v3.26.3
Fair Value Measurements
 9 Months Ended
Sep. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 2. Fair Value Measurements

Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The standards also establish a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

•
Level 1 — Quoted prices in active markets for identical assets or liabilities.
•
Level 2 — Assets and liabilities valued based on observable market data for similar instruments, such as quoted prices for similar assets or liabilities.
•
Level 3 — Unobservable inputs that are supported by little or no market activity; instruments valued based on the best available data, some of which is internally developed, and considers risk premiums that a market participant would require.

We did not have any financial assets or liabilities in Level 3 as of September 30, 2026 or December 31, 2025.

We applied the following methods and assumptions in estimating our fair value measurements:

Cash Equivalents — Cash equivalents comprise highly liquid investments, including money market funds with original maturities of less than three months at the acquisition date. We record the fair value measurement of these assets based on quoted market prices in active markets.

Investments — Our investments comprise fixed income securities, which include U.S. government agency securities, corporate notes and bonds, commercial paper and treasury bills. The fair value measurement of these assets is based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Long-term Debt — See Note 7 for the carrying amount and estimated fair value of the 2021 Notes and 2025 Notes.

Capped Call Transactions — In September 2026, we irrevocably elected cash settlement as the settlement method for our capped call transactions entered into in connection with the convertible notes due 2026, or the 2019 Notes, and as a result, these transactions are accounted for as derivative assets recorded at fair value. We determine the fair value measurement of these assets using a Black-Scholes option-pricing model with all significant inputs being observable market-based inputs. See below and Note 7 for additional details of these transactions.

The following table presents the balances of assets and liabilities measured at fair value on a recurring basis, by level within the fair value hierarchy, as of the dates presented (in thousands):

 

 

September 30, 2026

 

 

December 31, 2025

 

 

 

Level 1

 

 

Level 2

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Total

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

1,054

 

 

$

—

 

 

$

1,054

 

 

$

21,209

 

 

$

—

 

 

$

21,209

 

Commercial paper

 

 

—

 

 

 

3,838

 

 

 

3,838

 

 

 

—

 

 

 

—

 

 

 

—

 

Total cash equivalents

 

 

1,054

 

 

 

3,838

 

 

 

4,892

 

 

 

21,209

 

 

 

—

 

 

 

21,209

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agency securities

 

 

—

 

 

 

6,989

 

 

 

6,989

 

 

 

—

 

 

 

7,480

 

 

 

7,480

 

U.S. Treasury securities

 

 

—

 

 

 

1,250

 

 

 

1,250

 

 

 

—

 

 

 

25,390

 

 

 

25,390

 

Corporate notes and bonds

 

 

—

 

 

 

39,657

 

 

 

39,657

 

 

 

—

 

 

 

67,962

 

 

 

67,962

 

Commercial paper

 

 

—

 

 

 

26,342

 

 

 

26,342

 

 

 

—

 

 

 

26,298

 

 

 

26,298

 

Total short-term investments

 

 

—

 

 

 

74,238

 

 

 

74,238

 

 

 

—

 

 

 

127,130

 

 

 

127,130

 

Long-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agency securities

 

 

—

 

 

 

14,210

 

 

 

14,210

 

 

 

—

 

 

 

6,851

 

 

 

6,851

 

U.S. Treasury securities

 

 

—

 

 

 

1,984

 

 

 

1,984

 

 

 

—

 

 

 

—

 

 

 

—

 

Corporate notes and bonds

 

 

—

 

 

 

99,150

 

 

 

99,150

 

 

 

—

 

 

 

96,915

 

 

 

96,915

 

Total long-term investments

 

 

—

 

 

 

115,344

 

 

 

115,344

 

 

 

—

 

 

 

103,766

 

 

 

103,766

 

Total cash equivalents and investments

 

 

1,054

 

 

 

193,420

 

 

 

194,474

 

 

 

21,209

 

 

 

230,896

 

