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Fair Value Measurements

9 Months Ended

Apr. 29, 2023

We disclose and recognize the fair value of our assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance establishes three levels of the fair value hierarchy as follows:

Level 1: Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2: Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities 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 related assets or liabilities; and

Level 3: Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

Our financial instruments consist of cash and cash equivalents, short-term and long-term investments, accounts payable, and accrued liabilities. At April 29, 2023 and July 30, 2022, the carrying values of cash and cash equivalents, accounts payable, and accrued liabilities approximated fair value due to their short-term maturities.

The following table sets forth our cash equivalents, and short-term and long-term investments accounted for as available-for-sale securities that were measured at fair value on a recurring basis based on the fair value hierarchy as of April 29, 2023 and July 30, 2022:


	April 29, 2023								July 30, 2022
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash equivalents:
Money market funds	$	47,063	$	—	$	—	$	47,063	$	16,267	$	—	$	—	$	16,267

Investments:
U.S. Treasury securities	30,371		—		—		30,371		42,260		—		—		42,260

Commercial paper	—		—		—		—		—		2,985		—		2,985

Corporate bonds	—		19,768		—		19,768		—		54,517		—		54,517
Total	$	77,434	$	19,768	$	—	$	97,202	$	58,527	$	57,502	$	—	$	116,029

There were no transfers of financial assets or liabilities into or out of Level 1, Level 2, or Level 3 during the three and nine months ended April 29, 2023, and April 30, 2022.

The following table sets forth the amortized cost, gross unrealized gains, gross unrealized losses and fair values of our short-term and long-term investments accounted for as available-for-sale securities as of April 29, 2023, and July 30, 2022:


	April 29, 2023								July 30, 2022
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Financial Assets:
Investments:
U.S. Treasury securities	$	30,514	$	—	$	(143)	$	30,371	$	43,163	$	—	$	(903)	$	42,260

Commercial paper	—		—		—		—		2,985		—		—		2,985

Corporate bonds	20,050		—		(282)		19,768		55,526		—		(1,009)		54,517
Total	$	50,564	$	—	$	(425)	$	50,139	$	101,674	$	—	$	(1,912)	$	99,762

The following table shows fair value and gross unrealized losses, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position as of April 29, 2023:


	Less Than 12 Months				More Than 12 Months				Total
(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Financial Assets:
Investments:
U.S. Treasury securities	$	30,371	$	(143)	$	—	$	—	$	30,371	$	(143)



Corporate bonds	980		(18)		18,788		(264)		19,768		(282)
Total	$	31,351	$	(161)	$	18,788	$	(264)	$	50,139	$	(425)

Gross unrealized losses on our available-for-sale securities have decreased since July 30, 2022, due to maturities of our investments during the nine months ended April 29, 2023, and approaching maturities of securities in our portfolio. We evaluate securities for expected credit losses on a quarterly basis with consideration given to the financial condition and near-term prospects of the issuer, whether we intend to sell the securities, and whether it is more likely than not that we will be required to sell the securities before recovery of their amortized cost basis.

As of April 29, 2023, the losses on our available-for-sale securities were considered to be a direct effect of the increase in interest rates and not the creditworthiness of the issuers. We have the current intent and ability to retain these securities until maturity or recovery of the amortized cost basis. Therefore, expected credit losses as of April 29, 2023 were immaterial.

The following table sets forth the fair value of available-for-sale securities by contractual maturity as of April 29, 2023 and July 30, 2022:


	April 29, 2023								July 30, 2022
(in thousands)	One Year or Less		Over One Year Through Five Years		Over Five Years		Total		One Year or Less		Over One Year Through Five Years		Over Five Years		Total
Financial Assets:
Investments:
U.S. Treasury securities	$	30,371	$	—	$	—	$	30,371	$	35,473	$	6,787	$	—	$	42,260

Commercial paper	—		—		—		—		2,985		—		—		2,985

Corporate bonds	19,768		—		—		19,768		43,591		10,926		—		54,517
Total	$	50,139	$	—	$	—	$	50,139	$	82,049	$	17,713	$	—	$	99,762

- 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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