Fair Value Measurements

9 Months Ended

Sep. 30, 2022

Fair value accounting is applied for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. At September 30, 2022 and December 31, 2021, the carrying amount of cash and cash equivalents, accounts receivable, other current assets, other assets, accounts payable, and accrued and other current liabilities approximated their estimated fair value due to their relatively short maturities. The carrying amounts of borrowings under a certain credit agreement approximate fair value as interest rates on these instruments are variable and approximate current market rates. The following table sets forth the Company’s financial instruments that were measured at fair value by level within the fair value hierarchy on a recurring basis as of the dates indicated (in thousands):


				As of September 30, 2022
	Balance Sheet Location	Total		Level 1		Level 2		Level 3
Financial Assets:
Unrestricted Balances
Money market funds(1)	Cash and cash equivalents	$	723,394	$	723,394	$	—	$	—
Total financial assets		$	723,394	$	723,394	$	—	$	—


				As of December 31, 2021
	Balance Sheet Location	Total		Level 1		Level 2		Level 3
Financial Assets:
Unrestricted Balances
Money market funds(1)	Cash and cash equivalents	$	1,070,979	$	1,070,979	$	—	$	—
Marketable equity securities	Prepaid expenses and other current assets	$	2,532	$	2,532	$	—	$	—
Restricted Balances
Money market funds	Restricted cash equivalents	$	1,050,000	$	1,050,000	—		—
Total financial assets		$	2,123,511	$	2,123,511	$	—	$	—

(1) Includes balances in money market deposit accounts of $535.4 million and $921.0 million as of September 30, 2022 and December 31, 2021, respectively.

Non-Marketable Equity Securities Measured at Net Asset Value

The Company held equity interests in certain private equity funds of $20.6 million and $3.2 million as of September 30, 2022 and December 31, 2021, respectively, which are measured using the net asset value practical expedient. Under the net asset value practical expedient, the Company records investments based on the proportionate share of the underlying funds’ net asset value as of the Company's reporting date. These investments are included in other assets in the Company’s condensed consolidated balance sheets.

These funds vary in investment strategies and generally have an initial term of 7 to 10 years, which may be extended for 2 to 3 additional years with the applicable approval. These investments are subject to certain restrictions regarding transfers and withdrawals and generally cannot be redeemed with the funds. Distributions from the funds will be received as the underlying investments are liquidated. The Company’s maximum exposure to loss is limited to the carrying value of these investments of $20.6 million and the unfunded commitments of $36.1 million as of September 30, 2022.

During the three and nine months ended September 30, 2022, the Company made total capital contributions of $0.1 million and $18.6 million related to these investments. The Company recorded an unrealized gain of $0.8 million related to these investments in other income, net in the Company’s condensed consolidated statement of operations for the nine months ended September 30, 2022. The unrealized loss of these investments for the three months ended September 30, 2022 was immaterial. The Company had no such investments in 2021.

Non-Marketable Equity Securities Measured at Fair Value on a Non-Recurring Basis

During the second quarter of 2022, the Company purchased certain non-marketable equity securities for total proceeds of $38.0 million. Non-marketable equity securities are investments in privately held companies without readily determinable fair values. The Company elected the measurement alternative to account for these investments. Under the measurement alternative, the carrying value of the non-marketable equity securities are adjusted based on price changes from observable transactions of identical or similar securities of the same issuer or for impairment. Any changes in carrying value are recorded within other income (expense), net in the Company's condensed consolidated statement of operations. There was no change in the carrying value of the non-marketable equity securities since their acquisitions. These investments are included in other assets in the Company’s condensed consolidated balance sheets. The Company had no such investments in 2021.

- 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