Fair Value Measurements
The following tables present information about the Company’s financial assets that have been measured at fair value on a recurring basis as of January 31, 2025 and 2024, and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value:
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| January 31, 2025 | | January 31, 2024 |
| (in thousands) | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total |
| Financial Assets: | | | | | | | | | | | | | | | |
| Cash Equivalents: | | | | | | | | | | | | | | | |
| Money market funds | $ | 57,158 | | | $ | — | | | $ | — | | | $ | 57,158 | | | $ | 52,647 | | | $ | — | | | $ | — | | | $ | 52,647 | |
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| Marketable Securities: | | | | | | | | | | | | | | | |
| Corporate bonds | — | | | 106,654 | | | — | | | 106,654 | | | — | | | 98,703 | | | — | | | 98,703 | |
| Municipal bonds | — | | | 12,745 | | | — | | | 12,745 | | | — | | | 985 | | | — | | | 985 | |
| U.S. government and agency securities | — | | | 120,008 | | | — | | | 120,008 | | | — | | | 185,571 | | | — | | | 185,571 | |
| Certificates of deposit | — | | | 34,611 | | | — | | | 34,611 | | | — | | | 46,543 | | | — | | | 46,543 | |
| Commercial paper | — | | | 64,171 | | | — | | | 64,171 | | | — | | | 166,729 | | | — | | | 166,729 | |
| Total financial assets | $ | 57,158 | | | $ | 338,189 | | | $ | — | | | $ | 395,347 | | | $ | 52,647 | | | $ | 498,531 | | | $ | — | | | $ | 551,178 | |
The Company classifies its highly liquid money market funds within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The Company classifies its commercial paper, corporate and municipal debt securities, U.S. government and agency securities and certificates of deposit within Level 2 because they are valued using inputs other than quoted prices that are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security, which may not be actively traded.
The Company’s primary objective when investing excess cash is preservation of capital, hence the Company’s marketable securities consist primarily of U.S. government and agency securities, high credit quality corporate debt securities and commercial paper. The Company has classified and accounted for its marketable securities as available-for-sale securities, as it may sell these securities at any time for use in the Company’s current operations or for other purposes, even prior to maturity. As of January 31, 2025 and 2024, for fixed income securities that were in unrealized loss positions, the Company has determined that (i) it does not have the intent to sell any of these investments and (ii) it is not more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis. In addition, as of January 31, 2025, the Company anticipates that it will recover the entire amortized cost basis of such fixed income securities before maturity.
The Company regularly reviews the changes to the rating of its debt securities by rating agencies and reasonably monitors the surrounding economic conditions to assess the risk of expected credit losses. As discussed in Note 4, Marketable Securities, as of January 31, 2025 and 2024, there were no securities that were in an unrealized loss position for more than 12 months. The Company has not recorded any impairments in the periods presented.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.