FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2022

FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the price that would be received for an asset or the “exit price” that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between independent market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy, which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. This hierarchy prioritizes the inputs into three broad levels as follows:

•Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities.

•Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3—Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. Factors used to develop the estimated fair value are unobservable inputs that are not supported by market activity. The sensitivity of the fair value measurement to changes in unobservable inputs may result in a significantly higher or lower measurement.

Cash, cash equivalents and investments are reported at their respective fair values on the Company's condensed consolidated balance sheets. The Company's short-term and long-term investments are classified as available-for-sale.

The following table sets forth the Company’s financial assets subject to fair value measurements on a recurring basis by level within the fair value hierarchy as of June 30, 2022 and December 31, 2021 (in thousands):


	June 30, 2022
									Reported As:
	Amortized cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Cash and cash equivalents		Short-Term Investments		Long-Term Investments
Cash	$	179,950	$	—	$	—	$	179,950	$	179,950	$	—	$	—
Level 1:
Money market funds	2,710,148		—				2,710,148		2,710,148		—		—
U.S. Treasury securities	945,082		518		(876)		944,724		65,002		684,916		194,806
Subtotal	3,655,230		518		(876)		3,654,872		2,775,150		684,916		194,806
Level 2:
U.S. government agency securities	6,910		—		(1)		6,909		6,909		—		—
Certificates of deposit	221,573		11		(41)		221,543		20,999		200,544		—
Commercial paper	314,453		12		(171)		314,294		173,404		140,890		—
Corporate debt securities	194,712		54		(197)		194,569		1,037		110,283		83,249
Subtotal	737,648		77		(410)		737,315		202,349		451,717		83,249
Total assets measured at fair value	$	4,572,828	$	595	$	(1,286)	$	4,572,137	$	3,157,449	$	1,136,633	$	278,055


	December 31, 2021
	Reported As:
	Cash and cash equivalents
Cash	$	160,888
Level 1:
Money market funds	6,102,017
Total assets measured at fair value	$	6,262,905

During the three and six months ended June 30, 2022, there were no realized gains or losses on the sale of available-for-sale securities. Accrued interest receivable excluded from both the fair value and amortized cost basis of the available-for-sale securities was $4.2 million as of June 30, 2022, and is recorded in Other current assets on our condensed consolidated balance sheets. As of June 30, 2022, no allowance for credit losses was recorded related to an impairment of available-for-sale securities.

The following table summarizes our available-for-sale securities by contractual maturity:


	June 30, 2022
	Amortized cost		Estimated Fair Value
Within one year	$	1,137,726	$	1,136,633
After one year through three years	277,646		278,055
Total	$	1,415,372	$	1,414,688

Level 3 liabilities consist of convertible preferred stock warrant liability, contingent forward contract liability and common stock warrant liability, of which the fair value was measured upon issuance and is remeasured at each reporting date. The valuation methodology and underlying assumptions are discussed further in Note 7 “Contingent Forward Contracts,” Note 8 “Convertible Preferred Stock Warrant Liability” and Note 9 “Common Stock Warrant Liability”. Significant increases (decreases) in the unobservable inputs used in determining the fair value would result in a significantly higher (lower) fair value measurement. The following table presents a reconciliation of the contingent forward contract liability, convertible preferred stock warrant liability and common stock warrant liability measured and recorded at fair value on a recurring basis (in thousands):


	Three Months Ended June 30,
	2022		2021
	Common Stock Warrant Liability		Contingent Forward Contract Liability (1)
Fair value-beginning of period	$	871,478	$	1,164,610
Change in fair value	(334,843)		12,382
Settlement	—		(1,176,992)
Fair value-end of period	$	536,635	$	—


	Six Months Ended June 30,
	2022		2021
	Common Stock Warrant Liability		Contingent Forward Contract Liability (1)		Convertible Preferred Stock Warrant Liability (1)
Fair value-beginning of period	$	1,394,808	$	—	$	2,960
Issuance	—		2,167,332		—
Change in fair value	(858,173)		454,546		6,976
Settlement	—		(2,621,878)		(9,936)
Fair value-end of period	$	536,635	$	—	$	—

(1) Convertible preferred stock warrant liability and contingent forward contract liability were fully settled during the six months ended June 30, 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.

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