements

The Company establishes the fair value of its assets and liabilities using the price that would be received to sell an asset or paid to transfer a financial liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy is used to measure fair value. The three levels of the fair value hierarchy are as follows:

Level 1 Quoted prices in active markets for identical assets and liabilities.

Level 2 Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3 Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The Company’s available-for-sale securities by level within the fair value hierarchy were as follows:

As of December 31, 2013	Fair value measurement using:
	Level 1		Level 2		Level 3		Total
	(In thousands)
Cash equivalents:
Money market fund	$	8,454	$	—	$	—	$	8,454
Short-term investments:
U.S. government-related debt securities		—		1,566		—		1,566
Corporate debt securities		—		31,149		—		31,149
Total	$	8,454	$	32,715	$	—	$	41,169

As of December 31, 2012	Fair value measurement using:
	Level 1		Level 2		Level 3		Total
	(In thousands)
Cash equivalents:
Money market fund	$	20,510	$	—	$	—	$	20,510

Prior to the Company’s initial public offering, the Company had mandatorily redeemable convertible preferred stock which contained certain redemption provisions that precluded equity classification. Accordingly, warrants to purchase this mandatorily redeemable convertible preferred stock were classified as liabilities for the periods presented. These preferred stock warrants were subject to re-measurement at each balance sheet date and any change in fair value was recognized as a component of other income (expense).

The Company’s preferred stock warrants were categorized as Level 3 because they were valued based on unobservable inputs and management judgment due to the absence of quoted market prices, inherent lack of liquidity and the long-term nature of such financial instruments. The Company performed a fair value assessment of the preferred stock warrant inputs on a quarterly basis using the Black-Scholes option pricing model. The assumptions used in the Black-Scholes option pricing model are inherently subjective and involve significant judgment. Any change in fair value was recognized as a component of other income (expense) in the consolidated statements of operations. Upon the closing of the Company’s initial public offering, all warrants to purchase preferred stock were converted to warrants to purchase common stock and these warrants are no longer re-measured to fair value at each reporting date.

The Company’s preferred stock warrant liabilities by level within the fair value hierarchy were as follows:

As of December 31, 2012	Fair value measurement using:
	Level 1		Level 2		Level 3		Total
	(In thousands)
Preferred stock warrant liability	$	—	$	—	$	3,532	$	3,532

The Company may elect to apply fair value to its financial assets and liabilities on an instrument-by-instrument basis. The Company has not elected to apply the fair value option to any eligible financial assets or liabilities in 2013, 2012 or 2011.