Fair Value Measurements

3 Months Ended

Mar. 31, 2023

The Company’s cash equivalents are classified within Level 1 and Level 2 of the fair value hierarchy. The Company’s investments in marketable securities are classified within Level 2 of the fair value hierarchy.

The fair values of the Company’s marketable securities are based on prices obtained from independent pricing sources. Consistent with the fair value hierarchy described in Note 2, Summary of Significant Accounting Policies, marketable securities with validated quotes from pricing services are reflected within Level 2, as they are primarily based on observable pricing for similar assets or other market observable inputs. Typical inputs used by these pricing services include, but are not limited to, reported trades, benchmark yields, issuer spreads, bids, offers or estimates of cash flow, prepayment spreads and default rates. The Company performs validation procedures to ensure the reasonableness of this data. The Company performs its own review of prices received from the independent pricing services by comparing these prices to other sources. After completing the validation procedures, the Company did not adjust or override any fair value measurements provided by the pricing services as of March 31, 2023 and December 31, 2022.

The following tables summarize the Company’s cash equivalents and marketable securities as of March 31, 2023 and December 31, 2022:


	March 31, 2023
	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Cash equivalents:
Money market funds	$	164,139	$	164,139	$	—	$	—
U.S. corporate bonds		19,965		—		19,965		—
International commercial paper		4,984		—		4,984		—
Total cash equivalents		189,088		164,139		24,949		—
Marketable securities:
U.S. government securities		232,688		—		232,688		—
U.S. corporate bonds		267,310		—		267,310		—
International corporate bonds		75,766		—		75,766		—
U.S. commercial paper		62,428		—		62,428		—
International commercial paper		108,999		—		108,999		—
U.S. certificates of deposit		15,286		—		15,286		—
U.S. municipal securities		160,551		—		160,551		—
Total marketable securities		923,028		—		923,028		—
	$	1,112,116	$	164,139	$	947,977	$	—


	December 31, 2022
	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Cash equivalents:
Money market funds	$	161,185	$	161,185	$	—	$	—
Total cash equivalents		161,185		161,185		—		—
Marketable securities:
U.S. government securities		302,911		—		302,911		—
U.S. corporate bonds		354,495		—		354,495		—
International corporate bonds		127,248		—		127,248		—
U.S. commercial paper		63,114		—		63,114		—
International commercial paper		133,163		—		133,163		—
U.S. certificates of deposit		15,613		—		15,613		—
U.S. municipal securities		113,250		—		113,250		—
Total marketable securities		1,109,794		—		1,109,794		—
	$	1,270,979	$	161,185	$	1,109,794	$	—

During the three months ended March 31, 2023 and 2022, there were no transfers among the Level 1, Level 2 and Level 3 categories.

The following tables summarize the gross unrealized gains and losses of the Company’s marketable securities as of March 31, 2023 and December 31, 2022:


	March 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Credit Losses		Fair Value
	(in thousands)
Assets:
U.S. government securities	$	234,555	$	282	$	(2,149	)	$	—	$	232,688
U.S. corporate bonds		269,052		66		(1,808	)		—		267,310
International corporate bonds		76,313		7		(554	)		—		75,766
U.S. commercial paper		62,529		2		(103	)		—		62,428
International commercial paper		109,180		—		(181	)		—		108,999
U.S. certificates of deposit		15,286		—		—			—		15,286
U.S. municipal securities		161,191		138		(778	)		—		160,551
	$	928,106	$	495	$	(5,573	)	$	—	$	923,028


	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Credit Losses		Fair Value
	(in thousands)
Assets:
U.S. government securities	$	307,173	$	—	$	(4,262	)	$	—	$	302,911
U.S. corporate bonds		358,019		6		(3,530	)		—		354,495
International corporate bonds		128,374		7		(1,133	)		—		127,248
U.S. commercial paper		63,234		—		(120	)		—		63,114
International commercial paper		133,338		—		(175	)		—		133,163
U.S. certificates of deposit		15,613		—		—			—		15,613
U.S. municipal securities		114,249		31		(1,030	)		—		113,250
	$	1,120,000	$	44	$	(10,250	)	$	—	$	1,109,794

The following tables summarize the fair value and the unrealized losses of the Company’s marketable securities that have been in a loss position for either less than twelve months or greater than twelve months as of March 31, 2023 and December 31, 2022:


	March 31, 2023
	Less than 12 months					Greater than 12 months					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(in thousands)
U.S. government securities	$	59,680	$	(548	)	$	108,845	$	(1,601	)	$	168,525	$	(2,149	)
U.S. corporate bonds		144,665		(978	)		88,097		(830	)		232,762		(1,808	)
International corporate bonds		36,432		(213	)		35,015		(341	)		71,447		(554	)
U.S. commercial paper		36,712		(103	)		—		—			36,712		(103	)
International commercial paper		95,624		(181	)		—		—			95,624		(181	)
U.S. municipal securities		57,307		(299	)		22,014		(479	)		79,321		(778	)
	$	430,420	$	(2,322	)	$	253,971	$	(3,251	)	$	684,391	$	(5,573	)


	December 31, 2022
	Less than 12 months					Greater than 12 months					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(in thousands)
U.S. government securities	$	112,243	$	(1,517	)	$	185,691	$	(2,745	)	$	297,934	$	(4,262	)
U.S. corporate bonds		208,507		(1,989	)		130,633		(1,541	)		339,140		(3,530	)
International corporate bonds		50,982		(497	)		68,993		(636	)		119,975		(1,133	)
U.S. commercial paper		24,768		(120	)		—		—			24,768		(120	)
International commercial paper		30,987		(175	)		—		—			30,987		(175	)
U.S. municipal securities		86,251		(497	)		14,466		(533	)		100,717		(1,030	)
	$	513,738	$	(4,795	)	$	399,783	$	(5,455	)	$	913,521	$	(10,250	)

As of March 31, 2023 and December 31, 2022, the unrealized losses on the Company’s investments in U.S. government securities, U.S. corporate bonds, and international corporate bonds were caused by interest rate increases. The Company purchased those investments at a premium relative to their face amount. The current credit ratings are all within the guidelines of the investment policy of the Company and the Company does not expect the issuers to settle any security at a price less than the amortized cost basis of the investment. The Company does not intend to sell the investments and it is not probable that the Company will be required to sell the investments before recovery of their amortized cost basis.

As of March 31, 2023, all marketable securities held by the Company had remaining contractual maturities of one year or less, except for U.S. government securities, U.S. corporate bonds, international corporate bonds and municipal securities with a fair value of $186.3 million and maturities of one to two years.

As of December 31, 2022, all marketable securities held by the Company had remaining contractual maturities of one year or less, except for U.S. government securities, U.S. corporate bonds, international corporate bonds and municipal securities with a fair value of $211.2 million and maturities of one to two years.

All marketable securities, including those with remaining contractual maturities of more than one year, are classified as current assets on the balance sheet because they are considered to be “available for sale” and the Company can convert them into cash to fund current operations.

There have been no impairments of the Company’s assets measured and carried at fair value during the three months ended March 31, 2023 and the year ended December 31, 2022.