Fair Value Measurements

9 Months Ended

Sep. 30, 2021

The following is a summary of available-for-sale marketable securities held as of September 30, 2021 and December 31, 2020 (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 September 30, 2021

Commercial paper	$	79,744	$	2	$	(9)	$	79,737	$	79,737	$	—
Corporate bonds	1,097,056		3,100		(378)		1,099,778		507,238		592,540
U.S. government agency obligations	285,903		44		(122)		285,825		64,951		220,874
	$	1,462,703	$	3,146	$	(509)	$	1,465,340	$	651,926	$	813,414

As of December 31, 2020
Commercial paper	$	46,931	$	13	$	(8)	$	46,936	$	46,936	$	—
Corporate bonds	1,628,462		9,482		(262)		1,637,682		607,403		1,030,279
Municipal securities	3,495		—		(6)		3,489		—		3,489
U.S. government agency obligations	435,653		329		(63)		435,919		89,951		345,968
	$	2,114,541	$	9,824	$	(339)	$	2,124,026	$	744,290	$	1,379,736

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 condensed 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 condensed consolidated balance sheets. Upon realization, those amounts are reclassified from accumulated other comprehensive loss to interest income in the condensed consolidated statements of income. As of September 30, 2021, the Company held for investment one corporate bond with a fair value of $1.5 million, which was classified as an available-for-sale marketable security that had been in a continuous unrealized loss position for more than 12 months. The unrealized loss is attributed to changes in interest rates. Based on 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 as of September 30, 2021 and December 31, 2020 (in thousands):


	Total Fair Value		Fair Value Measurements at Reporting Date Using
			Level 1		Level 2
As of September 30, 2021
Cash Equivalents and Marketable Securities:
Money market funds	$	1,784	$	1,784	$	—

Commercial paper	121,537		—		121,537
Corporate bonds	1,099,778		—		1,099,778
U.S. government agency obligations	302,525		—		302,525
Mutual funds	22,429		22,429		—
	$	1,548,053	$	24,213	$	1,523,840




As of December 31, 2020
Cash Equivalents and Marketable Securities:
Money market funds	$	74,417	$	74,417	$	—
Commercial paper	75,785		—		75,785
Corporate bonds	1,637,682		—		1,637,682
Municipal securities	3,489		—		3,489
U.S. government agency obligations	435,919		—		435,919
Mutual funds	19,932		19,932		—
	$	2,247,224	$	94,349	$	2,152,875

As of September 30, 2021 and December 31, 2020, the Company grouped 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 September 30, 2021 and December 31, 2020, the Company grouped commercial paper, U.S. government agency obligations, corporate bonds and municipal securities using a Level 2 valuation because quoted prices for similar assets in active markets (or identical assets in an inactive market) are available. 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 nine months ended September 30, 2021.

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.

Contractual maturities of the Company’s available-for-sale marketable securities held as of September 30, 2021 and December 31, 2020 were as follows (in thousands):


	September 30, 2021		December 31, 2020
Due in 1 year or less	$	651,926	$	744,290
Due after 1 year through 5 years	813,414		1,379,736
	$	1,465,340	$	2,124,026