Investments and Fair Value Measurements

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Investments and Fair Value Measurements

Investments and Fair Value Measurements

Our total cash, cash equivalents and marketable securities consisted of the following:

	As of December 31,
	2019		2018
	(in thousands)
Cash and cash equivalents:
Cash	$	11,623	$	32,546
Money market funds	2,020		2,419
U.S. Treasury securities	—		1,998
Commercial paper	2,499		—
Total cash and cash equivalents	$	16,142	$	36,963
Marketable securities:
Corporate notes and bonds	$	17,470	$	12,852
Commercial paper	5,481		20,086
U.S. Treasury securities	78,160		5,932
Asset-backed securities	13,856		7,809
Total marketable securities	$	114,967	$	46,679

Available-for-Sale Investments

The following table summarizes adjusted cost, gross unrealized gains and losses, and fair value related to available-for-sale securities classified as marketable securities on the accompanying Consolidated Balance Sheets as of December 31, 2019 and December 31, 2018:

	As of December 31, 2019
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(in thousands)
Corporate notes and bonds	$	17,462	$	9	$	(1	)	$	17,470
Commercial paper	5,481		—		—			5,481
U.S. Treasury securities	78,075		85		—			78,160
Asset-backed securities	13,852		4		—			13,856
Total available-for-sale investments	$	114,870	$	98	$	(1	)	$	114,967
	As of December 31, 2018
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(in thousands)
Corporate notes and bonds	$	12,867	$	—	$	(15	)	$	12,852
Commercial paper	20,086		—		—			20,086
U.S. Treasury securities	5,933		—		(1		)	5,932
Asset-backed securities	7,817		—		(8		)	7,809
Total available-for-sale investments	$	46,703	$	—	$	(24	)	$	46,679

The majority of our securities classified as available-for-sale as of December 31, 2019 have contractual maturities of one year or less. Certain securities held and classified as available-for-sale as of December 31, 2019 have contractual maturities

greater than one year; however, we do not intend to hold these securities to maturity. Consistent with our intentions to hold the securities for less than 12 months we classify all securities as short-term. As of December 31, 2018, all securities classified as available-for-sale had contractual maturities of one year or less. There were no securities in a continuous loss position for 12 months or longer as of December 31, 2019 and December 31, 2018. Investments are reviewed periodically to identify possible other-than-temporary impairments. No impairment loss has been recorded on the securities included in the tables above, as we believe that the decrease in fair value of these securities is temporary and we expect to recover at least up to the initial cost of investment for these securities.

Fair Value of Financial Instruments

For certain of our financial instruments, including cash held in banks, accounts receivable, and accounts payable, the carrying amounts approximate fair value due to their short maturities, and are therefore excluded from the fair value tables below.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There is a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1—Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3—Unobservable inputs that are supported by little or no market activity, which require management judgment or estimation.

We measure our cash equivalents, marketable securities, and convertible preferred stock warrant liabilities at fair value. We classify our cash equivalents and marketable securities within Level 1 or Level 2 because we value these investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs. The fair value of our Level 1 financial assets is based on quoted market prices of the identical underlying security. The fair value of our Level 2 financial assets is based on inputs that are directly or indirectly observable in the market, including the readily available pricing sources for the identical underlying security that may not be actively traded. Prior to our IPO, we historically classified our convertible preferred stock warrant liabilities as Level 3. The convertible preferred stock warrant liabilities were valued using the Black-Scholes option-pricing model to determine the expected payout to calculate the fair value.

Financial assets and liabilities measured and recorded at fair value on a recurring basis consisted of the following types of instruments:

	As of December 31, 2019
	Level 1		Level 2		Level 3		Total
	(in thousands)
Cash equivalents:
Money market funds	$	2,020	$	—	$	—	$	2,020
Commercial paper			2,499		—		2,499
Total cash equivalents	2,020		2,499		—		4,519
Marketable securities:
Corporate notes and bonds	—		17,470		—		17,470
Commercial paper	—		5,481		—		5,481
U.S. Treasury securities	—		78,160		—		78,160
Asset-backed securities	—		13,856		—		13,856
Total marketable securities	—		114,967		—		114,967
Restricted cash:
Money market funds	70,087		—		—		70,087
Total restricted cash	70,087		—		—		70,087
Total financial assets	$	72,107	$	117,466	$	—	$	189,573

	As of December 31, 2018
	Level 1		Level 2		Level 3		Total
	(in thousands)
Cash equivalents:
Money market funds	$	2,419	$	—	$	—	$	2,419
U.S. Treasury securities	—		1,998		—		1,998
Total cash equivalents	2,419		1,998		—		4,417
Marketable securities:
Corporate notes and bonds	—		12,852		—		12,852
Commercial paper	—		20,086		—		20,086
U.S. Treasury securities	—		5,932		—		5,932
Asset-backed securities	—		7,809		—		7,809
Total marketable securities	—		46,679		—		46,679
Total financial assets	$	2,419	$	48,677	$	—	$	51,096
Convertible preferred stock warrant liabilities	$	—	$	—	$	3,261	$	3,261
Total financial liabilities	$	—	$	—	$	3,261	$	3,261

The convertible preferred warrant liability is related to the warrants to purchase shares of preferred stock. The fair value of the warrant liability was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. Upon the closing of the IPO, the warrant to purchase shares of preferred stock was converted into a warrant to purchase shares of our common stock. As a result, the warrant liability was remeasured a final time immediately prior to the IPO and reclassified to additional paid in capital within stockholders' equity.

The following table sets forth a summary of the changes in the fair value of our Level 3 financial liabilities:

	As of December 31, 2019
	(in thousands)
Fair value as of December 31, 2018	$	3,261
Change in fair value of Level 3 financial liabilities	2,404
Conversion of convertible preferred stock warrants into Class B common stock warrants	(5,665		)
Fair value as of December 31, 2019	$	—

The gains and losses from re-measurement of Level 3 financial liabilities are recorded as part of other expense, net in the accompanying Consolidated Statements of Operations.

There were no transfers of assets and liabilities measured at fair value between Level 1 and Level 2, or between Level 2 and Level 3, during the years ended December 31, 2019 and 2018.