Investments and Fair Value Measurements

6 Months Ended

Jun. 30, 2019

Notes To Financial Statements [Abstract]

Investments and Fair Value Measurements

Investments and Fair Value Measurements

Marketable Securities

As of June 30, 2019 and December 31, 2018, the estimated fair value of our short-term and long-term marketable securities, classified as available for sale, are as follows (in thousands):

Short-term

June 30, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial paper	$	29,556	$	—	$	—		$	29,556
Corporate bonds	125,299		74		(8		)	125,365
U.S. government agency bonds	20,507		2		(13		)	20,496
U.S. government treasury bonds	108,945		56		(6		)	108,995
Foreign bonds	12,976		14		—			12,990
Certificates of deposit	20		—		—			20
Total marketable securities, short-term	$	297,303	$	146	$	(27	)	$	297,422

Long-term

June 30, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Corporate bonds	$	23,879	$	40	$	(1	)	$	23,918
U.S. government treasury bonds	21,038		16		(3		)	21,051
Total marketable securities, long-term	$	44,917	$	56	$	(4	)	$	44,969

Short-term

December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial paper	$	17,793	$	—	$	—		$	17,793
Corporate bonds	45,100		—		(48		)	45,052
U.S. government agency bonds	19,981		—		(77		)	19,904
U.S. government treasury bonds	15,292		—		(1		)	15,291
Certificates of deposit	420		1		(1		)	420
Total marketable securities, short-term	$	98,586	$	1	$	(127	)	$	98,460

Long-term 

December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Corporate bonds	$	4,957	$	5	$	(2	)	$	4,960
U.S. government agency bonds	1,399		8		—			1,407
U.S. government treasury bonds	2,235		9		—			2,244
Certificates of deposit	500		1		—			501
Total marketable securities, long-term	$	9,091	$	23	$	(2	)	$	9,112

Cash equivalents are not included in the tables above as the gross unrealized gains and losses are not material. We have no short-term or long-term investments that have been in a continuous material unrealized loss position for greater than twelve months as of June 30, 2019 and December 31, 2018. Amounts reclassified to earnings from accumulated other comprehensive income (loss), net related to unrealized gains or losses were not material for the three and six months ended June 30, 2019 and 2018. For the three and six months ended June 30, 2019 and 2018, realized gains or losses were not material.

Our fixed-income securities investment portfolio consists of investments that can have a maximum effective maturity of up to 40 months on any individual security. The securities that we invest in are generally deemed to be low risk based on their credit ratings from the major rating agencies. The longer the duration of these securities, the more susceptible they are to changes in market interest rates and bond yields. As interest rates increase, those securities purchased at a lower yield show a mark-to-market unrealized loss. The unrealized losses are primarily due to changes in interest rates and credit spreads. We expect to realize the full value of all these investments upon maturity or sale. The weighted average remaining duration of these securities was approximately seven months and four months as of June 30, 2019 and December 31, 2018, respectively.

As the carrying value approximates the fair value for our short-term and long-term marketable securities shown in the tables above, the following table summarizes the fair value of our short-term and long-term marketable securities classified by contractual maturity as of June 30, 2019 and December 31, 2018 (in thousands):

	June 30, 2019		December 31, 2018
One year or less	$	297,422	$	98,460
Due in greater than one year	44,969		9,112
Total available for sale short-term and long-term marketable securities	$	342,391	$	107,572

Investments in Privately Held Companies

Our investments in privately held companies as of June 30, 2019 and December 31, 2018 are as follows (in thousands):

	June 30, 2019		December 31, 2018
Equity securities under the equity method investment 1	$	—	$	45,913
Equity securities without readily determinable fair values 2	$	5,887	$	9,862

¹  Refer to Note 5 “Equity Method Investments” of the Notes to Condensed Consolidated Financial Statements for more information.

