Fair Value Measurements

6 Months Ended

Jun. 30, 2019

The following is a summary of available-for-sale marketable securities held as of June 30, 2019 and December 31, 2018 (in thousands):



			Gross Unrealized							Classification on Balance Sheet
	Amortized Cost		Gains		Losses			Aggregate Fair Value		Short-Term Marketable Securities		Long-Term Marketable Securities
As of June 30, 2019
Commercial paper	$	13,558	$	22	$	—		$	13,580	$	13,580	$	—
Corporate bonds	710,794		915		(691		)	711,018		442,522		268,496
U.S. government agency obligations	75,257		19		(57		)	75,219		70,215		5,004
	$	799,609	$	956	$	(748	)	$	799,817	$	526,317	$	273,500

As of December 31, 2018
Certificates of deposit	$	40,000	$	—	$	(7	)	$	39,993	$	39,993	$	—
Commercial paper	282,996		—		(50		)	282,946		282,946		—
Corporate bonds	685,653		1		(4,309		)	681,345		482,088		199,257
U.S. government agency obligations	50,876		—		(404		)	50,472		50,472		—
	$	1,059,525	$	1	$	(4,770	)	$	1,054,756	$	855,499	$	199,257

The Company offers certain eligible employees the ability to participate in a non-qualified deferred compensation plan. The mutual funds held by the Company that are associated with this plan are classified as restricted trading securities. These securities are not included in the available-for-sale securities table above but are included in marketable securities in the consolidated balance sheets.

Unrealized gains and unrealized temporary losses on investments classified as available-for-sale are included within accumulated other comprehensive loss in the consolidated balance sheets. Upon realization, those amounts are reclassified from accumulated other comprehensive loss to interest income in the consolidated statements of income. As of June 30, 2019, the Company held for investment corporate and government bonds with a fair value of $293.9 million, which are classified as

available-for-sale marketable securities and have been in a continuous unrealized loss position for more than 12 months. The unrealized losses of $0.6 million related to these corporate and government bonds are included in accumulated other comprehensive income as of June 30, 2019. The unrealized losses are attributable to changes in interest rates. Based on the evaluation of available evidence, the Company does not believe any unrealized losses represent other than temporary impairments.

The following table details the fair value measurements within the fair value hierarchy of the Company’s financial assets and liabilities as of June 30, 2019 and December 31, 2018 (in thousands):



	Total Fair Value			Fair Value Measurements at Reporting Date Using
	Total Fair Value			Level 1		Level 2		Level 3
As of June 30, 2019
Cash Equivalents and Marketable Securities:
Money market funds	$	2,550		$	2,550	$	—	$	—
Commercial paper	13,580			—		13,580		—
Corporate bonds	711,018			—		711,018		—
U.S. government agency obligations	75,219			—		75,219		—
Mutual funds	13,825			13,825		—		—
	$	816,192		$	16,375	$	799,817	$	—

As of December 31, 2018
Cash Equivalents and Marketable Securities:
Money market funds	$	380,260		$	380,260	$	—	$	—
Certificates of deposit	39,993			39,993		—		—
Commercial paper	282,946			—		282,946		—
Corporate bonds	681,345			—		681,345		—
U.S. government agency obligations	50,472			—		50,472		—
Mutual funds	10,016			10,016		—		—
	$	1,445,032		$	430,269	$	1,014,763	$	—

Liabilities:
Contingent consideration related to a completed acquisition	$	(6,300	)	$	—	$	—	$	(6,300	)

As of June 30, 2019 and December 31, 2018, the Company grouped certificates of deposit, money market funds and mutual funds using a Level 1 valuation because market prices for such investments are readily available in active markets. As of June 30, 2019 and December 31, 2018, the Company grouped commercial paper, corporate bonds and U.S. government agency obligations using a Level 2 valuation because quoted prices for identical or similar assets are available in markets that are inactive. The Company did not have any transfers of assets between Level 1, Level 2 or Level 3 of the fair value measurement hierarchy during the six months ended June 30, 2019.

When developing fair value estimates, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs. When available, the Company uses quoted market prices to measure fair value. The valuation technique used to measure fair value for the Company's Level 1 and Level 2 assets is a market approach, using prices and other relevant information generated by market transactions involving identical or comparable assets. If market prices are not available, the fair value measurement is based on models that primarily use market-based parameters including yield curves, volatilities, credit ratings and currency rates. In certain cases where market rate assumptions are not available, the Company is required to make judgments about assumptions market participants would use to estimate the fair value of a financial instrument.

The valuation technique used to measure fair value of the Company's Level 3 liabilities, which consist of contingent consideration related to the acquisition of Cyberfend, Inc. in 2016, was primarily an income-based approach. The significant unobservable input used in the fair value measurement of the contingent consideration was the likelihood of achieving certain post-closing financial results.

Contractual maturities of the Company’s available-for-sale marketable securities held as of June 30, 2019 and December 31, 2018 were as follows (in thousands):



	June 30, 2019		December 31, 2018
Due in 1 year or less	$	526,317	$	855,499
Due after 1 year through 3 years	273,500		199,257
	$	799,817	$	1,054,756

The following table reflects the activity for the Company’s major classes of liabilities measured at fair value using Level 3 inputs during the six months ended June 30, 2019 (in thousands):



	Other Liabilities: Contingent Consideration Obligation
Balance as of January 1, 2019	$	(6,300	)
Cash paid upon achievement of milestone	6,300
Balance as of June 30, 2019	$	—