FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial assets measured at fair value on a recurring basis within the fair value hierarchy are summarized as follows (in thousands):
December 31, 2025
Level 1Level 2Total
Cash equivalents:
Money market funds$403,979 $— $403,979 
Marketable securities:
U.S. treasury securities132,036 — 132,036 
Commercial paper— 14,310 14,310 
Corporate notes and obligations— 183,985 183,985 
Total$536,015 $198,295 $734,310 
December 31, 2024
Level 1Level 2Total
Cash equivalents:
Money market funds$384,648 $— $384,648 
Corporate notes and obligations— 524 524 
Marketable securities:
U.S. treasury securities127,045 — 127,045 
Commercial paper— 18,433 18,433 
Corporate notes and obligations— 238,237 238,237 
Total$511,693 $257,194 $768,887 
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Historical Timeline

Fiscal YearFiled
2025Feb 24, 2026Showing above
2024Feb 26, 2025
2023Feb 26, 2024
2022Mar 1, 2023

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.