Fair Value Measurements

3 Months Ended

Apr. 30, 2020

The following tables present information about the Company’s financial assets and liabilities that have been measured at fair value on a recurring basis as of April 30, 2020 and January 31, 2020 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):



	Fair Value Measurement at April 30, 2020
	Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents:
Money market funds	$	631,466	$	—	$	—	$	631,466
Short-term investments:
U.S. government treasury securities	276,372		—		—		276,372
Total financial assets	$	907,838	$	—	$	—	$	907,838



	Fair Value Measurement at January 31, 2020
	Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents:
Money market funds	$	623,856	$	—	$	—	$	623,856
Short-term investments:
U.S. government treasury securities	280,326		—		—		280,326
Total financial assets	$	904,182	$	—	$	—	$	904,182

The Company utilized the market approach and Level 1 valuation inputs to value its money market mutual funds and U.S. government treasury securities because published net asset values were readily available. As of April 30, 2020, unrealized gains on our U.S. government treasury securities were approximately $1.0 million, net of tax, related to securities that the Company purchased as early as July 11, 2019. The decline in market interest rates as of April 30, 2020 has resulted in unrealized gains on those securities the Company previously purchased. Accordingly, the Company concluded that an allowance for credit losses was unnecessary for short-term investments as of April 30, 2020. All other unrealized gains and losses, as well as gross realized gains and losses for cash equivalents and short-term investments, as of April 30, 2020 and January 31, 2020 were not material and the contractual maturity of all marketable securities was less than one year as of April 30, 2020 and January 31, 2020.

In addition to its cash, cash equivalents and short-term investments, the Company measures the fair value of its outstanding convertible senior notes on a quarterly basis for disclosure purposes. The Company considers the fair value of its convertible senior notes at April 30, 2020 to be a Level 2 measurement due to limited trading activity of the convertible senior notes. Refer to Note 5, Convertible Senior Notes, for further details.

- 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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