Investments and Fair Value Measurements

3 Months Ended

Mar. 31, 2023

Investments

Investments on the condensed consolidated balance sheets consisted of the following (in thousands):


	As of March 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value		Cash and Cash Equivalents		Short-term Investments
Available-for-sale debt securities:
U.S. treasury securities	$	9,915	$	—	$	(45)	$	—	$	9,870	$	—	$	9,870
U.S. government agency securities	122,410		73		(444)		—		122,039		—		122,039
Commercial paper	118,507		—		(115)		—		118,392		9,896		108,496
Corporate debt securities	157,993		77		(1,441)		—		156,629		—		156,629
Total	$	408,825	$	150	$	(2,045)	$	—	$	406,930	$	9,896	$	397,034


	As of December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value		Cash and Cash Equivalents		Short-term Investments
Available-for-sale debt securities:
U.S. treasury securities	$	9,843	$	—	$	(86)	$	—	$	9,757	$	—	$	9,757
U.S. government agency securities	97,139		34		(521)		—		96,652		—		96,652
Commercial paper	138,973		10		(207)		—		138,776		25,390		113,386
Corporate debt securities	159,045		55		(1,583)		—		157,517		—		157,517
Total	$	405,000	$	99	$	(2,397)	$	—	$	402,702	$	25,390	$	377,312

The fair value and amortized cost of the Company’s debt securities with a stated contractual maturity or redemption date were as follows (in thousands):


	As of March 31, 2023
	Amortized Cost		Fair Value
Due in one year or less	$	261,783	$	260,635
Due in one year through five years	147,042		146,295
Total	$	408,825	$	406,930

The Company purchases investment grade marketable debt securities rated by nationally recognized statistical credit rating organizations in accordance with its investment policy, which is designed to minimize the Company's exposure to credit losses. The Company regularly reviews its investment portfolios to determine if any investment is impaired due to changes in credit risk or other potential valuation concerns.

As of March 31, 2023, investments in an unrealized loss position for which an allowance for credit losses has not been recognized had an aggregate fair value of $359.0 million. None of these investments were in a continuous unrealized loss position for more than twelve months. The Company does not intend to sell these investments until the recovery of their amortized cost basis or maturity and further believes that it is not more-likely-than-not that it will be required to sell these investments. The unrealized losses were primarily related to changes in interest rates, market spreads, and market conditions subsequent to purchase. The Company believes none of these debt securities were impaired due to credit risk or other valuation concerns, and, therefore, did not record a credit loss or an allowance for credit losses.

Interest income from cash and cash equivalents and short-term investments was $0.5 million and $9.9 million for the three months ended March 31, 2022 and 2023, respectively.

Fair Value Measurements

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation (in thousands):


	As of March 31, 2023
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents:
Money market funds	$	424,480	$	424,480	$	—	$	—
Commercial paper	9,896		—		9,896		—
Total cash equivalents	$	434,376	$	424,480	$	9,896	$	—
Short-term investments:
U.S. treasury securities	$	9,870	$	9,870	$	—	$	—
U.S. government agency securities	122,039		—		122,039		—
Commercial paper	108,496		—		108,496		—
Corporate debt securities	156,629		—		156,629		—
Total short-term investments	$	397,034	$	9,870	$	387,164	$	—
Total	$	831,410	$	434,350	$	397,060	$	—


	As of December 31, 2022
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents:
Money market funds	$	530,674	$	530,674	$	—	$	—
Commercial paper	25,390		—		25,390		—
Total cash equivalents	$	556,064	$	530,674	$	25,390	$	—
Short-term investments:
U.S. treasury securities	$	9,757	$	9,757	$	—	$	—
U.S. government agency securities	96,652		—		96,652		—
Commercial paper	113,386		—		113,386		—
Corporate debt securities	157,517		—		157,517		—
Total short-term investments	$	377,312	$	9,757	$	367,555	$	—
Total	$	933,376	$	540,431	$	392,945	$	—

- 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