Marketable Securities and Fair Value Measurements

9 Months Ended

Sep. 30, 2019

Marketable Securities and Fair Value Measurements

3. Marketable Securities and Fair Value Measurements

Marketable Securities

As of September 30, 2019 and December 31, 2018, all of the Company’s marketable securities were classified as available-for-sale and their estimated fair values were $6.0 million and $120.8 million, respectively. The Company periodically reviews its available-for-sale securities for other-than-temporary impairment. The Company considers factors such as the duration, severity and the reason for the decline in value, the potential recovery period, and its intent to sell. As of September 30, 2019, the Company’s available-for-sale securities primarily consisted of corporate bonds and other government obligations that are priced at fair value. During the three and nine months ended September 30, 2019 and 2018, the Company did not recognize any other-than-temporary impairment losses. The maturities of the Company’s long-term marketable securities generally range from one to two years. The cost basis of a marketable security sold is determined by the Company using the specific identification method. During the three and nine months ended September 30, 2019 and 2018, the Company did not have any realized gains or losses.

The following tables present details of the Company’s marketable securities as of September 30, 2019 and December 31, 2018 (in thousands):



	September 30, 2019
	Amortized Cost		Gross Unrealized Losses			Estimated Fair Value
Short-term:
Investment securities	$	6,055	$	(6	)	$	6,049
Total	$	6,055	$	(6	)	$	6,049



	December 31, 2018
	Amortized Cost		Gross Unrealized Losses			Estimated Fair Value
Short-term:
Investment securities	$	114,402	$	(124	)	$	114,278
Long-term:
Investment securities	6,603		(77		)	6,526
Total	$	121,005	$	(201	)	$	120,804

Fair Value Measurements

The Company's financial assets and liabilities are measured at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The three levels of inputs used to measure fair value are as follows:


▪	Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities


▪	Level 2—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 inputs other than quoted prices that are observable or can be corroborated by observable market data for substantially the full-term of the asset or liability


▪	Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The Company measures its cash equivalents and short-term and long-term investments at fair value. The Company classifies its cash equivalents and restricted cash within Level 1 because the Company values these investments using quoted market prices. The fair value of the Company's Level 1 financial assets is based on quoted market prices of the identical underlying security. The Company classifies short-term and long-term investments within Level 2 because unadjusted quoted prices for identical or similar assets in markets are not active. The Company does not have any assets or liabilities classified as Level 3 financial assets.

The following tables set forth the fair value of the Company’s financial assets measured at fair value on a recurring basis as of September 30, 2019 and December 31, 2018 based on the three-tier value hierarchy (in thousands):



	September 30, 2019
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds and other funds	$	1,214,845	$	—	$	—	$	1,214,845
Short-term investments:
Investment securities	—		6,049		—		6,049
Other non-current assets:
Certificate of deposit	5,076		—		—		5,076
Total	$	1,219,921	$	6,049	$	—	$	1,225,970



	December 31, 2018
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	715,086	$	—	$	—	$	715,086
Short-term investments:
Investment securities	—		114,278		—		114,278
Other non-current assets:
Certificate of deposit	5,000		—		—		5,000
Long-term:
Investment securities	—		6,526		—		6,526
Total	$	720,086	$	120,804	$	—	$	840,890

- Definition

Disclosure of marketable securities and 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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