Fair Value of Financial Instruments |
Fair Value of Financial Instruments Available-for-sale investments within cash equivalents and investments consist of the following (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | July 31, 2022 | | Amortized Cost | | Unrealized Gains | | Unrealized Losses | | Estimated Fair Value | U.S. Government agency securities | $ | 37,572 | | | $ | — | | | $ | (586) | | | $ | 36,986 | | Commercial paper | 197,998 | | | — | | | — | | | 197,998 | | Corporate bonds | 320,474 | | | 8 | | | (4,880) | | | 315,602 | | U.S. Government bonds | 47,014 | | | — | | | (1,312) | | | 45,702 | | Asset-backed securities | 54,782 | | | — | | | (611) | | | 54,171 | | Foreign government bonds | 15,109 | | | — | | | (361) | | | 14,748 | | Municipal bonds | 205 | | | — | | | — | | | 205 | | Certificates of deposit | 43,715 | | | — | | | — | | | 43,715 | | Money market funds | 349,492 | | | — | | | — | | | 349,492 | | | | | | | | | | Total | $ | 1,066,361 | | | $ | 8 | | | $ | (7,750) | | | $ | 1,058,619 | |
| | | | | | | | | | | | | | | | | | | | | | | | | July 31, 2021 | | Amortized Cost | | Unrealized Gains | | Unrealized Losses | | Estimated Fair Value | U.S. Government agency securities | $ | 85,165 | | | $ | 15 | | | $ | — | | | $ | 85,180 | | Commercial paper | 389,837 | | | — | | | — | | | 389,837 | | Corporate bonds | 371,374 | | | 623 | | | (37) | | | 371,960 | | U.S. Government bonds | 64,401 | | | 62 | | | (1) | | | 64,462 | | Asset-backed securities | 47,925 | | | 29 | | | (7) | | | 47,947 | | Foreign government bonds | 33,177 | | | 10 | | | (2) | | | 33,185 | | Municipal bonds | 1,685 | | | — | | | — | | | 1,685 | | Certificates of deposit | 82,250 | | | — | | | — | | | 82,250 | | Money market funds | 125,118 | | | — | | | — | | | 125,118 | | Strategic convertible debt investment* | 1,000 | | | — | | | — | | | 1,000 | | Total | $ | 1,201,932 | | | $ | 739 | | | $ | (47) | | | $ | 1,202,624 | | | | | | | | | |
*At original costThe Company does not consider any portion of the unrealized losses at July 31, 2022 to be credit losses. The Company has recorded the securities at fair value in its consolidated balance sheets, with unrealized gains and losses reported as a component of accumulated other comprehensive income (loss). The amount of unrealized gains and losses reclassified into earnings are based on the specific identification of the securities sold. The realized gains and losses from sales of securities are presented in the consolidated statements of comprehensive income (loss). The following table summarizes the contractual maturities of the Company’s available-for-sale investments measured at fair value (in thousands): | | | | | | | | | | | | | | | | | | | July 31, 2022 | | Less Than 12 Months | | 12 months or greater | | Total | U.S. Government agency securities | $ | 36,986 | | | $ | — | | | $ | 36,986 | | Commercial paper | 197,998 | | | — | | | 197,998 | | Corporate bonds | 203,960 | | | 111,642 | | | 315,602 | | U.S. Government bonds | 25,429 | | | 20,273 | | | 45,702 | | Asset-backed securities | 8,627 | | | 45,544 | | | 54,171 | | Foreign government bonds | 4,700 | | | 10,048 | | | 14,748 | | Municipal bonds | 205 | | | — | | | 205 | | Certificates of deposit | 43,715 | | | — | | | 43,715 | | Money market funds | 349,492 | | | — | | | 349,492 | | | | | | | | Total | $ | 871,112 | | | $ | 187,507 | | | $ | 1,058,619 | |
Fair Value Measurement Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability 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. The Company applies the three-level valuation hierarchy when measuring the fair value of certain assets and liabilities: Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2—Inputs other than quoted prices included within Level 1 that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data; and Level 3—Unobservable inputs that are supported by little or no market activity, which require the Company to develop its own assumptions. Available-for-sale investments The following tables summarize the Company’s available-for-sale investments measured at fair value, by level within the fair value hierarchy (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | July 31, 2022 | | Level 1 | | Level 2 | | Level 3 | | Total | Cash equivalents: | | | | | | | | U.S. Government agency securities | $ | — | | | $ | 10,000 | | | $ | — | | | $ | 10,000 | | Commercial paper | — | | | 132,066 | | | — | | | 132,066 | | | | | | | | | | Certificates of deposit | — | | | 9,689 | | | — | | | 9,689 | | Money market funds | 349,492 | | | — | | | — | | | 349,492 | | | | | | | | | | Total cash equivalents | 349,492 | | | 151,755 | | | — | | | 501,247 | | Short-term investments: | | | | | | | | U.S. Government agency securities | — | | | 26,986 | | | — | | | 26,986 | | Commercial paper | — | | | 65,932 | | | — | | | 65,932 | | Corporate bonds | — | | | 203,960 | | | — | | | 203,960 | | U.S. Government bonds | — | | | 25,429 | | | — | | | 25,429 | | Asset-backed securities | — | | | 8,627 | | | — | | | 8,627 | | Foreign government bonds | — | | | 4,700 | | | — | | | 4,700 | | Municipal bonds | — | | | 205 | | | — | | | 205 | | Certificates of deposit | — | | | 34,026 | | | — | | | 34,026 | | | | | | | | | | Total short-term investments | — | | | 369,865 | | | — | | | 369,865 | | Long-term investments: | | | | | | | | | | | | | | | | | | | | | | | | Corporate bonds | — | | | 111,642 | | | — | | | 111,642 | | U.S. Government bonds | — | | | 20,273 | | | — | | | 20,273 | | Asset-backed securities | — | | | 45,544 | | | — | | | 45,544 | | Foreign government bonds | — | | | 10,048 | | | — | | | 10,048 | | | | | | | | | | | | | | | | | | | | | | | | | | Total long-term investments | — | | | 187,507 | | | — | | | 187,507 | | Total | $ | 349,492 | | | $ | 709,127 | | | $ | — | | | $ | 1,058,619 | |
| | | | | | | | | | | | | | | | | | | | | | | | | July 31, 2021 | | Level 1 | | Level 2 | | Level 3 | | Total | Cash equivalents: | | | | | | | | Commercial paper | $ | — | | | $ | 115,825 | | | $ | — | | | $ | 115,825 | | | | | | | | | | | | | | | | | | Money market funds | 125,118 | | | — | | | — | | | 125,118 | | | | | | | | | | Total cash equivalents | 125,118 | | | 115,825 | | | — | | | 240,943 | | Short-term investments: | | | | | | | | U.S. Government agency securities | — | | | 69,183 | | | — | | | 69,183 | | Commercial paper | — | | | 274,012 | | | — | | | 274,012 | | Corporate bonds | — | | | 225,384 | | | — | | | 225,384 | | U.S. Government bonds | — | | | 45,320 | | | — | | | 45,320 | | Asset-backed securities | — | | | 9,036 | | | — | | | 9,036 | | Foreign government bonds | — | | | 28,353 | | | — | | | 28,353 | | Municipal bonds | — | | | 1,480 | | | — | | | 1,480 | | Certificates of deposit | — | | | 80,750 | | | — | | | 80,750 | | Strategic convertible debt investment | — | | | — | | | 1,000 | | | 1,000 | | Total short-term investments | — | | | 733,518 | | | 1,000 | | | 734,518 | | Long-term investments: | | | | | | | | U.S. Government agency securities | — | | | 15,997 | | | — | | | 15,997 | | | | | | | | | | Corporate bonds | — | | | 146,576 | | | — | | | 146,576 | | U.S. Government bonds | — | | | 19,142 | | | — | | | 19,142 | | Asset-backed securities | — | | | 38,911 | | | — | | | 38,911 | | Foreign government bonds | — | | | 4,832 | | | — | | | 4,832 | | Municipal bonds | — | | | 205 | | | — | | | 205 | | Certificates of deposit | — | | | 1,500 | | | — | | | 1,500 | | | | | | | | | | | | | | | | | | Total long-term investments | — | | | 227,163 | | | — | | | 227,163 | | Total | $ | 125,118 | | | $ | 1,076,506 | | | $ | 1,000 | | | $ | 1,202,624 | |
Convertible Senior Notes The fair value of the Convertible Senior Notes was $387.6 million and $452.0 million at July 31, 2022 and 2021, respectively. The Company estimates the fair value of the Convertible Senior Notes using commonly accepted valuation methodologies and market-based risk measurements that are directly observable, such as unadjusted quoted prices in markets that are not active (Level 2). The Company carries the Convertible Senior Notes at initial fair value less unamortized debt discount and issuance costs on its consolidated balance sheets. For further information on the Convertible Senior Notes, see Note 7.
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