Fair Value Measurements

3 Months Ended

Mar. 31, 2022

Assets measured at fair values on a recurring basis

We measure and report our cash equivalents, restricted cash, marketable equity securities and available-for-sale debt securities at fair value on a recurring basis. The following tables summarize the fair value of these financial assets by significant investment category and their levels within the fair value hierarchy (in thousands):


	As of March 31, 2022								As of December 31, 2021
	Level I		Level II		Level III		Total		Level I		Level II		Level III		Total
Financial Assets:
Cash Equivalents:
Money market funds	$	201,922	$	—	$	—	$	201,922	$	221,382	$	—	$	—	$	221,382



Marketable Securities:
Commercial paper	—		95,239		—		95,239		—		141,274		—		141,274
Certificate of deposits(1)	—		37,330		—		37,330		—		44,931		—		44,931
U.S. government notes	1,093,921		—		—		1,093,921		1,057,810		—		—		1,057,810
Corporate bonds	—		1,265,406		—		1,265,406		—		1,252,226		—		1,252,226
Agency securities	—		275,182		—		275,182		—		291,261		—		291,261
Marketable equity securities(2)	21,811		—		—		21,811		—		—		—		—
	1,115,732		1,673,157		—		2,788,889		1,057,810		1,729,692		—		2,787,502
Other Assets:
Money market funds - restricted	4,258		—		—		4,258		4,237		—		—		4,237
Total Financial Assets	$	1,321,912	$	1,673,157	$	—	$	2,995,069	$	1,283,429	$	1,729,692	$	—	$	3,013,121

______________________________________

(1) As of March 31, 2022 and December 31, 2021, all of our certificates of deposits were domestic deposits.

(2) The $21.8 million represents the fair value of marketable equity securities as of March 31, 2022. This amount includes $8.3 million that was reclassified from Investments on our condensed consolidated balance sheet following the commencement of public market trading of the issuer in the current quarter, in addition to unrealized gains of $13.5 million recorded during the current quarter. The unrealized gains are included in Other income, net on the Condensed Consolidated Statements of Operations. Refer to Note 3. Financial Statement Details.

During the three months ended on March 31, 2022, the Company did not make any transfers between the levels of the fair value hierarchy.

Marketable debt securities

The following table summarizes the amortized cost, unrealized gains and losses, and fair value of our debt securities at fair value on a recurring basis (in thousands):


	As of March 31, 2022								As of December 31, 2021
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value



Commercial paper	$	95,239	$	—	$	—	$	95,239	$	141,274	$	—	$	—	$	141,274
U.S. government notes	1,106,454		16		(12,549)		1,093,921		1,060,716		3		(2,909)		1,057,810
Corporate bonds	1,278,474		20		(13,088)		1,265,406		1,255,149		105		(3,028)		1,252,226
Agency securities	277,535		2		(2,355)		275,182		291,558		36		(333)		291,261
Total	$	2,757,702	$	38	$	(27,992)	$	2,729,748	$	2,748,697	$	144	$	(6,270)	$	2,742,571

We invest in marketable securities that have maximum maturities of two years and are generally deemed to be low risk based on their credit ratings from the major rating agencies. The longer the duration of these marketable securities, the more susceptible they are to changes in market interest rates and bond yields. We expect to realize the full value of these investments upon maturity and do not expect to sell the debt securities prior to maturity; therefore, we do not consider any of our marketable securities to be impaired as of March 31, 2022. We did not recognize any credit losses or non-credit-related impairments related to our available-for-sale marketable securities for the three months ended March 31, 2022.

The following is an analysis of our marketable securities in unrealized loss positions for a period of less than twelve months. As of March 31, 2022, there are no unrealized loss positions with a duration equal to or greater than twelve months (in thousands):


	As of March 31, 2022
	Unrealized Losses within 12 months
	Fair Value		Unrealized Losses
U.S. government notes	$	1,080,225	$	(12,549)
Corporate bonds	1,223,546		(13,088)
Agency securities	262,329		(2,355)
Total	$	2,566,100	$	(27,992)

As of March 31, 2022, we had no marketable debt securities with contractual maturities that exceed 24 months. The fair values of marketable debt securities, by remaining contractual maturities, are as follows (in thousands):


	As of March 31, 2022
	Fair Values
Due in 1 year or less	$	1,765,710
Due in 1 year through 2 years	964,038
Total debt securities	$	2,729,748

The weighted-average remaining duration of our marketable debt securities is approximately 0.8 years as of March 31, 2022. As we view these marketable debt securities as available to support current operations, we classify marketable debt securities with maturities beyond 12 months as current assets under the caption "Marketable securities" on the condensed consolidated balance sheets.

Assets measured at fair value on a non-recurring basis

Non-Marketable Equity Securities

We have non-marketable equity securities in privately-held companies that do not have readily determinable fair values. These equity securities are included in Investments on the condensed consolidated balance sheets. Their initial cost is adjusted to fair value on a non-recurring basis based on observable price changes from orderly transactions of identical or similar securities of the same issuer, or for impairment. These investments are classified within Level III of the fair value hierarchy as we estimate the value based on valuation methods using the observable transaction price at the transaction date and other significant unobservable inputs, such as volatility, rights, and obligations related to these securities. In addition, the valuation requires management judgment due to the absence of market price and lack of liquidity.

We did not record any realized gains or losses for our non-marketable equity securities measured at fair value on a non-recurring basis during the three months ended March 31, 2022 and March 31, 2021. We recorded an unrealized gain of $15.0 million on non-marketable equity securities based on observable price changes from orderly transactions of identical or similar securities of the same issuer in the three months ended March 31, 2022, but did not record any unrealized losses or further unrealized gains in the three months ended March 31, 2022 and March 31, 2021. We evaluate our non-marketable equity securities for impairment at each reporting period via a qualitative assessment with various potential impairment indicators, including, but not limited to, an assessment of a significant adverse change in the economic environment, significant adverse changes in the general market condition of the geographies and industries in which our investees operate, and other publicly available information that affected the value of the its non-marketable equity securities.

The following table summarizes the activity related to our non-marketable equity securities as of March 31, 2022 and December 31, 2021 (in thousands):


	March 31, 2022		December 31, 2021
Cost of investments (1)	$	23,625	$	14,933
Cumulative impairment	—		—
Cumulative upward adjustment (1)	15,000		5,314
Carrying amount of investments	$	38,625	$	20,247

(1) During the three months ended March 31, 2022, $3.0 million previously included in the Cost of investments and $5.3 million previously included in the Cumulative upward adjustment, or $8.3 million in aggregate, were reclassified from Investments to Marketable securities on our condensed consolidated balance sheet following the commencement of public market trading of the issuer.

- 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