Fair Value Measurements

3 Months Ended

Mar. 31, 2023

We measure certain financial assets and liabilities at fair value. Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:

Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability.

We consider an active market to be one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis, and we consider an inactive market to be one in which there are infrequent or few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers.

The following table presents our financial assets and liabilities measured and recorded at fair value on a recurring basis using the above input categories:


	As of March 31, 2023
	Level 1		Level 2		Level 3		Total
	(in thousands)
Description:
Assets:
Money market funds	$	62,390	$	—	$	—	$	62,390
U.S. Government agencies	49,214		—		—		49,214
Corporate bonds	—		11,413		—		11,413
Agency bonds	—		3,199		—		3,199
Foreign currency forward contracts designated as cash flow hedges (prepaid expenses and other current assets)	—		1,221		—		1,221
Total	$	111,604	$	15,833	$	—	$	127,437
Liabilities:
Foreign currency forward contracts designated as cash flow hedges (other current liabilities and other liabilities)	$	—	$	959	$	—	$	959
Total	$	—	$	959	$	—	$	959


	As of December 31, 2022
	Level 1		Level 2		Level 3		Total
	(in thousands)
Description:
Assets:
Money market funds	$	88,039	$	—	$	—	$	88,039
U.S. Government agencies	65,693		—		—		65,693
Commercial paper	—		14,121		—		14,121
Corporate bonds	—		7,944		—		7,944
Agency bonds	—		6,160		—		6,160
Foreign currency forward contracts designated as cash flow hedges (prepaid expenses and other current assets)	—		988		—		988
Total assets	$	153,732	$	29,213	$	—	$	182,945
Liabilities:
Foreign currency forward contracts designated as cash flow hedges (other current liabilities and other liabilities)	$	—	$	1,559	$	—	$	1,559
Total liabilities	$	—	$	1,559	$	—	$	1,559

As of March 31, 2023, the fair value of our 2.25% and 0.25% convertible senior notes due 2025 and 2027, as further described in Note 10, Debt, was $235.4 million and $521.1 million, respectively, based upon quoted market prices. We consider the fair value of the Notes to be a Level 2 measurement due to limited trading activity of the Notes.