Fair Value Measurements

9 Months Ended

Sep. 30, 2022

Note 7—Fair Value Measurements

The Company has characterized its investments in marketable securities, based on the priority of the inputs used to value the investments, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), and lowest priority to unobservable inputs (Level 3). If the inputs used to measure the investments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the investment. Investments recorded in the accompanying Consolidated Balance Sheets are categorized based on the inputs to valuation techniques as follows:

Level 1 These are investments where values are based on unadjusted quoted prices for identical assets in an active market that the Company has the ability to access.

Level 2 These are investments where values are based on quoted market prices in markets that are not active or model derived valuations in which all significant inputs are observable in active markets.

Level 3 These are financial instruments where values are derived from techniques in which one or more significant inputs are unobservable. The Company did not have any Level 3 instruments as of September 30, 2022 and December 31, 2021.

Short- and long-term investments and certain cash equivalents consist of investments in debt securities that are available-for-sale. The following table sets forth the cost, gross unrealized losses, gross unrealized gains, and fair value of the Company’s investments as of the dates indicated (in thousands):


	Cost		Gross Unrealized Holding Loss		Gross Unrealized Holding Gain		Fair Value		Cash and Cash Equivalents		Short-term Investments		Long-term Investments
September 30, 2022
Cash	$	289,768	$	—	$	—	$	289,768	$	289,768	$	—	$	—
Level 1

Money market funds (1)	571,727		—		—		571,727		495,205		76		—
U.S. Government and agency securities	73,702		(576)		2		73,128		—		73,128		—
	645,429		(576)		2		644,855		495,205		73,204		—
Level 2
Certificate of deposit	33,990		(206)		7		33,791		2,190		31,601		—
Commercial paper	44,397		(120)		1		44,278		1,495		42,783		—
Corporate bonds	139,386		(2,339)		—		137,047		1,332		103,577		32,138
	217,773		(2,665)		8		215,116		5,017		177,961		32,138
	$	1,152,970	$	(3,241)	$	10	$	1,149,739	$	789,990	$	251,165	$	32,138
December 31, 2021
Cash	$	214,771	$	—	$	—	$	214,771	$	214,771	$	—	$	—
Level 1
Money market funds	556,427		—		—		556,427		556,427		—		—
U.S. Government and agency securities	60,311		(55)		11		60,267		—		52,632		7,635
	616,738		(55)		11		616,694		556,427		52,632		7,635
Level 2
Certificate of deposit	20,709		(7)		1		20,703		—		20,703		—
Commercial paper	25,235		(14)		1		25,222		8,998		16,224		—
Corporate bonds	192,727		(481)		10		192,256		—		114,857		77,399
	238,671		(502)		12		238,181		8,998		151,784		77,399
	$	1,070,180	$	(557)	$	23	$	1,069,646	$	780,196	$	204,416	$	85,034

(1)$76.4 million of money market funds were classified as funds receivable and seller accounts as of September 30, 2022.

At December 31, 2021, there were no investments in a continuous unrealized loss position for 12 months or longer. The table below shows the gross unrealized loss and fair value of the following investments in debt securities that are available-for-sale classified by the length of time that the securities have been in a continuous unrealized loss position at September 30, 2022 (in thousands):


	Gross Unrealized Holding Loss		Fair Value
Less than 12 months in a continuous unrealized loss position
Corporate bonds	$	(1,373)	$	115,340
U.S. Government and agency securities	(527)		56,374



	$	(1,900)	$	171,714
12 months or longer in a continuous unrealized loss position
Corporate bonds	$	(966)	$	21,707
U.S. Government and agency securities	(49)		5,951




	$	(1,015)	$	27,658

The Company evaluates fair value for each individual security in the investment portfolio.

The Company typically invests in short- and long-term instruments, including fixed-income funds and U.S. Government and agency securities aligned with the Company’s investment strategy. The maturities of the Company’s non-current marketable debt securities generally range from greater than 12 and up to 37 months.

Disclosure of Fair Values

The Company’s financial instruments that are not remeasured at fair value in the Consolidated Balance Sheets include the Notes. See “Note 9—Debt” for additional information. The Company estimates the fair value of the Notes through inputs that are observable in the market, classified as Level 2 as described above. The following table presents the carrying value and estimated fair value of the Notes as of the dates indicated (in thousands):


	As of September 30, 2022				As of December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
2021 Notes	$	989,154	$	779,400	$	987,729	$	1,165,519
2020 Notes	644,133		586,755		643,237		862,774
2019 Notes	645,243		878,383		644,390		1,644,869
2018 Notes (1)	55		151		62		375
	$	2,278,585	$	2,244,689	$	2,275,418	$	3,673,537

(1)Contemporaneously with the partial repurchase of the 2018 Notes in the third quarter of 2020, the Company agreed with the counterparties to the associated capped call instrument (the “2018 Capped Call Transactions”) that the 2018 Capped Call Transactions would remain outstanding with a maturity of March 2023 and there was no exchange of any consideration for such agreement. See “Note 9—Debt” for more information on the Company’s capped call transactions.

The carrying value of other financial instruments, including accounts receivable, funds receivable and seller accounts, accounts payable, and funds payable and amounts due to sellers approximate fair value due to the immediate or short-term maturity associated with these instruments.

- 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.

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