Fair Value of Financial Assets
The following table presents information about the Company's financial assets measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values as of December 31, 2025 and 2024 (in thousands).
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| As of December 31, 2025 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Assets: | | | | | | | |
| Money market funds | $ | 195,296 | | | $ | — | | | $ | — | | | $ | 195,296 | |
| | | | | | | |
| Debt securities issued by U.S. government agencies | 190,999 | | | — | | | — | | | 190,999 | |
| Corporate debt securities | — | | | 198,318 | | | — | | | 198,318 | |
| Asset backed securities | — | | | 61,352 | | | — | | | 61,352 | |
| Commercial paper | — | | | 7,718 | | | — | | | 7,718 | |
| Other debt securities | — | | | 117,374 | | | — | | | 117,374 | |
| $ | 386,295 | | | $ | 384,762 | | | $ | — | | | $ | 771,057 | |
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| As of December 31, 2024 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Assets: | | | | | | | |
| Money market funds | $ | 128,652 | | | $ | — | | | $ | — | | | $ | 128,652 | |
| | | | | | | |
| Debt securities issued by US. government agencies | 144,644 | | | — | | | — | | | 144,644 | |
| Corporate debt securities | — | | | 107,852 | | | — | | | 107,852 | |
| Commercial paper | — | | | 8,794 | | | — | | | 8,794 | |
| Other debt securities | — | | | 8,821 | | | — | | | 8,821 | |
| $ | 273,296 | | | $ | 125,467 | | | $ | — | | | $ | 398,763 | |
The Company estimates the fair value of its marketable securities classified as Level 2 by taking into consideration valuations obtained from third-party pricing sources. These pricing sources utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include market pricing based on real-time trade data for the same or similar securities, issuer credit spreads, benchmark yields, and other observable inputs. The Company validates the prices provided by its third-party pricing sources by understanding the models used, obtaining market values from other pricing sources and analyzing pricing data in certain instances.
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.