 

 

252,105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capped call transactions

 

 

—

 

 

 

48,656

 

 

 

48,656

 

 

 

—

 

 

 

—

 

 

 

—

 

Total

 

$

1,054

 

 

$

242,076

 

 

$

243,130

 

 

$

21,209

 

 

$

230,896

 

 

$

252,105

 

 

Prior to the cash settlement election, the capped call transactions were classified in stockholders’ equity and were not remeasured. As a result of the election, the capped call transactions no longer qualify for the equity classification scope exception

under ASC 815, Derivatives and Hedging, and are accounted for as derivative instruments. The derivative assets are not designated as hedging instruments. Upon the election, we recognized a derivative asset of $48.6 million, representing the fair value of the capped call transactions on the election date, within other current assets on our Condensed Consolidated Balance Sheet, with a corresponding adjustment to additional paid-in capital. The derivative assets are remeasured to fair value each reporting period until settlement, which is expected to occur in December 2026.

As of September 30, 2026, the fair value of the capped call transactions was $48.7 million. During the three and nine months ended September 30, 2026, we recorded a gain of $0.1 million on remeasurement of the capped call transactions, which is included in other income, net in our condensed consolidated statements of operations.

 

We expect short-term investments to mature within 1 year and long-term investments within 1 to 3 years of the reporting date.

Investments

The following tables present the cost or amortized cost, gross unrealized gains, gross unrealized losses and total estimated fair value of our financial assets as of the dates presented (in thousands):

 

September 30, 2026

 

 

Cost or

 

 

Gross

 

 

Gross

 

 

Total Estimated

 

 

Amortized Cost

 

 

Unrealized Gains

 

 

Unrealized Losses

 

 

Fair Value

 

Description:

 

 

 

 

 

 

 

 

 

 

 

Money market funds

$

1,054

 

 

$

—

 

 

$

—

 

 

$

1,054

 

U.S. Government agency securities

 

21,349

 

 

 

—

 

 

 

(150

)

 

 

21,199

 

U.S. Treasury securities

 

3,255

 

 

 

—

 

 

 

(21

)

 

 

3,234

 

Corporate notes and bonds

 

140,513

 

 

 

5

 

 

 

(1,711

)

 

 

138,807

 

Commercial paper

 

30,231

 

 

 

—

 

 

 

(51

)

 

 

30,180

 

Total

$

196,402

 

 

$

5

 

 

$

(1,933

)

 

$

194,474

 

 

 

December 31, 2025

 

 

Cost or

 

 

Gross

 

 

Gross

 

 

Total Estimated

 

 

Amortized Cost

 

 

Unrealized Gains

 

 

Unrealized Losses

 

 

Fair Value

 

Description:

 

 

 

 

 

 

 

 

 

 

 

Money market funds

$

21,209

 

 

$

—

 

 

$

—

 

 

$

21,209

 

U.S. Government agency securities

 

14,339

 

 

 

2

 

 

 

(10

)

 

 

14,331

 

U.S. Treasury securities

 

25,378

 

 

 

17

 

 

 

(5

)

 

 

25,390

 

Corporate notes and bonds

 

164,563

 

 

 

383

 

 

 

(69

)

 

 

164,877

 

Commercial paper

 

26,285

 

 

 

14

 

 

 

(1

)

 

 

26,298

 

Total

$

251,774

 

 

$

416

 

 

$

(85

)

 

$

252,105

 

Marketable securities in a continuous loss position for less than 12 months had an estimated fair value of $183.4 million and $1.9 million in unrealized losses as of September 30, 2026, and an estimated fair value of $74.9 million and $0.1 million in unrealized losses as of December 31, 2025. Marketable securities in a continuous loss position for greater than 12 months had an estimated fair value of $3.0 million and immaterial unrealized losses as of September 30, 2026, and an estimated fair value of $8.5 million and immaterial unrealized losses as of December 31, 2025.