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Fair Value Measurements (Tables)

9 Months Ended

Apr. 30, 2022

Schedule of Financial Assets and Liabilities Measured on Recurring Basis

The fair value of our financial assets measured on a recurring basis is as follows:


	As of July 31, 2021
	Level I		Level II		Level III		Total
	(in thousands)
Financial Assets:
Cash equivalents:
Money market funds	$	72,583	$	—	$	—	$	72,583
Commercial paper		—		29,997		—		29,997
Corporate bonds		—		2,002		—		2,002
Short-term investments:
Corporate bonds		—		513,688		—		513,688
Commercial paper		—		347,088		—		347,088
U.S. Government securities		—		67,230		—		67,230
Total measured at fair value	$	72,583	$	960,005	$	—	$	1,032,588
Cash								181,141
Total cash, cash equivalents and short-term investments							$	1,213,729


	As of April 30, 2022
	Level I		Level II		Level III		Total
	(in thousands)
Financial Assets:
Cash equivalents:
Money market funds	$	45,423	$	—	$	—	$	45,423
U.S. Government securities		—		14,490		—		14,490
Commercial paper		—		64,958		—		64,958
Corporate bonds		—		5,004		—		5,004
Short-term investments:
Corporate bonds		—		407,865		—		407,865
Commercial paper		—		304,329		—		304,329
U.S. Government securities		—		201,707		—		201,707
Total measured at fair value	$	45,423	$	998,353	$	—	$	1,043,776
Cash								256,846
Total cash, cash equivalents and short-term investments							$	1,300,622

The carrying values and estimated fair values of financial instruments not recorded at fair value are as follows:


	As of July 31, 2021 (1)				As of April 30, 2022
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
	(in thousands)
2023 Notes	$	523,671	$	602,272	$	145,308	$	143,518
2026 Notes		532,023		1,128,953		579,426		967,975
2027 Notes (2)		—		—		566,624		466,009
Total	$	1,055,694	$	1,731,225	$	1,291,358	$	1,577,502

(1)

Prior period amounts have not been adjusted due to our adoption of ASU 2020-06 under the modified retrospective method. For additional information on our adoption of ASU 2020-06, refer to Note 1 and Note 5.

(2)

The 2027 Notes were issued in September 2021.

Schedule of Derivative Liabilities at Fair Value

The following table shows the change in the estimated fair value of the derivative liability through October 31, 2021:


	Three Months Ended October 31, 2021
	(in thousands)
Derivative liability at July 31, 2021	$	500,175
Change in fair value		198,038
Derivative liability at September 15, 2021		698,213
Reclass to equity upon conversion price becoming fixed		(698,213	)
Derivative liability at October 31, 2021	$	—

Fair Value Measurement Inputs and Valuation Techniques

We estimated the fair value of the derivative liability using a binomial model, with the following valuation inputs:


	As of
	July 31, 2021	September 15, 2021
Conversion ratio (1)	Conversion price of $27.75 with a 36.036 conversion rate per $1,000	Conversion price of $27.75 with a 36.036 conversion rate per $1,000
Risk-free rate	0.7%	0.8%
Discount rate (2)	6.5%	6.5%
Volatility	40.0%	45.0%
Stock price	$36.02	$42.77

(1)

The conversion ratio was calculated based on the achievement of the associated financial performance metric.

(2)

The discount rate was estimated based on the implied rate for the 2023 Notes as well as a credit analysis.