Fair Value Measurements
Assets and liabilities measured at fair value at each balance sheet date are as follows (in thousands):
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| December 31, 2025 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Assets: | | | | | | | |
| Cash equivalents: | | | | | | | |
| Money market funds | $ | 149,874 | | | $ | — | | | $ | — | | | $ | 149,874 | |
| | | | | | | |
| Commercial paper | — | | | 24,899 | | | — | | | 24,899 | |
| Short-term marketable securities: | | | | | | | |
| U.S. government treasuries | 600,084 | | | — | | | — | | | 600,084 | |
| | | | | | | |
| Corporate debt securities | — | | | 62,469 | | | — | | | 62,469 | |
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| Long-term marketable securities: | | | | | | | |
| U.S. government treasuries | 58,545 | | | — | | | — | | | 58,545 | |
| | | | | | | |
| Corporate debt securities | — | | | 39,777 | | | — | | | 39,777 | |
| | | | | | | |
| Total | $ | 808,503 | | | $ | 127,145 | | | $ | — | | | $ | 935,648 | |
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| December 31, 2024 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Assets: | | | | | | | |
| Cash equivalents | | | | | | | |
| Money market funds | $ | 126,728 | | | $ | — | | | $ | — | | | $ | 126,728 | |
| | | | | | | |
| | | | | | | |
| Short-term marketable securities: | | | | | | | |
| U.S. government treasuries | 629,400 | | | — | | | — | | | 629,400 | |
| | | | | | | |
| Corporate debt securities | — | | | 21,399 | | | — | | | 21,399 | |
| Commercial paper | — | | | 6,572 | | | — | | | 6,572 | |
| Long-term marketable securities: | | | | | | | |
| U.S. government treasuries | 334,892 | | | — | | | — | | | 334,892 | |
| | | | | | | |
| Corporate debt securities | — | | | 24,481 | | | — | | | 24,481 | |
| | | | | | | |
| Total | $ | 1,091,020 | | | $ | 52,452 | | | $ | — | | | $ | 1,143,472 | |
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The Company’s Level 2 securities are valued using third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly.
The Company did not transfer any assets or liabilities between the fair value measurement levels during the years ended December 31, 2025 or 2024.
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.