Fair Value Measurements

9 Months Ended

Sep. 30, 2023

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy has been established based on three levels of inputs, of which the first two are considered observable and the last unobservable.

Level 1: Quoted prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets.

Level 2: Inputs, other than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly. These are typically obtained from readily-available pricing sources for comparable instruments.

Level 3: Unobservable inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s own assumptions of the data that market participants would use in pricing the asset or liability, based on the best information available in the circumstances.

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

The Company measures certain financial assets at fair value on a recurring basis, including its marketable securities and certain cash equivalents. The Company considers all securities available-for-sale, including those with maturity dates beyond 12 months, and therefore these securities are classified within current assets on the Consolidated Balance Sheets as they are available to support current operational liquidity needs. The money market accounts are valued based on quoted market prices in active markets and are included in cash and cash equivalents on the Consolidated Balance Sheets. The marketable securities are generally valued based on other observable inputs for those securities (including market corroborated pricing or other models that utilize observable inputs such as interest rates and yield curves) based on information provided by independent third-party pricing entities, except for U.S. Treasury securities which are valued based on quoted market prices in active markets.

The following tables set forth the amortized cost, gross unrealized gains, gross unrealized losses and fair values of the Company’s marketable securities accounted for as available-for-sale securities as of September 30, 2023 and December 31, 2022.


	September 30, 2023
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Financial Assets:
Short-term marketable securities:
U.S. Treasury securities	$	25,850	$	—	$	(175)	$	25,675

Yankee bonds	2,605		—		(37)		2,568
Agency bonds	6,041		—		(98)		5,943
Municipal bonds	12,731		—		(828)		11,903
Commercial paper	2,973		—		—		2,973
Asset-backed securities	9,235		—		(90)		9,145
Corporate bonds	38,977		—		(1,159)		37,818
Total	$	98,412	$	—	$	(2,387)	$	96,025


	December 31, 2022
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Financial Assets:
Short-term marketable securities:
U.S. Treasury securities	$	56,426	$	—	$	(651)	$	55,775
Yankee bonds	5,358		—		(92)		5,266
Agency bonds	12,485		—		(116)		12,369
Municipal bonds	12,841		—		(1,030)		11,811
Commercial paper	2,846		8		—		2,854
Asset-backed securities	25,544		2		(427)		25,119
Corporate bonds	63,748		3		(2,136)		61,615
Total	$	179,248	$	13	$	(4,452)	$	174,809

The Company had $1.6 million and $0.9 million of accrued interest receivable at September 30, 2023 and December 31, 2022, respectively, included in other current assets on its Consolidated Balance Sheets related to its marketable securities. There were no realized gains or losses on marketable securities for the three and nine months ended September 30, 2023. Realized gains or losses for the three and nine months ended September 30, 2022 were immaterial.

The following tables set forth the fair value of available-for-sale marketable securities by contractual maturity at September 30, 2023 and December 31, 2022.


	September 30, 2023
(in thousands)	One Year or Less		Over One Year Through Five Years		Over Five Years		Total
Financial Assets:
Marketable Securities:
U.S. Treasury securities	$	25,675	$	—	$	—	$	25,675

Yankee bonds	2,568		—		—		2,568
Agency bonds	3,572		2,371		—		5,943
Municipal bonds	2,962		8,941		—		11,903
Commercial paper	2,973		—		—		2,973
Asset-backed securities	9,145		—		—		9,145
Corporate bonds	25,210		12,608		—		37,818
Total	$	72,105	$	23,920	$	—	$	96,025


	December 31, 2022
(in thousands)	One Year or Less		Over One Year Through Five Years		Over Five Years		Total
Financial Assets:
Marketable Securities:
U.S. Treasury securities	$	40,795	$	14,980	$	—	$	55,775
Yankee bonds	2,734		2,532		—		5,266
Agency bonds	6,470		5,899		—		12,369
Municipal bonds	—		11,811		—		11,811
Commercial paper	2,854		—		—		2,854
Asset-backed securities	23,179		1,940		—		25,119
Corporate bonds	35,377		26,238		—		61,615
Total	$	111,409	$	63,400	$	—	$	174,809

The following tables set forth the Company’s cash equivalents and marketable securities accounted for as available-for-sale securities that were measured at fair value on a recurring basis based on the fair value hierarchy as of September 30, 2023 and December 31, 2022.


	September 30, 2023
(in thousands)	Level 1		Level 2		Level 3		Total
Financial Assets:
Cash equivalents:
Money market funds	$	299,539	$	—	$	—	$	299,539


Marketable securities:
U.S. Treasury securities	25,675		—		—		25,675

Yankee bonds	2,568		—		—		2,568
Agency bonds	5,943		—		—		5,943
Municipal bonds	11,903		—		—		11,903
Commercial paper	—		2,973		—		2,973
Asset-backed securities	—		9,145		—		9,145
Corporate bonds	—		37,818		—		37,818
Total	$	345,628	$	49,936	$	—	$	395,564


	December 31, 2022
(in thousands)	Level 1		Level 2		Level 3		Total
Financial Assets:
Cash equivalents:
Money market funds	$	196,749	$	—	$	—	$	196,749

Commercial paper	—		36,965		—		36,965
Marketable securities:
U.S. Treasury securities	55,775		—		—		55,775
Yankee bonds	5,266		—		—		5,266
Agency bonds	12,369		—		—		12,369
Municipal bonds	11,811		—		—		11,811
Commercial paper	—		2,854		—		2,854
Asset-backed securities	—		25,119		—		25,119
Corporate bonds	—		61,615		—		61,615
Total	$	281,970	$	126,553	$	—	$	408,523

There were no transfers of financial assets or liabilities into or out of Level 1, Level 2, or Level 3 for the three and nine months ended September 30, 2023 and September 30, 2022.

The carrying value of cash and cash equivalents, accounts receivable, net, accounts payable, accrued expenses and other liabilities, and other current assets and liabilities, are considered reasonable estimates of their respective fair values at September 30, 2023 and December 31, 2022 due to their short-term nature.

- 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