Financial Instruments

Investments

The following tables present information about our financial assets measured at fair value on a recurring basis based on the three-tier fair value hierarchy (in thousands):



	Fair Value Measurement at March 31, 2018
	Level 1		Level 2		Total
Description
Money market funds	$	374,729	$	—	$	374,729
Corporate bonds	—		170,795		170,795
Commercial paper	—		33,495		33,495
Asset-backed securities	—		31,533		31,533
U.S. treasury securities	—		17,789		17,789
Agency securities	—		14,914		14,914
Total	$	374,729	$	268,526	$	643,255
Included in cash and cash equivalents					$	392,750
Included in marketable securities					$	250,505



	Fair Value Measurement at December 31, 2017
	Level 1		Level 2		Total
Description
Corporate bonds	$	—	$	149,069	$	149,069
Money market funds	32,832		—		32,832
U.S. treasury securities	—		28,382		28,382
Asset-backed securities	—		27,738		27,738
Commercial paper	—		19,622		19,622
Agency securities	—		14,911		14,911
Total	$	32,832	$	239,722	$	272,554
Included in cash and cash equivalents					$	37,531
Included in marketable securities					$	235,023

As of March 31, 2018 and December 31, 2017, there were no securities within Level 3 of the fair value hierarchy. There were no transfers between fair value measurement levels during the three months ended March 31, 2018. Gross unrealized gains and losses for cash equivalents and marketable securities as of March 31, 2018 and December 31, 2017 were not material. Unrealized losses for securities that have been in an unrealized loss position for more than 12 months as of March 31, 2018 and December 31, 2017 were not material.

The following table classifies our marketable securities by contractual maturity (in thousands):



	March 31, 2018		December 31, 2017
Due in one year or less	$	128,751	$	137,576
Due after one year	121,754		97,447
Total	$	250,505	$	235,023

For our other financial instruments, including accounts receivable, accounts payable, and other current liabilities, the carrying amounts approximate their fair values due to the relatively short maturity of these balances.

Derivative Instruments and Hedging

Our foreign currency exposures typically arise from expenditures associated with foreign operations and sales in foreign currencies of our products. To mitigate the effect of foreign currency fluctuations on our future cash flows and earnings, we enter into foreign currency forward contracts with certain financial institutions and designate those contracts as cash flow hedges. Our foreign currency forward contracts generally have maturities of 15 months or less. As of March 31, 2018, the balance of accumulated other comprehensive loss included an unrecognized net gain of $0.2 million related to the effective portion of changes in the fair value of foreign currency forward contracts designated as cash flow hedges. We expect to reclassify a net gain of $0.4 million into earnings over the next 12 months associated with our cash flow hedges.

The following tables present information about our derivative instruments on our consolidated balance sheets (in thousands):



	March 31, 2018
	Asset Derivatives			Liability Derivatives
Derivative Instrument	Balance Sheet Location	Fair Value (Level 2)		Balance Sheet Location	Fair Value (Level 2)
Foreign currency forward contracts	Other current assets	$	2,716	Accrued liabilities	$	1,945
Total		$	2,716		$	1,945



	December 31, 2017
	Asset Derivatives			Liability Derivatives
Derivative Instrument	Balance Sheet Location	Fair Value (Level 2)		Balance Sheet Location	Fair Value (Level 2)
Foreign currency forward contracts	Other current assets	$	2,359	Accrued liabilities	$	1,220
Total		$	2,359		$	1,220

Our foreign currency forward contracts had a total notional value of $174.2 million and $139.7 million as of March 31, 2018 and December 31, 2017, respectively. We have a master netting arrangement with each of our counterparties, which permits net settlement of multiple, separate derivative contracts with a single payment. We may also be required to exchange cash collateral with certain of our counterparties on a regular basis. ASC 815 permits companies to present the fair value of derivative instruments on a net basis according to master netting arrangements. We have elected to present our derivative instruments on a gross basis in our consolidated financial statements. As of March 31, 2018 and December 31, 2017, there was no cash collateral posted with counterparties.

The following table presents information about our derivative instruments on our condensed consolidated statements of operations (in thousands):



		Three Months Ended March 31, 2018				Three Months Ended March 31, 2017
Hedging Instrument	Location of Gain (Loss) Reclassified into Earnings	Gain Recognized in AOCI		Gain Reclassified from AOCI into Earnings		Gain Recognized in AOCI		Loss Reclassified from AOCI into Earnings
Foreign currency forward contracts	Revenue, cost of revenue, operating expenses	$	319	$	1,061	$	993	$	(533	)
Total		$	319	$	1,061	$	993	$	(533	)

All derivatives have been designated as hedging instruments. Amounts recognized in earnings related to excluded time value and hedge ineffectiveness for the three months ended March 31, 2018 and 2017 were not material.

Convertible Senior Notes

As of March 31, 2018, the fair value of our convertible senior notes was $587.2 million. The fair value was determined based on the quoted price of the convertible senior notes in an inactive market on the last trading day of the reporting period and has been classified as Level 2 in the fair value hierarchy.