Quarterly report pursuant to Section 13 or 15(d)

Financial Instruments

v3.21.1
Financial Instruments
3 Months Ended
Mar. 31, 2021
Financial Instruments Disclosure [Abstract]  
Financial Instruments

4.

Financial Instruments

Our financial assets are measured at fair value on a recurring basis using the following hierarchy to prioritize valuation inputs, in accordance with applicable U.S. GAAP:

 

Level 1:

Quoted prices in active markets for identical assets or liabilities that we have the ability to access

 

Level 2:

Observable market-based inputs or unobservable inputs that are corroborated by market data such as quoted prices, interest rates and yield curves

 

Level 3:

Inputs that are unobservable data points that are not corroborated by market data

We review the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels of certain securities within the fair value hierarchy. We recognize transfers into and out of levels within the fair value hierarchy in the period in which the actual event or change in circumstances that caused the transfer occurs. There have been no transfers between Level 1, Level 2 and Level 3 in any periods presented.

Financial assets and liabilities are considered Level 2 when their fair values are determined using inputs that are observable in the market or can be derived principally from or corroborated by observable market data such as pricing for similar securities, recently executed transactions, cash flow models with yield curves, and benchmark securities. In addition, Level 2 financial instruments are valued using comparisons to like-kind financial instruments and models that use readily observable market data as their basis. U.S. Treasury, government agency and corporate debt obligations, commercial paper and asset-backed securities are valued primarily using market prices of comparable securities, bid/ask quotes, interest rate yields and prepayment spreads and are included in Level 2.

Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. We have no Level 3 financial assets or liabilities.

The following tables summarize the estimated fair value and related valuation input hierarchy of our available-for-sale securities as of each period end:

 

 

 

 

 

Total

 

 

Total

 

 

Total

 

 

Total

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

As of March 31, 2021:

 

Input Level

 

Cost

 

 

Gain

 

 

Loss

 

 

Fair Value

 

 

 

 

 

(in thousands)

 

Money market funds

 

Level 1

 

$

138,100

 

 

$

 

 

$

 

 

$

138,100

 

U.S. Treasury obligations

 

Level 2

 

 

176,010

 

 

 

72

 

 

 

 

 

 

176,082

 

Government agency obligations

 

Level 2

 

 

25,218

 

 

 

15

 

 

 

(6

)

 

 

25,227

 

Corporate debt obligations

 

Level 2

 

 

61,259

 

 

 

100

 

 

 

(20

)

 

 

61,339

 

Commercial paper

 

Level 2

 

 

22,242

 

 

 

 

 

 

 

 

 

22,242

 

Asset-backed securities

 

Level 2

 

 

10,847

 

 

 

8

 

 

 

(8

)

 

 

10,847

 

Total available-for-sale securities

 

 

 

 

433,676

 

 

 

195

 

 

 

(34

)

 

 

433,837

 

Less: amounts classified as cash equivalents

 

 

 

 

(149,773

)

 

 

 

 

 

 

 

 

(149,773

)

Amounts classified as short-term investments

 

 

 

$

283,903

 

 

$

195

 

 

$

(34

)

 

$

284,064

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

Total

 

 

Total

 

 

Total

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

As of December 31, 2020:

 

Input Level

 

Cost

 

 

Gain

 

 

Loss

 

 

Fair Value

 

 

 

 

 

(in thousands)

 

Money market funds

 

Level 1

 

$

168,343

 

 

$

 

 

$

 

 

$

168,343

 

U.S. Treasury obligations

 

Level 2

 

 

230,239

 

 

 

113

 

 

 

(6

)

 

 

230,346

 

Government agency obligations

 

Level 2

 

 

22,537

 

 

 

22

 

 

 

(3

)

 

 

22,556

 

Corporate debt obligations

 

Level 2

 

 

50,080

 

 

 

166

 

 

 

(1

)

 

 

50,245

 

Commercial paper

 

Level 2

 

 

17,990

 

 

 

 

 

 

 

 

 

17,990

 

Asset-backed securities

 

Level 2

 

 

9,860

 

 

 

10

 

 

 

(5

)

 

 

9,865

 

Total available-for-sale securities

 

 

 

 

499,049

 

 

 

311

 

 

 

(15

)

 

 

499,345

 

Less: amounts classified as cash equivalents

 

 

 

 

(199,090

)

 

 

 

 

 

 

 

 

(199,090

)

Amounts classified as short-term investments

 

 

 

$

299,959

 

 

$

311

 

 

$

(15

)

 

$

300,255

 

 

The amortized cost and fair value of our available-for-sale securities by contractual maturity were as follows:

 

 

As of March 31, 2021

 

 

As of December 31, 2020

 

 

Amortized

 

 

Estimated

 

 

Amortized

 

 

Estimated

 

 

Cost

 

 

Fair Value

 

 

Cost

 

 

Fair Value

 

 

(in thousands)

 

 

(in thousands)

 

Maturing within one year

$

369,665

 

 

$

369,805

 

 

$

434,828

 

 

$

435,023

 

Maturing in one to five years

 

64,011

 

 

 

64,032

 

 

 

64,221

 

 

 

64,322

 

Total available-for-sale securities

$

433,676

 

 

$

433,837

 

 

$

499,049

 

 

$

499,345

 

 

As of March 31, 2021, no significant facts or circumstances were present to indicate a deterioration in the creditworthiness of the issuers of the available-for-sale securities we hold, and the Company has no requirement or intention to sell these securities before maturity or recovery of their amortized cost basis. We considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic and determined that our investments were not significantly impacted. For all securities with a fair value less than its amortized cost basis, we determined the decline in fair value below amortized cost basis to be immaterial and non-credit related, and therefore no allowance for losses has been recorded. During the three months ended March 31, 2021 and 2020, we did not recognize any impairment losses on our investments.

We have elected the practical expedient to exclude the applicable accrued interest from both the fair value and the amortized cost basis of our available-for-sale securities for purposes of identifying and measuring an impairment. We present accrued interest receivable related to our available-for-sale securities in prepaid expenses and other current assets, separate from short-term investments on our condensed consolidated balance sheet. As of March 31, 2021 and December 31, 2020, accrued interest receivable was $0.7 million. We have not written off any accrued interest receivables for the three months ended March 31, 2021 and 2020.

In addition, restricted cash collateralized by money market funds is a financial asset measured at fair value and is a Level 1 financial instrument under the fair value hierarchy. As of March 31, 2021 and December 31, 2020, restricted cash was $1.4 million. 

The following table provides a reconciliation of cash, cash equivalents and restricted cash within the condensed consolidated balance sheets that sum to the total of the same such amounts in the condensed consolidated statement of cash flows:

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(in thousands)

 

Cash and cash equivalents

 

$

151,097

 

 

$

200,404

 

Restricted cash - short term

 

 

194

 

 

 

194

 

Restricted cash - long term

 

 

1,200

 

 

 

1,200

 

Total cash, cash equivalents and restricted cash

 

$

152,491

 

 

$

201,798