Unity Software Inc.U

Unity Software Inc. Fair Value Disclosure

10-KFiled Feb 22, 20222 min read
Fair Value Measurements
We categorize assets and liabilities recorded or disclosed at fair value on our consolidated balance sheets based upon the level of judgment associated with inputs used to measure their fair value. The categories are as follows:
•Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
•Level 2—Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.
•Level 3—Inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. The inputs require significant management judgment or estimation.
The following table presents the fair value of our financial assets and liabilities measured at fair value on a recurring basis using the above input categories as of December 31, 2021 (in thousands):
Level 1Level 2Level 3Total
Restricted cash:
Restricted cash$10,823 $— $— $10,823 
Total restricted cash$10,823 $— $— $10,823 
Cash equivalents:
Money market funds$73,138 $— $— $73,138 
Total cash equivalents$73,138 $— $— $73,138 
Marketable securities:
Commercial paper$— $59,792 $— $59,792 
Asset-backed securities— 40,942 — 40,942 
Corporate bonds— 237,402 — 237,402 
U.S. treasury securities— 272,300 — 272,300 
Supranational bonds— 70,887 — 70,887 
Total marketable securities$— $681,323 $— $681,323 
The following table presents the fair value of our financial assets and liabilities measured at fair value on a recurring basis using the above input categories as of December 31, 2020 (in thousands):
Level 1Level 2Level 3Total
Restricted cash:
Restricted cash$21,369 $— $— 21,369 
Total restricted cash$21,369 $— $— $21,369 
Cash equivalents:
Money market funds$660,086 $— $— $660,086 
Commercial paper— 75,726 — 75,726 
Total cash equivalents$660,086 $75,726 $— $735,812 
Marketable securities:
Asset-backed securities$— $49,965 $— $49,965 
Corporate bonds— 92,322 — 92,322 
U.S. treasury securities— 327,050 — 327,050 
Supranational bonds— 10,069 — 10,069 
Total marketable securities$— $479,406 $— $479,406 
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Historical Timeline

Fiscal YearFiled
2021Feb 22, 2022Showing above
2020Mar 5, 2021

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.

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