Fair Value Measurements

6 Months Ended

Jun. 30, 2020

3. Fair Value Measurements

Assets and liabilities recorded at fair value on a recurring basis on the accompanying condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. We use a fair value hierarchy to measure fair value, maximizing the use of observable inputs and minimizing the use of unobservable inputs. The three-tiers of the fair value hierarchy are as follows:

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

Level II - 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 III - Unobservable inputs that are supported by little or no market data for the related assets or liabilities and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

We measure and report our cash equivalents, restricted cash, and available-for-sale marketable securities at fair value on a recurring basis. The following tables summarize the amortized costs, unrealized gains and losses and fair value of these financial assets by significant investment category and their level within the fair value hierarchy (in thousands):



	June 30, 2020
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Level I		Level II		Level III
Financial Assets:
Cash Equivalents:
Money market funds	$	355,353	$	—	$	—		$	355,353	$	355,353	$	—	$	—
Marketable Securities:
Commercial paper	68,865		—		—			68,865		—		68,865		—
Certificate of deposits⁽¹⁾	3,000		—		—			3,000		—		3,000		—
U.S. government notes	607,806		5,271		(6		)	613,071		613,071		—		—
Corporate bonds	928,562		7,901		(175		)	936,288		—		936,288		—
Agency securities	359,923		460		(18		)	360,365		—		360,365		—
	1,968,156		13,632		(199		)	1,981,589		613,071		1,368,518		—
Other Assets:
Money market funds - restricted	4,307		—		—			4,307		4,307		—		—
Total Financial Assets	$	2,327,816	$	13,632	$	(199	)	$	2,341,249	$	972,731	$	1,368,518	$	—



	December 31, 2019
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Level I		Level II		Level III
Financial Assets:
Cash Equivalents:
Money market funds	$	562,580	$	—	$	—		$	562,580	$	562,580	$	—	$	—
Certificate of deposits⁽¹⁾	4,001							4,001				4,001
	566,581		—		—			566,581		562,580		4,001		—
Marketable Securities:
Commercial paper	66,717		—		—			66,717		—		66,717		—
Certificate of deposits⁽¹⁾	3,000		—		—			3,000		—		3,000		—
U.S. government notes	518,884		414		(20		)	519,278		519,278		—		—
Corporate bonds	787,741		2,392		(73		)	790,060		—		790,060		—
Agency securities	233,491		577		(41		)	234,027		—		234,027		—
	1,609,833		3,383		(134		)	1,613,082		519,278		1,093,804		—
Other Assets:
Money market funds - restricted	4,229		—		—			4,229		4,229		—		—
Total Financial Assets	$	2,180,643	$	3,383	$	(134	)	$	2,183,892	$	1,086,087	$	1,097,805	$	—

______________________

(1) As of June 30, 2020 and December 31, 2019, all of our certificates of deposits were domestic deposits.

The unrealized losses associated with our marketable securities were immaterial as of June 30, 2020, and December 31, 2019. As of June 30, 2020 and December 31, 2019, we did not have any marketable securities that have been in a continuous unrealized loss position for more than twelve months. We invest in marketable securities that have maximum maturities of up to two years and are generally deemed to be low risk based on their credit ratings from the major rating agencies. We did not recognize any credit losses or non-credit-related impairments related to our available-for-sale marketable securities during the three and six months ended June 30, 2020.

As of June 30, 2020, the contractual maturities of our investments did not exceed 24 months. The fair values of available-for-sale marketable securities, by remaining contractual maturity, are as follows (in thousands):



	June 30, 2020
Due in 1 year or less	$	1,340,607
Due in 1 year through 2 years	640,982
Total marketable securities	$	1,981,589

The weighted-average remaining duration of our current marketable securities is approximately 0.8 years as of June 30, 2020. As we view these securities as available to support current operations, we classify securities with maturities beyond 12 months as current assets under the caption marketable securities on the accompanying unaudited condensed consolidated balance sheets.

- 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.

+ References + Details