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Fair Value Measurements
12 Months Ended
Dec. 31, 2022
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 4 — Fair Value Measurements

We value our financial assets and liabilities at fair value, defined as the price that would be received for assets when sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We utilize market data or assumptions that we believe market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable.

We primarily apply the market approach for recurring fair value measurements and endeavor to utilize the best information reasonably available. Accordingly, we use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and consider the security issuers’ and the third-party issuers’ credit risk in our assessment of fair value.

We classify fair value based on the observability of those inputs using a hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement):

Level 1 — Observable inputs, such as quoted prices in active markets for identical assets or liabilities;

Level 2 — Inputs, other than the quoted prices in active markets, that are observable either directly or through corroboration with observable market data; and

Level 3 — Unobservable inputs, for which there is little or no market data for the assets or liabilities, such as internally-developed valuation models.

Fair Value of Financial Assets

The follow tables set forth the fair value of our financial assets, which consist of cash equivalents and investments classified as available-for-sale securities, that were measured on a recurring basis (in thousands):

 

 

December 31, 2022

 

 

 

Fair Value Hierarchy Level

 

Amortized
Cost

 

 

Unrealized
Gains

 

 

Unrealized
Losses

 

 

Fair
Value

 

Money market funds

 

Level 1

 

$

45,887

 

 

$

 

 

$

 

 

$

45,887

 

U.S. Treasury securities

 

Level 1

 

 

172,568

 

 

 

 

 

 

(1,102

)

 

 

171,466

 

U.S. Treasury securities backed repurchase agreements

 

Level 2

 

 

16,003

 

 

 

 

 

 

 

 

 

16,003

 

U.S. and non-U.S. government agency bonds

 

Level 2

 

 

136,773

 

 

 

12

 

 

 

(889

)

 

 

135,896

 

Commercial paper

 

Level 2

 

 

329,359

 

 

 

28

 

 

 

(431

)

 

 

328,956

 

U.S. and non-U.S. corporate obligations

 

Level 2

 

 

128,594

 

 

 

 

 

 

(1,209

)

 

 

127,385

 

 

 

 

 

$

829,184

 

 

$

40

 

 

$

(3,631

)

 

$

825,593

 

 

 

 

December 31, 2021

 

 

 

Fair Value Hierarchy Level

 

Amortized
Cost

 

 

Unrealized
Gains

 

 

Unrealized
Losses

 

 

Fair
Value

 

Money market funds

 

Level 1

 

$

115,937

 

 

$

 

 

$

 

 

$

115,937

 

U.S. Treasury securities

 

Level 1

 

 

133,498

 

 

 

1

 

 

 

(268

)

 

 

133,231

 

U.S. government agency bonds

 

Level 2

 

 

33,489

 

 

 

 

 

 

(53

)

 

 

33,436

 

Commercial paper

 

Level 2

 

 

169,622

 

 

 

6

 

 

 

(19

)

 

 

169,609

 

U.S. and non-U.S. corporate obligations

 

Level 2

 

 

175,282

 

 

 

 

 

 

(536

)

 

 

174,746

 

 

 

 

 

$

627,828

 

 

$

7

 

 

$

(876

)

 

$

626,959

 

 

The available-for-sale securities in our consolidated balance sheet are as follows (in thousands):

 

 

December 31, 2022

 

 

December 31, 2021

 

Cash equivalents

 

$

61,890

 

 

$

115,937

 

Short-term investments

 

 

716,995

 

 

 

358,972

 

Long-term investments

 

 

46,708

 

 

 

152,050

 

 

 

$

825,593

 

 

$

626,959

 

Interest income was $11.4 million, $1.0 million, and $5.3 million in 2022, 2021, and 2020, respectively.

No credit losses on debt securities were recognized in either 2022 or 2021. In its evaluation to determine expected credit losses, management considered all available historical and current information, expectations of future economic conditions, the type of security, the credit rating of the security, and the size of the loss position, as well as other relevant information. The Company does not intend to sell, and is unlikely to be required to sell, any of these available-for-sale investments before their effective maturity or market price recovery.

The carrying amount of our accounts receivable and accounts payable approximate fair value due to the short-term nature of these instruments.

There were no transfers between Level 1, Level 2, and Level 3 during the periods presented.