Financial Instruments

3 Months Ended

May 04, 2025

Investments, Debt and Equity Securities [Abstract]

Fair Value Measurements

We define fair value as the exchange price that would be received from sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We measure our financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Three levels of inputs may be used to measure fair value:

•Level 1 - Observable inputs are unadjusted quoted prices in active markets for identical assets or liabilities;

•Level 2 - Observable inputs are quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments; and

•Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. These inputs are based on our own assumptions used to measure assets and liabilities at fair value and require significant management judgment or estimation.

We measure our cash equivalents, marketable securities, publicly held equity securities, and restricted cash at fair value on a recurring basis. We classify these assets within Level 1 or Level 2 because they are valued using either quoted market prices or inputs other than quoted prices which are directly or indirectly observable in the market, including readily-available pricing sources for the identical underlying security which may not be actively traded. Our fixed income available-for-sale securities consist of high quality, investment grade securities from diverse issuers. The valuation techniques used to measure the fair value of our marketable securities were derived from non-binding market consensus prices that are corroborated by observable market data or quoted market prices for similar instruments.

The following tables summarize our assets that were measured at fair value on a recurring basis by significant investment categories and their classification within the fair value hierarchy and in our condensed consolidated balance sheets at the end of fiscal 2025 and the first quarter of fiscal 2026 (in thousands):


	At the End of Fiscal 2025
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash Equivalents		Marketable Securities		Restricted Cash
Level 1
Money market accounts	$	—	$	—	$	—	$	264,067	$	258,750	$	—	$	5,317
Level 2

U.S. government treasury notes	360,578		735		(146)		361,167		27,663		333,504		—
U.S. government agencies	1,400		—		—		1,400		—		1,400		—
Corporate debt securities	395,532		1,903		(55)		397,380		—		397,380		—
Foreign government bonds	700		3		—		703		—		703		—
Asset-backed securities	64,926		331		(7)		65,250		—		65,250		—

Total	$	823,136	$	2,972	$	(208)	$	1,089,967	$	286,413	$	798,237	$	5,317


	At the End of the First Quarter of Fiscal 2026
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash Equivalents		Marketable Securities		Restricted Cash		Prepaid Expenses and Other Current Assets
Level 1
Money market accounts	$	—	$	—	$	—	$	202,151	$	190,686	$	—	$	11,465	$	—
Equity securities (1)	24,999		2,435		—		27,434		—		—		—		27,434
Level 2
U.S. government treasury notes	343,608		1,132		(75)		344,665		1,558		343,107		—		—

Corporate debt securities	423,887		2,307		(47)		426,147		—		426,147		—		—
Foreign government bonds	700		2		—		702		—		702		—		—
Asset-backed securities	69,470		332		(10)		69,792		—		69,792		—		—


Total	$	862,664	$	6,208	$	(132)	$	1,070,891	$	192,244	$	839,748	$	11,465	$	27,434

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(1) Subject to short-term lock-up restrictions.

The amortized cost and estimated fair value of our marketable securities are shown below by contractual maturity (in thousands):


	At the End of the First Quarter of Fiscal 2026
	Amortized Cost		Fair Value
Due within one year	$	319,474	$	320,003
Due in one to five years	514,133		517,239
Due in five to ten years	2,500		2,506
Total	$	836,107	$	839,748

Unrealized losses on our marketable securities have not been recorded into income because we do not intend to sell nor is it more likely than not that we will be required to sell these investments prior to recovery of their amortized cost basis. The fair value of our marketable securities is impacted by the interest rate environment and related credit spreads. The credit ratings associated with our marketable securities are highly rated and the issuers continue to make timely principal and interest payments. As a result, there were no credit or non-credit impairment charges recorded in the first quarter of fiscal 2025 and 2026. The following table presents the fair values and gross unrealized losses for those investments that were in a continuous unrealized loss position at the end of fiscal 2025 and the first quarter of fiscal 2026, aggregated by investment category (in thousands):


	At the End of Fiscal 2025
	Less than 12 months				Greater than 12 months				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. government treasury notes	$	99,397	$	(146)	$	—	$	—	$	99,397	$	(146)

Corporate debt securities	33,619		(55)		1,998		—		35,617		(55)

Asset-backed securities	10,702		(7)		30		—		10,732		(7)

Total	$	143,718	$	(208)	$	2,028	$	—	$	145,746	$	(208)


	At the End of the First Quarter of Fiscal 2026
	Less than 12 months
	Fair Value		Unrealized Loss
U.S. government treasury notes	$	98,847	$	(75)

Corporate debt securities	36,214		(47)

Asset-backed securities	11,003		(10)

Total	$	146,064	$	(132)

Realized gains or losses on sale of marketable securities were not significant for all periods presented.

Strategic Investments

Strategic investments primarily include equity investments in privately-held companies without readily determinable fair values in which we do not own a controlling interest or exercise significant influence. At the end of fiscal 2025 and the first quarter of 2026, the carrying amount of these investments was $36.7 million and $11.7 million and included primarily in other assets, non-current in our condensed consolidated balance sheets. During the first quarter of fiscal 2026, one of the privately-held companies completed its initial public offering and as a result its fair value at the end of the first quarter of fiscal 2026 is included in the above fair value hierarchy table as Level 1.

Strategic investments that are remeasured due to an observable event or impairment are classified as Level 3 in the fair value hierarchy as nonrecurring fair value measurements may include observable and unobservable inputs. No remeasurements occurred during the first quarter of fiscal 2025 and 2026.

Other Financial Instruments

The investments held in our nonqualified deferred compensation plan trust are considered trading securities that are measured at fair value using Level 1 inputs. The fair value of these investments was $8.4 million and $10.6 million at the end of fiscal 2025 and the first quarter of fiscal 2026.