Fair Value Measurements
The following tables present information about the Company’s financial assets and liabilities that have been measured at fair value on a recurring basis as of December 31, 2025 and 2024, and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):
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| Fair Value Measurement as of December 31, 2025 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Financial Assets: | | | | | | | |
| Cash equivalents: | | | | | | | |
| Money market funds | $ | 311,106 | | | $ | — | | | $ | — | | | $ | 311,106 | |
| Commercial paper | — | | | 29,879 | | | — | | | 29,879 | |
| Corporate debt securities | — | | | 1,524 | | | — | | | 1,524 | |
| Marketable Securities: | | | | | | | |
| Corporate debt securities | — | | | 2,583,393 | | | — | | | 2,583,393 | |
| U.S. government treasury securities | — | | | 695,894 | | | — | | | 695,894 | |
| Commercial paper | — | | | 599,967 | | | — | | | 599,967 | |
| Certificates of deposit | — | | | 192,784 | | | — | | | 192,784 | |
| U.S. government agency securities | — | | | 1,493 | | | — | | | 1,493 | |
| Total financial assets | $ | 311,106 | | | $ | 4,104,934 | | | $ | — | | | $ | 4,416,040 | |
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| Fair Value Measurement as of December 31, 2024 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Financial Assets: | | | | | | | |
| Cash equivalents: | | | | | | | |
| Money market funds | $ | 1,193,927 | | | $ | — | | | $ | — | | | $ | 1,193,927 | |
| Commercial paper | — | | | 9,088 | | | — | | | 9,088 | |
| Corporate debt securities | — | | | 2,502 | | | — | | | 2,502 | |
| Marketable Securities: | | | | | | | |
| Corporate debt securities | — | | | 1,896,041 | | | — | | | 1,896,041 | |
| U.S. government treasury securities | — | | | 466,460 | | | — | | | 466,460 | |
| Commercial paper | — | | | 390,283 | | | — | | | 390,283 | |
| Certificates of deposit | — | | | 187,802 | | | — | | | 187,802 | |
| U.S. government agency securities | — | | | 1,490 | | | — | | | 1,490 | |
| Total financial assets | $ | 1,193,927 | | | $ | 2,953,666 | | | $ | — | | | $ | 4,147,593 | |
The Company considers all highly liquid investments, including money market funds with an original maturity of three months or less at the date of purchase, to be cash equivalents. The Company uses quoted prices in active markets for assets to determine the fair value of its Level 1 investments in money market funds. The Company classifies its commercial paper, corporate debt securities, certificates of deposit, U.S. government treasury securities, and Non-U.S. government securities 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.
In addition to its cash equivalents and marketable securities, the Company measures the fair value of its outstanding convertible senior notes on a quarterly basis for disclosure purposes. The Company considers the fair value of the convertible senior notes to be a Level 2 measurement due to limited trading activity of the convertible senior notes. Refer to Note 8, Convertible Senior Notes, to the consolidated financial statements for further details.
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.