²   The equity securities are reported as a nonrecurring investment within other assets in our Condensed Consolidated Balance Sheet. During the six months ended June 30, 2019, there was approximately $4.0 million of impairment resulting from an observable price change.

Fair Value Measurements

We measure the fair value of financial assets as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use the GAAP fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value:

Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. We obtain fair values for our Level 2 investments. Our custody bank and asset managers independently use professional pricing services to gather pricing data which may include quoted market prices for identical or comparable financial instruments, or inputs other than quoted prices that are observable either directly or indirectly, and we are ultimately responsible for these underlying estimates.

Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.

The following tables summarize our financial assets measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018 (in thousands):

Description	Balance as of June 30, 2019		Level 1		Level 2
Cash equivalents:
Money market funds	$	193,390	$	193,390	$	—
Commercial paper	15,993		—		15,993
Corporate bonds	3,716		—		3,716
U.S. government treasury bonds	8,505		8,505		—
Short-term investments:
Commercial paper	29,556		—		29,556
Corporate bonds	125,365		—		125,365
U.S. government agency bonds	20,496		—		20,496
U.S. government treasury bonds	108,995		108,995		—
Foreign bonds	12,990		—		12,990
Certificates of deposit	20		—		20
Long-term investments:
Corporate bonds	23,918		—		23,918
U.S. government treasury bonds	21,051		21,051		—
Prepaid expenses and other current assets:
Israeli funds	2,983		—		2,983
	$	566,978	$	331,941	$	235,037

Description	Balance as of December 31, 2018		Level 1		Level 2
Cash equivalents:
Money market funds	$	431,081	$	431,081	$	—
Commercial paper	4,681		—		4,681
Corporate bonds	3,880		—		3,880
U.S. government treasury bonds	2,195		2,195		—
Short-term investments:
Commercial paper	17,793		—		17,793
Corporate bonds	45,052		—		45,052
U.S. government agency bonds	19,904		—		19,904
U.S. government treasury bonds	15,291		15,291		—
Certificates of deposit	420		—		420
Long-term investments:
Corporate bonds	4,960		—		4,960
U.S. government agency bonds	1,407		—		1,407
U.S. government treasury bonds	2,244		2,244		—
Certificates of deposit	501		—		501
Prepaid expenses and other current assets:
Israeli funds	3,047		—		3,047
	$	552,456	$	450,811	$	101,645

Derivative Financial Instruments

We enter into foreign currency forward contracts to minimize the short-term impact of foreign currency exchange rate fluctuations on certain trade and intercompany receivables and payables. These forward contracts are classified within Level 2 of the fair value hierarchy. The net gain (loss) from the settlement of foreign currency forward contracts during the three and six months ended June 30, 2019 was not material and the net gain from the settlement of foreign currency forward contracts during

both the three and six months ended June 30, 2018 was $5.4 million. As of June 30, 2019 and December 31, 2018, the fair value of foreign exchange forward contracts outstanding was not material.

The following table presents the gross notional value of all our foreign exchange forward contracts outstanding as of June 30, 2019 and December 31, 2018 (in thousands):

	June 30, 2019
	Local Currency Amount	Notional Contract Amount (USD)
Euro	€92,000	$	104,871
Chinese Yuan	¥465,000	67,626
British Pound	£21,000	26,702
Canadian Dollar	C$31,000	23,706
Brazilian Real	R$83,000	21,581
Japanese Yen	¥1,800,000	16,716
Mexican Peso	M$140,000	7,263
Australian Dollar	A$3,000	2,104
Israeli Shekel	ILS74,500	20,928
		$	291,497

	December 31, 2018
	Local Currency Amount	Notional Contract Amount (USD)
Euro	€62,000	$	71,095
Chinese Yuan	¥375,000	54,515
Brazilian Real	R$81,000	20,858
Canadian Dollar	C$27,000	19,808
British Pound	£13,000	16,635
Japanese Yen	¥1,700,000	15,357
Australian Dollar	A$3,000	2,114
		$	200,382