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Investments and Fair Value Measurements

3 Months Ended

Mar. 31, 2020

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



	As of March 31,		As of December 31,
	2020		2019
	(in thousands)
Cash and cash equivalents:
Cash	$	8,503	$	11,623
Money market funds	13,998		2,020
Commercial paper	—		2,499
Total cash and cash equivalents	$	22,501	$	16,142
Marketable securities:
Corporate notes and bonds	$	9,024	$	17,470
Commercial paper	2,498		5,481
U.S. Treasury securities	68,713		78,160
Asset-backed securities	13,849		13,856
Total marketable securities	$	94,084	$	114,967

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 Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019:



	As of March 31, 2020
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(in thousands)
Corporate notes and bonds	$	9,051	$	—	$	(27	)	$	9,024
Commercial paper	2,498		—		—			2,498
U.S. Treasury securities	68,106		607		—			68,713
Asset-backed securities	13,854		—		(5		)	13,849
Total available-for-sale investments	$	93,509	$	607	$	(32	)	$	94,084

	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

The majority of our securities classified as available-for-sale as of March 31, 2020 have contractual maturities of one year or less. Certain securities held and classified as available-for-sale as of March 31, 2020 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, 2019, 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 March 31, 2020 and December 31, 2019. 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.

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 restricted cash at fair value. We classify our cash equivalents, marketable securities and restricted cash 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.

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



	As of March 31, 2020
	Level 1		Level 2		Level 3		Total
	(in thousands)
Cash equivalents:
Money market funds	$	13,998	$	—	$	—	$	13,998
Total cash equivalents	13,998		—		—		13,998
Marketable securities:
Corporate notes and bonds	—		9,024		—		9,024
Commercial paper	—		2,498		—		2,498
U.S. Treasury securities	—		68,713		—		68,713
Asset-backed securities	—		13,849		—		13,849
Total marketable securities	—		94,084		—		94,084
Restricted cash:
Money market funds	70,087		—		—		70,087
Total restricted cash	70,087		—		—		70,087
Total financial assets	$	84,085	$	94,084	$	—	$	178,169



	As of December 31, 2019
	Level 1		Level 2		Level 3		Total
	(in thousands)
Cash equivalents:
Money market funds	$	2,020	$	—	$	—	$	2,020
U.S. Treasury securities	—		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

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 three months ended March 31, 2020 and 2019.

- 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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