Fair Value Measurements

3 Months Ended

Mar. 31, 2020

The following tables provide the financial assets measured at fair value on a recurring basis:


	Amortized Cost or Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value Hierarchy as of March 31, 2020									Aggregate Fair Value
													Level 1		Level 2		Level 3

Financial Assets:	(In thousands)
Cash and cash equivalents:
Money market funds	$	275,948	$	—	$	—	$	275,948	$	—	$	—	$	275,948


Total included in cash and cash equivalents	275,948		—		—		275,948		—		—		275,948
Marketable securities:
U.S. Treasury securities	193,234		1,927		—		195,161		—		—		195,161
Corporate debt securities and commercial paper	1,311,047		2,556		(10,895)		11,000		1,291,708		—		1,302,708
Total marketable securities	1,504,281		4,483		(10,895)		206,161		1,291,708		—		1,497,869
Strategic investments	5,750		1,944		—		—		—		7,694		7,694
Total financial assets	$	1,785,979	$	6,427	$	(10,895)	$	482,109	$	1,291,708	$	7,694	$	1,781,511


	Amortized Cost or Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value Hierarchy as of December 31, 2019									Aggregate Fair Value
													Level 1		Level 2		Level 3

Financial Assets:	(In thousands)
Cash and cash equivalents:
Money market funds	$	153,252	$	—	$	—	$	153,252	$	—	$	—	$	153,252
Reverse repurchase agreements	35,800		—		—		—		35,800		—		35,800

Total included in cash and cash equivalents	189,052		—		—		153,252		35,800		—		189,052
Marketable securities:
U.S. Treasury securities	215,847		241		(3)		216,085		—		—		216,085
Corporate debt securities and commercial paper	1,378,487		4,516		(55)		5,000		1,377,948		—		1,382,948
Total marketable securities	1,594,334		4,757		(58)		221,085		1,377,948		—		1,599,033
Strategic investments	5,500		—		—		—		—		5,500		5,500
Total financial assets	$	1,788,886	$	4,757	$	(58)	$	374,337	$	1,413,748	$	5,500	$	1,793,585

The Company's primary objective when investing excess cash is preservation of capital, hence the Company's marketable securities consist primarily of US Treasury securities, high credit quality corporate debt securities and commercial paper. As the Company views its marketable securities as available to support its current operations, it has classified all available for sale securities as short-term. As of March 31, 2020 for fixed income securities that were in unrealized loss positions, the Company has determined that (i) it does not have the intent to sell any of these investments, and (ii) it is not more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis. In addition, as of March 31, 2020, the Company anticipates that it will recover the entire amortized cost basis of such fixed income securities before maturity.

The Company regularly reviews the changes to the rating of its debt securities by rating agencies as well as reasonably monitors the surrounding economic conditions to assess the risk of expected credit losses. As of March 31, 2020, the risk of expected credit losses was insignificant.

Interest earned on marketable securities was $8.8 million and $1.5 million in the three months ended March 31, 2020 and 2019, respectively. The interest is recorded as other expense, net, in the accompanying condensed consolidated statements of operations.

The following table summarizes the contractual maturities of marketable securities:


	As of March 31, 2020						As of December 31, 2019
	Amortized Cost		Aggregate Fair Value		Amortized Cost		Aggregate Fair Value

Financial Assets:	(In thousands)
Less than one year	$	787,710	$	788,246	$	859,996	$	861,181
One to three years	716,571		709,623		734,338		737,852
Total	$	1,504,281	$	1,497,869	$	1,594,334	$	1,599,033

The Company holds strategic investments with a fair value of $7.7 million in debt and equity securities of privately held companies in which the Company does not have a controlling interest or significant influence. These securities are recorded as other long-term assets in the accompanying condensed consolidated balance sheets. The Company classifies its strategic investments as Level 3 within the fair value hierarchy based on the nature of the fair value inputs and judgment involved in the valuation process.

As of March 31, 2020, and December 31, 2019, the fair value of the 0.25% convertible senior notes due 2023 (the “Notes”), as further described in Note 8 below, was approximately $768.2 million and $841.3 million, respectively. The fair value of the Notes is determined based on the closing price on the last trading day of the reporting period and is classified as a Level 2 security within the fair value hierarchy.

- 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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