Fair Value Measurements

9 Months Ended

Sep. 30, 2020

Instruments Measured at Fair Value on a Recurring Basis. The following tables present our cash and cash equivalents’ and investments’ costs, gross unrealized gains (losses), and fair value by major security type recorded as cash and cash equivalents or short-term or long-term investments as of September 30, 2020 and December 31, 2019 (in thousands):


	As of September 30, 2020
	Cost		Net Unrealized Gains		Fair Value		Cash and Cash Equivalents		Short-term Investments		Long-term Investments
Cash	$	49,548	$	—	$	49,548	$	49,548	$	—	$	—
Level 1:
Money market funds	$	31,433	$	—	$	31,433	$	31,433	$	—	$	—
Subtotal	$	31,433	$	—	$	31,433	$	31,433	$	—	$	—
Level 2:
Commercial paper	$	116,849	$	22	$	116,871	$	14,971	$	101,900	$	—
Certificates of deposit	2,800		—		2,800		—		2,800		—
U.S. Treasury and agency bonds	592,734		1,723		594,457		—		393,501		200,956
Corporate bonds	186,738		641		187,379		—		129,058		58,321
Subtotal	$	899,121	$	2,386	$	901,507	$	14,971	$	627,259	$	259,277
Level 3:	$	—	$	—	$	—	$	—	$	—	$	—
Total	$	980,102	$	2,386	$	982,488	$	95,952	$	627,259	$	259,277

	As of December 31, 2019
	Cost		Net Unrealized Gains (Losses)		Fair Value		Cash and Cash Equivalents		Short-term Investments		Long-term Investments
Cash	$	53,039	$	—	$	53,039	$	53,039	$	—	$	—
Level 1:
Money market funds	$	223,580	$	—	$	223,580	$	223,580	$	—	$	—
Subtotal	$	223,580	$	—	$	223,580	$	223,580	$	—	$	—
Level 2:
Commercial paper	$	217,140	$	(6)	$	217,134	$	98,325	$	118,809	$	—
Certificates of deposit	1,000		—		1,000		—		—		1,000
U.S. Treasury and agency bonds	294,953		199		295,152		35,005		161,767		98,380
Corporate bonds	184,516		444		184,960		—		96,419		88,541
Subtotal	$	697,609	$	637	$	698,246	$	133,330	$	376,995	$	187,921
Level 3:	$	—	$	—	$	—	$	—	$	—	$	—
Total	$	974,228	$	637	$	974,865	$	409,949	$	376,995	$	187,921

All long-term investments had maturities of between one and two years in duration as of September 30, 2020. Cash and cash equivalents, restricted cash, and investments as of September 30, 2020 and December 31, 2019 held domestically were approximately $968.4 million and $963.4 million, respectively.

As of January 1, 2020, we did not have an allowance for credit losses related to our available-for-sale securities, which are comprised of fixed income securities, certificates of deposit, and money market funds. Our fixed income securities, which are predominantly high-grade corporate bonds, U.S. Treasury bonds, and U.S. Agency bonds, hold similar risk characteristics in that they are traded infrequently, with contractual interest rates and maturity dates. Our certificates of deposit have infrequent secondary market trades and are priced mathematically based on accretion or amortization from purchase date to maturity. Money market funds are actively traded and short-term, and, as a result, the risk for these securities is lower than the risk associated with fixed income securities and certificates of deposit. As a result of our adoption of ASC 326 effective January 1, 2020, we determined that the gross unrealized losses of $0.1 million as of January 1, 2020 were not related to credit losses and, as a result, were recorded in accumulated other comprehensive income (loss) in our condensed consolidated balance sheets.

As of September 30, 2020, we had gross unrealized losses of less than $0.1 million with respect to our available-for-sale securities, and we do not intend to sell, nor is it more likely than not that we will be required to sell, these investments before recovery of their amortized cost basis. These gross unrealized losses were classified in accumulated other comprehensive income (loss) in our condensed consolidated balance sheets as of September 30, 2020.

Instruments Not Recorded at Fair Value on a Recurring Basis. As of September 30, 2020, the fair value of our Notes (as defined in Note 8, Convertible Senior Notes) was $1.0 billion. The carrying amounts of our cash, accounts receivable, prepaid expenses and other current assets, accounts payable, and accrued liabilities approximate their current fair value because of their nature and relatively short maturity dates or durations.

- 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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