FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 10. FAIR VALUE MEASUREMENTS

Assets and liabilities measured at fair value on a recurring basis

The Company records its cash equivalents, marketable securities, Capped Call Transactions, and venture investments at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants based on assumptions that market participants would use in pricing an asset or liability.

As a basis for classifying the fair value measurements, a three-tier fair value hierarchy, which classifies the fair value measurements based on the inputs used in measuring fair value, was established as follows:

•Level 1 - observable inputs, such as quoted prices in active markets for identical assets or liabilities;

•Level 2 - significant other inputs that are observable either directly or indirectly; and

•Level 3 - significant unobservable inputs with little or no market data, which require the Company to develop its own assumptions.

This hierarchy requires the Company to use observable market data when available and minimize unobservable inputs when determining fair value.

The fair value of the Capped Call Transactions at the end of each reporting period is determined using a Black-Scholes option-pricing model. The valuation model uses various market-based inputs, including stock price, remaining contractual term, expected volatility, risk-free interest rate, and expected dividend yield. The Company applies judgment when determining expected volatility. The Company considers the underlying equity security’s historical and implied volatility levels. The Company’s venture investments are recorded at fair value based on multiple valuation methods, including observable public companies and transaction prices and unobservable inputs, including the volatility, rights, and obligations of the securities the Company holds.

Assets and liabilities measured at fair value on a recurring basis:

	June 30, 2024								December 31, 2023
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash equivalents	$	18,345	$	—	$	—	$	18,345	$	54,357	$	—	$	—	$	54,357
Marketable securities	$	—	$	406,819	$	—	$	406,819	$	—	$	193,436	$	—	$	193,436
Capped Call Transactions	$	—	$	915	$	—	$	915	$	—	$	893	$	—	$	893
Venture investments (1)	$	—	$	—	$	21,047	$	21,047	$	—	$	—	$	19,450	$	19,450

(1) Investments in privately-held companies

Changes in venture investments:

	Six Months Ended June 30,
(in thousands)	2024		2023
January 1,	$	19,450	$	13,069
New investments	350		400
Sales of investments	—		(2,773)
Changes in foreign exchange rates	(19)		119
Changes in fair value:
included in other income, net	1,628		4,475
included in other comprehensive income (loss)	(362)		(1,908)
June 30,	$	21,047	$	13,382

The carrying value of certain financial instruments, including receivables and accounts payable, approximates fair value due to their short maturities.

Fair value of the Convertible Senior Notes

The fair value of the Notes outstanding (including the embedded conversion feature) was $485.3 million as of June 30, 2024, and $466.5 million as of December 31, 2023.

The fair value was determined based on the Notes’ quoted price in an over-the-counter market on the last trading day of the reporting period and classified within Level 2 in the fair value hierarchy.