Fair Value Measurements

3 Months Ended

Mar. 31, 2019

4. Fair Value Measurements

Financial assets and liabilities are recorded at fair value. The accounting guidance for fair value provides a framework for measuring fair value, clarifies the definition of fair value and expands disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2—Inputs other than quoted market prices included in Level 1 are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level 3—Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

	Fair Value Measurements at March 31, 2019
	Total		Level 1		Level 2		Level 3
Assets
Money market funds	$	465,257	$	465,257	$	—	$	—
U.S. government agency obligations		98,165		—		98,165		—
Corporate securities		63,899		—		63,899		—
Total	$	627,321	$	465,257	$	162,064	$	—

	Fair Value Measurements at December 31, 2018
	Total		Level 1		Level 2		Level 3
Assets
Money market funds	$	245,194	$	245,194	$	—	$	—
U.S. government agency obligations		85,033		—		85,033		—
Corporate securities		63,679		—		63,679		—
Total	$	393,906	$	245,194	$	148,712	$	—

The following table is a summary of amortized cost, unrealized gain and loss, and fair value of the Company’s marketable securities by contractual maturities (in thousands):

	Fair Value Measurements at March 31, 2019
	Amortized Cost		Unrealized Gain		Unrealized Loss			Fair Value
Cash equivalents (due within 90 days)	$	465,257	$	—	$	—		$	465,257
Short-term investments (due within one year)		92,522		49		(31	)		92,540
Long-term investments (due between one and two years)		69,241		283		—			69,524
Total	$	627,020	$	332	$	(31	)	$	627,321

	Fair Value Measurements at December 31, 2018
	Amortized Cost		Unrealized Gain		Unrealized Loss			Fair Value
Cash equivalents (due within 90 days)	$	245,194	$	—	$	—		$	245,194
Short-term investments (due within one year)		68,656		—		(92	)		68,564
Long-term investments (due between one and two years)		80,118		98		(68	)		80,148
Total	$	393,968	$	98	$	(160	)	$	393,906

- 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